Crisis and stakeholder management

Whenever we talk about crisis, liquidity problems, news media reactions and contingency planning, we tend to overlook an essential consideration: the severity of the crisis is not only determined by the problem itself but also by the affected stakeholders and their reactions to what is happening.

When organisations are facing a crisis, such as cash flow problems, you need to deliver quick and effective results. Ideally, such issues should be managed by an experienced person or team (depending on the level of crisis) with a strong track record in managing stakeholder relationships and significant expertise in crisis situations with financial, resource and time constraints.

In the short term, you should focus on stabilising the financial position of the business and obtain both management and stakeholder buy-in. In the longer term, you should rebuild confidence and relationships whilst regaining control, keeping all parties informed every step of the way.

Here are some potential issues you could encounter during crisis:

  • You experience increasing tension with stakeholders;
  • You have or anticipate cash flow problems;
  • You are experiencing increasing working capital levels;
  • You are experiencing share price falls;
  • You are experiencing unexpected business surprises.

As solutions for the problems above, you could consider:

  • Identifying your key stakeholders as some may be more important than others;
  • Involving your key stakeholders in the process;
  • Quickly stabilising the business;
  • Exploring quick win cash generation opportunities;
  • Rebuilding stakeholder confidence in the business;
  • Improving sustainable working capital;
  • Drive robust financial information.

Once your business is back and running there are two groups of people who need to be kept informed of progress: your own employees and your key stakeholders. The most effective way of communicating progress is via regular progress reports. The reports, e-mailed to all relevant parties, should help you rebuild confidence.

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2 thoughts on “Crisis and stakeholder management”

  1. That is an interesting approach, Lynda. Your view seams like an extend of Edward Freeman’s theory, a risk centric mindset rather than wealth-creating significance analysis. I believe they both have value in practice as long as the exercise is performed on a regular basis. People may wane in their support, especially in large projects over significant periods of time, and it is good to have an updated view on where support is starting to slip.

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