Managing the Human Impact of Crisis

As a psychologist who has devoted his career to helping companies cope with the effects of natural disasters, organizational crises, industrial accidents and workplace violence, I am sometimes introduced as the expert who consults on the “soft side” of crisis management. I always, politely but firmly, take issue with this characterization. When we regard paying attention to the effects of critical incidents on employees, their families and the surrounding community as a soft issue, we jeopardize the success of the entire enterprise.

Every crisis is a human crisis. The biggest mistake that a company can make in its planning for crisis management and emergency response is to focus on systems, operations, infrastructure and public relations and ignore the people. There is no business recovery without employees who are healthy enough to return to work and be productive. They need to be assured of their safety, have their trust in leadership reinforced and have their loyalty rewarded. Only then will employees remain over the short and long haul.

The costs associated with workplace crises are not limited to health care dollars, absenteeism rates, legal battles or increased insurance rates. Traumatic events can severely impair trust between workers, their peers and their managers if mishandled. Without proper planning, a natural disaster, act of violence or corporate crisis can disrupt normal group processes, interfere with the delivery of crucial information and temporarily impair management effectiveness. These impacts on the human infrastructure of a company can undermine even welldesigned programs to protect vital data, preserve market share and uphold stockholder value. Indeed, failure to acknowledge and plan for the risks to employee health, functioning and loyalty can doom the best risk management strategy.

Human Impact Crisis Planning
The field of crisis management has continued to mature, with increasingly sophisticated approaches to emergency response planning, business continuity planning, security, preservation of information and restoration of critical business functions. These are all crucial components, but what is overlooked is the profound effect of the event on the survivors and witnesses – the employees.

Many case examples cite the importance of attending to the human impact of workplace crises. From fatal accidents to violence to product and organizational breakdowns, they all teach the same lessons, and point to the same basic guidelines.

1. Understand and plan for the physical and emotional health of employees at all levels.
The effects of psychological stress in the aftermath of crisis events can cause a range of potentially disabling conditions, especially if not prevented by timely intervention. In the days and weeks surrounding a crisis, traumatic stress reactions may produce symptoms of avoidance, concentration problems, depression and feelings of vulnerability and sadness. Long term, they can cause substance abuse, mental and physical illness, and marital problems. If these effects on employees are not recognized, they can disrupt normal business functioning, as well as expose the company to direct costs from absences, health care expenses, workers compensation claims and lawsuits.

The aftermath of the September 11 attacks provides a striking example of these effects on emotional health. Businesses directly affected carried out substantial efforts to provide emotional support to employees who were traumatized and shaken by grief. These effects, however, were not limited to employees living and working in New York and Washington, D.C. In 2001, the New England Journal of Medicine published a nationwide survey of 560 adults, taken just days after September 11. It found that 44 percent had substantial signs of stress, 90 percent experienced stress to some degree and 35 percent of their children were noticeably affected. The costs of these effects cannot be overestimated, considering the $300 million businesses spend annually on depression and other stress and mental healthrelated conditions.

Standard occupational health and employee assistance programs are often inadequate or inappropriate for many critical situations. Organizations must identify resources, make policy and establish delivery systems before a crisis, not in the thick of it.

2. Prepare to respond to the crisisrelated information needs of employees.
An organization’s leaders must ensure that their employees can fulfill their missions in the face of their personal sense of vulnerability, and their concerns about their own families and communities.

People need information in the midst of a crisis. If an industrial accident has put employees at risk or caused injury or death, staff need to know what is being done to establish safety and determine the cause of the failure. If there is a perceived threat to the future of the company, either because of a business crisis, merger, acquisition, investigation or product recall, employees and their families must know what is going on so that they can deal with their sense of insecurity. Are there plans for providing shelter, assistance and counseling to employees and families when this is required? Do managers have clear directions for early detection and reporting of situations that could develop into costly or even disastrous crises? Are plans adequate and up to date? Can the company account for people in the event of a disaster or attack? Business continuity and emergency response plans are essential, but they will be most effective if linked to plans for providing relief and keeping employees informed.

The most important crisis management function in the midst a downsizing, scandal or other risk to organizational survival is the preservation of employees’ sense of connection to the workplace. Trust can quickly break down, but it can be restored and preserved when information is available and communication is a top priority for the company’s leadership.

When a biomedical company faced a possible recall of a product that had accounted for 60 percent of the previous year’s revenue, leadership faced a monumental crisis. It had to conduct an investigation, implement an external communications plan and activate a contingency plan to continue business operations. The board of directors and agencies including the SEC and the FDA had to be updated daily. To do all this effectively, a multifunctional team had to coordinate input from operations, quality, customer relations, legal and public relations.

It was essential, however, not to neglect internal stakeholders, the employees. At every level, from upper managers through top scientists and lab technicians, staff were prepared to be loyal, but they needed to be in contact with leadership in order to function in the crisis situation: Were the rumors of massive downsizing true? Would the company close down? What should they do if approached by the media? What should they tell their families?

3. Create a safe haven for those directly and indirectly affected by events.

If employees lose their sense of organizational cohesion and positive identification with the company, the risk of liability, exposure and cost on a variety of fronts is increased. By creating an environment where employees can come together to discuss and deal with their emotional troubles, they feel personally supported and respected. That, in turn, makes them more productive.

When an employee at a computer chip manufacturing plant was killed because of the failure of a critical ventilation system, the company sent the international facilities manager to the factory to spend two days meeting with groups of employees to hear their concerns and explain what measures were being taken to learn from the accident and improve safety.

Company executives in a Manhattan-based clothing retailer heeded the advice of trauma specialists and reconsidered sales objectives and production deadlines in the aftermath of the September 11 attacks. In return, they earned the respect of employees, including line supervisors and middle managers. In addition, they improved their chances of reaching those business objectives.

A United States Postal Service facility in Michigan closed for four days after a terminated worker returned to the workplace and killed four managers before taking his own life. During that time, workers and supervisors met at a public library across the street, where they were able to talk, grieve and receive counseling. When the facility reopened, the postal workers, directed by no particular schedule, sorted and delivered four days’ worth of mail in one morning.

4. Monitor the medium and longterm effects of the crisis on the health and occupational functioning of individuals and work units.
The crisis is not over when the cleanup is complete and production resumes. Current industry data demonstrates that assisting employees during and after crises and traumatic events at work results in striking cost savings. When employees’ stress levels are reduced, they produce fewer errors.

A recent study of hospitals, for example, showed medications errors declined 50 percent after stress prevention activities were implemented in a seven hundredbed hospital. In another study by St. Paul Fire & Marine Insurance, there was a 70 percent reduction in malpractice claims in twenty-two hospitals that implemented stress reduction activities, and no reduction in the twenty-two hospitals that did not.

It is about People
The survival and success of a company depends ultimately not on profit and loss statements or market forces, but on the loyalty and energy of its people. Having systems in place to handle the internal effects of a crisis has become the responsibility of companies large and small, public and private, white and blue collar. Risk managers, along with their colleagues in security, human resources and health and safety, have a vital role to play. The risk manager sees – and is called upon to imagine – the damage that can be inflicted by critical events, and is charged with creating the safety nets to protect individuals and the enterprises for which they work. Experience with crisis management has shown that the workplace can be a place of safety and healing – a place, in the wake of tragedy and trauma, to search for meaning, connection and trust in the very midst of the wounds left by violence, tragedy and the unpredictability of life.

The Lesson for Risk Managers: Plan with Your Team
What is the role of the risk manager in controlling the costs of the human impact of crises? First, seek out support from the right organizational levels and consult with other key players. Check with your insurance broker to find out what written and consultative resources exist to help your team make the best use of your planning efforts. Risk management is most effective when conducted as part of a team effort that links internal and external communications, business continuity and attention to the needs of staff at all levels. This is important not only to speed recovery and limit damages after an incident, but for prevention.

Acquiring templates and models is useful, but that alone will not produce the best results. Assess organizational risks and current capabilities, taking into account the culture and structure of the company. Once these crucial factors are identified and the right team designated, planning can proceed.

This article reprinted with permission from Risk Management Magazine. Copyright 2003 Risk and Insurance Management Society, Inc. All rights reserved.