The Crisis Counselor

What Types of Organizations Are Most Vulnerable to a Crisis?

All businesses eventually experience some form of crisis. Those which seem to be most vulnerable, however, include businesses with one or more of the following characteristics:

Businesses that have recently experienced a crisis. Businesses should learn from crises. It would make sense that those which recently experienced a crisis should be the most prepared to avoid a future one. Lightning never strikes twice in the same place, right? Some feel, using that logic, the airline that just suffered a plane crash is the safest to fly. However, the odds are that if your business has suffered a crisis recently it is more likely than one that hasn't to suffer another one soon. Two reasons for this include: the previous crisis showed the company is vulnerable to a crisis; and, the business is often preoccupied fixing the previous crisis and may not notice the warning signs of another on its heels.

Those in highly regulated industries. It makes sense that the more rules your business must follow, with serious consequences for violators, the more vulnerable you are to a crisis. The crisis could be in the form of a product recall, environmental fines, labor-related penalties, stressful government probes and other costly investigations. These can significantly damage the reputation of your business which, even beyond the cash outlay for fines and penalties, can take years and even decades to overcome.

Businesses with financial difficulties. Your business is more likely to suffer a crisis when it is suffering financial troubles. When this occurs, a business is more likely to overlook a warning signal because it is preoccupied with other, more immediate matters. Financial troubles can also deplete the amount of goodwill earned by a business with some of its key publics. This occurs most frequently with suppliers who are not being paid on time, and, in some smaller companies, with employees who are faced with pay reductions or delays in cashing their checks. Without the strong support of your key publics, a business is significantly more likely to suffer a crisis.

High-profile companies with well-known CEOs. Some businesses have owners or CEOs who are heralded as "superstars," "brilliant" and "geniuses." They have received substantial amounts of media coverage and have helped make their companies and themselves newsworthy through their success and leadership. The positives from this almost always outweigh any potential negatives. However, a negative by-product of the increased profile is that a crisis experienced by the company and CEO become more newsworthy.

Publicly held companies. Businesses that are publicly owned are more vulnerable to crises for several reasons. They are highly regulated (i.e., Securities and Exchange Commission), have a greater number of publics to please (i.e., shareholders, investors, analysts), and are covered by media that focus primarily on publicly held businesses (e.g., The Wall Street Journal, Investor's Business Daily, Forbes). They need to disclose all "material" events occurring in the business and can't easily solve a problem over time with little fanfare, as can a privately held business.

Fast-growing companies. Businesses experiencing rapid growth are vulnerable to crises because they have hired employees who may not be adequately trained or experienced. They may be entering previously uncharted markets by the company. And, keeping up with the day-to-day work has left the business with little time to consider its vulnerabilities, heed its warning signs and work to prevent crises from occurring.

Those with market share among the top three in their industries. These companies are usually covered closely by industry analysts and trade media. Their actions and decisions are scrutinized and second-guessed. These businesses may feel others are waiting for any slip, flinch or mistake that can be sensationalized and used to damage the company. An otherwise manageable vulnerability in this company can easily be catapulted by competitors, analysts, media and others fanning the flames.

Start-up businesses. New businesses face extreme challenges during their early months and years to avoid major crises that could negatively affect their financial positions, marketing potential and future health. They are most vulnerable to crises because they haven't yet established a broad base of goodwill and support among a broad range of publics (e.g., employees, customers, prospects, suppliers, news media). Start-up businesses often have few management staff and employees who can help prevent vulnerabilities from turning into crises. They also may not have the financial resources to purchase the equipment, technology and other systems that would help reduce their vulnerabilities.

Businesses with absentee ownership. These include businesses whose owner, CEO or franchisee are not on site to personally experience the challenges of the crisis and to see they are managed swiftly and effectively. These can include multi-store franchise operations, where the franchisee is not on-site and rarely visits the outlet, or branches of retail stores, banks, fitness centers or wholesalers.

Businesses with high stress and unfavorable working conditions. Every business nowadays has an abundance of stress as it is forced by competitive pressures and economics to achieve more results with less resources. However, some businesses are clouded by an inordinate amount of workplace stress. This often occurs through the combination of pressure to meet tight deadlines; extremely demanding management; workers/employees feeling underpaid and underappreciated; little sense of accomplishment due to the relentless workload level; and, a working environment that only adds to the stress levels. These pressures can result in disruptive and even violent behavior by disturbed employees, which has occurred at U.S. Postal Service outlets in Michigan and Texas.