If we’ve learned one thing over the past decade, it’s surely that crises are ubiquitous, and no leader or organization is immune. Whether you head a top Fortune 500 or a small start-up, it is likely that you will encounter challenges that threaten your business.
My research defines a crisis as a volatile situation that invokes negative stakeholder reaction and threatens the well-being of a company. A crisis can be differentiated from a business problem in that the situation is usually critically and strategically important to the company and characterized by time pressure, ambiguity and, in many cases, negative publicity that damages an organization’ credibility and reputation.
Crises are of varying types. A simple distinction that my colleagues at the Institute for Crisis Management use is that some crises occur suddenly, with virtually no warning — such as an earthquake — and provide little time to respond. Alternatively, there are smoldering crises which start out as small and manageable problems that escalate over time, generally as a result of inattention by management — such as labor disputes or product defects. According to the institute’s annual crisis report, smoldering crises make up nearly three-quarters of all business crises.
Leadership during a crisis is of paramount importance. Often the news media will highlight particularly good or bad actions by an executive; however, what gets less attention is that leading an organization through a crisis is a team sport. Certainly you need a coach to call the shots, but just as important are players that assume key roles based on expertise, experience or ability to connect with others. An effective crisis management team works together under pressure, bringing specific skills that contribute to the overall team performance while working in a trusting and coordinated fashion.
Some companies, such as Cisco, have several types of teams organized by hierarchical level and geographic location. One of its teams, the Manufacturing Crisis Management Team, strove to keep operations moving during the global recession and created a plan for managing disruptions in the supply chain.
Unfortunately it is far more likely that we see a lack of team process in crisis handling. The recent winter storm that brought the Atlanta metropolitan area to a standstill is a revealing example. On Jan. 28, an unusual winter weather advisory was issued for the Southeast. According to officials in the region, there was sufficient ambiguity associated with the warning that they failed to make decisions that would have facilitated a smooth response to the warning. Couple the ambiguity of that warning with the limited experience of leaders in severe weather events, limited resources and a decentralized governing body, you end up with the calamity that occurred in one of the country’s most populated cities.
Atlanta Mayor Kasim Reed reported that there was no unifying body or team that was orchestrated to handle a crisis of this magnitude. There were no standardized procedures for coordinating activity and responses across businesses, schools, transit authorities or local government service providers. So although individual leaders may have made appropriate decisions for his or her jurisdiction, the crisis required a type of collaboration, communication and trust across leaders whose responsibilities and accountabilities are interdependent.
For example, Reed moved to have Atlanta city streets pre-treated for ice hours in advance of the storm, but state officials had not adequately responded to treat heavily trafficked highways leading into and out of the city. Likewise, there was no attempt by leaders to coordinate the timing of when to release local schools and government workers. Meanwhile, individual businesses were also releasing workers simultaneously, placing additional demand on Atlanta’s infrastructure. The result was severe gridlock on unpassable roads in the midst of heavy snow and ice, creating dangerous driving conditions.
The foundation of good teamwork originates in the team’s culture. To be successful, the culture should encourage consistent and frequent communication and information sharing in order to see the impact of decisions across silos and to identify the most appropriate response.
Erika Hayes James is professor of business administration and senior associate dean for executive education at the University of Virginia Darden School of Business. She co-teaches “The Women’s Leadership Program” executive education course April 27-May 2.