High Stakes Leadership: Leading in Times of Crisis

High Stakes Leadership: Leading in Times of Crisis

Published 23rd July 2020
Dr. Mike Barger

Assistant Clinical Professor of Business Administration and Executive Director, Ross Online, at the Stephen M. Ross School of Business, University of Michigan

Published 23rd July 2020

We live and work in a world that is becoming more complex, volatile, and uncertain every day. The COVID-19 pandemic has provided all of us with a tangible and, for many, frightening illustration of this reality. While countries around the world have rallied against the virus, their approaches have been varied, both in terms of strategy and outcome.

Nations such as Japan and New Zealand have been lauded by international communities for their containment and management of the virus. Notably, Jacinda Ardern, New Zealand’s prime minister, has been widely praised for her effective leadership during the crisis.

As this virus has undoubtedly had an impact on you and your family, you have likely paid a great deal of attention to how those around you have (or have not) been demonstrating leadership. What have you learned? Almost certainly, you have come to the conclusion that rarely has the need for exceptional leadership been so clear or so important.

What should you expect from leaders in a crisis? As a crisis leader, what should your stakeholders — your families, your businesses, your employees, your communities and more — expect from you? A growing body of research offers some answers to these questions.

In leading organizations through crises over the past 35 years, I’ve learned three simple principles that apply in every case. First, during a crisis, everyone involved will look to organizational leaders for tangible evidence of leadership. Who is in charge? What actions are they taking? How serious is the trouble we’re in? Second, when these people look for leadership, they want and need leaders that they can believe in. Will everything be ok? Will the company survive? Will I still get the product or service or value that I expected?  Will I still have a job?  And third, as crisis leadership is ultimately about addressing these concerns and fears, it is critical to truly understand and appreciate the perspectives of those most threatened by the situation. It is not sufficient to view crises from your perspective. You must be able to see a crisis through the eyes of others and to offer them clear, compelling, and tangible evidence of leadership.

What do those looking for leadership want to see in a crisis leader? The BE, KNOW, DO framework used by the United States Army for decades provides a practical structure for describing the expectations stakeholders have of their leaders during a crisis.

If you were asked to describe what a crisis leader should be during a crisis, and the characteristics that you would like that leader to demonstrate in the midst of a crisis, what would you say? From your COVID-19 experience, what should a leader be to instill confidence and deserve the trust of stakeholders? Based on our research done in development of the Business Leadership in Changing Times course at the University of Michigan’s Ross School of Business, the most effective crisis leaders are:

1.     Visible. Stakeholders want to see them, in front of their teams, leading the response.

2.     Caring. The most effective crisis leaders are able to demonstrate a great sense of care and concern for all stakeholders.

3.     Empathetic. Not only must crisis leaders care for their stakeholders, they must appreciate that some have lost or will lose a great deal as a result of the catastrophe and that their loss deserves acknowledgment and empathy.

4.     Calm. Stress and fear produce anxiety in stakeholders. The most effective crisis leaders are able to remain calm, think clearly, and through their composure can help reduce stress and fear in others.

5.     Assertive. Not only do stakeholders want to be able to see their crisis leaders, but they want to see them doing something, to be asserting themselves, and working toward a solution. In Asia Pacific, despite the economic fallout, some businesses and organizations have made commitments to reassure their employees – for example, banks in Singapore have pledged to avoid any staff job cuts due to the pandemic.

What do you want your crisis leaders to clearly understand – to know – in order to support your organization and its stakeholders during a crisis? In our research at Michigan Ross, stakeholders consistently want their crisis leaders to have a clear understanding of three things:

1.     Organizational Vision. To be truly effective, crisis leaders should know, be able to articulate, and align their crisis leadership efforts to the organization’s mission and vision. A portion of every stakeholder’s value proposition is attached to their belief in what an organization is trying to accomplish. Incorporating the organization's vision and mission into a crisis response will resonate with stakeholders.

2.     Organizational Values. If an organization’s vision describes what it is trying to accomplish, then its values describe the way it plans to get there. A great deal of research has been done on the extent to which employees aspire to work for a company that shares their values. New research indicates that other stakeholder groups—particularly customers—want values alignment as well. In a crisis, stakeholders will be looking for an organization to “walk the talk”. This is best demonstrated through values-driven leadership.

3.     Guiding Principles. Crisis leaders will be required to make an incredible number of decisions with limited information. Many of these decisions will prove to be less than perfect over time as new information becomes available. This is not typically a product of poor decision-making, but rather, a function of the crisis environment. What can be done to improve this seemingly impossible situation from crisis leaders? The most effective crisis leaders create and share a set of guiding principles that can be used in the decision-making process. Examples of guiding principles include: We will value, protect, and support our people. We will deliver on the vision and mission of our organization. We will communicate effectively and thoughtfully with all of our stakeholders throughout this crisis. Principles such as these can help stakeholders understand how decisions will be made before they begin to judge them after they have been made.

What should crisis leaders be doing during a crisis? Our research points to four primary actions that are core to effective crisis leadership.

1.     Communicate. We know that stakeholders are anxious during a crisis because their value propositions are being threatened. Given these concerns, these stakeholders want and need information, as well as clear, compelling, consistent and reliable communication. As a crisis leader, you should establish a communication plan, inform stakeholders of your plan, and become their primary source of learning about your intentions, your actions, and the facts as they become available.

2.     Make Decisions with Limited Information. A primary responsibility of every leader is decision-making. Unfortunately, during a crisis, leaders will be required to make urgent decisions with limited information. As mentioned earlier, this is why guiding principles become so important. But these principles won’t resolve the fact that decisions made by crisis leaders will typically produce as many poor outcomes as good ones. Exceptional crisis leaders embrace the reality that decisions made early in a crisis may have to be modified or even reversed as more is learned about the situation. This reality will make decision-making uncomfortable, but the alternative of not making decisions until all the facts are in and the choices are clear will almost certainly produce disastrous results.

3.     Take Responsibility. Stakeholders will want to understand what led to the crisis and who was ultimately at fault. As humans, we are wired to be extraordinarily curious about causation and the attribution of blame. When it is clear that the organization or a member of the organization is at fault in a crisis, the most effective crisis leaders communicate this reality to their stakeholders at the earliest opportunity. For example, as COVID-19 prompted Singapore-headquartered OTA (online travel agency) Agoda to lay off 1,500 staff, the company launched a talent directory to aid its laid-off staff in seeking new job opportunities – demonstrating ownership of the difficult decision that had to be made, and showing its empathy and concern for staff through the whole process.

4.     Engage Stakeholders. Stakeholder engagement may be the most valuable and important action a crisis leader can take. For a given crisis, exceptional crisis leaders take the time to determine how all of their stakeholder groups have been or will be impacted, and engage each of them in a way that helps them understand that they care, that they empathize, that they are taking ownership of a resolution, and that they are committed to creating a stronger organization going forward as a result of what they have learned through this crisis.

During a crisis, stakeholders will be looking for tangible evidence of leadership. They will want and need leaders to believe in, who understand and appreciate their perspective.

They will not expect crisis leaders to be perfect or omniscient, but they will expect them to be visible, courageous, and committed to the best possible path forward. Are you doing all that you can to be ready for your next crisis? Your organization and your stakeholders will be depending on you.

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