Business & Society
Ethics, Sustainability, and Stakeholder
Management
Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning
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Chapter 6
Issues and
Crisis
Management
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Learning Outcomes
1. Distinguish between the conventional and strategic
approaches to issues management.
2. Identify and briefly explain the stages in the issues
management process.
3. Describe the major components in the issues
development process and factors in actual practice.
4. Define a crisis and identify the four crisis stages.
5. List and discuss the major stages or steps involved in
managing business crises.
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Chapter Outline
• The Relationship Between Issues Management
and Crisis Management
• Issues Management
• Crisis Management
• Summary
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Issues Management and Crisis
Management
• The business environment is turbulent and
stakeholders are sensitive to emerging
issues.
• Some firms have not thought seriously
about public policy and ethical issues.
• Can be impossible to separate the two– the
“Siamese twins of public relations.”
• Well-conducted issues management can
help avoid crises.
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Issues Management
A process by which organizations identify
issues in the stakeholder environment, analyze
and prioritize those issues in terms of their
relevance to the organization, plan responses
to the issues, and then evaluate and monitor
the results.
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Issues Management: Conventional
Approach
Conventional Approach
• Narrowly focused.
• Issues fall within the domain of public policy
or public affairs management.
• Issues have a public policy/public affairs
orientation.
• Any trend, event, controversy, or public
development that might affect the corporation.
• Issues originate in social, political, regulatory,
or judicial environments.
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Issues Management: Strategic
Management Approach
Strategic Management Approach
• Broadly inclusive.
• Is typically the responsibility of senior line
management or strategic management staff.
• Issues identification is more important than
it is in the conventional approach.
• Issues management is seen as an approach
to the anticipation and management of
external/internal challenges to the company
strategies, plans, and assumptions.
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Strategic Issue Management
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Issues
Issue
• A matter that is in dispute between parties.
• The dispute evokes debate, controversy, or
differences of opinion.
 The “portfolio approach” of issues
management helps firms to prioritize and
focus resources on the most important
issues.
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Emerging Issues
Characteristics of an emerging issue
 Terms of the debate are not clearly defined
 Issue deals with matters of conflicting
values and interest
 Automatic resolution is not available
 Issue is often stated in value-laden terms
 Trade-offs are inherent
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Issues Management Process
Basic Assumptions
• Issues can be identified earlier, more completely,
and more reliably.
• Early anticipation:
• Widens the range of options.
• Permits study and understanding of the full range of
issues.
• Permits organization to develop a positive
orientation towards the issues.
• Organization will have earlier identification of the
stakeholders.
• Organization will be able to supply information to
influential publics earlier and more positively,
creating better understanding.
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Model of Issues Management Process
Identification of Issues
Analysis of Issues
Prioritization of Issues
Formulation of Issue Responses
Implementation of Issue Responses
Evaluation, Monitoring, and Control of Results
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Identification of Issues
Scan the environment
Identify emerging issues and trends
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Identification of Issues (continued)
Leading forces as predictors of social
change
• Events
• Authorities/advocates
• Literature
• Organizations
• Political jurisdictions
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Identification of Issues (continued)
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Issues Selling and Buying
Issues selling
•
Relates to middle managers exerting
upward influence in organizations as they
try to attract the attention of top
managers.
Issues buying
•
Top managers adopt a more open
mind-set for the issues that matter to their
subordinates.
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Analysis of Issues
•
•
•
•
•
Who (which stakeholder) is affected by the
issue?
Who has an interest in the issue?
Who is in a position to exert influence?
Who has expressed opinions on the issue?
Who ought to care about the issue?
To help with issue analysis:
•
•
•
Who started the ball rolling? (Historical view)
Who is now involved? (Contemporary view)
Who will get involved? (Future view)
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Ranking or Prioritization of Issues
Two essential questions
1. How likely is the issue to affect the
organization?
2. How much impact will the issue have?
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Other Issues: Ranking Techniques
Polls / Surveys
Expert panels
Content analysis
Delphi Technique
Trend extrapolation
Scenario building
Use of precursor events or bellwethers
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Formulation and Implementation of
Response
Formulation
• The response design process.
Implementation
• The action design process.
 Plan clarity
 Resources needed
 Top management support
 Organizational structure
 Technical competence
 Timing
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Evaluation, Monitoring, and
Control
• Companies should continually evaluate the
results of their responses to issues.
•
Includes careful monitoring of stakeholder
opinions.
 Information from this stage helps firms to
make adjustments to the process as needed.
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Issues Development Process
Issues Development Process
• The growth process or life cycle of an issue.
• Has five stages:
1. Early
2. Emerging
3. Current
4. Crisis
5. Dormant
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Issues Development Life Cycle
Process
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Issues Management in Practice
• Issues management covers a range of
public relations and management
activities.
• Companies that adopt issues
management processes:
 Develop better overall reputations
 Develop better issue-specific reputations
 Perform better financially
 Provides a bridge to crisis management.
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Crisis Management
To manage a crisis, one first must
understand that crises
 Occur abruptly
 Cannot always be anticipated
 May not occur within a specific issue
category
 Good issues management is a form of precrisis planning and can help stave off
crises.
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Crisis Management
We are in the era of the mega-crisis
• Enron, WorldCom, Arthur Andersen, Tyco,
and others accused of financial scandals
and malfeasance.
• Firestone and Ford were implicated in
massive tire recalls due to faulty tires.
• Bernie Madoff’s Ponzi scheme defrauded
thousands of investors out of billions of
dollars.
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The Nature of Crises
Crisis definitions
• An extreme event that may threaten your very
existence. At the very least, it causes substantial
injuries, deaths, and financial costs, as well as
serious damage to your reputation.
•
An organizational crisis is a low-probability, highimpact event that threatens the viability of the
organization and is characterized by ambiguity of
cause, effect, and means of resolution, as well as by
a belief that decisions must be made swiftly.
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Crisis Management
Rules of crisis management:
1. Don’t wait
2. Don’t run from the truth
3. Don’t hide
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Types of Crises
Economic
Physical
Personnel
Criminal
Information
Reputational
Natural disasters
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Outcomes of Major Crises
 Escalated in intensity
 Subjected to media and government
scrutiny
 Interfered with normal business operations
 Damaged the companies bottom line
 Resulted in major power shifts
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Crisis Management: Four Stages
Prodromal Crisis Stage
Acute Crisis Stage
Warning—precursor
Symptom —precrisis
Point of no return
Crisis has occurred
Learning
Crisis Resolution Stage
Patient is well/
whole again
Chronic Crisis Stage
Lingering on—perhaps
indefinitely; period of selfdoubt; self-analysis
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Managing Business Crises
Five practical steps in managing crises
1.
2.
3.
4.
5.
Identifying areas of vulnerability
Developing a plan for dealing with threats
Forming crisis teams
Simulating crisis drills
Learning from experience
 Effective crisis management requires
tailoring a program to a firm’s industry.
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Ten Steps of Crisis
Communications
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Identify crisis communication team
Identify key spokespersons
Train your spokespersons
Establish communications protocols
Identify and know the audience
Anticipate crises
Assess the crisis situation
Identify key messages to communicate
Decide on communication methods
Be prepared to ride out the storm
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Be First, Be Right, Be Credible
Be First
• Get the message out first to control
content and accuracy.
Be Right
• Say and do the right thing.
Be Credible
• Be open, honest, and speak with
one consistent voice.
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Successful Crisis Management
•
Being prepared for a crisis helps
companies get their acts together and
respond more quickly, with less damage.
•
Beung prepared for one type of crisis
provides valuable learning for when other
types of crises strike.
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Key Terms
• Acute crisis stage
• Chronic crisis stage
• Conventional approach
to issues management
• Crisis
• Crisis communications
• Crisis management
• Crisis resolution stage
• Crisis teams
• Emerging issue
• Issue
• Issue selling and
buying
• Issues development
process
• Issues management
• Portfolio approach
• Prodromal crisis stage
• Strategic approach to
issues management
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