A leader should develop effective leadership and communication skills that will help his firm survive difficult situations, writes Madhur Ramani, co-founder and managing partner at HR advisory firm, Stratum Consulting
For an organisation to survive a crisis with its reputation, operations and financial condition intact depends on the timeliness and effectiveness of the response by the top leaders of the organisation.
Crisis arise due to a number of reasons like professional improprieties or economic factors, loss of key employees or loss of key customers, organisational changes or factors that the organisation has no control over.
When crisis occur, they often take an organisation by surprise and call for an effective response by the leader of the organization to the situation.
Since crises are a part and parcel of running any business function, sooner or later nearly every organisation faces a crisis situation.
And when they do, there arises a need for strong and effective leadership to take care of it while protecting the interest of the organization and its employees.
Crises have a direct impact on a company’s productivity, profits, image and other quantitative measures of success.
It can put a company’s reputation at stake and hamper its business growth if right measures are not taken by the management at the right time.
During a crisis situation, effective communication both internally and externally is one of the most important measures that any organisation should keep in mind.
An interesting example that can be referenced here is the Kingfisher airline crisis.
The airline was facing issues since a few years but the major crisis was brought to light only in 2010.
They were facing debts worth $1.4billion after making annual losses for five consecutive years. The airline’s bank accounts were frozen and pilots were on strike. The company was almost on the brink of collapse and the pilots also lost their flying permit.
While the company was going through all this, the world only saw the owner billionaire - Vijay Mallya and his son continue to live their flamboyant and lavish lifestyle.
With thousands of employees not being paid for months, the owner was not available most of the time for comments or seen standing and fighting it out and facing the situation head on.
The ideal situation would have been for Vijay Mallya to have remained the face of the organisation by engaging directly with his employees.
He could have avoided the negative publicity by managing the crisis better and in a controlled manner rather than exhibiting his opulent and flamboyant life in public which created a sense of insecurity amongst his employees seething under the situation of blocked payments for a span of four months.
Mallya was subjected to severe criticism for flaunting his affluent lifestyle at a time when his company was struggling under mounting debts.
When confronted with organisational crisis, the primary goal is to resolve it and get back to business as quickly as possible without prolonging the crisis. Organisations should invest in leadership development that focuses on crisis management and effective communication.
Effective crisis response should aim not only at damage control but also push the company to get on with business faster and better than before.
For example, the global automobile company Ford found themselves at the receiving end for sexist advertisements by their advertising agency.
The advertisements were not the final cuts but the automobile major was about to be hit by one of the worst reputation damaging crisis of all times. The ads that featured caricatures of women bound and gagged in the trunk of a Ford Figo were slammed for being sexist and offensive.
But timely and prompt response by the top management of the company averted the situation.The Indian unit of Ford Motor Co. issued a statement apologising for advertisements decried as demeaning to women.
The brand managed to protect their reputation and at the same time not hamper sales of their cars. Here, good effective leadership helped when Ford took ownership and highlighted the actual issue to its consumers with the right communication from the right people going out at the right time.
Usually, in times of crisis the onus to take action and effectively respond to the crisis falls on the shoulders of the management leader. They hold the fate of the company in their hands.
The leader of the company not only needs to address the current problem but also ensure that organisation is running smoothly even with the situation at hand.
Hence, managing becomes more difficult during a crisis. Top executives need to step forward and understand the complexity and ambiguity of the crisis by bringing order to chaos.
The most important factor that leaders need to keep in mind while dealing with a crisis is to first identify the source of the crisis, then identify its organisational implications and accordingly develop an action plan to resolve the crisis.
Crisis situations demand leaders to demonstrate situational awareness and grasp the ramifications and its likely impact on the company and its stakeholders.
An effective leader should be able to make the right decisions during contingencies. He/she should demonstrate ability to redirect their energy and resources to mobilise a quick response to protect the company’s image and interest of the stakeholders.
The key is to safeguard the value of the enterprise and develop a strategy to bounce back to regular business as soon as possible.
A suitable example to validate this approach is that of global player Johnson & Johnson when it was hit by the Tylenol crisis in 1982 resulting in seven unfortunate deaths.
It is one of the examples of crisis situations arising as a result of tampering of the product by an external party.
The company faced a fall in its share value by $1 bn and its reputation was at stake. The company developed an upfront approach to tackle the crisis situation at hand by immediately recalling Tylenol from every outlet in the market.
Apart from this, the company also decided not to re-establish the product on shelves until better product protection was ensured for the future thus adopting a consumer first approach.
Appropriate action at the right time by the leaders of the organization not only helped Johnson & Johnson recover from the loss but also succeeded in preserving the long term value of the brand.
The company within five months of the disaster managed to recover 70 per cent of its market share for the drug and safeguarded its reputation as well.
This example demonstrates that one can be a better leader in times of crisis by addressing it through a structured framework and understanding the crisis through multiple perspectives.
The leader should be proactive rather than reactive and should solve the issue through structured crisis management, fill up the loopholes and thereby rebuild the organisation.
During a crisis, the leader should not forget about the interest of his employees and distribute the scope of work after understanding their capabilities and limitations.
In times of crisis, the focus of the organisation should be the future of the organization. Strategies should be developed keeping in mind resources that can mobilise business growth.
The leader should be able to determine the right channels of communication and comprehend the crisis barriers and accordingly craft a plan to work around these obstacles.
The overall culture of the organisation also plays an important role during a crisis situation since social-cultural trends of the company help the employees and the leaders to manage and learn from the crisis and overcome the situation together as a team.
On a whole, appropriate and effective leadership is one of the saving factors for an organization during crisis.
A leader can not only succeed by developing effective leadership and communication skills that will help the organisation to survive the crisis but also with a team that provides support and stands by the organisation in times of crisis.