Nov 21

Leading In A Crisis

Heinz Landau
Heinz Landau is a seasoned business leader who has gained valuable working and leadership experience on three different continents.

After having overcome successfully the impact of the global financial crisis, leaders in Thailand are now facing a different kind of crisis. Natural disaster has put one third of the country under water. Many people, not only upcountry, but also in Bangkok, currently cannot live in their homes anymore. Hundreds of factories have been shut down since weeks and for several months to come. The economic as well as the human impact of the flood will be huge.

A crisis is always a test for executives. Leaders need to be aware that leadership reputations are made or lost during times of crisis. It is the time when leaders must rise to the challenge, take responsibility, stay positive, build confidence and trust rather than blaming circumstances or fate.

Let me share with you some tips what you as a leader need to do in order to come successfully out of the crisis.

1) Accept and face reality

Acknowledge the crisis, get everyone else to acknowledge it. Define reality. Be highly visible and available, not only in your office, but across the organization. Establish a crisis response team with clearly defined areas of responsibility for every team member.

2) With the help of others, evaluate the situation

Do a thorough analysis of the situation together with your team members. Turn to your employees for assistance. Talk to customers or, at least, listen to your sales people who are in close contact with the customers and know what’s going on in the market. Discuss with friends and relatives. For some strongly number-driven male executives it might be wise to seek advice from the female gender. Stakes are high in times of crisis. If you fail to address the emotional needs of your employees, your leadership reputation will be ruined once and for all.

I remember the case of an expatriate CEO of an international company who, when the tsunami hit Thailand, decided to donate an unacceptably low amount of money (Baht 100,000.–, equals about 2,500.– Euro) as a company that had a sales turnover of more than a billion Baht. This news spread like wildfire among the employees who fell ashamed about their company’s small contribution and were very upset with the CEO. This executive failed the leadership test spectacularly. If he had consulted some of his people in advance, I am sure, the outcome would have been a very different one.

3) Communicate supportively, honestly, clearly and regularly

As the leader, take charge of communication. Reach out to your employees and to your customers rapidly, build confidence, give hope and allay fears.

It is important to connect with people and to understand the anxieties and issues they are dealing with in their business and personal lives. Acknowledge your people’s feeling. Show that you care.

Be honest. Be realistic, but be optimistic. Install confidence in your people. Remind your people of your company’s / your team’s successful past or of previous success stories. Explain why they should feel confident. Update your people regularly on the crisis situation, it’s impact on the organization and on them. And let them know what you expect from them.

A crisis is an excellent opportunity for a leader to strengthen the relationship with his people (employees and customers) and to create even stronger followers. And for the company, it is a great opportunity to show the human face of business.

A crisis is an excellent opportunity for a leader to strengthen the relationship with his people (employees and customers) and to create even stronger followers. And for the company, it is a great opportunity to show the human face of business.

4) Set clear goals, develop an action plan, execute and monitor it

During times of crisis, it is even more important that you get your people focused. Therefore, set a few specific goals, define an action plan and set clear priorities. Create alignment among your people for your vision for the crisis and beyond. Be aware that quick solutions might not work. Fundamental changes might be necessary. A crisis is also an opportunity to address structural changes for your business, a chance for transformation.

Therefore, never waste a crisis. See the opportunities that it holds. Let me share with you a personal experience.

The company that I previously worked for had its highest sales growth ever during the peak of the Asian financial crisis in 1998 that had its origin in Thailand. In that year, our chemicals business grew by more than 35%. We became the clear market leader. We took substantial market share away from our main competitor who took afterwards several years to recover.

The reasons:

We kept a positive mindset throughout the crisis. We did a clear analysis of the market situation. Our sales people kept our leadership team all the time aware what was happening in the market. Our managers drew the right conclusions, developed a clear action plan and our people executed it. It was a good example for great teamwork. Sales & marketing people, finance people and logistics people worked hand in hand.

The reasons for our success were so basic and so simple that you cannot find them in any business book and cannot learn them in any university.

As a result of our positive mindset, even during the financial crisis, we kept on importing goods (otherwise, soon, we wouldn’t have had any stock to sell). However, our main competitor (at that time the market leader) didn’t do that, because of the uncertainty of the at that time galloping exchange rate of the Baht. As soon as they had occurred some losses with the first few imports caused by the high exchange rate of the Baht and their unadjusted selling prices, they stopped bringing in goods from abroad. Their customers were not pleased and many of them switched to us to buy from. Obviously, you cannot let down your customers in times of crisis considering only your own short term profitability.

The other big issue was that our competitor stopped providing a price list. Again, this was because of the uncertainty of the galloping Baht exchange rate and its impact on the cost of the imported goods. Of course, customers refused to buy from them. Who would place an order for a product where he doesn’t know what the price is.

Our company, however, had a valid price list available at any time. So, more and more customers
switched to us. Throughout the year, we increased our prices only once. We saw it as a major opportunity and investment in our business. So we had temporarily smaller profit margins, however substantially increased sales volume. To help on the cost side, we brought down our marketing expenses for a period of time.

Always remember that a crisis has seeds of success as well as roots of failure. Keep an optimistic mindset and help your people focus on winning. And don’t let a crisis blow you off course.

This entry was posted on Monday, November 21st, 2011 at 18:05 and is filed under Human Resources, Leadership, Management. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

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