Crisis planning in the nonprofit sector: Should we plan for something bad if it may not occur?

Southern Business Review, Spring 2002 by Spillan, John E, Crandall, William

Conceptual Framework

Essentially, managers have two ways in which to view a crisis situation-reactive or proactive. They can ignore the warning signs and react to the crisis when it occurs, or they can prepare themselves to prevent and manage a crisis. The former decision has undefined outcome,, while the latter provides more opportunities to manage the crisis situation and may even avert the crisis altogether. Figure I illustrates and summarizes the decision stages that exist in the crisis management process. In the reactive model, the decisions about planning take place during and after the events) occur(s). In the proactive model, decisionmakers have already anticipated various forms of crises and have developed plans to deal with their eventuality. In addition, efforts are made shortly after the crisis to learn how to better deal with the next crisis. This critical stage of learning must occur soon after the event while the facts of the disaster are still fresh in the minds of managers (Kovoor-Misra &Nathan, 2000). The consequences of each management decision are significant. Organizational leaders must evaluate the difference between the investments in planning for a crisis versus the losses that will result from a lack of planning.

Research Rationale

If the proactive model is followed, decisionmakers must eventually ask which types of crises are of most concern to the organization and have such events actually occurred previously. The current study seeks to address these questions by asking NPO managers about those crisis with which they are most concerned and if the crisis event has actually occurred in their organizations.

This information is important for three reasons. First, when potential crisis events are identified, managers can plan for them. A manager who lacks sufficient information about the crisis cannot develop a plan to address it. For example, one of the most difficult crises in a business is the on-site death of an employee. Some planned procedure needs to be in place to deal with an employee's workplace death in a professional and dignified way (i.e., notifying next of kin, counseling existing employees, etc.). Additionally, if the employee was a key person, critical to the day-to-day operations, plans must be available to replace the deceased worker with someone who has comparable skills and experience (Wnek, 2000).

Second, recognition of potential events can enable management to enact measures to prevent the occurrence of that crisis. The now famous Y2K crisis illustrates this point. Careful planning and the implementation of crisis management procedures allowed the Y2K transition to occur with minimal difficulties. Upper levels of management recognized the importance of disaster recovery in their organizations (Salerno, 2000). Finally, identifying the most probable crises allows researchers, writers, and consultants to "warn" the general business community about the key crisis events or vulnerabilities that need organizational attention. The Y2K crisis was greatly minimized because of the awareness generated by the popular press and management researchers.