The Ultimate Metric for Crisis Management
A business crisis is probably one of the biggest threats to the success and progress of a company.
This damaging event can tarnish the company reputation, ruin the business operations, and have a negative impact on the finances.
Whether the crisis is caused by something externally or internally, it is very important to be prepared for managing such an event.
Every company should create a crisis management plan intended for the case of bigger disruption, in order to prevent long-term damages from happening as a result.
In 1906, William James wrote: “Great emergencies and crises show us how much greater our vital resources are than we had supposed”.
Later, it turned out he was absolutely right, but only when it comes to individuals or nations.
When speaking of organizations, his claim is not even close to the real image. In a crisis, a lot of corporations reveal how much fewer are their vital resources than they thought earlier (assuming that these resources include integrity, reputation, client loyalty, leadership and many more).
During the crisis, the companies risk to weaken these factors and lose many privileges they previously had. Therefore, the survival of a company’s reputation mainly depends on its integrity of leadership and strength of its internal communications.
Crisis metrics not only help supervisors monitor spillover risks for banking sectors, but also provide means to investors for overall risk management.
In crisis management, a systematic and structured approach is necessary to discover the needs for innovation and development.
Potential solutions might cover processes, human factors, technology or organization.
CRISIS MANAGEMENT PLAN
A crisis management plan is some sort of a process made up to deal with an urgent and unexpected situation and crisis.
A plan should be completed before such an event, so the company is prepared to use it for recovering after the crisis strike.
Here are some steps a plan should follow:
- Identifying the possible types of crises.
- Defining the impacts of all types on your business.
- Finding the actions that could be taken for resolving every type of crisis.
- Making a team of people who will get involved in these actions.
- Creating resolution plans and training a team according to your plan.
- Updating plans regularly.
Speaking of business disaster recovery, it’s important to acknowledge that the data is a key factor. Reporting on metrics is one of the best ways to see how what you do actually works.
However, many organizations’ managers find this quite challenging.
The first step to good BC/DR management is understanding metrics which matter in business continuity and disaster recovery planning.
This is what we’re going to explain today.
Next, you will need a good tool to collect and report on these metrics.
Managers, who don’t have an automated tool, usually have troubles tracking progress by using Word, Excel and those from other departments.
But collecting BC/DR metrics can be done much easier by simply using some of the countless automated software available nowadays.
It is possible to measure performance level numerically since they can be counted in a simple mathematical way. For numerical aspects, people found it easy to establish a KPI.
Binary metrics are used when some part or service can only be evaluated in a binary way, signalizing the state of a process by using yes/no metric.
These measures are linked to a qualitative or subjective assessment. Usually, they are expressed by integer numbers according to ranges of the performance level.
For example, in the survey for checking customer satisfaction, answers range from 1-5 (5-very good, 4-good, 3-average…). But while evaluating collected information, it is very important to consider target values for every metric.
The best metrics that allow for a meaningful view of the program’s status. They also offer the best information about the level of executability in your program.
You can measure things which provide you with substantive insight and then take an action based on what you found to make better use of your resources.
Examples of modern-day highly functional metrics:
- The number of verified business processes that are tested for your plan strategy.
- The number of application integrations which were verified or documented.
- The percentage of critical applications which were validated for your recovery strategy.
- The percentage of critical applications that were validated in the most recent exercise.
BEFORE THE CRISIS
Companies often do checks after a crisis, hoping to find out what exactly went wrong and how they could have responded better than they actually did.
And they do it when it’s already too late.
The outcome would be different if they did the checks before the crisis hit.
WHAT IS THE BEST WAY TO BE PREPARED?
Whether you are ready for a specific scenario or not, it’s best to share responsibility with colleagues and prepare a team for the unexpected events that might occur.
Every step of the plan should rely on a different person, to make sure the whole plan is covered well.
Try to establish the level of crisis you could be dealing with.
If your plan is strong, it means you’ll have many different action plans prepared for different events, from which you’ll be able to choose based on the level of crisis the business is faced with.
When your plan is mapped out, let your team deal with potential crises according to their part of the plan. Each of them should go through the whole situation as if it was happening in real-time.
In case you don’t have enough resources or time for this exercise, learn more about the crises your competitors went through.
If they got out of the crisis well, make a plan based on what they did good and what could have been done better in that situation.
Also, you might try as well as avoiding a crisis with comprehensive social listening.
Believe it or not, just by using social media you can catch issues growing before they turn into a crisis situation.
But before we discover how to measure the effectiveness of communication in a crisis, it is necessary to set basic foundations for what composes crisis communication.
Ideally, the best kind of crisis communication is the one that avoids the crisis situation altogether.
But according to a professor of public relations, James Grunig, strong crisis communication starts far before an incident happens.
“Communication with the public before decisions are made is most effective in resolving issues and crises because it helps managers to make decisions that are less likely to produce consequences that the public makes into issues and crises. If public relations staff does not communicate with its publics until an issue or crisis occurs, the chance of resolving the conflict is slim” – he claims.
DURING THE CRISIS
There are 4 principles of crisis communication:
- The relationship principle: Organizations can withstand issues and crises easier when they establish strong long-term relationships with the public who are at risk from the behavior of these organizations.
- The disclosure principle: During the crisis, organizations must reveal all the information they have about the crisis along with the problems following it. If they have no information, then they have to promise full disclosure once they find out what happened.
- The accountability principle: Organizations should always accept responsibility for crises, no matter if it was their fault or not.
- The symmetrical communication principle: During the crisis, organizations should consider public interests the same importance as their own. They must engage in true dialogue with publics and show socially responsive behavior until the crisis ends.
In order to be absolutely sure you’re doing everything you can to stay away from a crisis, you should listen patiently to your audience.
Find the issues in the media, newsgroups, forums or similar. See how employees and the community respond to your messages.
But even then you might not be able to prevent the accident from happening.
Sometimes your crisis communication plan will be great, the key messages will be received and everything will seem as it found its place, but a small piece could be missing.
How do you find it?
How do you make sure your strategy is effective enough for the organization to withstand the crisis and heal afterward?
There are different elements for measuring effectiveness during a crisis. Deciding on which type you need should be driven by your internal needs for better decision-making tools.
1. Measuring Outputs and the effectiveness of the process: Daily or hourly monitoring of the media to see if the key messages are being received and understood and by whom.
In case you can’t react or respond to the data, there is no point of commissioning this tool. But it is essential if during the crisis you need to make decisions daily/ hourly about what you should say.
Monitoring reports mostly examine print, radio, television, and internet to discover what is being said and which messages were delivered right.
By scheduling the delivery of the monitoring report, you will allow yourself to refine and edit the key messages needed for communicating.
2. Measuring Impact: Determining if the messages had the desired effect if the audience accepted and believed them and if they changed public opinion.
Although to turn around the crisis, it is enough to just get the messages out into the world, you will sometimes need to make sure they are being heard and understood.
One of the best ways to check your key audience’s opinion on your messages is through polling.
You can try making telephone poll that could cost around $10.000, which is still far cheaper than other more popular methods (for instance, a full-page advertisement in the New York Time costs around $100.000).
3. Measuring Outcomes: Checking the impact of the crisis on your reputation, employees and public opinion.
After-crisis measurement not only examines how well your messages are getting communicated but also what ultimately impacts your program had.
Maybe customers changed their behavior, maybe stock dropped, or maybe employees left at a higher than normal rate.
Some of these measures, such as looking at the stock price, are easy but the rest require higher efforts.
Tracking consumer behavior can be very tricky, so there are various firms who specialize in integrated marketing research and can help.
They know how to determine the impact of events of clients’ loyalty. They examine their purchases and plot their data against the crisis data.
But in case you don’t even have customers, you should check on the impact of a crisis on the target audience.
And no matter the nature of the crisis or organization, the best thing you can get after such an event is a lesson from your mistakes.
SETTING UP THE MEASUREMENT PROGRAM
Define Your Audiences
The first step is to list all possible audiences such as suppliers, customers, and clients, employees, investors, shareholders, sponsors, volunteers, distribution channel, regulators, etc.
Then gather the public relations, marketing, communication managers or anyone else in your company who might be able to help.
Senior management should agree to the prioritized audience far before the crisis strikes because during it you won’t have time to focus on this step.
And it’s a key step since these priorities determine which publications or media outlets you are monitoring.
Define Your Objectives
After identifying and prioritizing audiences, the next important thing to do is understanding how your organization can benefit from relationships with everyone in the audience.
Whether is a particular relationship leading only to increased sales or prevents lawsuits, you need to carefully determine the specific benefits of these efforts.
Why? In case some relationships break and you have to face the lost benefits, you’ll need to be sure you can keep up with your plan as earlier.
Define Your Criteria
Create specific criteria from your current list of benefits against which your success can be measured.
Choose What You are Benchmarking Against
The next important step is determining what/ who are you comparing your business to. Measuring your own progress overtime during the crisis is a good start, but it’s significantly better to measure the crisis against another group.
For example, one study compared an organization in crisis with other companies in their town. They revealed that the company had very negative coverage.
Decide Upon Your Budget and Timing
After you finish with determining audiences, objectives and benchmark points, your next step will be establishing a budget.
Generally, 5-10% of your budget should be intended for measuring, but during the crisis, the number could be much larger. It will depend a lot on the complexity of the issue.
Remember that a good measurement helps shorten the duration of a crisis or even avoid it. If it does help you avoid this uncomfortable situation, you should know that it was much cheaper than rebuilding the reputation over and over.
And for the last step of the measurement process, you will have to analyze the collected data.
See what you can learn from it. Find the actionable points and find a way to improve.
There must be something that could be done right away.
Also, analyzing will help you determine what you should ignore and what should you react to.
These insights ensure that the measurement system is perceived as worthwhile.
Of Course, Repeat
Measurement must always be ongoing. It’s good to continue the program after the crisis ends and make the measurement an integral part of the organizational strategy.
RECOVERING AFTER CRISIS
BC/DR recommends 7 most important metrics for tracking to measure recovery plans:
- Recovery Time Objectives
- Recovery Point Objectives
- The number of plans covering all critical business processes
- The amount of time since all plans were updated
- The number of businesses processes which are threatened by a potential catastrophe
- The actual time a business process needs for recovering
- The difference between the actual recovery time and the target
Recovery time objectives (RTO) is the highest acceptable amount of time an item can be down.
RTO can not only determine the age of the data company can afford to lose but whether the backups are able to save the rest as well.
Backup and recovery procedures are the center of the strong BC/DR plan. You might need to consider both to find an optimal backup and recovery tool.
Also, consider measuring the number of plans covering all business processes and how much time passed since every plan was last updated.
KPI (Key Performance Indicators) is a measure of how well programs function.
KPIs can be set for how often you update the plans (most often it’s yearly), and also the number of functions which are covered by the recovery plan (a goal should be achieving 100% coverage).
Metrics for Planning
Without a plan, the process can’t get restored, especially when there are more than hundreds of processes as there usually are.
For BC/DR planning, one of the key metrics is how many processes are threatened by potential disaster.
It is recommended to do risk and business impact analysis. Why? In the purpose of finding the highest risks which are threatening your business and also the impacts of the risks on many parts of your organization.
Afterward, make a plan for protection that will help you decrease the disruption caused by the crisis.
However, static plans tend to stagnate, so be ready to update plans occasionally. New changes will always show up in data, environments, risks, workers, customers, etc.
Metrics for Measuring Recovery Effectiveness
Try using a dependency modeling tool to determine the independence of business functions. It could help you visualize if application dependencies allow you to meet RTO and SLA.
The actual time the business process needs to recover should be measured.
You can test the recovery procedure by using BC/DR tool for tracking the time that all steps take. Or you could simply go with the old method – manually timing every step.
Tests of this type should help determine whether your processes and team meet RTOs by using your current plans.
If you’re unable to complete recovery tasks in the time that the plan permits, revise the plan until it becomes more feasible.
And finally, the last metric is the difference between your actual and target recovery time (better known as “gap analysis”).
You should test for gaps with recovery tests and gap analyses.
Only when you identify the gaps in your plan, you are able to set KPIs for the coming planning process.
TO SUM UP
Harold Burson once said: “When a company is in crisis, I always gather the management team and ask them to explain the worst possible consequence of the problem. If we avoid the worst possible consequence, then, that would be our success.”
There is no better explanation of the ultimate metric for crisis management.
Because if you’re prepared for the worst scenario, you can learn how to prevent it. And just by avoiding it, you are already winning.
Sometimes, the problem occurs when people are not sure if they need metrics at all.
Some of them consider that measurement of business continuity (BC) and disaster recovery (DR) programs are not necessary.
Here are some usual “reasons“ companies have for lacking business continuity management (BCM) and disaster recovery metrics:
- “ We don’t know what are metrics. “
- “ We don’t know what to measure. “
- “ If we already have a problem, metrics can’t help. “
- “ We don’t need to know how the program is doing. “
- “ Measuring takes too much time. “
- “ Management is not asking for measuring. “
Many people avoid metrics because they don’t want to deal with potential weaknesses their programs might have, and the chance they could be unable to fix the issues makes it even worse.
They are probably afraid to deal with problems and the best solution is to not even know if they exist.
On the other hand, lots of those who use metrics do it the wrong way.
Many BCM managers who understood why metrics are crucial for evaluating and rating the state of their program or making improvements, measure the wrong things.
They tend to miss the things that really count.
We know that the importance of the metrics lies in the ability to actively show what is going on with the programs.
They are helping us focus on fixing the biggest issues and point out the things requiring our highest efforts. Management is getting proper feedback that way.
A mistake that BCM workers most often make when using metrics is that they measure things in the purpose of presenting how much they’ve been busy in the past, rather than measuring things which offer useful insight into the state of the company’s processes.
BCM professionals mainly maintain metrics that show a number of tasks they performed (it could be the number of business impact analyses they finished, the number of training exercises they held, etc.).
The type of information we’re talking about isn’t necessarily useless, but it’s not of a high value currently.
In business continuity, what matters the most is the possibility of recovering the business after the disruption. How fast it can be done matters as well.
Basically, what people should measure the most are the functional metrics.
We must ask ourselves: why is the lack of business continuity program metrics a huge problem? And the answer is quite simple – “If you can’t measure it, you can’t manage it”.
If metrics don’t send reports on how the process functions, managers have no idea what would happen to the business in case of disruption.
They can’t identify which parts of the program are working properly, or predict which parts will collapse and which need enhancements.
And not only you should include metrics into your program, but also be sure that they gather meaningful and significant data that can be used for program improvement.
There are two key areas to focus on: the foundation and the execution of the particular program.
The most effective measures are the ones done with a combination of metrics focused on these exact areas.
Together, they give insight into how the program performs when it is needed.
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