Haifa University 16th COHRM Crisis Management 29 April, 2015

Organisational Crisis; Antecedents,
Challenges, Solutions
Prof. Zachary Sheaffer
Dept. of Economics & Business Administration
Ariel University
th
16
Haifa University
COHRM
Crisis Management
29 April, 2015
The English
word “crisis” is 危机 in
Chinese. It has two Chinese
characters: 危 means danger,
threats and 机 implies
opportunities.
23 Sept. 2008
NYC Stock
Exchange
Vietnam
1966
ECONOMIC
WAR
Twin Towers
20 11 2001
TERROR
Tsunami
Fukushima
11 March 2011
NATURAL
DISASTERS
An organisational crisis is a high
impact event that threatens the
viability of the organisation and is
typified by vagueness of cause,
effect and means of resolution, as
well as by a belief that decisions
must be made swiftly.
Organisational crisis is a multidimensional event
encompassing all organisational components in a vicious circle, is
perceived by stakeholders as threatening organisational viability
& experienced by them as threatening both personally & socially.
The ambiguity accompanying the cause, influence &
solution results in disillusions or inability to interpret the
situation. It shatters common beliefs, values & basic
personal assumptions. Decision-making process is affected
by strict time constraints and is exacerbated by cognitive
limitations.
Bankruptcy Date: 09/15/2008•
Assets: $691 billion•
09/26/2008• Washington Mutual
Assets: $327.9 billion•
07/21/2002•
Assets: $103.9 billion•
12/17/2002•
Assets: $61 billion•
06/01/2009•
Assets: $91 billion•
11/01/2009•
Assets: $71 billion•
04/30/2009•
Assets: $39 billion•
12/02/2001
Assets $ :65.5 billion
Israel’s national budget
(2013-14)
101 Billion US$
The Event Approach: A crisis as an adverse event.
 Typically, the 1982 Tylenol poisoning (Heath & Palenchar, 2009) and
the 1986 Chernobyl disaster (Falkheimer & Heide, 2006)
 Logical conceptualisation of CM as a chiefly tactical activity focussed
on incident response (what to do when a crisis occurs and how to
prepare for it in case it happens
 Functional activities critically important for successful organisational
crisis response and recovery
 “A crisis is a sudden and unexpected event that threatens to disrupt
an organisation’s operations and poses both a financial and
reputations threat” (Coombs, 2007)
 “A crisis is an unplanned (but not necessarily unexpected) event that
calls for real-time high level strategic decisions in circumstances
where making the wrong decisions, or not responding quickly or
proactively enough, could seriously harm the organisation” (Davies,
2005)
 The event approach typically positions CM structurally alongside
operational or technical functions (security or emergency response,
public affairs: media or community relations).
The Process Approach
Recent developments views CM as an evolution
beyond operationalised response
Essentially, a growing awareness that proactive
managers can and should be prepared to avoid a
crisis happening, 1st and foremost
Increasing acceptance of CM as part of a process
continuum, which builds on the recognition that:
(a)most crises are not sudden events but follow a
Root Causes
CRISIS SYSTEMS
SYSTEMS
1. Technology
3. Human Factors
1
2
3
2. Org
Structure/Strategy
4
5
4. Culture
5. TMT Psyche