Business Crisis and Continuity Management (BCCM) Class Session 18

1. Business Crisis and Continuity Management (BCCM)Class Session 18 18 - 1

2. Crisis Characteristics • Threats to major values. • Time urgency. • Ambiguity or uncertainty. • Surprise or uniqueness. Source: Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Page 472. 18 - 2

3. CRISIS SITUATIONS AND INFORMATION MANAGEMENT • Crisis situations are novel, unstructured and outside of an organization’s or individual’s typical operating framework • Crises require nonprogrammed decision responses • Crises are highly uncertain and complex situations • Crises are characterized by an overload of incomplete, conflicting information • The process of perceiving, selecting, and processing this information is critical to effective crisis management Source: Reilly, A.H. 1993. “Preparing for the Worst: The Process of Effective Crisis Management.” Industrial and Environmental Quarterly. Vol. 7, No. 2. Page 118. 18 - 3

4. CRISIS ATTRIBUTES THE ROLE OF INFORMATION IN CRISIS MANAGEMENT (Source: Reilly, A.H. 1993. “Preparing for the Worst: The Process of Effective Crisis Management.” Industrial and Environmental Quarterly. Vol. 7, No. 2.) PROBLEM SENSING CRISIS OUTCOMES EVENT PERCEPTION PROBLEM/THREAT DIAGNOSIS CRISIS MANAGEMENT DECISION RESPONSE EXTERNAL INFORMATION FLOW DECISIONS AND ACTIONS RESOURCE MOBILIZATION RESPONSE ACTIONS INTERNAL INFORMATION FLOW 18 - 4 Environment

5. The Three Rights of Information to Support Crisis Decision Making • Get the right information • to the right people • at the right time. 18 - 5

6. Layered Functions 5. Organizational Memory 6. Group Processes 4. Values Filtering Data Validation Connectivity Source: Hale, Joanne. 1997. “A Layered Communication Architecture for the Support of Crisis Response.” Journal of Management Information Systems. Vol. 14, No. 1. 18 - 6

7. Tasks of the Crisis Decision Maker • Define the main elements of the situation • Maintain receptivity to new information • Identify and adequately consider the major values, interests, and objectives to be fulfilled • Search for and evaluate alternative courses of action • Estimate probable costs and risks of alternatives • Search for new information relevant to assessment of options • Discriminate between relevant and irrelevant information • Consider problems that arise in implementing options • Assess the situation from the perspective of other parties • Resist both defensive procrastination and premature closure • Monitor feedback from the developing situation • Make adjustments to meet real changes in the environment 18 - 7

8. Characteristics of Defective Decision Making in Crisis • A truncated time span, with major attention being devoted to the immediate and diminished attention to long-range consequences of the action; • A perceived requirement for decisional closure, which may in turn lead to premature action or, conversely; • In searching for certainty, a tendency to irrational procrastination; • Cognitive rigidity, a tendency to maintain a fixed mind-set and not be open to new information; • A tendency to reduce cognitive complexity and uncertainty; • A reduction of the range of options considered; • In considering options, a tendency to “bolster,” - that is to upgrade factors in favor of the favored action prescription and downgrade factors militating against; Source : Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Pages 475. 18 - 8

9. Characteristics of Defective Decision Making in Crisis (Cont’d) • A tendency to view the present in terms of the past; • A tendency to seek familiar patterns, to relate the critical events to mental schemata or scripts; • Diminished creativity; • A tendency toward the fundamental attribution bias – to see the other’s actions as being precipitated by internal (psychological) causes rather than external circumstances (example: my adversary’s actions show he is malevolently out to destroy us, rather than that he is protecting himself from external threats); and • A corresponding tendency to fall into the actor-observer discrepancy – that is, to see the external situation as the cause of one’s own behavior without attending to one’s own internal psychological motivations. 18 - 9

10. The Impact of Crisis-Induced Stress on Decision Makers Stress Stimulus situation Perception of threat to values Impact on information processing Choice of decision or policy Anxiety or fear Coping Pattern Effects of stress on leadership decision-making Source:Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Page 475. 18 - 10

11. PERFORMANCE/STRESS CURVE Source:Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers.” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Page 474. Performance Stress 18 - 11

12. The Compulsive Personality Under Crisis Induced Stress • Folie du doute - paralyzed by indecision. • Tendency to irrational procrastination because of search for certainty; fear of making a mistake. • Once decisional closure, difficult to reopen. • Comfortable with applying set policies and procedures to solve problems. • Sensitive to position in hierarchy. • Overly responsive to superiors, competes with peers and dominates subordinates. Source:Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Pages 477-479. 18 - 12

13. The Narcissistic Personality Under Crisis Induced Stress • Self centered, egocentric, and self-absorbed. • Seek constant reassurance of self-worth. • Primary loyalty to self; acts to promote own position. • Can shift positions easily. • Believe that they are principled and scrupulous individuals. • Seek advisors who prop up their self-esteem. Source:Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Pages 479-481. 18 - 13

14. The Paranoid Personality Under Crisis Induced Stress • Surrounded by enemies - extreme suspiciousness. • Difficulty trusting own subordinates. • Fixed conclusion in search of evidence. • Do not accept information and advice that runs contrary to own conclusions. Source:Post, Jerrold M. 1993. “The Impact of Crisis-Induced Stress on Policy Makers,” in Avoiding Inadvertent War, edited by A. George. Boulder, CO: Westview Press. Pages 481-483. 18 - 14

15. Five Basic Patterns of Decision Making • Unconflicted adherence • Unconflicted change • Defensive avoidance • Hypervigilance • Vigilance Source: Fink, Steven. 1986. Crisis Management: Planning for the Inevitable. New York: Amacom. Pages 133–150. 18 - 15

16. Tasks of the Crisis Decision Maker • Define the main elements of the situation • Maintain receptivity to new information • Identify and adequately consider the major values, interests, and objectives to be fulfilled • Search for and evaluate alternative courses of action • Estimate probable costs and risks of alternatives • Search for new information relevant to assessment of options • Discriminate between relevant and irrelevant information • Consider problems that arise in implementing options • Assess the situation from the perspective of other parties • Resist both defensive procrastination and premature closure • Monitor feedback from the developing situation • Make adjustments to meet real changes in the environment 18 - 16

17. Decision Making Patterns • Vigilance – follows a methodical, high-quality process to objectively collect available information, thoroughly consider it, search for other possible options, and make a well reasoned decision. • Unconflicted adherence – continuing with the current situation. • Unconflicted change – following the last advice received. • Defensive avoidance – avoiding decision making. • Hypervigilant – vacillating approach. Source: Fink, Steven. 1986. Crisis Management: Planning for the Inevitable. New York: Amacom. Pages 133–150. 18 - 17

18. A Definition of “Groupthink” “a mode of thinking that people engage in when they are deeply involved in a cohesive in-group…members’ striving for unanimity override their motivation to realistically appraise alternate courses of action… a deterioration of mental efficiency, reality testing, and moral judgement that results from in-group pressures.” Source: Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 9 in Groupthink. 18 - 18

19. Antecedent Conditions for “Groupthink” • Primary: Moderately or highly cohesive group. • Structural or administrative faults in the organization in which the group exists including: • Insulation of the group. • The group leader’s preference for a certain decision. • A lack of norms requiring methodical procedures for the group. • Homogeneity of the group members’ social background and ideology. • High stress from external threats with low hope of a better solution than the leader’s. • Low group self-esteem induced by the group’s perception of recent failures, excessive difficulty on current decision-making tasks, and moral dilemmas (i.e., apparent lack of feasible alternatives except ones that violate ethical standards). Source:Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 2 and 3. 18 - 19

20. Symptoms of “Groupthink” • Direct social pressure placed on a member who argues against the group’s shared beliefs. • Members’ self-censorship of their own thoughts or concerns that deviate from the group consensus. • An illusion of the group’s invulnerability to failure. • A shared illusion of unanimity. • The emergence of self-appointed mind guards that screen out information from outside the group. • Collective efforts to rationalize. • Stereotyped views of potential adversaries outside the group. • Unquestioned belief in the group’s inherent morality. Source:Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 3. 18 - 20

21. Symptoms of Defective Decision-Making • Incomplete survey of alternatives. • Incomplete survey of objectives. • Failure to examine risks of preferred choices. • Failure to reappraise initially rejected alternatives. • Poor information search. • Selective bias in processing information at hand. • Failure to work out contingency plans. Source:Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 3. 18 - 21

22. Antecedent Conditions of “Teamthink” • Team beliefs and assumptions emphasizing the positive. • Team self-talk - encouraging open discussion. • Team mental imagery - creating a common vision. • Thought patterns - optimism. Source:Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 5–7. 18 - 22

23. Symptoms of “Teamthink” • Encouragement of divergent views. • Open expression of concerns and ideas. • Awareness of limitations and threats. • Recognition of members’ uniqueness. • Discussion of collective doubts. Source:Neck, C.P., and Manz, C.C. 1994. “From Group Think to Teamthink: Toward the Creation of Constructive Thought Patterns in Self-Managing Work Teams.” Human Relations. Vol. 47, No. 8. Derived from Victims of Groupthink, by I.L. Janis (Boston: Houghton Mifflin. 1972). Page 7. 18 - 23

24. Tasks of the Crisis Decision Maker • Define the main elements of the situation • Maintain receptivity to new information • Identify and adequately consider the major values, interests, and objectives to be fulfilled • Search for and evaluate alternative courses of action • Estimate probable costs and risks of alternatives • Search for new information relevant to assessment of options • Discriminate between relevant and irrelevant information • Consider problems that arise in implementing options • Assess the situation from the perspective of other parties • Resist both defensive procrastination and premature closure • Monitor feedback from the developing situation • Make adjustments to meet real changes in the environment 18 - 24

25. Myers Briggs http://www.humanmetrics.com/cgi-win/jungtype.htm http://www.typelogic.com/ 18 - 25