Sovereign Kazakhstan today is the outcome of the economic crises we have had experienced during the formation of our statehood, national economy, civil society, social harmony, regional leadership and international weight and authority (1). This is the one of the first statements in the Presidential Missive to the nation of Kazakhstan in the Strategy of Development 2050. Interestingly enough is that this very sentence demonstrates the tremendous complexity of efforts that had to be put together in order to overcome the crises in so many different but interrelated areas of national well-being.
The economic community and organizations in Kazakhstan and other post-soviet countries have had a very long time in forming a fairly vivid picture of what the crisis is and how to fight it. If that assumption is correct then why there are no crisis management institutes, crisis management major, and crisis management departments or at least teams in many organizations? Everything that has to deal with crisis in our mentality labeled anticrisis management instead of crisis management. The post-soviet heritage and mentality forces us to concentrate on the reactive measures instead of the proactive ones.
The Kazakhstani science of economics as in any other former soviet country with the remnants of never ending hope for socialism was dominated by the point of view that under socialism there are no crises ever going to happen crises are inherent only in capitalism. This erroneous concept of capitalism was perpetrated by Vladimir Lenin. Therefore, all the above formed an absolutely negative perception of everything that had to do with crisis, and if everything ever had to be done it had to be done in a reactive manner named anti-crisis management.
The turning point in the need for crisis management happened on January 2nd of 1992 after the liberalization of prices in Russia where state-owned companies lost their ability to fulfill their financial obligations and become insolvent. The whole situation turned into a bigger crisis and a chain reaction of defaults that spread over the entire Russian economy, forming the macroeconomic crisis. The avalanche of crises shook the Russian economy and the need for an alien capitalistic experience of fighting crises was suddenly in demand (2).
Оn June 14th of 1992, in order to prevent a national crisis of non-payments, the President of Russia issued the Decree “On measures to support and rehabilitate insolvent state-owned enterprises and applications of the special procedures to them” (3).
The outcome of this Decree was constituted by two institutions: the Bankruptcy Institute and the Institute of Anti-Crisis Management of Enterprises. The Bankruptcy Institute spoke for itself – if an enterprise failed it was named bankrupt and insolvent, followed by all the subsequent normative legal acts. Regarding the second institute of anti-crisis management it was not that easy to precisely determine its primary function. Different concepts had been used for its designation like “reorganization”, “improvement of the economic and financial condition”, “financial health”, “solvency restoration”, or “rehabilitation”. All of these designations carried the reactive meaning and purpose in them instead of proactive.
Nevertheless, creation of those institutes has not changed the general attitude toward the crisis matter itself. Perception of crisis remained as hostile and organizations as well as the whole economic sector in the post-soviet republics were frightened. This mentality was reflected and it is still is with the prefix “anti” in all the educational standards, literature, speeches and reports.
Another distinctive trait of post-soviet perception of anti-crisis management is that it is concentrated mainly on managing insolvency of an enterprise. Business realty demonstrates that there are many different examples of incidents that can escalate into acute crises. Natural disasters like hurricanes, earthquakes, floods, avalanches and others, accidents like
fire, leak, lengthy power outages or intentional acts like bomb or arson often result in a crisis situation. Financial problems like fraud or fuzzy accounting can lead to crises that destroyed huge corporations like Enron. If your organization has a problem and it appears to the public that you don’t care about it can also lead to a crisis of a negative public perception of your organization. Product issues like credibility, safety and tampering could ruin any organizations in a matter of days. Industry relation problems like strikes and employee lawsuits or workplace violence if not taken care of on time could lead to acute crisis. Any adverse international event can easily jeopardized your product or service in your home country in the era of globalization we are a part of today.
The list of incidents faced by the organizations that can turn into acute crises is huge and it is not possible to cover all of them. Modern economics and social conditions provide professionals in Kazakhstan with the opportunity to explore and learn from the crises on practice.
Kazakhstan has been an independent nation for over 25 years. It has faced and survived many crises along the way and has learned a great deal about how to overcome them. The record of the anti-crisis management in Kazakhstan is impressive, according to the World Bank announcement at the third annual Astana Economic Forum, which took place on June 1-2, 2010, in Astana, Kazakhstan (6). Despite the financial crisis of 2008, Kazakhstan continued the implementation of important structural reforms and investments in the country’s future in the areas of education, administrative barriers to business and budgetary reforms. The overcome challenges in restoration of the financial sector and a diversified growth strategy have provided the World Bank with its optimistic prospects for Kazakhstan as a rapidly growing economy that could succeed in meeting future challenges. This is a side view on the big picture of managing financial crisis of 2008. After 2008 Kazakhstan has experienced a number of following crises: social and financial again. After the 2009 crisis, the Kazakh economy grew by 1.2%. As the output of that our budget now is more than 55 %devoted to the development of the national economy, which demonstrates a big increase from 39 % of last year. In 2016, 4.8 % of the budget spending should go to the military needs. As one of the responses to crises, Kazakhstan has been attracting foreign investments and capital for interstate cooperation like the modernization of the port on the Caspian shore and a tremendous infrastructure project, connecting the new highways of the port to the Chinese border (7).
The major crisis management plan for the whole Kazakstani nation is the Presidential Missive to the nation of Kazakhstan in the Strategy of Development 2050. The President has outlined 10 major challenges that our nation and the whole universe are facing today. They are: the acceleration of the historic time, the global demographic imbalance, the threat to global food security, the acute water shortage, the global energy security, the depletion of natural resources, the third industrial revolution, the increasing social instability, the civilization values crisis, and the threat of a new global destabilization. The Kazakhstan 2050 strategy is a new policy or, in other words, country level crisis management plan for a fast changing environment and historical conditions we live in today. The President – the role-model, the leader of the nation, sets the bar for the organizations and companies of Kazakhstan to follow… still our mentality does not let us change the perception of crisis and the majority of people and organizations tend to, like our Russian neighbors, view the crises as threats and act reactively rather than proactively.
It is highly recommended that we change our perception from anti-crisis management to crisis management. Instead of dealing with the outcomes of crises we need to be prepared to face and fight them.
Our neighbors from the other side the Chinese people have developed a very interesting concept of crisis, where it is portrayed with two characters 危 机 veydzhi (wēijī). Where Chinese character wei is a threat, and Chinese character ji – indicates a time of significant change for the better or an opportunity.
Kazakhstan is located in the central Asia where it can benefit from the best of European and Asian cultures. We would be better off if we could accept the Chinese perception of crisis and view it as an opportunity to a change for the better rather than being afraid of facing crises.
One of the first western authors Edward Devlin wrote a book on crisis management planning and execution.(4) It can be quite a productive source of inspiration for our organizations. The subject of crisis management has often been overlooked and misunderstood in our industry due to the dominance of the anti-crisis paradigm. Our economic society concentrates its perception of anti-crisis management only on an enterprise’s insolvency. The author of this book uses crisis management in relation to a disaster recovery plan, a security plan, an emergency response plan, a corporate communication plan, and more.
Another proactive approach that can be applied to any Kazakhstani organization was developed by William R. Crandall, John A. Parnell and John E. Spillan in the book “Crisis Management. Leading in the New Strategy Landscape” (5). This groups of authors have offered a very comprehensive framework for being prepared and dealing with crises. In other words they have created a combination to utilize the proactive and reactive measures in one plan. The framework includes: Landscape Survey, Strategic Planning, Crisis Management and Organizational Learning. The first two steps concentrate on the proactive part of the crisis events that is new to our mentality. A landscape survey helps us to evaluate the processes that take place within and outside the organization or society. During that process all the weaknesses and vulnerabilities of an organization should be identified. The crises that have happened in Kazakhstan during the recent years in the economic, financial, and civil (acts of terrorism) spheres, pointed to the fact that we were not ready for facing them. Maybe we just refused to believe that something like that could happen to us, but the recent situations shook the society very hard and now we are more than ever open to adopt the proactive crisis management approach.
Strategic planning is part of the framework these scholars propose, using a simple, but powerful method of SWOT analysis to form the measures that would help an organization to be prepared to deal with different types of crises that were identified in the landscape survey. Every industry is vulnerable to specific types of crises, although there might be general ones that might affect all the organizations. This is why, long before a crisis occurs, it is vital for an organization to form crisis management teams and plans of actions for different crisis types. Crisis management teaches how to focus all the efforts on crisis and address it in a timely manner back to normal operations as soon as possible. Organizational learning should make the top management question themselves about why the crisis happened and, the most important, what could they take from it. In terms of learning abilities, crisis destroys weak, and helps the strong become more successful.
Every crisis situation is unique in its nature and the circumstances it is evolving in. Therefore, there is no single plan of action to overcome all of them. However, a certain plan of actions or in other words crisis management plan has to be developed in organizations in order to be ready to face critical events. Planning for the possible crises is a process of early identification of the specific sequence of actions that will be taken during the critical moment enabling the organization to act as quickly and effectively as possible.
Figure 1 demonstrates that the effective crisis management plan is the key that will help an organization to respond to a crisis. Crisis management team in an organization is responsible for coordination and strategy along with the tactical implementation of disaster recovery. It is not necessary for a company to create a whole department of crisis management, but at least an organized crisis management teams should be prepared for the crises.
Figure 1. Crisis management is the center of the overall response structure (8)
The following universal crisis management team roles can provide a company with the essential functions to manage most crisis events (9):
- Crisis Manager (CMT Team Leader)
- Approve the Crisis Management Plan and provide overall leadership.
- Security Manager Provide review and revision input regarding security related procedures during scheduled plan reviews.
- Public Affairs Advisor Provide input and participate on all aspects of Crisis Communications.
- Medical Advisor Assess and assist in human health impacts of events
- Human Resource Advisor Maintain a current, accessible contact list of all employees, contract employees, and responders
- Health, Safety, Security, and Environmental Advisor (HSSE) Coordinate direct implementation, and training and updating of Incident Response Plans
- Legal Advisor Ensure a Legal representative is available at all times in case of a crisis.
- Crisis Management Advisor Supervise and coordinate necessary support roles.
- Business Unit Advisor(s) Anticipate Business Unit issues, develop strategic plans to proactively address these issues, and adjust staffing of Business Unit Group and to suit evolving incident needs.
- Subject Matter Expert(s) (SME) Be available to assist crisis manager on as “as needed” basis.
An organization can activate the crisis management team it has on site for any situation of business interruption, non-physical damage crises, threat to property and people as well as company’s reputation or financial well-being.
REFERENCES
- Послание Президента Республики Казахстан -Лидера Нации Н. А. Назарбаева Народу Казахстана стратегия «Казахстан-2050»
- Файншмидт Е.А. Кризис-менеджмент, 2012
- Указ президента российской федерации от 14 июня 1992 года № 623 «о мерах по поддержке и оздоровлению несостоятельных государственных предприятий (банкротов) и применении к ним специальных процедур".
- Edward S. Delvin, Crisis Management planning and execution., 2007
- William R. Crandall, John A. Parnell and John E. Spillan in the book “Crisis Management. Leading in the new strategy landscape, 2014
- http: // www.worldbank.org/ en/ news/ press-release/ 2010/ 07/02/record-crisismanagement kazakhstan-impressive
- http://www.independent.co.uk/voices/ kazakhstan russia-and-two-verydifferentapproaches – to crisis management-a 7013081. html
- http: // www.xydeo.com/the-crisis-mana gement plan.html
- http://www.emergency-response-planning. com/ blog/ bid/ 55772/ an overview of crisis-management teams