Key Strategies to Survive a Company Crisis
Read Time: 11 minutes
The role of leadership in a crisis is to balance the needs of the company with the needs of the people affected by the crisis, both internally and externally. As one study put it, “Leadership during a crisis is no longer a tangential leadership competency.” Global finances, the pandemic, terrorism, and major changes in US regulatory agendas, let alone incidences of oil spills and salmonella poisoning have left companies reeling.
Any crisis is a stressful situation, making it all the more important that you:
- Recognize that parts of the crisis are out of your control—a crisis is, by its nature, destabilizing and unpredictable.
- Show up, be available, and actively contribute when people search for a way through the crisis.
- Avoid blaming—blaming is a sign of weakness and failed communication.
- Find a shared goal, to align as many people and resources as possible behind a strategy.
- Collaborate with others, especially those with the expertise you might not have.
- Adapt and cope with stress, using all the SMaRT strategies of resilience and stress management.
- Act decisively, without forgetting your core values.
Every company crisis has three main phases that may overlap:
- During preparation, the main focus is on strengthening communication and relationships.
- During the coping phase, you build agreement, negotiate, and take action.
- During the adapting phase, you and those around you get used to the changes resulting from the crisis.
- During the analyzing phase after the crisis, everyone affected examines lessons learned and makes necessary changes.
Even though you cannot predict the next crisis, you can prepare the strategies, tools, and processes that you must have in place to handle it.
- Design a communication system. Your current communications channels might become unavailable during a crisis—or the failure of communications might be the crisis. Be prepared with alternative ways of getting your message out. Make sure that members of your team, stakeholders, employees, and (if appropriate) customers are aware of these alternative sources of information.
- Identify one spokesperson. Confusion results when information flows from several sources at once. By channeling information through one spokesperson, you ensure that the message you want to send is the message that everyone hears.
- Build your contacts and relationships. The community that surrounds you is one of your greatest assets in a crisis—and the relationships you have nurtured in the past are the ones most likely to come to your aid. By building good will and respect now with the community, employees, internal and external customers, stakeholders, and business partners, you create a foundation of trust and competence that may give you some leeway in a crisis.
- Make sure your core values are clear to everyone. If an emergency occurs, what is your first obligation: to come to work, reassure your family and friends, contact your customers, shut the doors, evacuate to one location? Your choices depend not only on the type of crisis but on your core values.
TIP: Consider employee part of your communication network—since they will talk about the crisis and the company. Keep them accurately informed and involved in delivering the message you want to be heard.
Lack of agreement may occur throughout a crisis, all the way from the first rumblings (recognizing that a crisis is occurring or imminent) to long after the crisis ends (arguing over the meaning of “success” in managing the crisis). The lack of agreement can paralyze you or spur efficient decision making, depending on how well you have prepared and the level of your decision making/problem-solving skills.
To find a strategy that works in a crisis, you must be willing to be flexible in your approach. You have a dual goal: to avoid negative consequences to your company and to keep the most important relationships intact, including those with your employees, customers, and the surrounding community. It is much harder to rebuild a relationship than to keep it from fracturing in the first place.
As a leader, be prepared to:
- Harness the expertise of those who work in the business as opposed to your leadership team who run the business, and allow those employees to lead their area of expertise. In this way, during the pandemic, IT departments in hospitals all over the US quickly set up virtual healthcare where it had never existed before.
- Be honest and open. Lies and denial are difficult to maintain during a crisis; hiding a crisis is like trying to hide an elephant behind your back. Simple pragmatism states: If the situation were normal, it wouldn’t be a crisis; since it isn’t normal, it is obvious; and since it is obvious, you might as well be honest about it.
- Keep your cool. Arguing with the public, stakeholders, and employees seldom works. Sometimes follow up communications improve the situation; sometimes they come across as inflexibility. Bad publicity around a crisis normally dies down after a while, especially if you remain honest, open, and emotionally intelligent.
- Analyze your obligations. Are there deliveries you will be unable to make? Are there vendors you will be unable to pay? Are there delays in accounts receivable that will affect your revenue stream and payroll?
- Analyze your contracts. Check every contract to see whether the crisis will affect it and whether there are terms—time limits, liabilities, penalties, termination procedures—that you can negotiate while you are handling the crisis.
- Propose solutions. You might consider accepting or offering partial payments, giving or receiving additional guarantees, deferring part of your or the other party’s obligation.
- Look for opportunities. During the pandemic, for example, many companies survived by accepting the loss of their key customers and recognizing new customers—those in the medical field, those vulnerable people who are unable to leave their houses, remote workers, and homeschooled children. Those new customers could use the products and services that the company offered, or the company could modify its products and services enough to fill a new need.
- Decide on your message. Is an apology in order? Do you need to clarify the situation or get ahead of outside media reporting or videos? Do you need to restate your mission or core values? Have you expressed empathy with those affected by the crisis? Have you anticipated likely questions? Do you have any solutions to offer or a timeline when the company crisis will be turned around?
- Take action. Sometimes the best action during a company crisis is no action at all: you made a mistake and you will only compound it by striking out in all directions. But usually, there are steps you can take to improve the situation. Be sure to coordinate with those affected, internally and externally, so that you do not worsen their situation or impede their efforts.
- Document. If possible, document your efforts and the responses to your communications to give you information you can analyze later for what worked and what didn’t. Documentation also allows you to make course corrections during the crisis without repeating the same mistakes or overlooking a missed opportunity.
TIP: Optimism is important but blind optimism (“this will all go away”) is dangerous.
Adapting and Analyzing
- Monitor communication channels for accurate information. You may need to provide follow-up explanations or adjust timelines as more data comes in. You may need to deal with internal and external criticism. However, do not assume that every critic needs to be answered; sometimes, it simply takes a while for old news, gossip, and second-guessing to stop circulating.
- Thank people. Many people will have contributed to your success in dealing with the crisis. Acknowledge their effort.
- Deal with post-crisis stress and fear. You may find that the stress of the situation lingers on. Everyone has trouble restoring their resilience; they may become overly passive or aggressive in response to their fear. Take care of yourself, call in outside help, and let people know what resources are available.
- Think about prevention. Once the crisis is over, you must analyze not only the success of your crisis response but ways in which you can prevent and prepare for future crises. Again, you may very well need the objectivity and special expertise of outside consultants to see the situation clearly. You may need to set up new or improved rules, core values, culture, training, processes, and goals to avoid past mistakes.
TIP: Ask your employees to participate in your post-crisis analysis. Did your communications channels and messages give them the information they needed? What will they need in the future to more effectively execute the actions you decided on? Do they need more involvement in decision making and problem-solving before, during, and after the crisis.
Every crisis has the same stages: preparation, coping, adapting, and post-crisis analysis. During these phases, the steps you take will determine whether you achieve the dual goals of protecting your company and salvaging the relationship with your employees, customers, and associates. The strength of your core values and your use of SMaRT strategies, especially in dealing with stress and fear, will help determine the outcome.