An abrupt and unforeseen event that leads to the restlessness amongst the individuals of an organization is called an organizational crisis. In general, a crisis can be any occurrence which causes an unstable and dangerous situation and affects a community, a group of people or whole society. A crisis usually happens at a short notice and triggers the feeling of fear and threat which cause a sequence of unexpected events. A crisis creates situations where time is short and a quick and effective decision has to be taken.
In addition to this, crisis cause elements of surprises, where no one can predict the outcome of a particular step. crisis cause lack of stability in the work environment and make the situation worse. crisis don’t only happen in organizations but they are also a part of everyone’s life. There are times when we find ourselves in deep waters. For example, you have only 10,000 bucks in your bank account and you will have to pay for your college fees by tomorrow which is 50,000 bucks and nobody is ready to help you with the rest of the amount. This is one example of a personal crisis.
crisis are becoming very frequent because of the different means of communication and the intervention of the internet in every field. A good way to protect an organization from crisis situation is by preparing before it arises. If you take extra measures to prepare for the future crisis, you will be less likely to face negative consequences. The process or system by which such unexpected and threatening situations are dealt with is called crisis management. In this article, you will learn and understand different types of crisis and also learn how to deal with such crisis effectively. Followings are the different types of crisis.
Table of Contents
1) Technological crisis :
Nowadays most of the business work depends on technology. Any breakdown in technological appliances creates hindrance in the service of customers. Let us take a very simple example of a coffee shop. The business of coffee shop entirely depends on the coffee machine. On some days when the coffee machine gets out of order the entire business slows down and customers go cranky.
Let us understand this crisis using one well known example. Imagine what will happen if someday servers of “Instagram” get compromised and all of your beautiful “no-filter” photographs get deleted. Happening of such crisis will be termed as a technological crisis. Mostly, a technological crisis includes hardware failure, software gets compromised by software or industrial accident. To deal with such situations, management should try to mitigate the losses and ensure a plan to get things back to normal as soon as possible.
2) Financial crisis :
Financial crisis happens when an organization is hit by the sudden loss of a large amount of money. Financial issues such as bankruptcy, revenue losses, inflation or sudden change of trend in the market can cause the financial crisis in an organization. Financial crisis can happen in any organization. This type of crisis is very difficult and damaging for the entire organization. Customers can lose their trust if the financial crisis are not handled carefully and quickly.
These types of crisis make the negative reputation of the organization in the market and inefficiency to handle such crisis can cause permanent damage that may lead to the permanent shut down of the business. Keeping a certain amount of funds aside for such situations is one solution. other than that, management should take important decisions such as changing business as per market requirement, upgrading and mobilizing requisite funds etc.
3) Natural crisis :
Natural crisis takes place because of the occurrence of natural phenomena such as earthquake, volcano, floods, storms or any other act of nature.
Damages caused by these calamities are classified as a natural crisis. Natural crisis are not in the hands of anyone. These crisis can be on large scale. The best way to deal with such crisis is by planning for them beforehand, such as, building an earthquake resistant building, making emergency exit doors and providing training to employees for what to do and not to do under such circumstances.
4) A crisis of malice :
The success of any business attracts many adversaries. Every business has its competitors and usually, companies play tactics to become better from one another and get better business. Healthy competition is good and it gives room to grow. However, sometimes some competitors forget where to stop and play real nasty tactics to ruin the image of their opponent.
This could include hacking into the website of the company and posting wrong information about it, tampering with the product or software of the company or spreading rumors. These types of crises are difficult to handle and they require utmost expertise to clear out.
5) A crisis of deception :
In an organization, when thousands of people work together, it becomes difficult to keep the important information secret. A crisis of deception can prove to be outlandish for an organization. A person from the organization itself misrepresents the information about the organization with the intent of causing harm to the organization. These situations can be handled by discussing the matter with the legal practitioner and taking the required steps to mitigate the damage.
6) Confrontation crisis :
These types of crisis happen when a group of people or an individual have certain demands and they fight against the organization, institute or government to make them accept their demands and fulfill their expectations.
The common methods confrontation crises are boycotts, strikes, blockade or occupation of a workplace, picketing outside the organization, giving an ultimatum to the people in authority, destroying the property of the organization. There is no cooked way to deal with such situations. However, taking the help of police and law might help to deal with confrontation crisis.
7) A crisis of organizational misdeeds :
A crisis of organizational misdeeds happens when the management take decisions without taking precautions which are not favorable for the employees or the stakeholders. These type of crises leads to court cases and cause financial as well as reputational damage to the organization. A crisis of organizational misdeeds can be classified in three categories such as,
1) crisis of deception: this crisis takes place when the member from the management do something malicious which affects the people associated with the organization.
2) A crisis of skewed management values: a decision taken for short time economic gains by neglecting long term social values and staking stakeholder’s money.
3) A crisis of management misconduct: these types of crisis happen when management takes immoral and illegal actions.
8) Workplace violence :
These types of crisis happen very frequently among the labor class of the organization. When employees of an organization fight within the premises of the organization and disturb the work – environment is called workplace violence. It is a crisis which has long term influence and also disturbs the mental health of employees within an organization and it should be dealt with harshly.
The above article delved in the 8 main types of Crisis an organization can face.
Liked this post? Check out the complete series on Management
Thanks to those came out with this