When Crisis has Damaged
Their Confidence in You
Crisis comes in all forms, all shapes. Sometimes you see it coming, but often you don't. But one thing is certain: when a crisis strikes, your workforce, your customers, and even your owners will inevitably, if not always appropriately, blame management.
Experience teaches that crisis is not always the fault of management. Johnson & Johnson's famed crisis shows that anyone can have their Tylenol poisoned - the equivalent of a corporate mugging. In those cases, with forthright and full communications, the company can usually be nursed back to health and regain the confidence of its customers.
But what of those situations where the crisis really is caused by events that are a result of management ineptitude, such as corporate malfeasance or a restatement of earnings?
When management is viewed as inept, the company can expect to see an avalanche of mistrust develop. Executives start running for the door. The best and brightest get recruited - hard. Many abandon what they perceive as a sinking ship. Competitors smell blood - and they work hard to help your best customers smell it too. Your best and brightest will fear that the organization can no longer support their personal career aspirations. Your best customers may have the same fears.
In response, management focus becomes rapidly skewed. A whole cadre of accountants, lawyers, and investigators take center stage. Management becomes a slave to the biddings of these "advisors" - with little time left for customers or employees. Confusion reigns. No one really knows the facts. A snowball of mistrust begins to run downhill, picking up speed as it collects rumors and misperceptions until it's moving with almost unstoppable momentum throughout the organization.
When the nightmare of mismanagement-created crisis strikes, it's like skating on thin ice: your only safety is in your speed. Here are 10 tips for surviving crisis when even your owners don't trust you anymore:
First, Untangle the Crisis
1. Know What You Know
Lack of information is your biggest enemy; lack of time and structure necessary to get information quickly and accurately is your likely obstacle. Yet you've got to make decisions, and you've got to make them fast - regardless of the quality of your information. The first step: figure out what you know, and what you don't know. Start with that clarity. Make decisions. Act. Work to be mostly right in your decisions. Continually seek new and better information. But refuse to be paralyzed by your fears of being "not sure."
2. Say What You Can Say - Clearly, Openly, and Fast
When your credibility is already in question, you've got to work hard to protect what little you have remaining. Rebuilding your credibility will rest with your command of the facts, and your frank and open willingness to share those facts. Say what you can say. If you can't say much, say so. Be clear, open, and quickly forthcoming to the greatest extent possible.
3. Identify and Enlist Your Best, Before Your Competitor Does
Your competitors know who your best and most important employees are, and they want them on their team, and off yours. Your crisis may present that opportunity; expect your competitors to seize it. But get to the best first. Enlist them in your vision, ask them for their support. Provide them whatever retention incentives you can, as soon as you can.
4. In Reducing Force, Cut One Time, Cut All the Way
Your credibility will survive one material reduction in force. Every business
has cuts; it won't be surprising that yours will too. But don't expect your
credibility to survive a second significant cut. All will assume you wrongly
estimated - again. They'll wonder if you know what you're doing. They'll assume
even more cuts must be in store. So if you've got to make a staff reduction,
assume the worst case as likely - experience shows crisis usually hits at
least as hard as managers can imagine. Then make the cut swiftly, once and
When information is lacking, fears only get worse. Owners fear they'll lose their investment. Employees fear they'll lose their jobs. Customers fear they'll lose their budget and their time. Suppliers fear they'll get stuck with non-payment. When information is lacking, and people are scared, you'll begin to see wild visions of the "worst case" becoming expectation. For everyone's good, work to control those fears.
Next, Stabilize the Business
6. Make Sure Someone Stays Focused on the Business
When crisis strikes, that crisis becomes the focal point for much of what goes on in the business. But a good business is about best serving some set of customers, not responding to crisis. To the extent possible, implement approaches that allow - even demand - that key personnel stay focused on the core business at hand. Provide a mechanism for handling the crisis that allows most of your key players to maintain vital external focus.
7. Understand, and if Necessary, Redefine the Core Value You Offer Your Customers
If you haven't already, define for yourself the key customers who value your offering most, and the key value they perceive from your offering. In most cases, this will be a simple clarification of your strategic focus. In other cases, it may be more significant. For example, a company whose core value depends on its own corporate stability, such as a bank, will have a new and central challenge to its whole business when instability strikes. This situation should be quickly evaluated, and where needed, the value and messages should be reconstituted.
8. Lack of Speed Kills
Momentum will build - either directed and leveraged by you, or undirected and opposed to you. Success rests largely with protecting whatever perceptions of control, confidence, clarity, and quality that you can maintain. So go fast. Protect and build momentum. Don't let perfect ruin good. In other words, make decisions and act quickly, based on what knowledge you do have.
9. Stabilize, Not Economize
You will likely have to be flexible, cut deals, and invest in help. Your need for speed may require some outside resources for some period of time. You may need to spend money to protect and to build your momentum. Spend it. Now is the only time you'll have to restore your business stability. You can refocus on economy later when you've saved the business.
10. Communicate Fully and Truthfully, With Force and Focus
Be clear on what you're saying. Say it loud, forcefully, and with conviction. Be clear on who's accountable, and in what ways. Speak often, remembering that in an absence of information, people will naturally create their own "facts" - and their imagined facts will likely be worse than reality. Managing in crisis requires that an entire workforce knows what the drill is going to be, quickly and fully. Honest and frequent communication is the key to exiting the crisis with your business hide intact.
A time of crisis may demand top down management. But keep in mind, too, that the best ideas for managing, controlling or ending the crisis may come from the most unlikely of sources. So keep the lines of communication continuously open, and two-way. Chances are, you'll have to act every day with more speed and more openness than you may be comfortable with. You may make more crucial decisions in a week of crisis than you faced in the previous year combined. Times like these can be complex, scary, and certainly uncomfortable. At this time, your credibility, more than your organizational vulnerability or discomfort, is what must be managed. When your credibility is at stake, there is no more calming salve than truthful and sensitive communications.
Tim Gregory is Executive Vice President of BakerER, a strategic growth and workplace management consulting firm. Whether in the marketplace or workplace, our promise is simple: we help organizations that compete on the basis or their relationships to be the “best choice” for their customers and employees. The end result: sustainable, profitable growth for the organization.
Contact Tim Gregory by e-mail: email@example.com
Many more articles in Executive Performance in The CEO Refresher Archives