Crisis Management

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Paper Presented at the International Conference “Shipping in the era of Social Responsibility” In Honour Of The Late Professor Basil Metaxas (1925-1996) Argostoli, Cephalonia, Greece, 14-16 September 2006

A Six-step process for effective Crisis Management in the Port Industry EVANGELOS KOUNOUPAS, University of Piraeus, Department of Maritime Studies, 40, Karaoli & Dimitriou Str., 185 32, Piraeus – Greece, Tel: +30 210 414 2535, Fax: +30 210 414 2569, Email: kounoupa@unipi.gr, kounoupa@ath.forthnet.gr

ABSTRACT Crises often appear to be inevitable for a number of reasons. Traditional crisis management theory distinguishes between environmental factors and internal explanations referring to weak environmental assessment of market developments and psychological or social-political factors. Classic literature approaches attempt mainly to identify the reasons behind the occurrence of crises. Although the ability to manage crises incorporates understanding their sources, it should not be limited to that. Transport and Shipping are by definition unstable markets and the world crisis is quite common amongst Maritime Economists. Ports are exposed to various physical or business originated dangers. However existing literature does not cover the appliance of this philosophy into the area of Port Management. Based on an extensive revision of existing management literature and drawing examples from actual cases, this paper suggests a conceptual formulation for Seaport Crisis Management. Building on a process initially developed by Augustine (1995), it presents a framework within which a Port Organisation can identify, manage and finally profit from such events.

Key words: crisis planning, crisis units, management commitment, organisational learning, organizational profiting.

A SIX-STEP PROCESS FOR EFFECTIVE CRISIS MANAGEMENT IN THE PORT INDUSTRY 1. An introduction to crises. A short derivational search reveals that in Greek, the word “crisis” has both the meaning of “emergency” and “judgement”. Indeed, it is often this judgement, in a case of an emergency, which can lead an organisation to success or failure. The attacks of September the 11th in New York were an emergency situation. However, as the U.S. Administration later discovered with regards to the Dubai Ports World case, crisis (and even failure) can derive from less obvious sources. Business literature offers many definitions and different perspectives for crisis. Pearson and Claire (1997) synthesise them by stating that “an organisational crisis is a low-probability, high impact event that threatens the viability of the organisation, is characterised by ambiguity of cause, effect and means of resolution, as well as by a belief that decisions must be made swiftly”. Since decisions need to be taken, there is consequently room for managers to interfere and proceed in proper action. As it will be demonstrated, a crisis situation is a provoking field for implementation of managerial and leadership talent. Dubrowski (2004) notes that from a management perspective, “a crisis brings about a state of emergency, which due to its acuteness requires, prompts decision making and which must be as good as possible, since corrections are usually not possible.” Spillan & Crandall (2002) point out a paradox: “The diversity of crisis events requires to be both specific in preparing for worst case scenarios and, simultaneously, to be flexible in terms of planning for these events”. Crises occur and depending on the case they can be devastating for an organisation. But they can also be managed. Ideally, a crisis can even improve an organisation’s operations. Ten Berge (1991) observes that “a well-managed crisis develops the sense of togetherness among employees” creating a positive climate that lasts for long after the crisis has ended. Thus, the whole concept of management confrontation and resolution has been described as “Crisis Management”. An entire management philosophy has been...
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