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Leadership in a Crisis

 

For many years, I have worked upon an honorary basis for, among others, an international organization for risk management. We have been preparing for many years for the truly major event. Because we now have been confronted for some weeks with the COVID-19 pandemic, we have now been utilizing all those things which we have been preparing and training for over the course of many years. We had quickly established a crisis staff and activated an international network so that we would be able to efficiently communicate locally with our members upon a regular basis, collect and exchange data locally and internationally, collectively assess and analyze the situation upon a regular basis and above all we have not overreacted. And even if I now stand back a little as I observe the responses from governments and company management teams, I have been quite impressed by how professionally some have responded, but also have been horrified by how unpreparedly and unprofessionally the others have responded and thus put human lives and/or companies at risk. Without a doubt, the Coronavirus has imposed extraordinary challenges on us all. It is time to learn from these challenges.

 

Gemma D’Auria and Aaron De Smet from McKinsey recently drafted an interesting article on the theme of leadership in crises and, in so doing, accurately stated: “What leaders need during a crisis is not a predefined response plan, but behaviors and mindsets that will prevent them from overreacting to yesterday’s developments and help them to look ahead.” In crisis situations, the company management must let go of the notion that only it can ensure top-down stability. This is a major difference from an emergency situation in which a command-and-control structure ensures order in order to establish a solution. Only crises are characterized by uncertainties: In this situation, the management is confronted with a set of circumstances for which it is not prepared. A small group of executives is not able at all to rapidly collect and evaluate the information in order to be able to make all decisions quickly and efficiently. In this context, management’s task is rather to mobilize the organization and to empower it by setting clear priorities to make the correct decisions.

 

Crises are always the times for network organizations. In this context, the various network groups must have a clear understanding of their roles and responsibilities. Indeed, groups are needed which feel responsible for the stabilization of operations while others assume responsibility for the external communication (closely cooperating with the executive team) and again others must formulate the new norms for the new situation and thus increasingly focus on medium-term issues. Crises have sufficient complexity that experts must be empowered to embrace their responsibilities. That is their role and their expertise is critical whenever it encompasses making as few mistakes as possible during the crisis and, whenever mistakes do occur, to learn more quickly from them. In this context, hierarchical structures are too slow and time is one of the essential factors in a crisis.

 

“Letting go” for the executive team means to give the groups the orientation and security required so that they can utilize their autonomy in order to quickly develop solutions. This includes above all also the guaranteeing of transparent communication and access to all information. Efficient crisis management thus directly alters the power architecture at a company. Therefore, management must quickly establish efficient decision-making processes. What must be decided at what level? Who has which responsibilities and which authorities? Crises have their own laws and it is necessary to establish them directly, quickly and transparently. Whoever does not understand this will lose time in order to be able to respond to the crisis appropriately and correctly.

 

In the report from McKinsey, it is stated: “Just as an organization’s senior executives must be prepared to temporarily shift some responsibilities from their command-and-control hierarchy to a network of teams; they must also empower others to direct many aspects of the organization’s crisis response. This involves granting them the authority to make and implement decisions without having to gain approval.” Thus, it is astonishing to see how difficult it is for top executives to “let go” in times like these. Leadership in the crisis is nonetheless decisive in determining whether an organization will come out of the crisis in a strengthened position or whether it perhaps will ultimately not even survive at all. History will be the best judge of this in the end.


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