The business world has always been unpredictable, today even more so. Your employees might go on a strike for the right to work at home; your customers might abandon your brand because your products contain too much fat, sugar, wheat … or the opposite; your supplier might increase their price or go bankrupt overnight; and without preamble, your municipal government might declare that your rented office building is no longer available for commercial purposes.
Those are but a few examples of the potential changes faced by businesses. There are certainly a lot more dramatic situations that can be termed as crises, the handling of which can literally make or break a company, including smoldering crises like product defects, customer activism, rumors and scandals, class action lawsuits, sexual harassment, etc., and sudden crises like natural disasters, terrorist attack, technology disruption, hostile takeover, etc.
In order to thrive or simply survive in such a protean business land, leaders must be equipped with proper crisis leadership that can help their organizations to weather the storm and achieve long-term success. Crisis leadership sets apart those companies that flourish following a crisis from those that don’t. It entails more than managing corporate communications and public relationships during a crisis.
More specifically, leaders need to possess (or develop) the following four competences to steer their organizations in turbulent times and use crises to promote positive organizational changes:
1. Build a foundation of trust.
Leaders must create an environment of trust that covers all stakeholders so that their employees feel safe at work, their customers have faith in their products and services, their business partners expect mutually serving intentions, and so on.
2. Create a new corporate mindset.
Companies need to create a more expansive mindset that recognizes the value in all stakeholders. By taking a big picture approach, leaders will be able to have a more holistic view that allows them to appreciate their responsibilities and accountabilities to employees, customers, suppliers, business partners, communities, and stockholders. Leading with such an expanded mindset minimizes the possibility of crisis because leaders will need to weigh the consequences of their decisions and actions on multiple constituencies. With a broader mindset, business leaders will be better positioned to identify not only the obvious vulnerabilities (for example workplace safety problems and equipment malfunctions are typical triggers of crises in a manufacturing environment) but also anticipate and consider the less obvious threats that could equally throw the business into chaos (such as customers’ waning brand loyalty due to their environment concerns, or employees’ discriminating behavior against certain customer groups due to weak company policies regarding ethical conduct).
3. Make wise rapid decisions and take courageous actions.
First of all, leaders should avoid ineffective approaches to handling crises, including:
· the traditional approach of decision making (collection of complete information → creation of all possible alternatives → thorough analysis of each alternative → final decision making) that assumes access to complete information and unlimited time,
· the classic crisis management approach that mainly relies on soliciting advise from corporate council who would often encourage leaders to say as little as possible or deny allegations altogether to avoid legal culpability (It’s not advice that leaders should be seeking in crisis situations, but clear-cut decisions for how to proceed.),
· as well as the approach that depends solely on the opinions of the experts (who specialize in the field that the crisis is seemingly closely related to) who are often narrowly focused and incapable of lateral thinking.
The key to decision making in crisis is to gather information from a wide variety of perspectives as time will allow, then make a decision in light of the gathered information as well as the leader’s own insight developed from his expansive business mindset that offers him holistic points of view.
In times of crisis, the tendency toward risk aversion is strong. Leaders need to approach crises as an opportunity to think and act big, yet responsibly, which entails making decisions and adopting behavior that is counter-intuitive or that goes above and beyond what might be mandated by the situation.
4. Learn from crisis to effect change.
Competent leaders use crises as an opportunity to create a better organization with a learning mentality. Following crisis situations, leaders need to engage in a great deal of reflection about crisis, such as why it happened and how well the organization responded to it. In other words, leaders need to learn from the past to prepare for the future.
James, E. H., & Wooten, L. P. (2004, June 10). Leadership in Turbulent Times: Competencies for Thriving Amidst Crisis. SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=555966
Related articles and book:
Collet, B. (2019). Agile leadership. (Online course). https://www.udemy.com/course/agile-leadership/