The Sudden and Smoldering Crisis Phases and the Challenges for a Leader to Be Successful
In recent years, U.S. newspapers and television have featured some company in crisis almost daily. The crises have ranged from corporate fraud to allegations of widespread sexual harassment or discrimination. In almost all cases, the leaders of these companies are caught off guard; yet with the world watching, they are expected to say (and do) something to manage the situation. The consequences of mishandling a corporate crisis on a firm’s reputation can linger for decades. We want to emphasize that it is often the mishandling of crises, not the crises themselves, that can have the most severe consequences for a firm. What differentiates those firms that thrive following a crisis from those that do not is the leadership displayed throughout the process.
Companies face problems all the time, and solve them one way or another. Sometimes one of these problems is difficult-at least at the time it occurs-and it becomes public interest with the help of the press. This problem is then known as a Crisis, where the company is faced with legal, political, financial and governmental impact on its business. The most serious property of crises is the element of surprise. The worst part in their handling is being unprepared. Crisis can come from nowhere at any time; natural disasters, human error, and industrial accidents can all cause crisis. Sometimes the cause of a crisis is management itself; managers may insist that they face no crisis, and they fall into the brink of lying and rejection of its existence. Then, when the time of the deadline comes their answer to why the job is not finished will be: “We faced trouble and stopped the operation.” Some managers fall into the crises fallacies, and they overdo their denial of its existence. With time, the problems accumulate, causing absolute failure. We can categorize crises according to the cause of their existence, or in another way based on the warning time. Crises, like any business activity, have life cycles. The length of each phase depends on the efficiency of the management in dealing with the crisis. It is the management responsibility to try to solve the crisis using everything it can, beginning with self confidence, going through using all the skills, and ending by having the ability to absorb the public’s anger or fear without harming the firm’s income or reputation. If a crisis is solved by a manager without the public hearing about it then the manager has proven his brilliant capability. This is considered one of the most important stages in a crisis-if not the most important. In it, a problem is first recognized and it can be either solved and ended forever, or it can expand and lead the way to complete destruction. Crisis can occur after this stage easily because of fear of facing the “storm” or the problem by ignoring it. The general response in this stage is either shock, or denial and complacency.
Since the Cyanide-laced Tylenol had been discovered in shipments from the company’s plants and had been found only in the Chicago Vicinity, it was reported that the tempering with the drugs was done when the products were placed on the shelves. These drugs were taken from the shelves, infected with the deadly substances and then taken back to the shelves to be sold to consumers. It was found that the poisoned capsules were from four manufacturing lots and they were taken from different pharmacies over a period of weeks or even months. Before the crisis, Tylenol had managed to control 37% of the market and had reported revenue of approximately 1.2 million dollars. However, after the crisis, Tylenol market share dropped to 7% with a substantial decrease in its revenue (Effective Crisis Management 4) The publicity about the cyanide-laced capsules created a nationwide panic immediately and with the expansion of 24 hours electronic media, people were bombarded with more and more news on the subject. Aroused by such sensational news through the media, people started calling hospitals to enquire about Tylenol. A Chicago hospital was reported to have received over 600 telephone calls just on a single day.
Finally, crisis management therefore will greatly succeed if there is an effective leadership that is able to facilitate and implement an effective crisis management plan. Without a sound leadership however, there may be crisis management plans and teams, while the organization will not escape the impacts of the crisis when it occur. Therefore, it is prudent for all organizations and other institutions to develop a reliable, effective, and dependable crisis management leadership that can be instrumental in guiding the organization towards effective management of crises.
Effective Crisis Management. “The Tylenol Crisis, 1982.” University of Florida, not dated. Web.
Kaplan, Tamara. “The Tylenol Crisis: How Effective Public Relations Saved John And Johnson.” The Pennsylvania state university, 2010. Web.