Monday, March 29, 2010

Crisis Management in Business

cri•sis (krī'sĭs) n., pl.

1. a. A crucial or decisive point or situation; a turning point.
b. An unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change.
2. A sudden change in the course of a disease or fever, toward either improvement or deterioration.
3. An emotionally stressful event or traumatic change in a person's life.
4. A point in a story or drama when a conflict reaches its highest tension and must be resolved.
[Middle English, from Latin, judgment, from Greek krisis, from krīnein, to separate, judge.]

The definitions above clarify and point to the solutions or opportunities within the crisis circumstance. In the final analysis, how a crisis is handled is how you and your company will be defined, separated from the pack and judged. If it’s a crisis: deal with it!

The Crisis
On Valentines Day 2007 Jet Blue, a company that was known for stellar customer service blew it. They really blew it. When a snow storm hit the East Coast of the United States they were forced to cancel 1,096 flights the result of which was that thousands of passengers and flight crews were stranded. In the first twelve hours JetBlue demonstrated that it had no contingency plan for such an event. People were stranded for up to nine hours on planes with nothing to do. Passengers were literally left out in the cold for hours on end without food, proper rest room facilities or basic necessities. People were not happy and with today’s technology they vented that displeasure onto the world wide web and in the media. Pictures from cell phones and blogs from stranded passengers became immediately available for anyone who wanted to commiserate. This blunder could have ushered in the end of JetBlue. This paper discusses how JetBlue failed its customers and how it redeemed itself. It also considers the methods for crisis management and how JetBlue could have done even better.

A Valentine’s Day Card (A report Card)

On the basis of the Service Quality model (Parasuraman et al. 1985), JetBlue has been rated for the purposes of this paper on the five service quality determinants as demonstrated in the first hours of the snow storm crisis.
1. Reliability: The company did not have the ability to perform the promised service dependably. Grade: failed
2. Responsiveness: The company appeared to have no willingness to provide help or prompt service in the early stage of the crisis. Grade: Failed
3. Assurance: Without a contingency plan the front line employees had no knowledge to share with their passengers and they lost the trust and confidence of the passengers. Grade: Failed
4. Empathy: While individual crew had and attempted to demonstrate great empathy, leaving passengers without information and without alternatives was perceived as indifference. Grade: Failed
5. Tangibles: Insufficient appropriate physical facilities, equipment, personnel and communication materials left passengers improperly tended. Grade: Failed

The White Knight Appears

One might argue that the situation was beyond JetBlue’s control. After all no one can control the weather. However, David Neeleman never took that approach publicly. Just when most CEOs would have been hunkering down behind closed doors or blaming others, Neeleman stepped up to the plate and said and did something surprising and very wise. He took responsibility. He took action quickly and in a highly visible manner. He calmed the storm of controversy by doing something profound. He communicated heart felt apologies on every major media. He diffused the situation with the basic human skill of clearly communicating that he ‘got it’, that he was sorry and that he would make it right. David Neeleman wrote a public letter of apology to Jet Blue customers. The letter was in response to what Neeleman refers to as the worst operational week in Jet Blue's history. It starts ' We are sorry and embarrassed. But most of all, we are deeply sorry.' The letter's last paragraph starts 'You deserved better — a lot better — and we let you down . Nothing is more important than regaining your trust... ' The letter is short, direct and sincerely remorseful. (2)

He promised to make it right. His actions would make it right not just for this time but by introducing a customer’s bill of rights he made it clear that his intent was to make it right for all customers in the future as well. He made it concrete too. He announced a detailed list of how the company would treat passengers in troubling situations including the monetary compensation for delayed flights that escalated with the length of the delay. Neeleman chose the right path to diffuse anger and mend relationships.

IN the next blog, I'll outline the steps to effective crisis management

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