The Human Touch in Corporate Crisis Management (**This is a tip sheet inspired by the recent earthquake events in Japan)

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When crisis strikes, companies must swiftly swing into action. This calls for management teams to be readily armed with a robust crisis management process. However, the success of that process depends on the level of employee trust and loyalty towards their companies. Inspired by the recent earthquake events that occurred in Japan, Nicholas Goh - CEO of Verztec Consulting Pte Ltd, an international ISO 9001:2008 certified global content management and localization services company, shares a tip sheet in mastering the delicate art of maintaining strong employee relations in preparing for the unforeseen.

When crisis strikes, companies must swiftly swing into action. This calls for management teams to be readily armed with a robust crisis management process. However, the success of that process depends on the level of employee trust and loyalty towards their companies.

Inspired by the recent earthquake events that occured in Japan, Nicholas Goh - CEO of Verztec Consulting Pte Ltd, an international ISO 9001:2008 certified global content management and localization services company, shares a tip sheet in mastering the delicate art of maintaining strong employee relations in preparing for the unforeseen.

The twin disasters of earthquake and tsunami that hit Japan in March 2011 were not only national disasters per se. They also had global repercussions on markets and MNCs alike. Of those hit badly, MNCs with operations based in Japan—and especially Japan-based MNCs—faced a double bind as they had to decide whether to pull their staff out of the disaster-stricken area or not.

To do so, would gravely hurt employee relations with local Japanese staff, as there is an ingrained culture and attitude of staying together in the face of adversities. On the other hand, holding out operations would risk concerns of staff resignation or even possible lawsuits and legal liabilities if staff were hurt in the course of business operations.

In such situations, human resource (HR) departments face the strategic challenge and the need to execute their HR responsibilities swiftly and appropriately without hurting cross-cultural ties. It’s a precarious balance between what’s practical with what’s cultural.

Study the Past, Play it Right

Lessons can also be gleaned from history. In 1998, US leading manufacturer and marketer of men's shirts, Phillips-Van Heusen (PVH) abruptly closed down its factory in Guatemala as it claimed it had to cut back on its productive capacity. Hence the multinational laid off 500 workers overnight, leaving them in shock as they only found out they had lost their jobs when they reported for work the next day.

In the aftermath, the International Garment Workers' Secretariat and Union of Needletrades, Industrial, and Textile Employees (UNITE!) launched a consumer campaign against PVH. Consequently, the Human Rights Watch published a critical report that severely hit PVH's image and pressured the company to eventually begin contract negotiations.

On the contrary, InterContinental Phoenicia Hotel was severely hit by a car-bombing incident in Lebanon in 2005. Instead of laying off workers, the InterContinental Phoenicia Hotel re-assigned 150 employees to other hotels in the InterContinental chain. Performance indicators for Phoenicia Hotel turned out even higher than the regional and total averages!

Marc Ronez, Managing Director of Asia Risk Management Institute, wrote in an article titled “HR – Human Resource Contribution to Crisis Management” of his belief that HR can play a strategic role in organizational sustainability through advance preparation. And preparation includes immediate aspects of business such as leadership development and talent management, as well as not-immediately-apparent aspects like safety and security initiatives to help prepare and reassure employees, and solid communication plans to support effective crisis management.

InterContinental Phoenicia Hotel clearly did all these right to be able to swing into action soon after a crisis.

Cornerstone of Crisis Management: Bond, Plan and Assure

1.    Forge strong community and employee relations

When the global clothing company Levis Strauss decided to close down six of its US manufacturing plants in 2002, its Levi Strauss Foundation set aside as much as £1.9m to help the communities which depended heavily on the manufacturing plants make the transition to other revenue sources. One of the initiatives was the addition of an employee advocate role in each plant location who stayed for a couple of months, to help laid-off staff tap into the network of support available to them.

2.    Devise a thorough crisis management process

Companies that display foresight in their ability to manage themselves and their assets in crises are often those that pick themselves up rapidly post-crises. Given that HR departments act as the liaisons between management and employees, it is important that the HR manager is actively involved in the crisis management process, and routinely communicates to and supports employees with their health and personal issues during crises.

3.    Policies for pay and benefit continuation

In the event of disaster, one of the biggest concerns of employees is their job and financial security. A survey conducted, after Hurricane Katrina, of large US companies showed that over 70% of the companies lacked formal policies on how to handle pay and benefits matters. Really, HR managers should ensure that employees' pay and benefits are being considered in crisis management plans, and take that additional step of assuring employees of the fair treatment that the company will give.

For Japan, it is common knowledge that their people are stoic and able to bond strong together in the face of adversities. Hence, it is all the more imperative that MNCs learn and apply the delicate art of building and maintaining employee relations, given that Japan will eventually – probably soon – be up on its feet again.

About the Author:

Nicholas Goh is the CEO of Verztec Consulting Pte Ltd, an international ISO 9001:2008 provider of Global Content Management and Localization services in over 60 languages.For more information on Verztec, please visit http://www.verztec.com.

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