The Organisational Development of Crises

In document Benchmarking the Resilience of Organisations (Page 31-39)

Chapter 2 – Theoretical Development

2.2 The Organisational Development of Crises

This section discusses how crises develop within organisations. This literature is introduced by considering whether crises are caused by human error or interaction, or by the design of organisations (or systems) themselves. Five models or sequences of crisis generation are presented and reviewed, each representing a different approach to organisational crises. The contribution of each model to this thesis is discussed.

Reason (2000) introduces two approaches to the accident or crisis causation problem; person and system. The person approach focuses on the errors of individuals and attributing blame. Reason observes several problems with the person approach; it

discourages a culture of reporting, it prevents the organisation from learning lessons, it breaks down trust, and errors can be made by anybody and do not necessarily reflect their knowledge or expertise (Reason, 2000). The systems approach focuses on the conditions within the system, e.g. organisations, which incubate or create errors. The systems approach is the most common within crisis and disaster management literature, where it is accepted that the person approach is counterproductive. Dawes et al. (2004) provide an example of this when they review the response to the September 11th terrorist attacks, and identify lessons from technology, information, relationships, resources and response strategies.

Turner (1976) was one of the first to create a disaster sequence to describe the stages of disaster which included pre-disaster or crisis conditions as part of the escalation or creation of the crisis itself. This can be seen as Table 2.2. For the purpose of his analysis, Turner focused on failures of foresight, or crisis events where some forewarning was potentially available but where there was a failure to act to prevent the crisis (Turner, 1976).

Table 2.2: The Sequence of Events Associated with a Failure of Foresight

Stage Description

Stage 1 Notionally normal starting point:

(a) Initial culturally accepted beliefs about the world and its hazards (b) Associated precautionary norms set out in laws, codes of practice, mores, and folkways

Stage 2 Incubation period: The accumulation of an unnoticed set of events which are at odds with the accepted beliefs about hazards and the norms for their avoidance

Stage 3 Precipitating event: Forces itself to the attention and transforms general perceptions of stage 2

Stage 4 Onset: The immediate consequences of the collapse of cultural precautions become apparent

Stage 5 Rescue and salvage – first stage adjustment: The immediate post- collapse situation is recognised in ad hoc adjustments which permit the work of rescue and salvage to be started

Stage 6 Full cultural readjustment: An inquiry or assessment is carried out, and beliefs and precautionary norms are adjusted to fit the newly gained understanding of the world

(Turner, 1976, p. 381)

Of the six stages in this sequence, theincubation periodhas received the most attention. Within the context of organisations, it suggests the idea that the triggering event (e.g. a fault in a component of a space shuttle) should not necessarily be labelled as thecause

of a disaster or crisis. This is revisited by Smith (1990) who argues that managerial style and organisational culture often promulgate crises.

In his seminal publication Man-made Disasters, Turner (1978) discusses an ill- structured problem, as a complex problem which needs to be managed by a variety of groups across organisational boundaries, because no one individual or organisation has a big enough picture (Turner, 1978). Using this idea, Turner (1978) suggests that the interaction between social and technical systems could provide a platform for the incubation of crisis.

The incubation of crisis is also the stage of Turner’s (1976) sequence where resilience is most important. This is highlighted by Turner and Toft (2006) when they extend Turner’s original discussion with ideas of organisational learning. Traditionally, resilient characteristics are more visible in the response phase (Dynes & Quarantelli, 1986); described in Turner’s model as stages 5 and 6. However, resilience is not necessarily only a reactive approach, it can also be proactive. Organisations must use their awareness and understanding of the situation to continuously jump ahead of their current performance curve. This then fits into the incubation of crisis stage because an awareness and understanding of the situation and potential consequences could prevent theaccumulation of unnoticed events(Turner, 1976).

Mitroff et al. (1989) explore the effects of corporate culture on crisis management. They argue that organisational culture is the most influential factor on crisis management, and present this argument using the model seen as Figure 2.1. In this model, core organisational identity represents factors including self-centeredness, defensive mechanisms, and fatalism or passivity. The organisational assumptions layer represents those assumptions that can make organisations vulnerable to crises, e.g. large organisations sometimes feel that an organisation of their size could recover from any crisis (Mitroff, et al., 1989). The organisational structure and the organisation’s plans, actions and behaviours layers, represent the aspects of organisational culture which are most visible. Factors of this include crisis management structures, flexibility, roles and responsibilities, resources cohesion and surveillance (Mitroff, et al., 1989).

Figure 2.1: The Onion Model of Crisis Management - The Nature and Impact of Organisational Culture on Crisis Management

(Adapted from Mitroff, et al., 1989, p. 272)

Mitroff et al. (1989) go on to emphasise that organisations can be either crisis-prone or crisis-prepared. Using the factors identified under each of the layers of their onion model as scales, they argue that an organisation that has ‘a great deal’ of, e.g. defensive mechanisms (Core Organisational Identity) is more crisis-prone – equally the opposite applies. Discussing the model as a whole, Mitroff et al. (1989) explain that the model is multiplicative, that is, an organisation that performs at a satisfactory level on all four of the layers can be labelled as crisis-prepared. However, an organisation that performs very well on three layers but poorly on the fourth is not crisis-prepared. That organisation is vulnerable, and despite the fact that it may appear to be crisis-prepared, it is in fact, crisis-prone to some degree (Mitroff, et al., 1989). In addition Mitroff et al.

Core Organisational Identity: Deep beliefs,

anxieties, defensive mechanisms Organisational Assumptions/Beliefs Organisational Structure Organisational Plans, Actions or Behaviour

(1989) suggest a hierarchy of influence between the layers (from the inside out) when they argue that good performance on the outer three layers, will not produce a crisis- prepared organisation unless it also performs well on the core beliefs layer.

Hwang and Lichtenthal (2000) use survival analysis, a technique used in materials engineering to study the fracture probability of components. They propose a model of how and why organisations fail and the probability of this happening, and identify two types of crises; abrupt and cumulative. Abrupt crises are those that happen suddenly and create tension between the organisation and its stakeholders, and cumulative crises are those that build up over time until a certain threshold-limit is reached. They go on to argue that the probability of crisis because of abrupt failures is constant and independent of the length of time that the organisation has been established. However, the probability of a crisis because of cumulative failures is an increasing function of time (Hwang & Lichtenthal, 2000); this accumulation of latent errors is Turner’s (1976) incubation period. Hwang and Lichtenthal (2000) call their model the Genesis of Crisis; it can be seen as Figure 2.2.

Figure 2.2: The Genesis of Crisis

(Hwang & Lichtenthal, 2000, p. 133)

Smith (1990) reviews common approaches to crisis management and notes that the management process is often characterised by three phases; crisis of management, operational crisis, and crisis of legitimisation (shown as Figure 2.3).

Low

High

High

Low Precedented Event Trigger

Abrupt

Unprecedented Event Trigger

Organisation Stagnation/Mental

Cumulative Rigidity

Organisational Metamorphosis/ Structural Change

Figure 2.3: Model of Crisis Management

(Smith, 1990, p. 271)

Smith (1990) notes that the crisis of management phase is characterised by a failure to take account of impending situations where,

“…the actions (or inactions) of management can promulgate the development of an organisational climate and culture within which a relatively minor triggering event can rapidly escalate up through the system and result in a catastrophic failure”.

(Smith, 1990, p. 271)

Here Smith (1990) shows how management, and by extension leadership, play a key role in the development of organisational crises. This occurs through the mismanagement of organisational culture which can enable latent errors, and promote

HISTORICAL INPUTS FEEDBACK

LOOP

TRIGGER EVENTSINTERNAL & EXTERNAL

INTERACTIVELY COMPLEX TIGHTLY COUPLED

CRISIS AMPLIFICATION ORGANISATIONAL CULTURE

LIMITS OF CONTINGENCY PLANNING

COMMUNICATIONS AND DECISION FUNCTIONS

COMMUNICATIONS “TRIAL BY MEDIA” SCAPEGOATING CRISIS OF MANAGEMENT OPERATIONAL CRISIS CRISIS OF LEGITIMISATION ORGANISATIONAL ‘SUPPORT’ LEARNING PROCESS

OUTPUTS TO OTHER ORGANISATIONS

GOVERNMENT INVOLVEMENT

organisational silos. In a later publication, Smith and Sipika (1993) expand on this model within the context of emergency planning. As part of this discussion, they identifythe 7Cs of crisis management; culture, communications, contingency planning, control, configuration, cost, and systems coupling and complexity (Smith & Sipika, 1993, p. 29). They go on to argue that these seven characteristics are important in determining an organisation’s ‘proneness’ to crises (Mitroff, et al., 1989) and they have an impact on the first phase of Smith’s (1990) model – crisis of management.

The second phase, the operational crisis, causes the organisation to move into crisis mode. Often referred to as the response phase, this is the time when the organisation is confronted with the effects of the crisis, and has to manage its impacts. The third phase, the crisis of legitimisation is often overlooked by other models which refer instead directly to the idea of recovery. Smith (2005) refers to recovery as part of the crisis of legitimisation stage but realises that organisations are also struggling to negotiate a new ‘normal’ at this time. Crisis of legitimisation is characterised by attempts to apportion blame and has been the subject of considerable research regarding crisis communications and media strategies (Coombs & Holladay, 2002). Following this final phase, Smith (1990) addresses the idea of recovery again, but instead discusses a move towards equilibrium, recognising that a return to normal may not be either possible or desirable. In this model, resilience is the quality and use of information, organisational learning, and the management of an organisational culture in which a relatively minor triggering event can rapidly escalate.

Smith and Sipika (1993) expand the model of crisis management further by considering what happens within an organisation after a crisis; they present another side to the model, which is discussed in Section 2.3.

The four models of crisis generation and management discussed above; Turner’s disaster sequence, the onion model, the genesis of crisis, and Smith’s model of crisis management, are based on a socio-political perspective. This means that crises are characterised by a breakdown in the social and cultural practises, norms or values within an organisation (Pearson & Clair, 1998). With the exception of Perrow’s (1984) Normal

Accident theory and High Reliability Organisation (HRO) theory which are based on a technological-structural perspective and will be discussed in Section 2.3, the socio- political perspective represents the dominant approach within crisis management (Pearson & Clair, 1998). Pearson and Clair (1998) argue that these approaches alone are ineffective, have led to the fragmentation of the field, and have prevented the research from being fully accepted within management theory (Pearson & Clair, 1998, p. 59). They go on to acknowledge the multidisciplinary nature of crisis management, and argue that it could be improved by properly integrating the three broad domains upon which it is based; socio-political, technological-structural and psychological. To achieve this, Pearson and Clair (1998) present an integrated model of crisis management; shown as Figure 2.4.

Figure 2.4: The Integrated Model of Crisis Management

(Pearson & Clair, 1998, p. 66)

Working from left to right in the model, executive perceptions about risk are affected by the environment or business landscape, this in turn informs and determines the crisis management preparations that are adopted. Once the trigger event has occurred the organisation’s response is shown as individual and collective actions. An important

Executive perceptions about risk: concern for attention to crisis preparations Adoption of organisational crisis preparations Environmental Context: •Institutionalised practices •Industry regulations Individual and collective reactions: • Shattered assumptions • Impaired cognitive, emotional and behavioural responses

• Eroded social structure

Planned and ad hoc response: • Team vs. individual response • Alliance/coordination of stakeholders • Information dissemination • Organisation/industry visibility Outcomes Success Failure

feature of this model is that it not only incorporates the three perspectives, but also the idea that organisations can fail or succeed as a result of crisis.

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