Managing Change 2

Chapter 1- Organizational resilience

Resilience is the ability to recover from or adjust easily to misfortune or change.

Organizational resilience is the ability of an organization to anticipate, prepare for, respond, and adapt to incremental change and sudden disruptions in order to survive and prosper. 

Organizational resilience as a long-term value driver for new opportunities:

• Increase the likelihood of adapting to change  
• The shortened time of adapting to change 
• Maximize the impact of adapting to change on the organization’s key products and services.

Organizational resilience requires a holistic approach and an appropriate balance between:

• Preventative control 
• Mindful action 
• Performance optimization 
• Adaptive innovation 

Organizational resilience has split by 

two core drivers:

• Defensive (stopping 

bad things happening).

• Progressive (making 

good things happen).

Two approaches to how resilience 

can be achieved:

• Consistency
• Flexibility

Business continuity is the ability of an organization to continue the delivery of products and services within acceptable time frames at a predefined capacity during a disruption. 

HROs– (High-reliability organizations)- are organizations that achieve safety, quality, and efficiency goals by employing 5 main principles.

Sensitivity to operations: awareness state of relevant systems and processes.

• Reluctance to simplify
• Preoccupation with failure
• Deference to expertise 
• Practicing resilience 

Chapter 2- Crisis management

An organization crisis is:

• Low-probability event 
• High-impact event 
• Ambiguity of cause
• Ambiguity of means 
• Swift decision making 
• The life cycle of a crisis:

• Preconditions (small events)
• Trigger event (crisis escalates)

Crisis management is a change of tasks and processes when a crisis occurs. Strategies, processes, and measures are planned and put in force to prevent and cope with a crisis.

Classification of crises:

• Potential crisis (neither ascertained nor existent)
• Latent crisis (exists, but is not yet identifiable)
• Acute crisis (destructive effect of the crisis is perceived and the company strives to cope)

Stages of crisis management:

• Pre-crisis: prevention and preparation 
• Crisis response
• Post-crisis: improve preparation for the next crises 

7 family crises identified by Pearson and Mitroff’s framework:

• Economic attacks 
• Environmental accidents 
• Occupational health disease

Organizational misbehaves: 

• Not addressing known risks
• Improper job performance that leads to an accident 
• Legal and regulatory violations 

Chapter 3- Crisis management strategy 

The strategic management process 5 steps:

• External analysis of opportunities and threats 

Identify the source of the crisis and specific vulnerabilities. Environmental scanning on market demand, economic forces, and consumer preferences. Monitoring what has been said about the company on the Internet. Contract with research organizations. 

3 key characteristics of the organization’s environment:

• Simple-complex environment 
• Stable-unstable environment 
• Uncertainty-certainty of the quality or richness of information available for decision-makers

• Internal analysis of strengths and weaknesses (SWOT)

Strengths: can eventually lead to vulnerabilities 

Weaknesses: connections between organizational weaknesses and crises 

Opportunities: problems behind business opportunities can surface and escalate into a crisis

Threats: a common source of crisis like climate conditions, diseases, etc.

The link between crises and strengths is not always obvious.

Example: the strength of the resort is its location (island), but at the same time it can lead to crises (hurricanes).

• Strategy formulation (2 types)

Corporate strategy– strategic approach that top management formulates for the organization.

Which industries does the organization complete? (Single, multi-related, unrelated)

Which growth pattern will the organization follow? (Growth, stability, retrenchment)

Business strategy– a strategy that outlines competitive advantage.

Low-cost strategy (global outsourcing, low wages, low training)

Differentiation strategy (abrupt shifts in consumer preferences)

Focus strategy (high exposure, more at stake) 

• Strategy execution 

Companies set action plans to permit them to achieve smart goals derived from corporate and business strategies.

• Strategic control (2 key factors)

• Need to know how well the organization is performing.
• Highlights when environmental uncertainties have upset the performance of the organization.

Chapter 4- Risk management and risk assessment

Risk management consists of the processes of risk assessment, risk communication, and risk treatment and provides an analytical foundation for decision-making regarding the treatment of risk.

An event is an occurrence that could have an impact on the organization.

A threat is a potential source of a negative impact.

Areas of risk management:

• Enterprise risk: impactions on the organization in terms of PEARL (people, environment, assets, reputation, legal)
• Operational risk: vulnerabilities in business operations (effectiveness of processes, analysis of downtime, governance, reporting)

Risk assessment is a process of risk analysis and risk evaluation. It is used to prioritize planning by assessing the events and their potential impact on critical functions.  

Risk analysis is a process of identifying events, determining causes, and estimating probabilities and impacts.

Risk evaluation is a process of comparing risk levels with established risk criteria. 

Vulnerability is a measure of exposure to a threat that increases as the probability and impact of the event increase.

Principles of risk management:

• Analyzing the underlying threats and possible crisis events.
• What controls are in place?
• Evaluating current exposure 
• Identifying new controls
• Investigate the costs and benefits

Risk assessment is concerned with those threats which are likely to result in one of six disruptive scenarios:

• Loss of access 
• Loss of people
• Loss of supplies 
• Loss of communication
• Loss of function 
• Loss of data

The impact of disruption on an organization is measured:

• Quantitively (numbers)
• Qualitatively (high, low)

Risk treatment:

• Risk avoidance (activities that cause risks are eliminated)
• Risk transfer (risk is assigned to insurance or outsourcing)
• Risk reduction (impact of the risk is reduced)
• Risk acceptance (risk is retained)

Chapter 5- Crisis management plan (CMP)

Purpose of Crisis management team (CMT):

• Identifies crisis threats for organization
• Develops crisis management plan
• Leads training in crisis management 
• Manages the crisis
• Leads postcrisis evaluation for learning 

Crisis is an event with low probability of occurring, but when occurs has negative impact on the organization. Cause and ways to solve the crisis do not occur clearly. Crisis impact may not be obvious to stakeholders of the organization. 

• Activating CMT– any member can activate the team by notifying the team, team will meet at the primary command centre, discuss strategies for crisis managing.
• Regular CMT meetings– reviewing CMP, presenting new material, crisis management

Potential problems in CMT:

• Not being able to decide due to the lack of information
• Lack of interest of the senior management 
• Verbal aggressiveness 
• Lack of psychological preparation 

2 keys positions in CMT:

• The leader of the team
• Person who is designed to talk to the media

Response plans for specific crisis situation– is the longest section in CMP, all possible crises are identified, and a response plan is offered for each one. Example: evacuation plan for bomb threat.

Components of the plan:

• Cover page
• Table of contents 
• Team members of CMT
• Team members responsibilities 
• Activation of CMT
• Command centre location 
• Response plan for specific crisis situations 

Chapter 6- Crisis communication

• Crisis communication definition 

The crisis communication may be defined as “the information that is exchanged by and between public authorities, organizations, the media, affected individuals, groups before, during and after a crisis.”

• Initiating the communication process 

Crisis management and crisis communication are intricately interlinked. The Crisis Management Team (CMT) will execute the crisis management plan (CMP), which contains communication strategies as part of the crisis response.

The CMT will execute the crisis management plan (CMP), which contains communication strategies as part of the crisis response.

During a crisis your challenge is two pronged:

– To have enough information to identify the crisis quickly and accurately

– To have the resources available to:

Manage the problem solving process

Control the information flow

Protect and enhance the hotel’s and Marriott International’s reputation and business

Reposition the course and direction of the hotel/Marriott International as the lessons of the emergency situation dictate. 

Initiating the communication process: Internal stakeholders 

When a crisis strikes the organization, there are two functions that must be addressed concerning communication with internal stakeholders:

• First, command-and-control function that involves management, the owners, and selected employees. 
• Second, the general employee population needs to be updated on the status of the crisis and how it has affected the organization and what can be expected in the future in terms of its resolution.

Internal stakeholders should be aware of all information and situation details before external stakeholders are advised. This will ensure consistency of messages. 

To avoid speculation which is dangerous because it can launch a wave of rumors, employees should be reminded not to respond on their own to reporters’ questions but should refer all inquires to the organization’s designated spokesperson (Coombs, 2007; Wailes, 2003).

Using one designated spokesperson helps ensure the organization’s message is consistent.

Communication process: Social and Internet networks 

Monitor internet

Examining blog activity and internet search engines can yield insights on a crisis and to what magnitude it is being communicated via the Internet.

Utilize Social Media Outlets as an Ongoing Component of the Overall Corporate Communications Plan

Larger companies usually have an in-house staff, whereas smaller firms may need to use social media specialists on retainer. 

in the event of a crisis, social networks can help to disseminate messages to stakeholders or link readers to Internet sites providing details of the organization’s response (Ziemnowicz et al., 2011).

Make differences on social media

It is important to be aware of the difference between a dissatisfied customer (who can eventually be satisfied) and a troll(who will never be satisfied).

United airlines case (watch video in youtube)

Social media world demands that the company make a response quickly

Publicly responding to an organizational crisis within 24 hours was once considered the standard by some PR practitioners. (It took Domino’s more than 24 hours to respond with its now-famous YouTube video in 2009)

Chapter 7- Organizational learning 

• What is organizational learning? 

Organizational learning is the process of detecting and correcting errors (Argyris & Schön, 1978). It seeks to improve the operation of the organization by reflecting on past experiences (Sullivan & Beach, 2012).

It should not be assumed that learning always emanates from a crisis, because some organizations do not appear to learn effectively. 

LEARNING FROM FAILURES 

LEARNING FROM A CRISIS 

Organizational learning from a crisis should involve evaluating each of the four stages of the crisis management framework. In evaluating the organization’s response, management should seek improvements in each stage: landscape survey, strategic planning, crisis management, and organizational learning.

• Barriers to organizational learning

• Overreliance on Programmed Decisions

Because this mode of operation is usually effective, management may become complacent and not seek new approaches to running the operation. 

• Information Asymmetry

For example, information asymmetry can exist when the manufacturer of a product has information that customers do not possess. Sometimes information asymmetry is used to pretend that each accident was a one-off fluke.

• Small Failures Are Routinely Ignored

Small incidents can be interpreted as warning signals of a larger crisis on the horizon (“smoldering crisis”)

•  Organizational cultural considerations 

• Solid Track Record of “Success” in the Organization

A track record of success implies that there is nothing new to learn (Veil, 2011). i.e. NASA Challenger

• Culture of Scapegoating

It indicates a company’s lack of ethics in running the business (Elliott et al., 2000).

Putting the blame on a scapegoat diverts attention away from the issue that needs attention

i.e. firefighters intervention in the Grenfell Tower fire where 72 people died in 2017.

• Status Quo–Seeking Culture

A crisis “cannot happen here” or “it can’t happen to us” syndrome.

• Analyzing Failure Is Painful

When a manager achieves success, she may attribute that success to her own personal traits as a leader. However, if that same manager encounters failure, she may attribute that failure to external causes; in other words, it is not her fault. This type of rationale is known as a self-serving bias.