This post was most recently updated on June 20, 2023
How to know if your business has been hit by a reputation crisis and understanding the 5 different types so you can protect yourself.
Crisis Management is an essential process and strategy developed by a business or organization to maintain a positive image and reputation should an unexpected crisis occur where the company is viewed by the public in a negative light.
Abusiness relies on its reputation and image to keep customers coming back and to bring in new customers, investors, employees, etc. Whether you own a giant global corporation or a small local shop,having a crisis management plan in place is crucial for the growth and future of your business.
In an internet and social media-based world where news and information are so readily available, a company’s reputation can be impacted and destroyed in a matter of minutes. This post outlines what crisis management is, how to navigate the crisis and crisis planning process, and how businesses can use public relations strategies to reduce harm as a result of a crisis.
Part 1: What Does Business Crisis Management Mean in 2022?
Part 2: Why is Crisis Management Important for Businesses?
Part 3: Types of Crises
Part 4: Stages of Crisis Communication
Part 5: How Businesses Can Prepare for a Crisis
Part 6: Addressing a Crisis
Part 7: Hiring Crisis Communications Professionals
Take Control of Your Online Reputation for Good!
What is Business Reputation Crisis Management?
By definition, crisis management is the “process by which a business or other organization deals with a sudden emergency situation.”
A business reputation crisis can be unpredictable by nature, though many organizations try to identify a crisis and implement risk management strategies before they occur.
Crisis management is used as an emergency response tactic to help recover from an array of different types of crises.
A crisis management plan might also be known as a business continuity plan or a disaster recovery plan. Human resources, crisis management teams, or other business operation personnel in an organization work together to deal with a negative event.
There are many different types of reputation crises that a business or organization can face, from something as minute as a social media post gone awry, or as significant as a terrorist attack. A common example in today’s age is the COVID-19 pandemic, which has affected organizations financially.
Why is Crisis Management Crucial for Business Reputation?
Crisis communication can either help or hurt a business depending on how they respond to an event. Saying anything is better than saying nothing at all, but saying the wrong thing can be detrimental to business. Having a crisis management response strategy in place will help your organization be prepared, and manage the situation.
In the digital age, businesses need to be more careful about what they say and do online. Even then, an organization may not be safe from negative press and potential disaster.
In fact, information may be put out there by third parties that are completely false or exaggerated, yet it still holds the same daunting effect on the company’s reputation and image.
While a business can be well equipped and prepared for most mistakes and mishaps, a media or PR crisis isnearly impossible to predict. A public relations crisis can involve a wide variety of unfortunate instances including:
Social media mishap
Company or employee defamation
Attack from a competitor or disgruntled employee/customer
Negative press & news articles
Negative content related to your company goes viral
If an incident like this arises, things can spiral down quickly, particularly if a company does not react in the right way. For this reason, many companies and organizations make the decision to work with an experienced crisis management firm that can provide guidance and custom-tailored strategies when an incident occurs.
5 Types of Business Reputation Crisis
Every crisis is different from the next one. An organizational crisis can arise in many forms. What are the types of crises a business can experience?
Generally speaking, there are six categories of crises that any organization can experience. Here is a list of each potential crisis.
1 – Financial Crises
As a business, a financial crisis loses value in its assets and the company can’t afford to pay off its debt. This is usually due to a drop in revenue for products or services. If that’s the case, a new business plan that outlines a long-term plan to address revenue is needed to generate more income.
Examples of Financial Crises:
A lack of funds to pay:
A few options to address a financial crisis are usually more capital or financial restructuring. However, neither are likely to happen without an updated business crisis management plan.
2 – Personnel Crises
A personnel crisis occurs when an employee or individual associated with a business or an organization is involved in unethical or illegal misconduct. This can happen both in the workplace, or away from the office, regarding an employee’s personal life (more on how to handle a personal reputation crisis here). This misconduct falls solely on the organization that hired the employee, and their lack of judgment is reflected in the organization’s reputation.
Examples of Personnel Crises (in business environments):
Workplace legal issues
Violence in the workplace
3 – Social Media
Social news media has become increasingly popular and accessible, making it an important piece of business branding and marketing strategies. Engaging on social media can be great for business, however, even the slightest mishap can put your company under fire. Misusing a hashtag or having an employee accidentally tweet from the company account instead of their own can have disastrous effects on abrand’s reputation. Taking precautions, researching hashtags and current events, and understanding how to effectively engage on social media can help prevent the onset of a business crisis.
Examples of Social Media Crises:
Misuse of a hashtag
Inappropriate content posted on an employee’s account
Accidental posts from a company’s social media accounts
4 – Organizational Crises
An organizational crisis occurs when a company has significantly wronged its consumers. With this type of crisis, a business or organization will take advantage of its customers as a means of benefiting the company. An organizational crisis can have a big impact on a business that goes beyond reputation, including financial losses.
Examples of Organizational Crises:
misusing managerial powers
5 – Technology
Businesses are constantly relying on technology to automate tasks on a daily basis. However, when technology crashes or causes an issue, or humans mismanage technology, it can spiral into a crisis. Because employees manage the technology used, an organization takes full responsibility for any issues related to technology. Depending on the impact and reach of the blunder, a crisis caused by technology can cause a huge loss in potential revenue.
Examples of Technology Crises:
Online Marketing or social media automation mistakes
For businesses, the crisis management process follows the 6 stages of a crisis. Knowing the crisis process will help you create a communication plan while navigating the stages of a crisis. From beginning to end, a company will manage the crisis and those affected by it, with the end goal of restoring a brand’s reputation while minimizing negative impact.
6 Stages of Crisis Communication
Each crisis has a starting point. In the warning stage, you’ll first encounter a potential crisis. Warning signs can come in different forms, which can vary with the type of crisis and the circumstance. In some cases, you’ll have time to react to a crisis, and in other cases, there is no time.
2. Risk Assessment
Key people in the organization must assess the situation. Understanding how and why the incident happened. Then, quickly assess the reputational risk and perceived impact the crisis may have on an organization. Then, come together to make an informed decision to execute a plan that avoids as much loss as possible.
An effective response is important in addressing a crisis and mitigating the negative long-term damages of a company. Crafting and delivering a public response that addresses the incident and those who were affected. If the response is delivered in the wrong way, you jeopardize further damaging the brand reputation of your organization.
After the response happens, there should be a continued effort to manage the business reputation crisis in an ongoing manner. The purpose of the management stage is to monitor the crisis and further mitigate any issues that result.
During this stage, communication should provide reassurance, confidence, and stability to those impacted by a past crisis. The resolution stage is also an opportunity for a business at fault for an incident to address the evolution of the crisis, and the process of transition to recovery or normalcy. The length of time for full resolution may take a long time.
This step is often skipped but is one of the most important in managing a business reputation crisis. This step should address the long-term steps to restore the brand. If an effective plan is drawn up and executed, then normal business operations will be achieved.
How Businesses Can Prepare for a Crisis
Every situation is unique, meaning a crisis communication and planning strategy will vary based on the severity and circumstances. Depending on its scale, and the parties involved post-crisis, you may want to address the crisis. At the same time, there are some crisis best practices to follow and keep in mind when preparing for a public relations crisis.
What can organizations do to prepare for a crisis? Here are some tips on how businesses can be proactive about crisis management.
Draft a crisis management plan
Monitor online mentions
Draft a Crisis Management Plan
Crisis management should be a core component of yourbusiness plan, so avoid the temptation to use a generic crisis response template. It’s important to customize your own business continuity plan based on the results of your weaknesses audit. Plans tailored to other companies may be ineffective or even harmful to your business.
While you may be putting plenty of your own information out there, it is important to know what others are saying about your company or organization.
Online tools such asGoogle Alerts,Hootsuite, andSendible allow you to monitor specific keywords and phrases related to your brand and industry. That way you’ll know when something new comes out on a given topic.
Whether the brand mentioned is positive or negative, being able to respond quickly makes your brand more approachable, respected, and trusted by consumers.
As a company, you’ll want to prepare for the worst and hope for the best. Being realistic about a potential crisis will help you better plan for an incident when it occurs. Ask yourself, what are some potential situations that could specifically arise? When you have your answers, have a plan in writing to address the situation.
Having leaders be prepared will make handling a business reputation crisis go significantly more effective. Depending on the size and structure of your organization, you may want to do formal training with the CEO, C-level employees, and the board of directors.
Addressing a Business Reputation Crisis
When a business goes through a crisis, you’ll need great public relations to address it. This could be an internal person, or more likely, an external PR specialist or agency.
6 Crisis Management Tips on How to Rebuild
1. Follow the plan
If you have a crisis management plan outlined already, this acts as your starting point for handling any crisis. It’s worth mentioning that each crisis is different, meaning the plan may need to be updated or altered depending on the crisis you’re experiencing.
2. Determine the impact of a business crisis
Consider the crises that could impact your business and determine the impact each of these events could have on your company, employees, and customers before addressing them publicly.
Loss in sales
An increase in expenses (to fix the issue at hand)
A decrease in customer loyalty to your brand
By quantifying the impact each crisis could have on your business, you’ll be able to understand each possible angle of a threat or catastrophe and, therefore, prepare for it appropriately. This type of review will lead you to determine the appropriate actions you and your fellow employees need to take to resolve each event.
3. Communicate with employees
It’s important that company employees (no matter what their position) know how to handle the crisis an organization is going through. Communicating with employees also means sharing updates as soon as they happen. Remember, over-communicating is better than under-communicating.
4. Appoint a spokesperson
In the case that a business reputation crisis becomes so big, it generates media coverage, having a spokesperson to address the crisis. Appointing an internal spokesperson to represent the company and deliver the message helps ensure that the communication strategy comes from one voice that helps align the message company-wide.
5. Be honest
Addressing the situation with a lack of honesty can perpetuate negative media attention toward your organization. Being transparent and addressing the crisis head-on in an open and honest way will help defuse the situation.
6. Communicate with stakeholders
It’s better to address stakeholders personally rather than having customers, partners and suppliers find out through the media. Again, this helps mitigate the situation, while getting out in front of the story.
Hiring Crisis Communications Professionals
Hiring a crisis management team provides a non-biased, outside perspective that is not directly involved with the company’s day-to-day operations.
Emotions can run high in intense and sensitive situations. It can be challenging to keep personal feelings out of it, which can often amplify the situation and complicate things even more.
Work with a crisis management team that has your best interests in mind. Team members will help you to handle a crisis situation carefully, respectfully, and effectively in order toprotect your corporate reputation. Developing a crisis communication management process with the help of a professional ensures piece of mind during difficult times.
Be Proactive in Managing Your Online Reputation
Don’t wait until a crisis strikes tostart managing your business reputation. Take control of how you are perceived online by actively creating content through websites, social media posts, blogs, guest posts, press releases, and beyond.
Promoting your positive content allows consumers and the general public to see your brand’s true colors rather than focusing on the negative that may have come from one small mistake or an uncontrollable attack.
If there is nothing out there about your company when a crisis occurs, the negative content will be all that everyone sees and knows about your business.
Take Control of Your Online Reputation for Good!
If you have already established a positive online presence when a crisis occurs, people are more likely to encounter good content and take it into consideration should they also encounter the bad.
Even when you think you have your bases covered, potential crises could be knocking at your door at any moment. By implementing these business reputation crisis management tips and working with a crisis management firm, you will be better equipped to stop a small mishap from turning into a full-blown crisis.
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