White collar mismanagement and subsequent employee lawsuits, along the lines of the Texaco fiasco, are on the rise and crisis management plans will become key to how companies fare in the future. That's according to a recent study by the Institute for Crisis Management.
On the positive side, the report projects that business crises will drop by 4 percent by the end of this year. Which isn't to say, however, that companies are learning from their colleagues' misfortunes.
"We find it amazing that so many executives have failed to learn from the crises other organizations are having," said Robert Irvine, president of the Institute for Crisis Management, a Louisville, Ky.-based research and consulting firm specializing in crisis communications. "The biggest single problem is management denial."
ICM's findings were based on an analysis of 59,495 business crisis stories covered by more than 1,500 news sources, including the New York Times, Associated Press, United Press International, Reuters, Dow Jones, and The Wall Street Journal. Conclusions were based on news accounts fed into a database and tracked for key words such as fire, explosion, damage, destroys, harrassment and discrimination.
According to ICM, reports of business crises dropped from 9,861 in 1994 to 6,538 in 1995 with a projection for 6,271 by the close of this year. The report also indicates that news of typical business crises - industrial accidents, environmental accidents and product defects - have declined; however, class action lawsuits are expected to rise by 57 percent; white collar crime by 13 percent; employee discrimination by 6 percent; and whistleblowing by 6 percent.
"The battlefield has shifted from hazardous industrial plants and environmentally sensitive regions to the human resources departments and boardrooms," ICM reports.
ICM also points to the irony of this genre of burgeoning crises because, in so many cases, those in management are aware of the problems but decide to ignore them. That's because they don't have a grasp of how a crisis can affect the bottom line, Irvine added.
But Irvine said it's PR practitioners who can help corporate heads learn the importance of a progressive crisis management program by attaching a price tag to a disaster. They should point to what other companies have been fined, provide copies of lawsuits and explain what penalties have resulted, Irvine said.
"The media is always looking for someone to blame --whether it is an accident or a personnel issue," Irvine said. "You better be prepared when people start pointing fingers... What companis need is more introspection, more debriefing and more ways to keep up with major changes and keep their plans up to date."
One Houston company is among those helping businesses develop and implement up-to-date crisis programs. The Churchill
Group Inc.
has developed software that can be tailored to a company's need by coming up with a program which continually updates strategies, information, messages and affected audiences, according to Churchill spokesman Don King.
"We have embedded crisis management principles into software that is interactive," King explained. "This isn't a shrinkwrapped version that's used for all of our clients. We're able to put individual company's crisis management plans into software that becomes a tool." The software ranges in price from $25,000 to $75,000. The study is free. (Institute for Crisis Management, 502/584-0402; Churchill, 713.781-0020)