What are three "must do's" for a leader during a corporate crisis?
On Jan 7, 2009, Chairman of Satyam resigned stating he had overstated revenues and understated liabilities for a number of years. This has turned out to be only a set of half truths. Read news about Satyam. Now, we are faced with financial hardship, the hope of being acquired by another company, and thousands of leaders who have never had to face this type of situtation.
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Clarification added 9 months ago:
Some people think I am asking what the leader who confesses should do. I am not! I am asking what are the three "must do's" for leaders who are left to pick up the pieces during a corporate crisis?
Clarification added 8 months ago:
Thanks to everyone for the great response. I plan to consolidate all the information into a report and will make it available to anyone who participates. Let your voice be heard!
Clarification added 8 months ago:
FOR ALL WHO RESPOND WE WILL BE PROVIDING A COMPREHENSIVE SUMMARY REPORT.
Answers (163)
In such a scenario, the three "must do's" for a leader should be -
1. Look back at where you have come from and identify few most important events or episodes in your life, the moments that have defined who you are today.
2. Define your personal leadership vision.
3. Take the four-way view - This exercise gives you an understanding of how you are focusing your attention on your four life domains today. It shows how you manage the allocation of your time and energy--the amount of attention you pay to various people and projects in your life--and so helps you assess whether you're actually doing what you care about doing.
Ramesh K
CTO & one of the Top 10 All time experts at Linkedin
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Corporate crisis is not only 'wrong doing' by one person. It is generally a collective failure. By saying Raju alone is respsonsible, it is wrong. Whole system is at fault.
Why we talk about only Satyam? Every failed corporate has a story to tell. Did we learn from Enrons and many other which declared bankruptacy?
In case of Satyam, he just declared what he did. He was not given a chance to tell the world what his ideas and plans!
If I was Raju and if I was asked to tell the world, I would have
1. Told what I have done
2. How I have done
3. Why I have done
4. What went wrong.
5. What are my learnings?
6. How can I undo these?
I am sure Raju have answers for all. He revealed first 3. He may not tell the answers for 4,5,6 as the share holders did not trust him and every one took pride in stopping him from acquiring Mytas, probably that was the answer for 4,5,6. And now that they did not trust, all of them are doomed and have lost heavily.
Ramesh
The Human Search Engine
Octavio B
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Hi Ed,
Unfortunately, current economic downturn has taken by surprise to many companies whose executives are paralysed while they are assuming an indolent attitude toward the employees who feel fear of being fired in a recessive context where opportunities to find a new job are really scarce.
In such emotionally charged scenario, best practices in Talent Management should be articulate to provide from the mechanisms to alleviate uncertainty, create a strong sense of belonging to the organization in the remaining employees and a feeling of cohesiveness to face the vagaries of an evolving crisis.
These are the 5 critical competencies for leaders when managing a crisis team:
Boldness: managers belonging to a crisis team should have the courage of recognizing the magnitude of managerial mistakes, misconceptions and bad decisions taken in the past and must assume diligently the initiative of taking opportunely the business decisions that should not be postponed, and at the same time, make sure that is possible conciliating the best concerns of the shareholders with the emotional integrity of the workforce.
Proactivity: To slowdown and mitigate the impact of a disruptive crisis over the organizational climate, financial performance and operational continuity, any leader who belongs to a crisis team should be a champion in applying his/her skills, knowledge, influence and experience in deploying of the relevant contingency plans to avoid harmful repercussions for the company in a long term perspective.
Effective and pragmatic communicator: In times of systemic crisis an exaggerated and alarming media coverage may cause further damage, increase shareholder´s fears, nurture employee´s demoralization and create a negative opinion in the public opinion regarding the likelihood of a troubled company of experiencing a quick and safe recovery. In facing such a perspective is convenient, relevant and pertinent that a smart CEO take the decisions of appointing and empowering to those managers who will play the role of authorized spokesman to bring accurate, correct and opportune information to media and so mitigate the harmful effects of a crisis systemic, unexpected and/or disruptive.
Outstanding abilities of team working: When an unexpected crisis arises in such a way that the future viability of a company may be threatened is advisable that the managers who belong to a crisis team being commanded by their CEO, consider the pertinence of hiring immediately to expert consultants in PR and facilitators in Change management from a long term perspective to preserve the public image of this company and recover at the same time, employee´s morale to face constructively to the different stages of this crisis and achieve so a positive organizational learning that ensures the profitability and competitiveness of this company for the years to come. In such pessimistic perspective Board of Directors and the Advisory Board must operate in tandem with Top managers with the aim to articulate the strategic framework to be applied systematically for the relevant plans of mitigation and contingency.
Strategic focus and leadership: The members of a crisis team should be influential managers, with a thorough knowledge in their functional disciplines, a strategic mindset strongly developed and the willingness of assuming the role of coaches to support to their coworkers in a initiative of recovery of their company, that will require from them a sense of purpose, full motivation, hard-work and adaptability to new and uncertain business perspectives.
Links to 3 questions I have posted time ago in Linkedin Answers:
1. How to Build Successful Teams in the Midst of a Transition?
2. How leaders may confront positively their fears?
3. In what extent and in which ways could future leadership be different than traditional leadership?
Octavio
Links:
Three Fundamentals Leader must do :-
1) Never Say Die & Stay Consistent
2) Communicate with employees to boost their morale
3) Spend More Time with Customers to increase their confidence
Sameer V
* Senior Marketing Manager - Corporate Strategy & Business Planning * Innovative Marketing Specialist
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- Accept complete responsibility for the position the firm is in during the corporate crisis
- Work on an immediate crisis management plan and put into place resources towards addressing the current crisis
- Be a captain and serve as a mentor, counselor, leader, friend and guide
Hi Ed,
To me, the three steps could be as follows:
1. Put the things in Black & White, publicly, in terms of company's financial position. Majorly any Liabilities, company's cash position, Earnings, Future Growth, etc.
2. Keep earning Associate's confidence in Satyam (As a Brand) by Daily News Digest and Simmilar kinds of positive news. Associates need assurance about their salaries, their future growth (Appraisals, etc.). Associates in turn, would make sure the clients stick to Satyam. Because for Clients, "if the associate associated with the project is working then Satyam is working". Let the belief come up again that Satyam is very strong in their policies and procedures to implement projects.
3. Try and reduce attrition of the critical resources as much as possible. Every critical resource moving out of Satyam is a Project moving out of Satyam's hand.
Thanks,
Viral Dhruv
Terrence S
Organization Effectiveness Consultant - Transitionist - Facilitator - Journey Coach - Job Angel
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For leaders in a crisis such as the one at Satyam...
1. Look in the mirror. All change begins there.
2. Envision the change. What is the desired state?
3. Formulate a plan. How will you and your teams overcome adversity to get there?
Terry
1.Identify the errants in the company & remove them at once
2.Take the remaining employees into confidence lead them to meet the challenge
3.Resolve the financial mess that is the root of all the evils
Then to Carry out Confidence Building with clients will be less embarrasing while you apprise them of action taken
Hi Ed,
1. Communicate a clear understanding of the situation; all stakesholders need to know that the leader fully understands the situation.
2. Communicate and demonstrate that you are in command of the situation; that you are in-charge, responsible, and ready to lead. Show determination, courage, enthusiasm, and commitment.
3. Form a guiding coalition of leaders who will assist in creating the new vision and strategy for change; change from crisis to order. In today's world no one person can do it alone.
Art
Rob D
Innovation Catalyst. Director of innovation & commercialization group. Keynote speaker, author, consultant.
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1. Communicate early and often.
2. Model the behaviours you want from others.
3. Communicate some more.
Cheers.. Rob
In Specific to context of the Question, but also relevance to the sighted example-
1. Damage Control- Mitigate the on going. Ensure, that trantivities be plugged to best possible.
2. Strengthen Competencies- With Internal (optimize on Leadership Multiplier, focus core businesses, shell off non-productive* etc) and External partnerships (business and otherwise).
3. Envision and Engage- Commit to that "Envisioned state" and formulated "Business Strategy".
*Non-productive projects, and possessions (assets..). Ofcourse hard decision to take, but relevant to bring back that "Optimum State".
PS:
To the quoted above "and thousands of leaders who have never had.".
If ? there are thousands of Leaders, the Optimum State shall be reached at better the pace, than optimally.
1) Understand exactly where the corporation stands financially; short and medium term revenues, liabilities and cash balance
2) Determine specific courses of action that maintain/regain momentum in core LoBs
3) Act decisively; communicate unambiguously (to everyone concerned).
I know, "Easier said than done", but undeniable nonetheless.
Jody B
Partner at ACHEV
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1. Begin re-building trust through transparency; open, honest, clearly
stated decsion-making process.
2. Provide a positive vision for the future with passion and sincerity.
3. Tell the people how we will move toward the vision and how they will be
impacted.
Mark H
Associate Partner at Edwards Executive Search
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Ed:
I believe a leader's three most critical responsibilities during a corporate crisis are these:
- Publically and personally communicate the reality of where the organization is at.
- Articulate the vision and broad plan for moving through this crisis and their personal accountability for implementing the plan.
- Role model the appropriate behaviors and implement a zero tolerance policy for any individual or behavior that is not consistent with the organizations values.
Gautam G
OD Consultant helping Organizations become more collaborative using social technologies | Blogger- Organizations 2.0
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Communicate
Communicate
Communicate.
In the time of corporate crisis a leader should do the following:
1. Ensure the interest of stakeholders intact (be it employees, investors, clients or the management)... there are many ways to do this and leader should be able to demonstrate and act on it at large immediately.
2. Do always right for Clients & Employees
3. Take hard decisions to rebuild confidence.
1. Establish Integrity
2. Make a 30-60-90 day plan and share it with ENTIRE company BEFORE meeting media.
3. Connect with everyone in the company as much as possible and keep them motivated - especially those who are about to be sent away... It is important to keep them warm, for they are just but victims of situation. Promise them that you will recall them before any new hiring offers are made and live by the promise.
Asheesh C
Project Management & Business Development : High Performance Computing Practice (HPC) at Infosys Technologies Ltd
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Dear ED,
From my perspective, you just need to follow basics to come out of the crises.
Below can be three focus areas/steps:
1) Focus on employee satisfaction by doing small changes.
a. Leaders need to take care of employee involvement in different activities. Group activities and increase productivity.
b. HR need to be more friendly and people oriented and focus should be satisfaction and showing the growth path.
c. Employee is the key for a successful of organization. Moreover it’s difficult to get back lost talent in such market scenarios.
2) Customer satisfaction
a. Need to keep on show casing attribute of successful organization in small/big assignments. Closure track of release to customer and frequent mentoring of customer’s feedback.
3) Establish Vision and Value system and follow it.
a. This seems to be missing in such organization and its better to establish it and follow it for success of the organization.
Warm regards,
Asheesh Chaddha
In case of Satyam Leaders' responsibility are more critical because of double impact by economy downturn and size of the company (50K resources and 600 customers). In Satyam the Leader should do first thing to stabilize and focus on keeping resources and the customer intact once this is planned and controlled then to focus on getting out and winning.
To achieve this, I think the most important things to do is:
1. Communicate, communicate and communicate, clear, precisely and truth but leader should also listen from all their piers and their plans. Every geographical leaders are very important to participate and plan to stabilize and move forward. Learning from mistake is good but forget the past and see the future.
2. Get to the bottom, don't look from 50000 feet, act like a leader be focused. If leader is not convinced and confident what they are doing, they can't convince others to win. Winning what should be the theme for a leader in Satyam
3. Execution - execution of the plan properly and confidently, no one is perfect but we need to try towards perfection and winning.
In my opinion, the 3 broad "Must Do's" for leaders during a corporate crisis would be to -
1. Manage employee motivation and to retain talents
2. Form a group to manage the clients expectations as that would acertain revenue inflow.
3. Reduce cost with innovative thinking.Drastic Staff reduction should be the LAST STEP to cut cost.
Bill R
General Manager at Nypro
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Ed, you might have worded this "What three must do's are required in a turnaround."
I think they are:
1. Evaluate your team's capability to get the job done. Fix or replace as necessary. Leader's often lose sight that the people are the company. If they cannot, or will not, get the job done, you cannot be patient in these times.
2. Set up an accountability system for each major department. Add a visual board for the key metrics and track and meet daily. Never miss a meeting and always have the data. Key metrics in general are Safety, 5S, Profitability, Quality, and Delivery. More specific metrics are required for these general goals.
3. Identify the areas which are major constraints. What is it that is costing the company the most? This is often hidden in the financials, so look with common sense. Are you missing customer deliveries lowering satisfaction levels and causing premium shipments? Is the quality so bad that scrap and returns are very costly? Are machines breaking down all the time? Are sales so low you need to be marketing or selling? You get the idea. The key constraints must be evident to you to focus on these as a priority. All resources must be committed to fixing these.
I hope this helps.
1. Take responsibilty.
2. Tell the truth.
3. Make the first sacrifice personally before asking others to sacrifice.
Ed,
I think you have had some very good responses to your question - the key theme and one that I would support is around communications. Looking back at past corporate crisis events the best survivors are the ones where the leadership takes responsibility early and communicates with all the stakeholders. I stress all, as you should cover regulators, investors, business partners, employees and the community. However do not leave the communication only to the PR folks - the senior management must be engaging the stakeholders directly - it gives added confidence and connection to any messages.
Geoff T also suggests this expert on this topic:
Felix P. N
Certified Security Consultant
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Ed,
These are my three "must do's" ...during a corporate crisis in no particular order. I would recommend these on the base of individual responsibility, accountability and consequences.
1. Conduct a thorough business risk assessment of where we are now and what contributed to the problems.
2. Conduct a key personnel performance and potentials assessment to arrive at conclusions that might help identify shortcomings in personnel assignments.
3. Establish new vision going forward with open dialogue and input after have made appropriate personnel changes of key leaders involved in the analysis and recommendations process.
Felix P. N also suggests this expert on this topic:
Clarification added 9 months ago:
Item three should read...and input after having made..
1) Identify the strengths - devise plans to sustain those strengths.
Reason - If we oversee the strengths part assuming that it will take care of itself for the time-being, the negative side could be a tailspin effect pulling down the corporation even further.
2) Identify stakeholders - devise plans to manage stakeholders' thoughts and actions.
Reason - Information technology helps spread each and every word in all possible directions. The stakeholders' actions and reactions might go a long way to lend balance to the company even in testing times.
3) Devise financial stimulus plans.
Reason: The one entity that everybody understands despite the hardships. A strong financial stimulus plan helps avoid numerous other feel-good communication inward and outward.
These would be my top 3 must do's from my observations involving different corporate crisis situations.
Ed, a Satyamesque environment needs a leader grand-er than the problem.
I generally follow the QREC principal.
Quality time: spend lots of time with the staff and customers. Be bold and forget thr marking of boundaries. If you being a leader are scared, imagine the others in the team!
Reliability: Make sure your words and actions signify reliability. You shouldn't make people think that all your words are gas; that the origination of your words come from management books, and not from your heart & brain. Work on making your image that of a highly reliable leader- a man of your words!
Efficiency: Once the plan is in place, get into action. And work on things constantly. As we see in the Satyam case, the new board has relentlessly been doing (and at least supplying the feeds to the media) on their constant endeavor to help Satyam overcome this problem.
Communication: You may have to say things once, twice, eight times, three hundred times, a million times. keep communicating!
hope this helps
cheers,
k
1- Moving on quickly without too much time wasting on complaining and blame game, what's happened is happened, time is crucial and should not be wasted on such matters when one is in a mess
2- Troubleshooting, which is a key factor any one with the title Leader must possess, if one cannot be creative and troubleshoot, he or she has never been a true leader
3- Being honest with oneself and others, never claim big and the impossible, but hope & think anything IS possible
The CEO must:
Tell the truth
Share information with stakeholders
Scan the organization for areas of resistence that will impede moving forward
A leader should: (really a perfect system should work regardless of what the economy is doing…..)
1. Provide Vision: Don’t wait - today is the perfect day to assess where and how the organization can create the greatest long-term value. This question should be asked (to themselves) every day - from the new hire to the CEO – “How am I creating value for the company? “
2. Got Talent? Ensure that the right people are in place. That they have the skills and capabilities needed to nail the vision (see above). Find, hire, retain and develop them. Then ensure these people have the authority to make decisions and then hold them accountable.
Create a learning organization - as most are not. You are smart, smart enough to tap into the tacit knowledge of your people to improve the org. (Get the answers from the daily question your people should be asking themselves –see above). Best yet - it's free information!
Hint: The people you need to find and hire will have confidence in themselves and their abilities. You just need to be sure that the role description and responsibilities you need to nail the vision match their unique skills and abilities. These are people who are willing to fire themselves when they realize they are no longer contributing to the vision of the company or to their own personal vision. This is no time to have a crew that fears for their jobs. It means they don’t know the value they are creating for the organization.
3. Provide Incentives: In good times, reward these people according to the value they create for the organization. It’s time to share. Be sure that all incentives for all departments are based on a single goal. Base an incentive goal that supports the vision of value creation not some contrived sales objective for example – that’s not tied to anything other than last quarter’s objective. They will understand that in bad times - reward may be sacrificed for the good of the org - but re-implement in the upswing.
As the CEO, provide leadership by example - use the same incentive plan as the rest of the organization. Leave when you no longer provide value to the organization. After all you have the self-confidence, abilities and talent to lead an organization that is a better fit for you.
During a corporate crisis, the top 3 "must do's" are:
1) Communicate. A leader must communicate to the organization and its members. The organization must know what is happening. The strategy of open communication is key. Do not shelter the organization's members. People are resiliant.
2) Be truthful. Let people know exactly what is happening. Do not "sugar-coat" the situation.
3) Be Optimistic. "Tough times do not last, tough people do" is a quote by Robert Schuler. Let people know that what does not kill us, makes us stronger. Show that this situation is short term and will pass. As a leader, be positive. After all, the organization is looking up to you to lead them. The organization is leaning on you to help them survive the crises.
-Ted Gorski
President, Get Your Edge ( Leadership Coach)
www.GetYourEdge.com
