What is a Crisis? Is it Headed Towards Your Organization?

Traditionally crisis may be defined as a severe problem. But as we see it, crisis are problems that show several indications. Such as, undermine a vital product line or business module, harm an organization’s money related execution, damage the well-being and health of customers, affect the workers, create chaos in the environment, adversely affect the trust of customers in an organization and damage its reputation.

What is Organizational Crisis?

Organizational crisis may be defined as  “specific, sudden, and unanticipated events or series of events that generate instability and risk to an organization’s high end goals.”

It has been observed that in many organizations – management consider the signs of crisis as false alarms. For instance, a minor customer issue at a retail counter may be considered one off and ignored, only to realize that 6 months later, there are dozens of such issues. Another example could be a steady increase in employee turnover – and the HR may not give it much importance because its not a major issue – only to realize that a year later, the annual turnover has gone upto 25%. Sometimes when the old system can no longer be sustained, management often blame it on employees but do not consider to evaluate its organizational policy.

Common Types of Crisis

Technical Breakdowns: Failure of organization’s predetermined policies or work structure

Human Breakdowns: Stress due to workload, inharmonious work culture and lack of appraisals.

Challenges: It becomes difficult to achieve marketing and sales target, maintain customer loyalty or even finding the right staff.

Organizational Misdeeds: when management takes some decisions knowing the harmful outcomes of the same towards the partners and third parties. In such cases, higher management overlook the repercussion and implement the same for fast results.

Workplace violence: Employees involved in violent acts such as boycotts, strikes or even beating up co-workers in the office premises.

Why Signs of Crisis are Ignored by the Management

Cognitive limitations: management can’t always anticipate everything, and can go to just a predetermined number of tasks, threats and needs.

Mitigating Unexpected Events: some unexpected events or situations are often scraped by the management and thus prevented from becoming crisis for the time being.

Reputation is at its Stake: when management is not empowered to take desired action due to the market reputation of organization, they are less likely to take interest in organization’s internal matters

Crisis Later on Might be More Serious and Threatening

We see crisis as something that is always heading towards businesses or rather businesses heading towards crisis all the time; but how many are able to timely realize and take preventive measures? Or even more – how many realize the impact in a timely measure and are able to react as first responders to an emergency situation?

Crisis often requires urgent decisions in short time which builds pressure over time and routine business becomes increasingly difficult. These are some of the crisis identified in many organizations. To develop a better understanding about crisis and its types, read my next post.