What is a crisis?

Usually an event that creates an interruption or a blockage in an organisation’s normal functioning, a crisis can be upstream, happening in the supply chain, or downstream, affecting the end consumer of products sold by a company.

A crisis can affect a company’s sales, both because consumers are focused on more important needs in the short term and because they might be unable to access non-essential goods and services. Crises can occur externally, such as through natural disasters, political insurgency or disease outbreaks, or they can be the consequence of internal practices, such as the failure to perform a critical function, like maintaining inventory safety or securing customer credit card information.

What is crisis leadership?

Crisis leadership can help in various ways in solving crisis of an organisation. The first one can be implemented by a leader and it is known as crisis leadership. In addition, crisis leadership might also be applied. In case an organisation faces a pre administration phase, crisis leadership will help preventing such event again. It means that crisis leadership is also process of managing and analysing what are employees and customers emotions.

Crisis leaders mostly communicate through their tone and body language with employees and customers. They exhibit empathy, try to tailor employment and service delivery decisions to employees’ or customers’ anxiety and support needs. In addition, they prepare or create new plans about how they will deal with these kinds of problems in the future.

Crisis leadership vs. crisis management

It is no longer a black and white situation, but rather one where crisis leadership and crisis management – while complementary – do have some differences. Organisations that understand what those differences are can make sure they deploy both approaches at the right time. The main difference between crisis leadership and crisis management is that the former deals more with the long-term strategy of the organisation. By being able to preserve the company’s values and focusing on the needs of customers and employees, crisis leaders can help the company make the right moves to maintain a favourable public image. Crisis management generally takes a more reactive approach where the goal is also to keep an organisation as normal as possible. Crisis management might also mean temporarily changing certain procedures to make them more efficient, and ensuring that a company can pay its employees.

Components of effective crisis leadership

Here are six components of effective crisis leadership:

1. Early recognition This is why crises, which are slow moving, are the most difficult to recognise before they affect the organisation. If a crisis is fast moving, the leadership may not sense the extent to which that the crisis disrupts normal operations until after it has started. You can facilitate an excellent leadership style by practicing earlier recognition. Research world events to see if they will begin to affect the organisation. If you pick up on customer attitudes, it will help you become aware before it hits. Once you pick up the possibility, you can act with crisis managers to damper the effects on the organisation.
2. Bounded optimism Bounded optimism adopts an optimistic orientation, but acknowledges the consequences of a crisis for the community. This allows the leaders to comfort employees and customers, but also be sensitive to how the crisis impacts their lives. But we are certain this community will overcome.’
3. Transparent communication Transparency can reduce the anxiety of your customers and employees during a crisis and can protect your reputation. You might want to start your communication map with a public statement that acknowledges the impact of the crisis (‘We recognise how this crisis has affected our community’) and establishes the company’s goals for overcoming it (‘We will do all that we can …’). If you know how you’re going to respond now, provide as much detail as you can (‘We will …’). But if you don’t know, say so. Promise to do more research to find the answers to the important questions and reassure the public that you are not simply responding on the fly. As the crisis evolves, keep the public regularly informed about what steps the organisation is taking and the results, so as to keep the organisation accountable and incentivise its leaders to adjust their response plans when it is called for. Use the channels to deliver your updates that make sense to the target audience even during the crisis. For example, through social media you can reach the biggest number of users and also have them engage with you.
4. Establishment of priorities As you make decisions as a crisis leader, keep in mind your organisation’s priorities. Most leaders will prioritise customers and employees before everything else. Every decision is designed to protect life. For example, a retail chain might lose money closing stores during an outbreak of disease, but doing so will protect public health. Secondary priorities have to do with upholding values. An organisation can have many values – ‘innovation’, ‘excellent customer service,’ ‘commitment to the environment’ are all common. And after you’ve made the situation safe, you can start to improve things in terms of your general values. Take the business example above, where a company shuts its stores during a disease outbreak. During that time, it could industrialise its website so it’s a better place to shop online. If it was committed to customer service, it would come up with new ways of providing that value to shoppers during the crisis.
5. Willingness to seek additional support Even if you’re the type of leader who feels like the worst thing you can do is give up power during a crisis, getting more support is often a good idea. You can ask other stakeholders to take parts of the responsibilities. You can ask customers and employees for feedback to tailor the response to their expectations.
6. Adaptability Therefore, good crisis leaders are fluid because they can modify their response plans on the fly. They could tweak a current procedure to reflect new research, or modify an existing policy. Adaptability also involves assessing whether the situation is working – and tweaking your approach based on what did and didn’t work.