Revealed: 6 Business Crisis Management Lessons Every HR Leader Needs to Know

“The most important thing to do if you find yourself in a hole is to stop digging,” Warren Buffett.

Warren defined crisis management in highly eloquent words. Operating a business, whether big or small, involves encountering challenges and crises along the way. The key to effective crisis management lies in understanding that every crisis holds an opportunity to grow and observe the situation from a new perspective.

This blog highlights six key lessons that HR leaders can learn from crises to better equip themselves if such situations ever arise in the future. You will also learn about the role of HR during a crisis and the benefits that an organization realizes from handling a problem effectively.

What Is Crisis Management?

Crisis management is a set of processes or strategies that organizations employ to handle critical events. Incidents like threats, negative disruptions, bad press, controversies, etc. are considered critical events because they have the potential to damage a company’s reputation.

Organization leaders must be well-equipped with well-defined protocols and tools to prevent such crises from causing too much damage to the organization and its reputation.

Unmanaged crises cause multi-tiered damage to an organization, including threats to people, property, reputation, sales, business relations, and more. This makes it essential for businesses to have a sophisticated crisis management plan in place that gives direction to the leaders so that they may act to predict a crisis before it happens or to minimize the damage it causes.

KFC’s PR team demonstrated an excellent example of crisis management in 2018 when a series of unprecedented events led to a critical shortage of chicken in 870 restaurants across the UK and Ireland and caused severe delivery delays.

The PR team got to work immediately by rolling out witty, sympathetic ads in newspapers, billboards and other prominent media by rearranging the letters “KFC” to humbly accept their “FCK up.”

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The team kept on top of the situation by promptly answering all influx of questions through social media every single day. This prompt action helped them preserve transparency and open communication through a crisis, thus preventing any consumer dissatisfaction from escalating and causing further damage to their reputation.

Role of HR in Crisis Management

HR is responsible for a wide range of operations at an organization and is particularly well-placed to help manage crises quickly in four distinct ways:

1. Communication and Relations

The Human Resources department is often responsible for internal communications on a regular basis. They keep the company intranet sites updated with the latest information and circulars.

During a crisis, HR leaders step up and work with the crisis management department or leadership of their organization to broadcast crisis communications. It is their job to ensure that the communication remains consistent and that the employees get full access to FAQs and resources pertaining to the issue.

HR leaders focus on setting up seamless communication and maintaining good employee relations during a crisis.

2. Policies and Processes

The HR department sometimes functions as a handy repository for company SOPs (Standard Operating Procedures), policies, protocols, and procedures. Crisis management requires HR leaders to promptly make these resources available at handy for reference and perusal.

HR leadership should work with company executives to formulate new policies and frameworks that can help the organization effectively manage and overcome a crisis.

HR leaders also coordinate with other department leaders to ensure that all the requisite information required to manage a policy effectively is readily available to company leadership over dedicated channels.

3. Skills and Tracking

HR actively tracks, manages, and maintains employee records for everyone on the company’s payroll. This includes the employees’ personal information, skills and experience, the roles they have undertaken at the organization, projects they are involved in, etc.

This information works as a good database to quickly assemble a crisis management team for the field. For example, in a crisis where an employee gets injured and emergency services are far away, HR leaders can tap into employee databases to find other employees who have first-aid training to handle the situation until help can arrive.

4.  Talent and Success

Several types of crises occur when certain employees or members of an organization are prevented from doing their jobs. For example, a key company figure suddenly faces a medical emergency and must remain absent from their duties to recover.

In such situations, HR leaders must step up and work with company managers to identify internal talent who can replace or temporarily assume this vacant position. They must provide the managing team with a clear, holistic picture of the potential substitutes so that they can quickly get the operations back up and running.

6 Business Crisis Management Lessons for HR Leaders

It is not necessary to undergo a crisis to learn important lessons on how to manage it effectively.

Below are six key lessons that you can learn from the crises of other businesses and explore their effectiveness for your own organization:

1. Clear Communication

Clear communication helps maintain transparency during critical times, builds trust with stakeholders, and empowers leaders to take coordinated actions.

Meta (formerly Facebook) taught world HR leaders how clear communication can prevent a crisis from becoming a catastrophe by demonstrating it during the Russia-Ukraine war. Facebook experienced a crisis when Russians reportedly used fake accounts on the platform to spread hateful misinformation about the war.

Meta swung into swift action by clearly communicating its policies to battle misinformation and disinformation to the public. It engaged in open dialogue with journalists, civil society organizations, policymakers, etc., to address its concerns and elaborate on its solutions. This helped to improve Facebook’s public perception as a responsible platform that took accountability for the crisis.

2. Decisiveness

Decisiveness is the willingness to make tough decisions to avert a crisis or to prevent it from damaging a company’s reputation and business relations.

Johnson & Johnson demonstrated decisiveness when in 2021, their talcum powder product caused a liability crisis. It was alleged to have been causing ovarian cancer, which was refuted later.

Without delay, the company immediately decided to discontinue selling its talcum powder products in the region. This decision demonstrated that the brand was serious about prioritizing consumer safety over profits and was not hesitant to make tough decisions.

Although the legal action cost the company significant settlement money and damaged its reputation, it was restricted to timely action. It refocused its business case on other products that demonstrated resilience in the face of adversity.

3. Adaptability and Inventiveness

Adaptability and inventiveness are the keys to managing the toughest of crises for businesses that are serious about surviving the competition.

McDonald’s demonstrated these properties exceptionally well in its approach to managing business crises after the COVID-19 pandemic. The pandemic forced lockdowns and restrictions on businesses, which caused significant losses. Additionally, the change in consumer behavior significantly impacted sales.

McDonald’s pivoted its business model to focus more on drive-thrus and deliveries, which allowed it to continue serving customers without hindrance. The company also enhanced its focus on digital renovations, which enabled it to provide contactless solutions and keep sales up.

Its best crisis management strategy was active involvement in community support through charities. It also provided free meals to healthcare workers and vulnerable people to help them through the crisis, demonstrating adaptability and inventiveness like no other.

It helped strengthen their brand reputation and allowed them to grow despite of the pandemic crisis.

4. Empathy and Compassion

Empathy and compassion enable crisis management leaders to view a situation from the perspectives of stakeholders. These qualities are most important to building trust and mitigating reputational damage by mobilizing holistic management measures.

Patagonia, the outdoor apparel company, is a paragon of demonstrating empathy and compassion during a time of crisis. When wildfires ravaged the West Coast of the US, Patagonia stepped in with immediate relief efforts for the affected communities.

The company provided financial assistance, housing, and mental health resources to its employees affected by the wildfires. Patagonia also worked with specialists to advocate for environmental awareness and create policies that addressed climate change.

These crisis management efforts not only made its employees more loyal to the brand but also had a positive impact on the communities, strengthening its brand reputation.

5. Gather a Strong Team

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A strong crisis team mobilizes management efforts in the right direction and helps the organization minimize damage quickly.

Starbucks is a living demonstration of this crisis management strategy. In 2018, the company came under heavy fire for racial profiling, perhaps one of the biggest crises of the time.

Starbucks promptly mobilized a strong and diverse leadership by appointing a new CEO and diversifying its senior leadership personas. They created a Racial Bias Task Force that consisted of field experts in DE&I and civil rights who were responsible for investigating discrimination and developing strategies to prevent it.

This helped Starbucks improve its public perception and also worked to enhance employee morale. Not surprisingly, these efforts made Starbucks an industry leader in diversity and inclusion.

6. Maintain Accountability

Accountability is the act of facing up to the crisis caused by mistakes and actively taking measures to correct them.

Peloton, a fitness company, came under fire in 2021 when a child lost their life while using one of their treadmill models. The company immediately issued a voluntary recall of the said models and urged its customers to stop using this product.

It maintained transparent communication regarding the incident and provided all the necessary information to its customers and regulators alike. It also stepped in to support the affected families.

To demonstrate improvement, the company implemented several safety improvements to the recalled models and added new safety features to the newer models. Peloton also stood up to the legal actions that ensued.

This helped the brand regain consumer trust and improve the safety of its products along the way.

Facilitate Seamless Communication During Crisis with The EMPLOYEE App

Crisis management is a combined responsibility of all the stakeholders in an organization.

While it is important to create a dedicated crisis management team and learn from past mistakes, it is also crucial to keep every employee informed and in the loop about the company’s efforts to control the damage.

The EMPLOYEE App by Engagedly aids crisis management efforts by providing a singular, uninterrupted, pan-organizational communication channel to company leadership. The robust content management system helps crisis leaders aggregate and disseminate relevant information and resources to keep the employees abreast of the efforts.

The app also facilitates a secure company intranet, over which crisis management teams can seamlessly coordinate their efforts with HR leaders.

Visit the website today to explore how The EMPLOYEE App’s diverse features can help your organization prepare for a crisis.

FAQs

What are the advantages of business crisis management?

Crisis management helps organizations identify potential crisis scenarios preemptively. It improves employee confidence in the company and preserves brand reputation by minimizing damage.

What are the disadvantages of not managing a crisis properly?

Mismanagement of business crises can lead to reduced employee morale and high employee turnover. The company could face legal actions that could lead to monetary losses and pressure. Additionally, brand reputation could be at risk.

What does a crisis management team do?

This team detects potential crises early and acts to mitigate them. It is also responsible for developing a crisis management plan, monitoring facilities, and ensuring the safety of everyone involved. This team is the first to respond when a crisis occurs.