Dos and Don’ts of Managing a Crisis

delongThomas DeLong 

A crisis can destroy an organization if the organization does not respond appropriately. During a crisis or a low growth environment, organizations fall apart, unless they have a few leaders who have the courage to be transparent and set an example. The irony, though, is that I see over and over again that companies and leaders are not honest with their employees. We don’t talk. We don’t give feedback. And we simply don’t have the courage to have an honest conversation.
The typical behaviour during a crisis is to blame other people for all of our problems rather than looking for our contribution to the problems. I think this is true all over the world. This is because of the dilemma that we have. Leaders allow their insecurities to build. They don’t share the challenges they’re facing, nor do they sit down and sort out their disagreements. They go around blaming each other, which does nothing but create more dishonesty between them.
So what can companies and leaders do about this? Number one: Set clear goals and include your management in those conversations as opposed to being autocratic. The second thing is to execute the goals that you set and hold those people accountable for it. In too many organisations I see people being held accountable without ever being specifically told what they are responsible for. The third thing is to communicate more and become less secretive. Leaders need to have conversations when problems are small instead of waiting for them to become too large. They should have an open door policy for managers who report to them in an effort to prevent this type of build-up. It is very important to for leaders to take more feedback when times are tough, not less. It is about asking questions rather than having all the answers.
Take the case of Harsh Mariwala of Marico. He used to hold quarterly meetings with his leadership team in which they had conversations with each other around what each person could do to be better. It is important to conduct this sort of meeting as a group so that the group becomes more supportive and does not fall apart. Mariwala is a role model for the kind of transparency that we should have in organizations. These organizations are the ones that will leverage the crisis and not only learn from it, but get to a very different place in a positive way.
Phil Daniels, a psychology professor I had in graduate school, taught us about a feedback mechanism which he used to call the SKS form. It was a very simple process where we would ask others what we should start (S), keep (K), and stop (S) doing. The form is designed to be sharp and clear. People have to express themselves in three bullet points under each subhead. I have introduced this system of evaluation in universities as well as in appraisals on Wall Street. It helps leaders anchor themselves in reality and stop having any illusions and living in a fantasy world.
In times of low growth, leaders are not feeling the best about themselves and wouldn’t want to solicit feedback. Typically they would have enough excuses ready not to take feedback. This leads to a situation where leaders start believing that there is no real need to learn what views other people in the organization have at that point in time. Nor do they get around to asking for help when they need it. The SKS form breaks that kind of thinking. I believe even negative feedback can be satisfying. It is rarely as bad as we expect it to be and it tells us very clearly exactly where we are and what we need to work on. Once a leader is armed with clarity, he or she can work more effectively with a greater sense of purpose.
The final point is, do employees have faith in the management? If I look at my boss, do I say to myself that I have faith in this person? Is this person spending time and mentoring me? Am I growing and developing because of this person? Typically what happens in tough times is that leaders are too busy trying to achieve their numbers. So they think they don’t have the time to mentor, and instead try to outsource the activity to someone else. This is when the whole culture starts to break down.
Many leaders do not realize the importance of mentoring, especially in times of crisis. In such times, young professionals who work in an organization start to see themselves as free agents, and jump jobs as soon as the first good offer comes along. Still others leave to maintain a work-life balance. Employees regularly complain that leaders do not spend time mentoring them, and leaders don’t think they should spend time and energy mentoring people who are going to leave anyway.
In an economic downturn leaders and managers simply focus on the bottom-line and they forget about human capital issues because they don’t have the time to deal with them. They ignore their own culture. They become path driven, which is important, but they forget the human dimension. One of the first things that happens is that employees are laid off. This occurs because too many leaders are not aware of the culture of the organization or the implications of letting people go. They are myopic and short-sighted. More often than not it’s the lower and middle levels of the organization that have to bear the brunt of these firings. As individuals rise through an organization and become leaders, they intuitively, without knowing it, protect themselves.
But any transformation has to take place at all levels. It isn’t about letting go of the individuals at the lowest level on the rung. It is about making changes throughout. All that firing does is create cynicism and frustration throughout the organization. Leaders who remain protect their own security.
It doesn’t need to happen that way. I am writing a Harvard Business School case right now about the pharmaceutical company, Novartis. They wanted to do better in the US market. They knew that they had to re-envision their strategy. At the same time, they looked at their structure and how they were going to organise the business differently. They had to rethink what their capabilities were.
They did a very effective job in managing business, strategy and creating new systems, all simultaneously. One of the side effects was a reduction in force. However, because everything was done in a very systematic, thoughtful manner Novartis was able to engage those who stayed in a dramatic way. They built greater trust because of the way in which they went about the transformation. If the only variable that you change is the number of employees, there is going to be a problem.
For me, the head of human resources in an organization is the CEO. A CEO is responsible for human capital. But too many human resource departments are seen as law enforcement as opposed to being partners to the CEO. Too often HR departments are seen as spies for the leaders rather than as strategic partners. If HR is only used to police and help reduce the number of employees there will be no trust whatsoever with the HR department.
To conclude, here are a few tips about what employees should do in a low growth or recessionary environment. Number one: They need to have their own personal agenda or goals. Number two: They need to set up systematic communication with their managers, whether it is feedback or two way communication. Number three: They need to know what their capabilities are. Number four: They need to decide whether they are putting the company first or putting their own personal well-being first. I think the final point is that, at the end of the day, individuals are responsible for their own careers.  

The article originally appeared in the Business Today edition dated January 19, 2014
As told to Vivek Kaul 

(Thomas J. DeLong is the Philip J. Stomberg Professor of Management Practice in the Organizational Behavior area at the Harvard Business School. Before joining the Harvard Faculty, DeLong was Chief Development Officer and Managing Director of Morgan Stanley Group, Inc., where he was responsible for the firm’s human capital and focused on issues of organizational strategy and organizational change. He is also the author of Flying Without a Net: Turn Fear of Change into Fuel for Success (Harvard Business School Press, 2011), which centers on the challenges of helping talented professionals who are resistant to change.) 

 

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About vivekkaul
Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis(DNA) and The Economic Times, in the past. He is the author of the Easy Money trilogy. Easy Money: The Greatest Ponzi Scheme Ever and How It Is Set to Destroy the Global Financial System , the latest book in the trilogy has just been published. The first two books in the trilogy were published in November 2013 and July 2014 respectively. Both the books were bestsellers on Amazon.com and Amazon.in. Currently he works as an economic commentator and writes regular columns for www.firstpost.com. He is also the India editor of The Daily Reckoning newsletter published by www.equitymaster.com. His writing has appeared across various other publications in India. These include The Times of India, Business Standard,Business Today, Business World, The Hindu, The Hindu Business Line, Indian Management, The Asian Age, Deccan Chronicle, Forbes India, Mutual Fund Insight, The Free Press Journal, Quartz.com, DailyO.in, Business World, Huffington Post and Wealth Insight. In the past he has also been a regular columnist for www.rediff.com. He has lectured at IIM Bangalore, IIM Indore, TA PAI Institute of Management and the Alliance University (Bangalore). He has also taught a course titled Indian Economy to the PGPMX batch of IIM Indore. His areas of interest are the intersection between politics and economics, the international financial crisis, personal finance, marketing and branding, and anything to do with cinema and music. He can be reached at vivek.kaul@gmail.com

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