Sensemaking and sensegiving as predicting organizational crisis

Abstract

The current study examined crisis management and the signals that indicate its appearance. Based on cognitive and social psychology theories, we explored how senior and non-senior employees engage in sensemaking and sensegiving activities prior to and during crisis. Based on natural language processing, we analyzed a database of 86,643 emails sent by Enron employees before Enron declared bankruptcy and after the bankruptcy event. Our findings showed that employees could sense the impending crisis and applied informal scanning methods in an attempt at sensemaking of their unstable reality. In parallel, managers used sensegiving by deploying more positive confidence words in their emails. This tendency escalated after the crisis broke out. We explain this increase as the need to resolve feelings of cognitive dissonance related to their identity and reality. Our findings suggest both theoretical and practical contributions for the survival of organizations.

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Notes

  1. 1.

    On December 3, 1984, more than 40 tons of methyl isocyanate gas leaked from a pesticide plant in Bhopal, India, killing at least 3800 people and causing significant morbidity and premature death for many thousands more (Budescu et al. 1988). The Bhopal tragedy is a classic case of organizational catastrophe, up with the Challenger disaster.

  2. 2.

    Welch F(12,7605.814) = 12.192 p < 0.01.

    Brown-Forsythe F(12, 34759.619) = 16.231 p < 0.01.

  3. 3.

    Welch F(12,7708.012) = 22.262 p < 0.01.

    Brown-Forsythe F(12, 43836.950) = 20.004 p < 0.01.

  4. 4.

    We excluded the last period (Q3.02), since negligible correspondence was sent and received during this period, as the firm had already declared bankruptcy.

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Correspondence to Galit Klein.

Appendix 1: set of confidence expressions

Appendix 1: set of confidence expressions

Positive Neutral Negative
Good chance Fair chance Almost impossible
Very possible Some chance Very poor chance
Very likely Quite likely Improbable
Almost certain Quite probable Unlikely
Possible Quite possible Poor chance
Very good chance Toss-up Doubtful
  Toss up* Somewhat unlikely
  Even odds Very unlikely
  Likely  
  Somewhat likely  
  Probable  
  1. *We added ‘Toss up’ without the hyphen, since in email an expression is more likely to appear in its shorter form

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Klein, G., Eckhaus, E. Sensemaking and sensegiving as predicting organizational crisis. Risk Manag 19, 225–244 (2017). https://doi.org/10.1057/s41283-017-0019-7

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Keywords

  • Crisis management
  • Sensemaking
  • Sensegiving
  • Enron
  • Natural language processing (NLP)