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Human Resources Crisis Management
and Contingency Management
HL ONLY
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Learning Objectives To explain the difference between crisis
management and contingency planning Evaluate the costs and benefits of contingency
planning Discuss how far it is possible to plan for a crisis
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What disasters could your house face?
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What disasters could your business face?
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Whole industry crisis
Whole country crisis
Individual company crisis
Write down some examples of each one
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Crisis managementRefers to the management of operations before, during and after the event of a crisis
Contingency planning Is about being proactive, development plans before an event happens. A ´what if´ approach
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What can a business do to avoid the following ‘disasters’?
• Fire in building• Power supply breakdown• Virus infection• Theft of equipment• Theft of customer data
Think about working in
the headquarters
of a bank
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What implications did this have for Pemex
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What other types of crisis might a business face?
Hostile takeover
Faulty/dangerous products
Environmental disaster
Major customer withdrawingorders
Physical destruction e.g. bombing / earthquakes / Physical destruction e.g. bombing / earthquakes / fires
Strikes by workforce
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What areas of a business
could a crisis affect?
Marketing: public image under threat – PRAd campaignsPromotions to increase sales
Personnel: Leadership style …crisis usually requires direct authoritarian leadership;
internal and external communication that is rapid and direct; external communication that is informative and truthful.
Training
Recruitment
Operations: particularly if JITStorage/warehousingMachinery
Finance: ad campaigns; environment clean up; compensation
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Can crisis be avoided?• Companies can have contingency plans
established in order for staff to know how to deal with a crisis when it occurs
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Contingency Plan content• A list of the most critical business functions;• A list of the facilities, hardware, software, data, personnel and
other equipment necessary to support those functions• A back-up procedure• A method for getting in touch with all key personnel• A recovery procedure • Education and training of personnel involved in implementing the
plan• Regular drills to test the effectiveness of the plan
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Contingency Plans
Value• Sense of security• Limits damage• Speeds up recovery
process• Informs staff training• Preventative
measures can be part of CSR
Limitations• Costly and time
consuming– Including opportunity
cost
• Needs reviewing• Lack of predictability
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Key steps in contingency planning
1. Identify the potential disasters – some could be the same for all businesses, some maybe specific to the industry
2. Assess the likelihood of these occurring
3. Minimise potential impact4. Plan for continued operations
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Contingency Plan
• Cadbury’s withdraws products made in China
• Cadbury’s is fined
In each case:
• Identify the cause of each event• Identify the potential threat
• What actions could have been taken to prevent these events?• Rank each event on a scale of 1 – 10 in terms of seriousness to the future
success of Cadbury’s• Justify your answer
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Strategy tactics – what would the
school do if a bomb went off if you were in the
centre oftown during a college trip?
Strategy tactics You are head of ICT at
a bank and a ‘tape’ of all
customerData has been lost in
transit!
Strategy tactics What are the
implications to Pemex if the main FUEL lines break?How would you have reacted?
Strategy tactics – what if Richard Branson
died in an accident?
How should the Virgin conglomerate react?