Fundamentals of Management, 8th ed


Contingency Planning and Crisis Management



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Contingency Planning and Crisis Management

Another important type of planning is



contingency planning

, or the determination of alter-

native courses of action to be taken if an intended plan of action is unexpectedly disrupted or

rendered inappropriate.

38

Crisis management

, a related concept, is the set of procedures the

organization uses in the event of a disaster or other unexpected calamity. Some elements of

crisis management may be orderly and systematic, whereas others may be more ad hoc and

develop as events unfold.

policy

A standing plan that

specifies the

organization’s

general response to

a designated

problem or situation

SOP

A standard plan that

outlines the steps to

be followed in

particular

circumstances



rules and

regulations

Describe exactly how

specific activities are

to be carried out



contingency

planning

The determination of

alternative courses

of action to be taken

if an intended plan is

unexpectedly

disrupted or

rendered


inappropriate

crisis management

The set of

procedures the

organization uses in

the event of a

disaster or other

unexpected calamity

86

Part 2: Planning

Copyright 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).

Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.



A classic example of widespread contingency planning occurred during the late 1990s

in anticipation of what was popularly known as the Y2K bug. Concerns about the impact

of technical glitches in computers stemming from their internal clocks’ changing from

1999 to 2000 resulted in contingency planning for most organizations. Many banks and

hospitals, for example, had extra staff available; some organizations created backup

computer systems; and some even stockpiled inventory in case they could not purchase

new products or materials.

39

The devastating hurricanes—Katrina and Rita—that hit the Gulf Coast in 2005



dramatically underscored the importance of effective crisis management. For example,

inadequate and ineffective responses by the Federal Emergency Management Agency

(FEMA) illustrated to many people that organization’s weaknesses in coping with crisis

situations. On the other hand, some organizations responded much more effectively.

Walmart began ramping up its emergency preparedness on the same day Katrina was

upgraded from a tropical depression to a tropical storm. In the days before the storm

struck, Walmart stores in the region were supplied with powerful generators and large

supplies of dry ice so they could reopen as quickly as possible after the storm had passed.

In neighboring states, the firm also had scores of trucks standing by crammed with both

emergency-related inventory for its stores and emergency supplies it was prepared to

donate—bottled water, medical supplies, and so forth. And Walmart often beat FEMA

by several days in getting those supplies delivered.

40

Seeing the consequences of poor crisis management after the terrorist attacks of



September 11, 2001, and the 2005 hurricanes, many firms today are actively working to

create new and better crisis management plans and procedures. For example, both

Dana

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Rules and regulations are standing plans describing how activities are to be carried out. This

workplace, for example, has posted a set of safety rules to be followed by all employees near the

time clock where they register their hours of work.


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