“In day-to-day operations, organizations are susceptible to a variety of events that can create a crisis situation. Such crises can damage the reputation of the organization and can induce negative responses from angry stakeholders. Stakeholder responses can range from minor annoyance to active disruptions of organizational objectives through protests and boycotts, to challenging an organization’s legitimacy to exist. Thus, understanding crises, how organizations manage them, and the way stakeholders assess and respond to them is important for managers handling crisis events.
The messages communicated by an organization in crisis play a vital role in the alleviation of a crisis situation. More specifically, communication assists in reducing the damage incurred by the impacted organizations due to the crisis event. Therefore, understanding how individuals perceive and cognitively process crisis events and post-crisis messages is crucial to the crisis manager.”
In this activity, you will learn about a very simple but powerful model that will help you better understand how stakeholders react to crisis situations. This model will not only be useful for understanding stakeholder reactions during a crisis, but perhaps just as importantly, it can help you predict how stakeholders are likely to react to a given scenario. If you can predict how stakeholders are likely to react to a particular situation —particularly if that situation has some degree of likelihood — then spending time working through a few of these scenarios would help high stakes leaders in a number of ways: 1) They could begin to build generic response plans for certain types of situations; 2) They could identify gaps in crisis response capabilities; and 3) They could begin to prioritize the types of crises that would be most important to be prepared for.
The model introduced by Fediuk, Coombs, and Botero is illustrated in Figure 1 below and, according to the authors, “presents a framework for understanding how stakeholders process crisis events.” While this framework was created primarily for what the authors call “transgression-based events or crises that are believed to be due to intentional organization misconduct”, it is useful for our purposes to view any sort of crisis that threatens a stakeholder’s value proposition as a case where that stakeholder is likely to, at least initially, consider the organization to be a primary contributor to the threat. Therefore, we will consider this model as being applicable to any type of crisis. This will allow it to contribute very effectively to our crisis planning efforts.
The model is divided into four parts: the trigger event; the knowledge and evaluation process of the event; the affective reactions generated by the crisis event; and the outcome components. This activity will provide a brief explanation of the four parts. In subsequent activities, each part will be explored in greater detail.
Fig 1. Exploring Crisis from a Receiver Perspective: Understanding Stakeholder Reactions During Crisis Events, Feduik, Coombs, & Botero, 2010. [Recreated]
At the onset of a crisis, something happens to threaten the value proposition stakeholders have with an organization. This ‘something’ will be referred to in this module as the trigger event. As the trigger event takes place, stakeholders are likely to view the situation as one in which the organization may no longer be able to live up to its commitment to provide value. In other words, when a crisis appears and value propositions are threatened, stakeholders will sense what the authors of this model call a potential violation of contract expectations. As the crisis plays out and value propositions are actually impacted in some negative way, the potential violation of expectations will begin to appear as an actual violation. This perception will lead stakeholders to sense that an “injustice has been committed against them”. Not surprisingly, they will react in some way to this injustice. According to the authors, this reaction will lead to an Evaluation Process, which is the second part of the model.
When a violation of expectations has been perceived by a stakeholder, an evaluation process will follow. According to the authors, the first process that takes place is a determination of whether the violation is good or bad for them. For our purposes, we’ll assume that this assessment results in the negative case. Next, stakeholders will evaluate the situation in two ways: 1) to what extent is the organization responsible; and 2) how severe is the impact likely to be for me?
The determination of responsibility will be made using multiple inputs, but as stated earlier, there is a very high likelihood that at least some responsibility is going to be assigned to the organization. As humans, we want to know why things are happening to us and we want to find a way to assign blame or responsibility. Particularly, in the early stages of a crisis, little will be known about the event. Therefore, it’s reasonable to assume that stakeholders will tend to perceive some or all of the fault to lie with the organization.
Appraisal of severity of damage will be based on observations and perceptions of how significantly the crisis might impact (typically in the early stages of a crisis) or has already impacted (typically in later stages) a specific stakeholder. The greater the amount of perceived or actual damage, the more significant the severity evaluation.
Once these evaluations have been initially completed, Affective Responses will follow. These responses represent the third stage in the model. High stakes leaders should keep in mind that as crises evolve, stakeholders are likely to continue their evaluation of responsibility and severity of damage. As more is learned – as more information becomes available – stakeholders will re-evaluate both of these areas and are likely to modify their evaluations.
According to the authors “crisis incidents are not only inconvenient times for organizations, but also are important psychological events experienced by individuals. Often, these events are emotion-laden experiences. Specific emotions experienced after a contract violation event are determined by the significance and meaning a stakeholder assigns to the specific event and different appraisals lead to different emotions and action tendencies. Affect is a term that is often used interchangeably with emotions.”
Once a stakeholder has made an evaluation regarding responsibility and severity of damage, an affective response will lead to some degree of Moral Outrage. Moral outrage is used in the model to describe the anger and resentment a stakeholder feels when they believe they or someone else has been wrongfully harmed. Naturally, the extent of this outrage will be a direct result of the degree to which the stakeholder has perceived the severity of the contract violation and the organization’s responsibility for the situation. The extent of the outrage will also be strongly correlated with the resultant Outcomes, which represent stage four in the model.
The outcomes in our stakeholder reactions model will manifest themselves in two ways that matter to high stakes leaders. First, stakeholders will update their confidence in the brand of the organization. Second, their evaluations and subsequent level of moral outrage will inform a stakeholder’s future intentions. For sake of simplicity, we will not explore the myriad outcomes that stakeholders could pursue as a result of the crisis, but high stakes leaders should recognize the potential for a very broad spectrum of potential actions from simply dismissing the situation entirely, on one end of the spectrum, to confrontation, retaliation, or revenge on the other. What is most important here is that stakeholder’s reactions to a crisis will produce outcomes of some sort. These outcomes will impact how stakeholders will perceive the organization’s brand going forward and their future intentions to interact with the company.
Why can this model be useful to high stakes leaders? Because it can help them think through potential crisis scenarios and how different stakeholders are likely to respond in each case. These likely response predictions can support efforts to proactively: 1) build generic response plans for certain types of situations; 2) identify gaps in crisis response capabilities; and 3) prioritize the types of crises that would be most important to be prepared for. In the activities that follow, you will learn more about this model and the benefits of using it to develop a greater capacity for resilience.