Crisis management (CM) has gained prominence in the last decades, as the complex global business environment has forced executives to pay attention to practices that may safeguard organizations against potential crises. However, despite the fact that various scholars point to the need for autonomy and delegation of authority when responding to crises, it appears that the overarching rationale in the crisis literature is geared toward a centralized approach. This suggests that preventive actions and response to crises lie mainly with the leader of the organization and with designated crises teams. It is also apparent that this literature places too much weight on contingency plans and classification schemes. Although behavioral factors have been discussed by some authors as a fundamental element in dealing with crises, it is not clear how to develop these traits. It is our contention then that these conventional perspectives, although valuable to CM, are insufficient to deal with the uncertainty that characterizes global business today where firms must be prepared for the unexpected. We discuss the limitations of this traditional approach and argue for a combination of central control with decentralized execution when responding to unexpected crises situations. This enables management to better comprehend the complexity embedded in any crisis and allows adaptive practices to emerge throughout the organization. An analysis of two cases paired with empirical field studies support our proposition.
Darbonnens, C. and Zurawska, M. (2017), "Effective Crisis and Emergency Responses in the Multinational Corporation
Emerald Publishing Limited
Copyright © 2017 Emerald Publishing Limited
Today businesses operate in a highly interconnected global world (Alhawari, 2012; Smart & Creelman, 2013). International market access including emerging markets provides organizations with immense possibilities for global expansion (FEMA, 2011). However, this scenario also creates new risks and unpredictable business conditions, where organizations are forced to adapt to the changing demands of the environment being exposed to unexpected events and crises (Alhawari et al., 2012; Simona-lulia, 2014). For those that are incapable of adjusting, it may be difficult to achieve sustainable success or even survive (Smart & Creelman, 2013). This is why business leaders should understand that all organizations sooner or later will face some type of crisis situation (Sahebjamnia, Torabi, & Mansouri, 2015; Verbano & Venturini, 2013). To survive and thrive in such a dynamic complex environment, organizations must entertain processes that allow them to respond swiftly, learn along the way, and be flexible when handling complexity (Takeda & Helms, 2006). A great deal of uncertainty circumscribes the initial phase of a crisis situation determining exactly what has happened and how it can be resolved (Larsson, 2008). Hence, organizations that have crisis plans in place are arguably in a better position to prevent crisis and deal with unexpected events should they occur (Simpkins, 2009; Wooten & James, 2008).
Reality will tell that although organizations increasingly engage in crisis planning, they still represent a rather small percentage (e.g., MIR3, 2015). Some managers do not acknowledge the importance of contingency plans (Wooten & James, 2008), while others find them of little use, even when they are established (Hough & Spillan, 2005). In the face of crises, many organizations rely on predefined protocols that are incapable of dealing with all potential threats (Kapucu, 2006). Studies also show that organizations with a rigid hierarchy of command are unable to respond in situations that deviate from the plans where coordination and flexibility are paramount (Kendra & Wachtendort, 2003; Lussier & Achua, 2013). Sometimes, teams are not prepared to manage crises where mishandling can have negative, long-term consequences for profitability, reputation, and market position (Wooten & James, 2008). Even if organizations are aware of their vulnerabilities, the crisis management (CM) process can create challenges due to its ambiguous and unpredictable nature (Weick, 2006). Hence, planning for the unexpected represents an obvious paradox. How can one plan for the unknown? (Jacques, Gatot, & Wallemacq, 2007) This question is quite essential because the task of CM is to manage something that is unexpected, ambiguous and highly improbable (Vargo & Seville, 2011).
The elements of unpredictability make CM challenging, but also an interesting and relevant topic to investigate. This prompted us to ask how one can prepare for something so ambiguous and unexpected. We reached out to the available CM literature to find answers, but found diverse and at times contradictory views. Thus, the full scope of how crisis can be handled effectively is not clear. The literature reveals that CM is a daunting and cumbersome task, since responsive actions are interrelated, simultaneous and highly complex. Since responsive actions include “here and now” decisions, the question of what to do and when, becomes a quandary. Those responsible for responsive actions must follow procedures, but also rely on their own judgment and skills quickly finding available information and improvise, especially when the plans fail to match reality.
The literature proposes two solutions to deal with uncertainty. First, develop contingency plans where centralized leaders assemble teams, plan expected responses, allocate tasks and monitor developments. Second, establish preparedness, counting on reliable and skillful staff, team leaders, and members of crisis teams (CTs). These views, however, do not discuss in any detail how to deal with the unexpected element embedded in every crisis. For this reason, we have searched for additional insights that could help us resolve the maze of handling the unexpected. To this end, we reached for studies on High Reliability Organizations (HROs) that are capable of anticipating emerging events and thereby handle crises better than other organizations. This interesting discovery motivated us to continue our investigation to provide us with a better understanding of effective CM.
In the following, we first discuss the conventional CM literature with its prescriptions for contingency plans and preparedness. Then we present the key characteristics of HROs that set them apart from other types of organizations. Subsequently, we outline our two case analyses and empirical field interviews before we conclude that to deal with the uncertainty that characterizes global business today, a combination of centralized control and decentralized execution is highly necessary. Following this line of thought, we present a revised model in which the conventional CM practices should work in tandem with the principles of HROs. We believe that the principles of the latter can circumvent the limitations of the former.
Crisis management is a very broad, fragmented, and evolving discipline (e.g., Jacques et al., 2007; Parnell, 2015). Thus, one can find multiple views on what constitutes CM and crisis itself. Numerous definitions of crisis have been suggested, however, many authors agree with the definition by Pearson and Clair (1998) who describe crisis as an ambiguous, low-probability, high-impact situation that poses a threat to the survival of an organization, and where responsive actions must be taken swiftly. Similarly, the literature is congested with numerous interpretations of CM, usually influenced by the particular field of study (e.g., Pergel & Psychogios, 2013; Smith, 2006a). However, one can distinguish between two main perspectives to CM often referred to as the event approach and the process approach (e.g., Frandsen & Johansen, 2011; Jaques, 2009a, 2010).
The event approach perceives crisis as a sudden, unavoidable and unexpected event where management is reactive (Jaques, 2009a, 2010; Roux-Dufort, 2007) and preoccupied with the immediate consequences of the incident (Crandall, Parnell, & Spillan, 2009; Roux-Dufort, 2007). It has been defined as the practice that mitigates the impact of a crisis helping the organization to regain control (Hough & Spillan, 2005). Conversely, the supporters of the process approach argue that crises do not just happen, but stretch over a longer time preceded by a precognition period (Jaques, 2009a, 2010; Roux-Dufort, 2007). In this sense, crises are usually preceded by early warning signs before they occur, thus distinguishing between procedures before, during and after the crisis. CM practices consist of anticipation and preparation procedures during the pre-crisis stage, responsive actions during the crisis, and post-crisis recovery, evaluation and learning (Crandall et al., 2009, p. 251). Yet, there is no agreed taxonomy on how to differentiate between these CM phases (Jaques, 2009a). There are multiple frameworks with each their distinctive terminology and proposed steps to follow (e.g., Fink, 1986; Jaques, 2007; Turner, 1976). 1
This implies that the process approach is more comprehensive in its prescriptions (Hough & Spillan, 2005; Roux-Dufort, 2007). As a consequence, we have arranged our findings according to the preparation, crisis response, and post-crisis phases. However, even though we use this outline, we acknowledge that the proposed practices are interrelated, overlap, and often happen simultaneously. Thus, the order in which we introduce them does not necessarily illustrate the sequence in which these activities happen in reality.
Crisis Management in Practice – Preparation
If organizations previously have engaged in preparation activities they are able to respond better to unexpected events (e.g., Hough & Spillan, 2005; Smith, 2006a, 2006b). The literature has many different perspectives on how to plan and prepare for crises.
Signal Detection and Categorization
Considering that it takes time for crises to evolve and escalate, many scholars emphasize the importance of early signal detection (e.g., Chong, 2004; Coombs, 2005). If warning signs can be spotted in time, managers have the opportunity to prevent crises from happening or mitigate them should they occur (Mitroff, Pauchant, & Shrivastava, 2006). If threats are known they can be managed is the argument, and once identified, managers can determine how much they can influence events to achieve the expected outcomes (Fink, 1986). Signal detection depends on the capacity of being aware of changes in the internal and external environments through scanning (Kash & Darling, 1998) and data analysis (Chong, 2004). It enables organizations to identify what triggers certain events and categorize the potential threats (Wooten & James, 2008). For instance, crises can result from dysfunctional systems (e.g., Perrow, 1999), human error caused by psychological or emotional aspects of human behavior (e.g., Pergel & Psychogios, 2013). Such classification can help organize and assess crises according to their causes and develop relevant responsive actions (e.g., Coombs, 2014; Lerbinger, 2012).
Crisis Plans and their Limitations
The importance of crisis plans has received considerable scholarly attention (Coombs, 2014; Hofmann, 2015). By asking “what if” questions, CM plans and guiding tools can help organizations to prepare for uncertain events (e.g., Kash & Darling, 1998; Simpkins, 2009) and significantly improve the outcomes (Chong, 2004; Simpkins, 2009) with resource efficient responses (Coombs, 2005). Due to the many possible causes for crises, the plans must be tailored to the business context, but yet be flexible (Coombs, 2014) and not too complex (Boin, 2008; Coombs, 2014).
Despite the benefits, CM plans do not necessarily ensure effective practices (Paraskevas, 2006; Smith, 2006a). There are two main reasons why contingency plans are flawed. No organization is able to prepare for all possible eventualities, so there will always be an array of threats that cannot be anticipated (Hofmann et al., 2015; Jacques et al., 2007). The planners plan in steady and predictable periods and assume that events will evolve as anticipated (Weick & Sutcliffe, 2007). However, there is always an element of unpredictability embedded in crisis situations where the ways in which events develop remain unknown (Jacques et al., 2007; Weng, 2009). The claim that contingency plans prepare organizations for the unexpected is thus an obvious paradox noticed by authors like Jacques et al. (2007). If crisis is caused by an unpredictable event, how can one plan for it? Furthermore, the perceptions of the planners will inevitably influence their decisions (Pauchant & Mitroff, 2006; Vargo & Seville, 2011) which may hinder rather than enhance the CM process (Pearson & Clair, 1998; Smith, 2006a). Hence, planned actions are influenced by the cognitive biases or predominant mindset of the people who create them.
Organizational crisis preparedness is influenced by top management perceptions, where leaders may assume that the organization is not vulnerable to specific threats, so little will be done to prepare for or prevent those from happening (Pearson & Clair, 1998; Penrose, 2000). Sometimes managers are unaware of particular risks or ignore them (Pergel & Psychogios, 2013; Smits & Ally, 2003). Hence, it is not uncommon that organizations exhibit defensive mechanisms to protect an inflated self-image (Pauchant & Mitroff, 2006; Pearson & Clair, 1998) or common beliefs on immunity to crises (Pergel & Psychogios, 2013). Consequently, even though many managers admit that crises are real threats, many do not really engage in CM activities (Kash & Darling, 1998). Even if an organization prepares for crises, the process is often limited to develop contingency plans (Hough & Spillan, 2005; Penrose, 2000). This creates overconfidence and a faulty impression of being crisis prepared (Penrose, 2000; Smith, 2006a). Thus, it is important that managers remain aware that plans and people have their limitations (Smith, 2006a) and allow members to be proactive and engage in ongoing learning (Hale, Dulek, & Hale, 2005; Hough & Spillan, 2005).
The reluctance to see crisis as an opportunity is one reason why companies choose not to prepare for crises (Pergel & Psychogios, 2013; Ulmer, 2011). Even though it is a cognitive challenge, seeing the positive attributes of crisis could increase managerial engagement and improve the preparation process (Penrose, 2000; Wooten & James, 2008). Managers should realize that proactive CM practices have the ability to turn the crises into something positive (Penrose, 2000; Ulmer, 2011). A lack of open communication prior to as well as during the crisis can have strong adverse effects (Jaques, 2012; Smith, 2006a). If leaders fail to encourage speaking freely about failures and shortcomings at all organizational levels, the possibility of crisis occurrence increases dramatically (Jaques, 2012). It is paramount to maintain open communication with external stakeholders to gain current insights about ongoing developments (Jaques, 2012; Parnell, 2015). If organizations fail to acknowledge the importance of open communication channels it will diminish the chances to deal actively with crisis (Pauchant & Mitroff, 1992).
According to a socio-political view, organizational culture is one of the most influencing factors for effective crisis handling (e.g., Pergel & Psychogios, 2013; Smith, 2006a). Organizational culture imposes generally accepted behaviors that affect crisis preparedness and determines how, when, and where the organization perceives and responds to crises (Frandsen & Johansen, 2011). According to Turner (1976) 2 crises arise in organizations where the culturally accepted beliefs held by managers are at odds with reality. The unnoticed events will eventually trigger a crisis leading to an immediate collapse of cultural assumptions. Thus, managers fail to notice the warning signs, as they do not fit their expectations. This perspective was elaborated by Smith (2006a) who claims that crises occur when management is incapable of foreseeing potential threats. Mitroff et al. (1989) concluded that crisis-prone organizations are characterized by rigid hierarchies with poor communication flows. Conversely, the crisis-prepared organizations do not just rely on contingency plans, but actively engage in training and learning where CM becomes an integral part of everyday business (Mitroff et al., 1989; Pergel & Psychogios, 2013; Vargo & Seville, 2011).
The response phase creates certain challenges, especially if decisions must be made swiftly and under stress (Jacques et al., 2007; Vargo & Seville, 2011). People are influenced by emotional factors and personal agendas that influence the decision-making process (Janka et al., 2015; Vargo & Seville, 2011). Trying to perceive a problem under stressful conditions makes the processing of cognitive information a real challenge (Bacon, MacKinnon, Cesta, & Cortellessa, 2013; Vargo & Seville, 2011). How an organization responds during crisis depends on how well its members are prepared (Smits & Ally, 2003) where the decisions are both planned and adaptive are made (Demiroz & Kapucu, 2012; Vargo & Seville, 2011). The plans usually do not fit the reality of the crisis situation and managers must be flexible, creative, and improvise (Demiroz & Kapucu, 2012; Meshkati & Khashe, 2015). Knowing that people may act in irrational and unpredictable ways makes these tasks highly challenging (Pearson & Clair, 1998) and require effective sensemaking skills (Weick, 2006).
Managers need to understand that when a crisis occurs it will affect all employees, so they become fragmented and disconnected where random communication can paralyze the leadership (Boin, 2008). Consequently, managers must communicate with all internal stakeholders and provide them with a sense of belonging (Frandsen & Johansen, 2011). Ambiguous and misaligned information can pose a real threat to the CM activities because it will interrupt crisis responses even in organizations with crisis plans in place (Mazzey & Ravazzani, 2011). Other communication challenges can be caused by the inability to use normal communication channels (Hale et al., 2005). Hence, communication and collaboration are very important elements for effective crisis responses (Jacques et al., 2007; Smits & Ally, 2003). It is also necessary to coordinate activities to execute the contingency plans effectively (Hofmann et al., 2015; Smits & Ally, 2003). In a crisis situation, the organization depends on many players (Demiroz & Kapucu, 2012; Parnell, 2015), so it is crucial to gain support from other organizations through collaboration (Demiroz & Kapucu, 2012). The organization’s stakeholders are also affected by the crisis (Alpaslan, Green, & Mitroff, 2009; Pearson & Mitroff, 1993) that can hurt the reputation and future relationships (e.g., Coombs, 2014; Lerbinger, 2012). Hence, having a good stakeholder communication is essential (Alpaslan et al., 2009; Coombs, 2014).
Conceiving CM as an ongoing process, some scholars emphasize the importance of reinstating effective practices after the crisis. However, it is difficult to clearly mark the different phases of crisis, so it is uncertain when the post-crisis phase really starts (Jaques, 2009b). If one agrees that the acute crisis is when the event reaches its apogee, the post-crisis phase must include all activities that come after the dust settles. Many argue that organizations must engage actively in post-crisis recovery and use it as a valuable source of learning (Chebbi & Pündrich, 2015; Wooten & James, 2008). Members should learn both from failures and successes and assess all the aspects of the crisis experience (Chong, 2004; Hough & Spillan, 2005). This can creates new understanding about causes, consequences and solutions that can stimulate ongoing adaptation (Chebbi & Pündrich, 2015). It is also important to acknowledge, that crises have a long-term impact (Boin, 2008). Thus, managers should pay attention to the warning signals before a crisis (Jaques, 2009b). However, sometimes managers are reluctant to discuss these experiences after a major crisis and rather urge employees to forget the events altogether (Chebbi & Pündrich, 2015; Jaques, 2009b). Thus, they miss the opportunity to learn and change. By reducing the defensiveness among managers it is possible to engage in post-crisis evaluation (Hough & Spillan, 2005; Jaques, 2009b) and create shared values for future preparedness (Chebbi & Pündrich, 2015).
Scholars propose a vast array of leadership styles required for effective CM solutions. To many CM proponents the processes are initiated by top management as being responsible for creating a culture that facilitates responsive practices (e.g., Jaques, 2012; Smits & Ally, 2003). However, the leaders must be aware of the organizational vulnerabilities and acknowledge that no organization is immune to crises (Boin & Lagadec, 2000; Smits & Ally, 2003). They must set an example by critically assessing their own managerial limitations (Harwati, 2013; Schoenberg, 2005) and perceive crises as a potential for improvement (Coombs, 2005; Penrose, 2000). The main responsibilities of leaders include crisis prevention (Jaques, 2012; Wooten & James, 2008), strategy clarification (Boin & Lagadec, 2000; Schoenberg, 2005), guidance of CTs (Schoenberg, 2005; Smits & Ally, 2003), damage containment (Lerbinger, 2012), communication (e.g., Jaques, 2012; Ulmer, 2001), and learning after the crisis (Wooten & James, 2008). In order to undertake these tasks, leadership must possess knowledge, expertise and personal traits like intelligence and integrity (Schoenberg, 2005).
Leadership is often associated with clear lines of authority and responsibility (Smits & Ally, 2003). Still, some argue that, while it is necessary to have a structure to enable leaders to lead and monitor CM activities, both employees and leaders should have sufficient leeway to decide how to handle particular situations during a crisis (Harwati, 2013; Lussier & Achua, 2013). In that sense, identification of threats, as well as crisis response procedures, should engage all members of the organization (Harwati, 2013). The literature introduces a number of leadership styles considered appropriate for crisis managers. For instance, a collaborative style makes the leader’s physical presence during crisis a matter of a moral importance as it conveys solidarity and concern (Meyer, 2009). Thus, the responsive actions are the result of teamwork and collaboration between leaders and CTs (Lussier & Achua, 2013). Harwati (2013) points to a transformational leadership style where the manager encourages employees to exchange and express ideas (Harwati, 2013; Lussier & Achua, 2013), and show understanding as path to build two-way communication (Harwati, 2013; Jaques, 2012). Thus, leaders should create trust, which is especially important during the post-crisis phase, where members often blame management for the crisis (Wooten & James, 2008).
Another leadership style is adaptive where managers improve their preparation and crisis responses by acquiring adaptive skills (Pfeifer, 2013; Weng, 2009). These skills can be developed through training sessions that stimulate critical thinking (Weng, 2009). However, top managers rarely see themselves in charge during a crisis and often do not participate in the training sessions, which can cause them to use obsolete methods, that lead to unsuccessful crisis responses (Boin & Lagadec, 2000).
According to parts of the literature, leaders should not undertake the CM tasks themselves but should assign responsibilities to designated CTs (Kash & Darling, 1998; Smits & Ally, 2003). Many scholars argue that having CTs in place is likely more successful in overcoming crisis and thus should feature permanently in organizations (e.g., King, 2002; Smits & Ally, 2003). King (2002) suggests that teams of members with prior collaborative experience are more likely to share ideas and create innovative solutions. Also, CTs should reflect departmental diversity to provide access to expertise from various fields (e.g., Hough & Spillan, 2005; Smits & Ally, 2003) and thereby enrich the exchange of ideas and insights (King, 2002; Smits & Ally, 2003). CT members must engage in planning, training, and execution during crisis and post-crisis evaluation to learn for future operations (e.g., Hough & Spillan, 2005; Smits & Ally, 2003). Team members should evaluate and assess the organization’s capability to preempt incidents, prepare damage control, and develop actions needed to manage the unexpected (e.g., Sapriel, 2003; Smits & Ally, 2003).
While some authors state that CTs are formed and monitored by leaders (e.g., Schoenberg, 2005; Smits & Ally, 2003), others argue that teams must operate on their own (Hough & Spillan, 2005; King, 2002). For instance, Penrose (2000) writes that CTs should be given a greater autonomy to allow them with the ability to respond swiftly when crises burst. The literature is also unclear with respect to the formation and assembly of teams where some take a broader view on membership while others claim that CTs should consist strictly of top managers (Hough & Spillan, 2005) even including the CEO as a member (Pearson, Clair, Misra, & Mitroff, 1997; Pearson & Mitroff, 1993). This reflects a more centralized planning approach in the organization, where Coombs (2014) in contrast argues that CTs is not the place for a CEO, and instead the decision-making power should be delegated to one or more of the team members.
Some argue that to be effective, CTs should exhibit proper communication, decision-making and managerial skills (Coombs, 2014; Pearson et al., 1997) exhibiting trust and commitment to allocate tasks to third parties (Pauchant & Mitroff, 1992). This enables team members to exchange knowledge and promote practices that are more pertinent to the given situation (Pauchant & Mitroff, 1992). Thus, CT members should exhibit personal traits, such as creativity, assertiveness, and ability to cooperate (Smits & Ally, 2003). Some mention that CTs have their downsides and may be ineffective when struggling with interpersonal conflicts, substandard teams, faulty decision-making, and similar issues (King, 2002; Pearson et al., 1997). Such ineffective management and flawed communication will be influenced by the team composition personal traits, diversity of members, etc. (King, 2002).
Even the most detailed and well-prepared plan will never match reality. So many authors instead emphasize the importance of training in the preparation phase (Bacon et al., 2013; Robert & Lajtha, 2007). Being actively engaged in simulated crisis events customized to the organization will help members learn how to react to sudden events (Weng, 2009). Training is a particularly useful way to develop collaborative skills searching for alternative solutions and improving decision-making under pressure (Pearson et al., 1997; Robert & Lajtha, 2007). It can also teach participants how to use plans in a flexible manner establishing relationships with stakeholders to assess the effectiveness of revised plans through trial and error (Bacon et al., 2013). Management cannot be sure about the efficacy of the contingency plans unless they are tested to see if the teams are able to perform as expected. Simulations are a good way of testing the plans as an important part of the training, but it should not be a drill on following the planned steps but rather about creating effective responses that adapt the plans to the circumstances (Boin and Lagadec, 2000; Hart, 1997).
Despite the obvious benefits from training and simulations (Hart, 1997; Robert & Lajtha, 2007), the way organizations design crisis exercises often fail to understand the complexity of CM processes. The tendency to arrange an annual training day incorporating routinized procedures, forces participants to merely go through the different steps of the contingency plan in an automated manner. This can create skepticism and distrust where participants fail to understand the overarching purpose thus ignoring the experience altogether (Robert & Lajtha, 2007). Engaging in this form of routinized training will handicap people’s capacity to see new solutions and prevent them from looking beyond the framework (Hart, 1997; Robert & Lajtha, 2007). Sometimes there is no evaluation of the simulation and often no feedback is provided, which prevents participants from developing analytical competences and experiential insights (t’ Hart, 1997). Such ill-structured training sessions often derive from a shared belief that detailed plans and procedures are the key to CM effectiveness (Robert & Lajtha, 2007).
In sum, the conventional literature shows a rather fragmented understanding of CM although it is permeated by a prevailing belief that it is a complex, multi-phased and ongoing process typically handled through preplanned contingencies. The underlying rationale of this literature offers specific practices and responsive actions that organizations should deploy to improve their CM effectiveness. However, at the same time it is obvious that these actions are determined by the dominant mindset of the organization inevitably expressed in the contingency plans. Hence, the mindset imposed by leadership determines the practices pursued by the organization that in turn will influence the actual response(s) taken to deal with the exposure uncovered by an eventual crisis event and thereby affecting the realized post-crisis outcomes (Figure 7.1). If management is aware of these limitations and understands the vulnerabilities of the organization, it is in a better position to implement and adjust the planned actions according to the circumstances. Hence, the prevailing mindset among managers and organizational members is often formed by unconscious biases that inevitably influence the preplanned practices and the subsequent responsive actions taken during a crisis situation (Figure 7.1).
High Reliability Organizations
Unlike the CM literature, the study of HROs agrees on the principles of mindfulness that these organizations share and which sets them apart. HROs are focused on potential failure under change using tactics to deal with the present enhanced by resilience and anticipation (Weick, Sutcliffe, & Obstfeld, 1999). Scholars attribute the success of HROs to their mindful approach and attention to interrelated actions (Weick & Sutcliffe, 2007). Weick and Sutcliffe (2001, 2007) call this approach mindful. because the HROs attempt to maintain a cognitive process of uninterrupted updating with a deepening interpretation of the evolving context.
Reliable systems have to operate under all circumstances and conditions. For a system to be reliable, it has to manage unexpected events so unintentional outcomes are precluded (Weick et al., 1999). Reliability is not the result of unvarying processes, but the outcome of constantly managing variations in tasks across interacting groups (Schulman, 1993). Unexpected events require emendments to procedures and strategies, which is only possible when mechanisms of understanding, data collection, and reassessment are present. These cognitive mechanisms detect changes and the variation in responses adapts activities to events (Weick et al., 1999). In contrast to this organizations often adopt the opposite approach and enforce stable activity patterns (Weick & Sutcliffe, 2007). To understand how HROs organize, we must be aware of what is done repeatedly as cognitive mechanisms and what varies in view of standardized practices (Weick et al., 1999). Every time a routine is re-enacted, it may evolve in a unique way (March & Olsen, 1989; Weick et al., 1999). This capacity of adaptive variation creates useful information about strengths, weaknesses, and ongoing changes in the surroundings (Landau & Chisholm, 1995; cited in Weick et al., 1999). This information can be utilized if organizational members are constantly mindful of these variations (Weick et al., 1999).
Expectations and Mindfulness
To manage the unexpected, one has to comprehend how expectations operate and then employ them mindfully (Weick & Sutcliffe, 2007). Expectations are embedded in the established organizational roles, processes, and strategies that form predictable outcomes that one relies on when performing. However, these expectations may create blind spots that prevent participants from detecting unexpected events. It may also bias the search for information in ways that seek to confirm expectations while hiding minor errors that can turn into major events. HROs constantly strive to develop mindfulness and prevent blind spots, which is paramount in achieving high reliability (Hines, Luna, Lofthus, Marquardt, & Stelmokas, 2008). Mindfulness is when one constantly tries to moderate expectations based on new experiences and use them to transform the current situation into a better one. It makes participants aware of their context noting how details differ and deviate from prevailing expectations (Weick & Sutcliffe, 2001). Mindfulness in HROs is espoused by the following five practices or principles: preoccupation with failure, reluctance to simplify, sensitivity to operations, commitment to resilience, and deference to expertise (Weick & Sutcliffe, 2007). The first three principles can help anticipate unexpected issues, where the last two may help contain potential effects (Hines et al., 2008; Weick & Sutcliffe, 2007).
The Three Principles of Anticipation
In complex organizations many things, if not everything is interconnected. In tightly connected systems, it is easier for the organization to fail when incidents occur (Perrow, 1999). Events happen so rapidly that a flaw in one part of the organization may affect other parts before the problem can be discerned and taken care of. HROs do not necessarily notice inconsistencies any faster, but when they do, they comprehend the meaning and are able to tackle them more effectively. This captures the essence of the first three principles of anticipation (Weick & Sutcliffe, 2007).
First Principle: Preoccupation with Failure
Preoccupation with failure signifies that HROs pay utmost attention to weak signals of errors that may turn into major failures. Part of their strategy is to carry out in-depth analyses of errors presuming that even the most sophisticated procedures and systems may be flawed. Contrary to many organizations that tend to respond to weak signals with weak responses, HROs perceive the relevance of weak signals with swift and forceful responses (Weick & Sutcliffe, 2007).
To perceive an error is one thing, to report it is another. HROs encourage and reward employees who observe, report, and learn from failures (Weick & Sutcliffe, 2007). They create reward systems that balance the cost of short-term risky strategies with the gains of safe long-term strategies (Roberts & Bea, 2001). This is achieved through mindful leadership embracing bottom-up communication of errors (Hopkins, 2009). HROs have developed methods to communicate the entire situation to everybody in the organization and engage them (Weick & Sutcliffe, 2007).
Second Principle: Reluctance to Simplify
Mindfulness is a way to avoid simplifications. Closer attention to the context propels a more diverse depiction of probable outcomes proposing a wider set of preventive measures (Weick & Sutcliffe, 2007). HROs are equally concerned with the disentanglement of simplifications probing their own faulty systems and practices (Roth, 1997; Weick & Sutcliffe, 2007). HROs assume that it takes a diverse compounded system to match the complexity of the environment (Weick et al., 1999). They are willing to accept different negotiation practices that harmonize various opinions without destroying the subtle differences among participants (Weick & Sutcliffe, 2007). They acknowledge that similarities between present and past events cover over more profound dissimilarities that could turn into major plights (Woods & Hollnagel, 2006). On the other hand, many organizations tend to simplify the way events are understood (Turner, 1978) where participants ignore data and just continue business as usual (Weick & Sutcliffe, 2007; Weick et al., 1999).
When faced with failure HROs question interpretations of the situation adding their own input on what could be the danger of a certain course of action and what could be done in view of the long-run consequences. Teams with diverse expertise better understand variations in the environment and realize that changes might be needed that recombine current skills and capacities in new ways. Action and cognition are connected as the teams enhance their capacity to manage complexity (Weick & Sutcliffe, 2007). HROs invest intentionally in redundancy to provide backup facilities when the organization is under pressure (Roberts & Bea, 2001; Weick et al., 1999). Redundancy creates duplication including cross checks and excess capacity (Weick & Sutcliffe, 2007; Weick et al., 1999). Redundancy can also be present in flexible systems, equipment, and procedures where participants are trained for various tasks and jobs (Dekker, 2011).
Third Principle: Sensitivity to Operations
For HROs being sensitive to operations means that they know how different elements work together and how failures in one area may expand and affect other areas (Weick et al., 1999). HROs are vigilant against developments on the front line (Weick & Sutcliffe, 2007). This enables them to observe and examine anticipated synergies within a complex system, predict possible failures and respond quickly to unexpected and chaotic developments. What sets HROs apart from other organizations is that they recognize the ambiguities of intentions and give proper attention even to minor deviations. The operational activities in complex systems clearly depend on the sharing of information and constant adjustments to planned actions (Weick et al., 1999). Being aware of the cognitive limitations of individual decision-makers the HROs break the hierarchal structures and provide every participant, regardless of rank, with real-time information, and enable them to respond (Eisenhardt, 1993).
This principle can be jeopardized if one relies too much on quantitative knowledge while disregarding the experiential insights of lower-ranking operators. So, HROs refuse to prioritize quantitative over experiential knowledge and no individual is valued higher than others in the hierarchy (Weick & Sutcliffe, 2007). When routines become mindless, or automatic, the “what if” questions are likely to languish whereas mindful participants are prone to modify and update routines to fit the changing conditions. HROs perceive close calls as a failure that uncover possible threats to learn from (Weick & Sutcliffe, 2007). Hence, sensitivity to operations can counterbalance blind spots that may accrue to practices focused on tasks rather than intentions by observing the execution of routines in a mindful manner.
The Two Principles of Containment
Oftentimes preventive measures fail and unexpected events turn into major disasters. This is why HROs commit to resilience and expertise, which allow them to contain the effects and bounce back from a crisis situation. Contingency plans are influenced by expectations, which may limit the number of errors that people see while ignoring things that seem unimportant to the plan (Weick & Sutcliffe, 2007). They assume that the same outcomes will occur over and over and thereby preempt improvisation. Hence, many organizations continue to perform the routines when an event occurs, which leads to unstable cognitive mechanisms and subdues the ability to notice unusual developments.
Fourth Principle: Commitment to Resilience
To be resilient signifies being mindful about failures that have occurred and fixing them before they turn into something worse. It requires mitigation instead of anticipation (Weick & Sutcliffe, 2001). Resilient people spread knowledge, services, and resources to minimize surprises (Widavsky, 1991). Resilient systems can continue operations and swiftly recover after an event and assimilate learning into the system (Wreathall, 2006). HROs degrade gracefully under crisis and gradually return to normalcy instead of experiencing a major breakdown where operations are put completely on hold (Weick & Sutcliffe, 2007).
Resilience assimilates strain and maintains operational functions regardless of adverse events with an ability to bounce back and learn to become better. What happens to the flexible processes when a troubled system settles back into its normal routine is very relevant. Organizations and systems often react to harmful events with new prohibitive practices devised to preempt similar disruptions in the future, which reduces flexibility to handle future events (Reason, 1997). HROs respond with new learning from experience to safeguard responsiveness being aware that every event resembles and yet differs from previous incidents (Weick & Sutcliffe, 2007).
Patterns of Resilience
HROs overcome failure, learn and cope with unexpected events as participants with diverse experiences use a broader set of practices to improvise and respond to rapid changes. They develop knowledge, feedback mechanisms, faster learning, proper communication channels, expertise and improvisation (Weick & Sutcliffe, 2007). Improvisation has the capacity to foster a broader set of responsive actions (Weick et al., 1999). This can be promoted in training sessions where simulations of worst-case scenarios prepare employees to be vigilant, have flexible mind-sets open for possible solutions and responsive actions (Roberts & Bea, 2001).
When events deviate from, or transgress the common operational boundaries, experienced participants self-organize in groups to solve the situation at hand (LaPorte & Consolini, 1998; Roberts & Rousseau, 1989). These groups last only until things go back to normal, at which point they dissolve again (Weick et al., 1999). They supplement the customary hierarchy with predetermined roles and responsibilities (Bourier, 1996). The self-organized groups trigger collective cognitive knowledge that enables them to manage unexpected events and handle ambiguity (Wildavsky, 1991).
Fifth Principle: Deference to Expertise
Hierarchy is present in HROs. However, they do not allocate the problem solving to higher ranks, but rather delegate to relevant experts (Weick & Sutcliffe, 2007). Many organizations place too much weight on the hierarchy disregarding the fact that higher-ups have neither been exposed to daily operations nor to the dynamic challenges that arise in the front line. As a result, they are not fully aware of the current situation, which can be very detrimental in managing the unexpected. While an event begins to unravel, people in lower-ranking positions may be able to perceive early warning signs, but invisibility of lower-level employees most likely result in failure to notify the potential problem.
HROs are extremely skillful in altering their patterns of deference as the pace of change becomes more intense and unexpected events unravel. They rely on specialist expertise regardless of seniority (Weick & Sutcliffe, 2001, 2007) enhancing the likelihood that different capacities can be linked to deal with new challenges (Rasmussen & Batstone, 1989; Vaughan, 1996). Expertise is constituted by a cluster of shared knowledge, experiences, learning processes, and intuitive mechanisms that rarely are concentrated in single individuals (Weick & Sutcliffe, 2007). The participants see their insights as contributions to a mindful collective system.
The expertise of lower-ranking participants may rise momentarily towards the top, when critical decisions have to be made (Weick et al., 1999). They tackle every sign of potential error as novel, which creates the awareness needed to match expertise against emerging issues and create proper solutions to deal with them. By loosening the ties of centralized hierarchy, participants are able to observe irregularities and decide whether they represent a problem or not.
In complex and dynamic systems centralized organizations are unable to respond to local changes (Kendra & Wachtendort, 2003). Hence, organizations have to delegate power to develop dispersed processes capable of noticing potential threats locally (Weick et al., 1999). This decentralized capability for local detection should be combined with a centralized capability to preserve the overall understanding to coordinate responsive actions and learn from local experiences. HROs maintain a balance between decentralization and centralization depending on the circumstances (Weick, 1987). This flexibility requires not only decentralization of power, competencies, and resources but also the existence of clear rules to switch roles when needed (Daniellou, Simard, & Boissière, 2011). Decentralization enables rapid and more appropriate responses to current crises or potential threats (Weick, 1987).
HROs pursue opposites like rigidity and flexibility, repetition and variance, anticipation and commitment to gain resilience and find equilibria rather than attempting to resolve the contradictions (Weick et al., 1999). It is the mindfulness of organizational members that enable them to detect and interpret unexpected events and develop pertinent responses with outcomes that restore the operating system (Figure 7.2). In depicting this mindful approach in managing the unexpected, we have developed a model that illustrates the interrelatedness between mindfulness, the five principles and the level of exposure. These principles induce “a rich awareness of discriminatory detail and capacity for action” (Weick et al., 1999, p. 37) which results in reliable outcomes (Figure 7.2).
We conducted two qualitative case studies of organizations operating in different contexts. Both cases illustrate that lack of proper preparation can result in unsuccessful CM responses during a crisis event.
Hurricane Katrina in New Orleans
The first case analyzes the disaster response practices of the New Orleans Police Department (NOPD) and considers the effects of Hurricane Katrina in 2005. Katrina is known for being the largest natural disaster to hit the United States so far flooding 80% of New Orleans (Mittal, 2005). More than 18,000 people were reportedly killed and tens of thousands more lost their homes (Moynihan, 2009). The menace of such a catastrophe had been acknowledged for quite some time before the incident occurred where the Federal Emergency Management Agency (FEMA) referred to New Orleans as a looming potential catastrophe (Moynihan, 2009) and it was public knowledge that the levees and floodwalls were poorly designed (Grunwald & Glasser, 2005). Prior to Katrina’s landfall, the NOPD had designed emergency plans to deal with various hurricane events. However, after the disaster, the validity of these plans was questioned as a preventive measure. The NOPD response actions were not only flawed but in fact triggered a set of events that resulted in complete chaos. First, the broadcasted weather reports were inconsistent with respect to the direction and intensity of Katrina (Moynihan, 2009). As a result, the overall state of preparedness of the national emergency services, military forces, and the NOPD itself was poor. Second, the NOPD did not test the preparedness plan in advance. Many officers were neither familiar with the protocols to be followed prior to a hurricane nor did they know how to proceed after disaster had struck (Deflem & Sutphin, 2009). To further complicate matters, the plans were confined to consider evacuation procedures failing to take into account the possibility of levee failures or a higher magnitude hurricane (Anderson, 2006). Third, the structure of the NOPD became unstable (Deflem & Sutphin, 2009) with loss of communication, transportation, and equipment as the extreme floodwater deteriorated the NOPD’s capacity to respond. Fourth, the usual chains of command were gravely destabilized with police officers stranded without proper direction to follow in such an event (Adams & Stewart, 2015). All this combined with high-stress levels and emotions that impaired the officers’ capacity to preserve safety and deploy rescue work ( Ibid. ).
Food Poisoning at a Mediterranean Hotel
The second case analyzes the crisis response of a five-star hotel chain in a Mediterranean country after food poisoning was reported. Unlike the first case, this one shows that having plans may create a false impression of being prepared where plans by themselves do not ensure successful crisis responses. Lauded as a seamless organization the hotel chain had a leading position with a reputation of excellent quality. The chain had established a comprehensive Crisis Management Plan (CMP) including detailed scenarios for terrorist attack, extensive product failure, etc. (Paraskevas, 2006). The main office broadcasted a red alert on Monday, July 14, 2003, after receiving emails reporting incidents of food poisoning in some of their properties. The number of cases increased dramatically within a short period of time, which prompted a crisis response team to be organized lead by the CEO while requesting the inflicted properties to enact the designed CMP for extensive product failure. Two Crisis Task Force (CTFs) teams of senior managers were set up in the main office to visit the infected properties and deal with key customers. The chain reported 176 cases of food poisoning treated in the hotel with no further hospitalizations. Despite the thorough CMP, some of the eventual outcomes were not anticipated. The teams in charge of media relations were able to prevent negative publicity but a major key account was lost. Furthermore, the chain was hit financially by indemnities provided to avert lawsuits from guests (Paraskevas, 2006).
To understand what happened in these cases, we analyze how the responses to Hurricane Katrina and the foodborne illness compared to the five principles of HROs and the arguments from the CM literature.
First Principle of HROs: Preoccupation with Failure
HROs pay attention to weak signs of error to detect and solve discrepancies as soon as possible, since even the most sophisticated procedures may be flawed (Weick & Sutcliffe, 2007). The importance of early signal detection is discussed in the CM literature as one of the main elements of preparation and prevention (Chong, 2004; Fink, 1986; Hough & Spillan, 2005). Systems that ignore early signals and small failures are prone to mishandle unforeseen events (Reason, 1990, cited in Weick & Sutcliffe, 2007), which was observed in both cases.
In the case of the NOPD, the weather forecasts were not consistent describing the strength of the hurricane or its landfall. First, it was broadcasted that Katrina would hit New Orleans, then that it was heading towards Mississippi, finally changing its course back towards New Orleans. Second, the forecast stipulated Katrina as a category four hurricane, but turned into a category five a few hours before it struck New Orleans. The NOPD should have acknowledges the frailty of forecasts and made preparations for worst-case scenarios if they had been mindful and preoccupied with failure. Furthermore, even when they knew that the hurricane was approaching New Orleans, the wrong expectations made them falsely believe it would resemble previous storm alerts precluding the NOPD from taking additional precautionary measures.
Some of the officers interviewed after the incident remained unaware of the existence of emergency plans, while others were unfamiliar with the procedures. Knowing that many of the police officers were inexperienced, the absence of clear responsibilities hindered the response capacity. Furthermore, the officers had a mere 30-hour window to relocate their own families and get back to their posts, which was 18 hours short to the initial plans. Considering the criticality of the situation and the fact that the officers were emotionally charged, this time discrepancy was important. As noted in the CM literature, when trying to perceive a problem under intensely stressful conditions, it becomes a real challenge to process routine cognitive information accurately (Bacon et al., 2013; Janka et al., 2015). Hence, the officers had great difficulties comprehending the current situation and interpreting received orders in the proper context. Furthermore, the first 3 hours after Katrina stroke, the officers were not informed about the breached levees, so they continued to deploy the standard post-disaster protocols. For obvious reasons, these plans were unsuited to deal with the situation.
In the second case, the hotel chain made some serious mistakes designing and testing the crises plans. The plans were too rigid and training sessions limited to a few simulations. The managers were taught to strictly follow the directives and not deviate from plans or exhibit critical thinking. Consequently, managers were reluctant to share their views on possible improvements, in fear of losing out on promotion. Hence, these weak signals of failure were ignored where HROs would embrace such bottom-up communication (Hopkins, 2009) and encourage error reporting (Weick & Sutcliffe, 2007). While the benefits of open communication are equally recognized in the CM literature (e.g., Harwati, 2013; Wooten & James, 2008), it was suppressed in the hotel chain preventing them from finding better collaborative solutions to the crisis (Harwati, 2013; Jaques, 2012; Smits & Ally, 2003).
Furthermore, the two CTFs were formed primarily to take care of key accounts rather than focusing on the sick guests, their wellbeing and safe recovery. This resulted in significant delays in effective responses on the properties where guests needed immediate attention, which gave these important constituents a poor experience that hurt the reputation of the hotel. This was a clear sign that the system did not work in the best interest of the hotel’s most important stakeholders as it should. Equally, it is evident that two CTFs were insufficient to deal with an emergency situation spread across 19 locations.
Second Principle of HROs: Reluctance to Simplify
Ironically organizations gain efficiency and survive by simplifications that enable organizations to organize better and improve their strategic planning (Burnett, 1998). This praxis is antithetical to HROs, because it can limit the emergence of preventive measures while escalating the commitment to standard practices (Weick et al., 1999). HROs accept diverse expertise and negotiation of standard practices (Weick & Sutcliffe, 2007) while investing in redundancy to ensure things are under control (Roberts & Bea, 2001; Weick et al., 1999).
In the case of the NOPD, the simplification through standardized operating procedures created adverse effects. Some of the plans were the same as those used under previous hurricanes where conditions were significantly different. In HROs participants acknowledge that similarities between the present and the past may hold significant dissimilarities that can turn into major plights (Woods & Hollnagel, 2006). Similarly, the CM literature argues that organizations prepared for crisis must anticipate that the way events unfold remain largely unknown (Weng, 2009). The NOPD assumed that the upcoming crisis was predictable and proceeding as anticipated based their experiences from previous events. The complex nature and sheer extent of a hurricane like Katrina were clearly underestimated and additional measures or deviations from the plans were not considered.
Further investigations revealed that most plans had never been tested and thus not questioned or improved. Whereas plans are needed, members of an organization should not trust the simplifications encountered in the plans (Schulman, 1993). According to CM literature, managers should acknowledge the limitations of plans as they are tested (Coombs, 2005; Hough & Spillan, 2005). Training sessions could have taught participants how to improvise and think about alternative solutions (Bacon et al., 2013; Robert & Lajtha, 2007). The exchange of diverse interpretations and expectations could hinder simplifications and facilitate a comprehensive understanding of environmental variation (Schulman, 1993). Simulation exercises including scenarios deviating from plans would be a crucial part of creating sufficient preparedness (e.g., Boin & Lagadec, 2000; Robert & Lajtha, 2007; Weng, 2009). However, neither the NOPD commanders nor their officers were given such an opportunity. Also, there were no investment in redundancy, no backup plans, no extra resources, communication systems, or additional means of transport (Committee of Homeland Security and Governmental Affairs, 2006).
In the second case, the hotel chain invested in crisis plans and simulations. However, the plans were rigid and the simulations instructed managers to strictly follow the directives effectively preventing them from any deviations to the plans. Thus, the employees were exposed to ill-designed and routinized simulations that can create certain risks when things evolve in unanticipated directions that render the routinized practices and plans useless (Robert & Lajtha, 2007; t’ Hart, 1997). Contingency plans should be easy to apply, but should not to be used as simple step-by-step instructions. They should rather be treated as a reference tool that enables members of organizations to improvise and remain creative and flexible when responding to crisis (Meshkati & Khashe, 2015; Slam, Wang, Xue, & Wang, 2015).
According to Turner (1978) it is typical for organizations to simplify the way events are understood. Some authors propose different ways to classify crises and develop better responses to such events (Lerbinger, 2012; Mitroff et al., 2006). These crisis plans are designed to match predetermined responses to the specified classifications (Pearson & Mitroff, 1993). This is exactly what we observe in this case, as the prepared crisis plans included scenarios designed specifically for events, such as terrorist attack, natural disaster, an epidemic incident, or extensive product failure. In addition, the two CTFs were composed of senior managers where the assembly of teams was not sufficiently diverse to understand the full context. On the contrary, HRO teams consist of participants with varied backgrounds and expertise, who are better able to understand variations in the environment and execute needed changes (Weick & Sutcliffe, 2007). Similarly, the CM literature argues that CTs should include members with various skills and expertise (e.g., Coombs, 2005; King, 2002).
Third Principle of HROs: Sensitivity to Operations
Each of the two operations depended on the sharing of information and interpretations of the situation between participants (Weick et al., 1999). To this end, HROs break hierarchal structures and provide every participant, regardless of rank, with real-time information to be ready to respond accordingly (Eisenhardt, 1993). In the case of the NOPD, the commanders held important preparation meetings with only the high-ranking officers thus preventing lower-ranking staff from having up-to-date information. This situation very likely propelled simplifications in the planned preventive actions and inhibited continual adjustments that could have precluded errors from piling up. It further caused serious misalignment between preparation and responses taken among the officers, which contributed to the overall chaos. The officers lacked knowledge and experience and ended up following orders automatically.
In addition, the communication systems were inoperative, partly due to the fact that the generators were located on the ground floors. Thus, the officers were forced to use face-to-face communication (Senate Committee on Homeland Security and Governmental Affairs, 2006, p. 9). This prevented them from gaining the full picture of the current situation and knowing how their actions impacted the general crisis response. The lack of responsiveness created panic and propagated crimes, which further hampered the response capacity as the NOPD had to devote additional resources to fight crime (Anderson, 2006). Lacking timely communication systems, organizations are forced to guess about the best course of action allowing rumors to prevail whereas the potential of available skills and resources are disregarded and not deployed in adapted responses (Frandsen & Johansen, 2011; Janka et al., 2015).
In the hotel chain, top management failed to see how all the organizational decisions affected each other thus letting the negative impact of some of their actions go unnoticed. If leaders are unaware of potential threats stemming from the internal and external environment, the CM actions will not be effective (Pearson & Clair, 1998; Wooten and James, 2008). The CM process is a top-driven effort, so if the leaders have a flawed understanding of reality, the entire process will also be flawed (Pearson & Clair, 1998). To ensure common understanding and motivate employees, leaders should create an organizational culture that engage them in supportive CM efforts (Jaques, 2012; Wooten & James, 2008). However, the hotel chain did not establish a common mindset recognizing the significance of the CMP initiatives.
What is more, the CTFs acted strictly in accordance with the plans without making sense of their actions and information about the current situation was not spread across all the locations to local managers that were excluded from the CM actions. Furthermore, the information available on the Intranet website was insufficient and lacked updates. The communication system was operable but limited to top management only. No one in the organization had a complete picture of the current situation and information did not reach the recipients who were precluded from making effective and coordinated crisis responses (Hale et al., 2005; Hofmann et al., 2015; Mazzey & Ravazzani, 2011; Smits & Ally, 2003). If the local managers had been provided with up-to-date information and autonomy to act, they could have adjusted their actions to deal better with the circumstances acting faster precluding delays and growing dissatisfaction among the guests.
Fourth Principle of HROs: Commitment to Resilience
Resilience materializes when the system is able to maintain usual operations regardless of failures in other parts of the system and recover after major mishaps (Weick & Sutcliffe, 2007) learning from the changes assimilated into the system (Wreathall, 2006). Learning from crisis is recognized as a main element of CM practices (Chebbi & Pundrich, 2015; Pergel & Psychogios, 2013) especially in the post-crisis phase (e.g., Jaques, 2009b; Ulmer, 2011) where attention to the warning signs can help build resilience (Jaques, 2009b).
Once Katrina struck New Orleans, the overall resources of the NOPD were stretched thin with many officers stranded at their homes, which dramatically increased the pressures put on the remaining officers. The officers on site had to work long shifts, which greatly reduced their capacity to handle the changing situation. In addition, many of them were inexperienced, which hampered creative thinking, improvisation and containment under the dramatic conditions causing loss in flexibility to respond and capacity to restore the lost flexibility.
The hotel chain also lacked resilience, which had a negative impact on the continuation of business activities and the corporate reputation (Coombs, 2014; Jaques, 2010; Lerbinger, 2012). The communication with major external stakeholders has a great impact on the effectiveness of CM actions (Coombs, 2014; Lerbinger, 2012). The crisis communication of the hotel chain focused only on the outside public, whereas they failed to consider the needs of their guests, who needed immediate attention. After the crisis, local managers expressed their resentment and disappointment with the leadership blaming management for the crisis and feeling betrayed, which challenged the continuation of business as usual (Frandsen & Johansen, 2011; Wooten & James, 2008). Bad planning, inappropriate training, lack of cooperation, and a centralized structure considerably delayed attending to the sick guests illustrating a lack of resilience. The system did not allow teams and local managers to be flexible or allow for improvisation and adaptation to the situation. Also, lack of information and inability to communicate created additional stress, which coupled with fear of losing out on promotion made local managers reluctant to engage in effective responses outside the CMP scope.
Fifth Principle of HROs: Deference to Expertise
Strict hierarchies are very vulnerable to errors since they discard the insights gained from errors at lower levels (Weick & Sutcliffe, 2007). In contrast, HROs push decision-making to the lowest levels to enable local managers and give them greater flexibility to respond (Ibid.). This is often not the case in organizations where routine emergency responses are the tradition of formal command-and-control approaches (Meyer, 2009; Pfeiffer, 2013). However, both leaders and organizational members should have decision rights to take independent responsive actions during a crisis (Harvati, 2013; Pfeiffer, 2013). People responsible for CM actions, being it leaders, CTs or others need a certain level of autonomy to be effective (Meshkati & Khashe, 2015; Slam et al., 2015). Some claim that organizations should rely on a collaborative leadership style, since it will allow decisions to take into account the opinion of relevant experts (Lussier & Achua, 2013; Meyer, 2009).
In the case of NOPD there was no clear understanding of tasks and responsibilities and no backup resources of any kind available, which together with the failure of communication destabilized the centralized command structure. The officers were forced to improvise, self-organize, and reestablish the chain-of-command ad hoc relying entirely on their own judgment to develop alternative rescue plans (Adams & Stewart, 2015). Although these self-organized teams were forced to take charge of the situation, they did not operate as decentralized units in the context of HROs where centralized and decentralized controls interact.
Decentralized execution is perhaps the quintessential example of deference to expertise as it enables rapid appropriate responses to current crises and emerging threats. Decentralization requires the delegation of authority with a more detailed process to notice potential threats locally (Weick et al., 1999). This should be carried out concurrent with a centralized capability that preserves the organization’s overall understanding and coordination of responsive actions with clear roles and responsibilities (Ibid.). The NOPD struggled with the chaotic situation without a clear structure of command and delegation where supervisors were unreachable and officers not trained. HROs maintain a balance between decentralization and centralization and they train and prepare for crisis (Weick, 1987). This never occurred in the NOPD and it was incapable of switching from centralized planning to decentralized execution.
In the hotel chain, we notice a lack of deference to expertise as well. Local managers were instructed to follow the plans to the letter and not make any deviating decisions. The decision-making power was strictly centralized at the headquarters and CTFs, who lacked detailed and updated local knowledge. This suggests that the whole CM effort was based on hierarchy from the outset, which evidently hindered deference to expertise. The highly centralized structure created flaws in the communication with lack of reliable current information on the state of affairs. According to Mitroff et al. (1989), crisis-prone organizations tend to have a rigid hierarchical structure with a poor communication flow, which corresponds to the observations from the case. In times of crisis all members of the organization are affected including lower-ranking employees that should have their share of responsibilities responding to crisis (Robert & Lajtha, 2007) actively cooperating with other organizational members (Pauchant & Mitroff, 1992). Unfortunately, the CTFs in the hotel failed to respond to the emails from local managers who had no information on the situation forcing them to self-organize on their own but to little avail.
We performed our own empirical research conducting three interviews with a firefighter and two police incident commanders in the Copenhagen municipal region along with 12 surveys from firefighters in Bilbao and Madrid. These respondents all operate in high-reliability environments and should be able to confirm what sets HORs apart. It turned out to be their ability to adapt and coordinate actions based on new updated information and quickly modify activities in response to changing conditions. All interviewees reflected clearly defined hierarchies however with adaptive structuring processes as standard practice to facilitate flexible decisions and better responses to a crisis event.
All respondents maintain strong relationships with and commitments to external stakeholders expressing awareness of their responsibilities facilitating communication and collaboration. These HROs maintain internal and external flexibility allowing them to adapt as circumstances transpire and change. When facing a crisis, these leaders set up an emergency meeting, with other rescue units to discuss the need for resources to contain the current event. The resources are usually released within a short time unveiling the cooperative nature of activities. Faced with a potential crisis, these individuals exhibit cognitive flexibility realizing that when the environment is changing they must quickly develop new mental models to understand situations as they progress. This facilitates early identification of irregularities during a crisis, which is essential to devise proper responses for high-reliability outcomes. They exhibit a collective mindset of safety and reliability stemming from a general understanding that each of their actions is connected prompting them to strive to avoid errors that could accumulate and turn into major events. Although clear lines of authority are demarcated, there are also significant elements of collaborative leadership.
Contingency plans are essential in preparing for identified threats and a great deal of effort is devoted to update the plans, so they are fit for the purpose. Nonetheless, while the plans cover a wide range of scenarios, they are not detailed and allow for autonomous initiatives when needed. Regardless of rank, these members can question the plans and offer their own perspective and it is expected that plans are challenged. If plans are contested, they can be improved to deal more effectively with crises. Teamwork is present as activities require coordination across and collaboration among many individuals. They learn about their weaknesses, strengths, and personalities through periodical meetings, which enable them to work in sync and help each other out when dealing with crises. The level of commitment, trust, and fellowship between is very high and they take responsibility for their own actions. When facing a potential failure, they resolve it or look for the expertise with the specific knowledge to solve it. Backup systems are also a permanent feature, e.g., radios have security features working in two modes, in case one mode fails, the other is at hand. When preparing for a crisis, they have access to updated information regardless of rank and additional resources are available if needed.
The learning and mastery of reliable anticipation and containment practices are taken seriously and involves both preventive and proactive practices to deal with potential threats. This is why preparing for the unexpected devotes a great deal of on rigorous training and realistic simulations focused on improvisation, coordination, and local responses to unpredictable situations. The aim of these exercises is to observe the reactions of participants teaching them to be mindful at all times and learning to improvise when events deviate from the plans.
There is a common practice of debriefing meetings after every crisis event, where every member has the opportunity to share their experience to learn and improve their knowledge about CM. The officers are constantly motivated to be alert and provided with all the information needed to do their jobs and understand the background for the current activities. They exhibit great diversity in terms of skills and backgrounds, which propels exchange of views to avoid “tunnel visions” and improve current processes. When the existing plans seem to be inadequate to deal with an event, the overall structure is reset promptly including the operational structure and plans. There are always back-up plans in place to retain alternative actions and maintain flexibility. If the plans are inadequate to deal with the needs of an event, parts of the system can be detached and others attached through role-switching that propels flexible responses. Decision-making can migrate across the members depending on who has the specific knowledge needed to handle a specific situation. Even if there is and overall plan, there is always some room to maneuver, adapt actions and improvise. These structural processes instill fluidity into the decision-making process and minimize bottlenecks. Although crisis constitutes potential danger, the interviewees also perceive crisis as an opportunity to improve incorporating new knowledge into their systems.
The literature study, the case analyses, the interviews, and questionnaires have unveiled practices that both prevent and enable organizations to deal effectively with crisis. The diverse sources of information helped us understand how multinational organizations respond effectively to crises through preparation, decision-making processes, and post-crisis evaluations.
International competition and emerging markets are more present than ever before, which provides organizations with immense possibilities for expansion (FEMA, 2011). However, this new scenario has created a more unpredictable business environment, which means organizations, especially multinational organizations, are more exposed to crises and are forced to continuously evolve and adapt to the demands of the environment (Alhawari et al., 2012; Simona-lulia, 2014). For those incapable to adjust, prevalence and success may be difficult to achieve (Smart & Creelman, 2013). In order to survive in such a complex environment, organizations should have systems and processes which, among other things, allow them to learn and facilitate continual growth, together with flexibility when handling complexity or responding to crises (Takeda & Helms, 2006). As one can imagine this is not exempt from difficulty, and in the case of multinational organizations the difficulty and complexity greatly increases.
To begin with, we observe that the organizational mindset plays a major role in the CM process influencing the way in which organizational members respond to crises. In effective organizations top management is fully aware of environmental exposures and initiate CM practices. Under such leadership employees understand the need for CM actions and acknowledge that no organization is immune to crisis and recognize their own cognitive limitations. They understand that plans are useful, but not infallible and thus are less resistant to change seeing that crisis can also be an opportunity. The proper organizational mindset can help organizations avoid the most common biases and defensive mechanisms. The organizational mindset like mindfulness in HROs influences how the five principles are enacted. In HROs everyone at all levels is engaged and everyone commits to the five principles constantly so as to act mindfully being aware that they need to be flexible and adapt actions according to circumstances.
Organizational Structure, Roles, and Responsibilities
Organizations with a strict hierarchy are less likely to engage all members in the CM efforts and rely mainly on high-ranking employees rather than on specific expertise. When top management is detached from local knowledge and insights, it lacks the competences to spot early warning signs and is unable to respond to current events and also impairs delegation of tasks and decision-making.
We found that cooperative behavior is important in the whole CM process at every level. It is allowed to question plans and members are trained to be flexible adapting plans in times of crisis with some autonomy to enact ad hoc responses. Team members understand their roles and responsibilities, but also understand their limitations and challenges of uncertainty and ambiguity. Decision-making is typically delegated to people that possess the needed expertise and knowledge as decentralized execution, which leads to more effective local responses. The organization has structure but team members also have authority to act when the local situations need it and cooperate with other parties to deal more effectively with a crisis situation.
Contingency plans are key to the CM efforts that if carefully designed can improve the way the organization deals with crises. However, the plans should not be used as a step-by-step guide, but rather as a flexible tool of reference. Organizational members should be prompted to engage in the planning activities to help them constantly update and enhance their knowledge. Organizations should invest in redundancy in the form of additional resources, alternative backup plans, and excess capacity. The employees should also acknowledge the cognitive limitations and the fact that plans may be flawed and that crisis introduces unexpected situations.
Organizations should be wary of simple interpretations of possible developments although classification of events can be useful in prior analyses. Managers ought to question their own expectations about planned responses to specified classes of threats or events to enable flexibility and resilience. Mindful managers know when plans cease to work and how a failure in one area may affect other areas that reveal and anticipate potential flaws in the plans so they can be fixed before they turn into major problems.
Organizations deal more effectively with crises if they have open communication channels that provide members with updated information including the reporting of errors. If everybody has access to updated information about current events, it will enable more effective responsive actions. Even within hierarchical structures, leaders can establish two-way information systems where bottom-up communication is encouraged and where employees feel comfortable delivering bad news and warning signs.
Effective organizations have technology enhanced information systems in place that makes the most to enhance open communication flow. Top management must ensure that the information they provide is well understood by everyone at every level of the organization to generate a common understanding and obtain more effective coordination of tasks in a crisis situation. Better access to information enable employees to carry out their tasks more effectively while executing the contingency plans with improvisation and flexible adaptation as required by the circumstances.
Communication with external stakeholders is also important to safeguard reputation and ensure ongoing collaboration between the affected parties. As observed in both cases, without proper communication the planned CM actions can have catastrophic consequences.
Training and Learning
HROs exhibit high commitment to resilience, which can be achieved if the people engaged in the crisis response remain flexible and mindful. This is expressed in the way they learn, change and adapt so the daily operations remain unaffected. Being able to deal effectively with unexpected events that deviate from the plans is an important organizational capability. During a crisis, organizational members face highly stressful situations where decisions must be made swiftly with an ability to improvise and exhibit flexibility. Employees can practice these challenges through training in numerous simulations that teach them how to act under stressful, ambiguous and highly uncertain conditions. Organizations that understand the benefits of learning from mistakes are more likely to deal with crisis more effectively.
We introduced the most relevant aspects from the CM literature, which enabled us to grasp the nature of this discipline. We outlined several perspectives on CM and merged them to account for how organizations can improve their crisis preparation and learning practices. We identified two main complementary streams of thought; planning and human behavior that enabled us to understand the important elements in play. The CM literature recommends a specific organizational mindset that introduces a proper crisis culture teaching employees to overcome their cognitive limitations. This mindset influences CM practices on planning and training that further dictate responsive actions and their impact on the eventual outcomes (Figure 7.1). However, the CM literature is not very clear on how to deal with the unexpected elements of crises. Therefore, we investigated how HROs handle the unexpected by committing to mindfulness and enabling decentralized decision-making when conditions call for it (Figure 7.2).
To gain deeper insights we analyzed two case studies of organizational crisis. None of the organizations dealt effectively with the crisis they faced and we detected concrete mistakes that lead to the mismanagement reflecting arguments presented in CM and HROs literatures. We further conducted our own empirical research to understand first-hand how HROs members think about their work and daily routines. The findings are consistent with the literature studies and case research all of which point to several factors that can improve CM effectiveness. The differences between the CM literature and HROs are evident. While the former mainly deals with planning and preparedness, the latter takes additional steps to anticipate and contain errors that can turn into major quandaries. HROs focus mainly on reliability where other organizations primarily focus on efficiency, so the level of employee commitment will most likely differ under the two regimes. Resource constraints and pressure for efficiency make it challenging to incorporating backup systems and commit to costly training. Nonetheless, the mindful approach detected in HROs provides valuable insights about how organizations can deal effectively with crises. The mindfulness in HROs implies that some of the assumptions embedded in the CM practices can be enhanced by adopting the five principles of HROs. Hence, we contend that the two approaches should work in tandem as the principles of HROs can circumvent the limitations of the conventional CM practices (Figure 7.3).
The proposed integrated model has several implications for our recommendations to multinational organizations that would like to deal more effectively with pending crises that will arise sooner or later when operating in a turbulent global environment. First of all, do not slavishly implement the actions suggested in the current CM literature, but learn from the demonstrated praxes of HROs. Organizations should not only strive for efficiency, but should invest in reliability as well to safeguard long-run resilience. This calls for a balance between centralized contingency planning and building a capacity for decentralized execution to propel flexibility and adaptive responses.
This article is based on the thesis “Managing the Unexpected: Exploring Crisis Management in Theory and Practice” completed by the two authors at the Copenhagen Business School.
There are three frameworks we find very interesting for this analysis. Namely, the frameworks of Barry Turner (1976), Steven Fink (1986), and Tony Jaques (2007). The first two authors’ models represent a turning point in the evolution of CM, respectively. Jaques on the other hand, constructed a circular model that is both non-sequential and relational, where he distinguishes between clusters of managerial activities.
The seminal paper of Barry Turner (1976) is among the most important publications on CM. Turner’s model was one of the first to appear in the CM literature. Many authors continue to support this perspective, especially those who argue that organizations may cause their own crises due to the accumulation of organizational failures (e.g., Mitroff, Pauchant, Finney, & Pearson, 1989; Pergel & Psychogios, 2013; Smith, 2006a; Roux-Dufort, 2007; Vargo & Seville, 2011).
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- Introduction: Adaptive Corporate Strategies in a Turbulent World
- Chapter 1 Multinational Corporate Strategy-Making: Integrating International Business and Strategic Management
- Chapter 2 The Implications of Subsidiary Autonomy for Multinational Flexibility
- Chapter 3 Democratizing the Multinational Corporation (MNC): Interaction Between Intent at Headquarters and Autonomous Subsidiary Initiatives
- Chapter 4 Internationalization Effects in a Global Knowledge-Based Industry: A Study of Multinational Pharmaceutical Companies
- Chapter 5 Navigating a Global Corporate Culture: On the Notion of Organizational Culture in a Multinational Corporation
- Chapter 6 Building a Global Responsive Organization: The Case of the Haier Group
- Chapter 7 Effective Crisis and Emergency Responses in the Multinational Corporation
- Chapter 8 Global Catastrophe Effects – the Impact of Terrorism