CRISIS MANAGEMENT
CRISIS MANAGEMENT IN TIMES OF
CORONA | COVID 19
HOW TO NAVIGATE THROUGH THE CRISIS SITUATION
Recognizing that a company faces a crisis is the first thing leaders must do. It is not as easy as it seems. The circumstances are usually unclear and hope is always there. The discussion can go on for some time. Only when shareholders, leaders recognize they are in a crisis, they can start to act and prepare a crisis plan to mitigate the impact.
The coronavirus (COVID 19) has made the crisis managment one of the top priorities of each and every leader. We were hit unexpectedly and unprepared. This is typical for Low Probability High Consequence Events (LPHC).
Low-Probability High-Consequence (LPHC) events
are accidents that are unexpected, with few similar past events.
Unfortunately, when they do happen the impact is extreme.
100-years Flood, Tsunami, Financial crisis of 2009 are examples of LPHC events. In the CEE region, we also remember the outbreak of the war in Ukraine, ban on export to Russia, ban on Egypt during the Arab Spring etc. With few prior events available to learn from, it is difficult for a company and leaders to understand, manage or mitigate the risks during crisis. This is because they do not have enough past learning experiences to design their decision making process and improve their overall risk management performance, and properly address the threat.
Part of the problem is the lack of appropriate metrics (we see it today with the COVID 19 measurements, predictions, tests, statistics etc).
A CRISIS SITUATION REQUIRES A SPECIAL TYPE OF A LEADERSHIP
Some will remain paralyzed, some will complain and a small portion will like the challenge and the spirit of it.
BASIC RULES OF ANY CRISIS MANAGEMENT MISSION
ACKONWLEDGE THE TRUTH THAT YOU ARE IN A CRISIS SITUATION
Like I already mentioned in the introduction, this is the alfa and omega of any approach during a crisis management. If you protect and deceipt yourself, that this is not the case, please do not move to the next step.
Typical signs, that you are in a crisis, but do not acknowledge this are :
- we know what to do, we just need more time
- we already did this and it did not work
- we just need a young and passionate employee to….
CHOOSE AN EXPERIENCED LEADER WITH FULL DECISION MAKING AUTHORITY
Even the best leaders, who perform during good times, with a dominant inspirational leadership style might fail in a crisis situation. Leading through a crisis is not “follow me, and let’s see where we will arrive”. There is not much room for the creativity.
Don’t get this wrong.
Leading by improvisation based on past crisis experience is something different and very useful
Choose an experienced leader, who already led companies through difficult situations, who can prove his experience by tangible results, references and always double check his track record. In crisis, the time is ticking, and there is no room for trial and error.
Hiring a manager, who almost fits to the role, but needs some time and support in a crisis situation is a route to failure
TRUST THE LEADER AND GRANT HIM FULL DECISION MAKING AUTHORITY
A crisis manager is (should be) a dominant leader. If you put shackles on him, you made a clown out of him. Leaders do assess and think quickly, they also need the authority to make quick decisions and command their troop to implement them.
Your corporate policies with several rounds of regional signatures have to be put on hold for some time. As an owner of small or medium size family company, if you believe you can do it (better), please do. But in a crisis situation, you can not have two captains.
Don’t limit the decision making authority of the crisis manager
Your job is to select him. His job is to lead through the crisis.
ESTABLISH A CENTRALIZED MILITARY STYLE OF COMMAND
I remember my first crisis management mission almost 20 years ago.
Rule Number one : Global crisis meeting daily 05:00 in the morning.
Rule Number two : Global crisis meeting daily 23:00 in the evening.
Rule Number three : Set up your clock according to the time in Germany. If you miss one of the meetings, you are out.
The information….the orders
- must come from one single source – you can not have two generals, you can not communicate over mail, whatsapp, viber, and radio. There is also no time to search for “the right” or “most recent” information,
- must be clear, understandable for your troop. Maybe we should…., I think…., later…is not a crisis vocabulary.
A military style is unevitable to keep control and the neccessary discipline.
UNDERSTAND THE VALUE OF THE TIME,
SET-UP A CRISIS TEAM QUICKLY,
WHEN THERE IS DOUBT THERE IS NO DOUBT
90 days to default from the financing bank before bankruptcy. 40% increase in corona active cases for each day of delay in preventive measures, 1 000 Eur per each minute of JIS stop at automotive client, and the story can go on and on.
In a crisis, you need to act quickly. And you need to quickly establish a crisis team to support you.
The most important take away for a crisis management mission is :
WHEN THERE IS DOUBT, THERE IS NO DOUBT
If you feel your team member is not fully commited or is not up-to the challenge, if you think your partners will not make it till the end of the journey DON’T WAIT, don’t give second chances, don’t wait for improvement. It will not come. Replace them immediately and do not count on their support anymore.
LOOK FOR AN EXTERNAL SUPPORT AND KNOWLEDGE EARLY ENOUGH
When you do not have the neccessary conceptual know-how in house, don’t waste time, look for an external support and transformation knowldge quickly.
CRISIS MANAGEMENT IS NOT
NAVIGATING ON A SEA IN A NICE WEATHER
ENSURE QUICK AND CONFIDENTIAL INFORMATION FLOW BETWEEN THE MEMBERS OF THE CRISIS TEAM
Information must be spread quickly, but confidentially. With your crisis team you are sharing confidential and strategic information. If these information leak to any other stakeholder or to anybody at any other then the planned time, it could lead to a communication catastrophy. A big book about the measures to be taken in this area could be written by IT guys, but in general :
Control the flow of the inforamtion and access to them.
An IT Manager should be an integral part of your team. I remember case when the IT manager leaked all the information from steering committee to the employees and trade unions by having an administrative access to the e-mail. They knew well before us what will happen….
COMMUNICATE, COMMUNICATE, COMMUNICATE
Keep your stakeholders informed, all of them. If you plan to downsize, talk to the trade unions, talk to the employees. If you need to postpone the payment to your supplier, talk to your supplier. If you have full stock of inventory, talk to your customer to deliver earlier at a discount (generate cash!). Talk to your bank, that you are responsible and taking care. Communicate!
Be transparent in all your communication and keep your professional integrity
DON’T WAIT FOR THE PERFECT INFORMATION
You will never have them in a crisis situation. If you do…it’s not a crisis situation. You must use your experience and quick decision making capability, take risks. A crisis is not managed by a cost-center report 15 days after the month’s end. You work with estimates, assumptions, and base your decision upon them.
DON’T RELY ON THE HELP FROM THE GOVERNMENT
Simply don’t.
PAUSE. ASSESS. ACT. REPEAT
An external crisis manager thinks out of the box, therefore he need to pause, and keep an “external view”. The key to success is “thinking hard”, not only “working hard”. A crisis is a unique situation that is not going to be solved by working more the same way as before.
LET THE PROFESSIONALS DO THEIR JOBS
We at EIM would be happy to support you by finding the right executive interim managers who, based on their diverse experience, can quickly take on the challenge and deliver rapid results. Thanks to our Nurtured Knowledge Community of reputable Executive Interim Managers, we can provide you with professionals who are experienced at very short notice and selected according to strict criteria.
EIM Executive Interim Management CEE
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