Everyone is looking to an organisation’s leaders to serve as role models in protecting people’s health and safety while acting decisively and with purpose amidst chaos. Leader’s priority should be to support management team’s crisis response without encroaching on its operating role while also safeguarding longer-term shareholder and stakeholder interests. So how should leaders and leaders fulfill their responsibility during a crisis? Here are four practical ways to do so as proposed by professional leaders:
There are good chances that your organisation already has a crisis response team in place. The team takes care of employee safety, shores up the balance sheet, and interacts with suppliers and customers to ensure business continuity. But that is not enough. The scale of the economic crisis that is unfolding is unprecedented in living memory. Organisations need a crisis operating model that can scale as issues escalate, with a plan-ahead team that develops strategic responses to multiple scenarios across all time horizons. Leaders should also frequently review and discuss strategic crisis-action plans that plan-ahead teams develop to stay ahead of the evolving crisis.
See also: HR in the Field of Managerial Leadership
A leader can ease the pressure on the management team by reviewing communication plans and reputation-management strategies and engaging with select external stakeholders. Importantly, directors should help manage investor expectations in light of financial decisions, such as dividend cuts and changes to share-buyback programs, that might draw negative reactions. And since COVID-19 might affect directors or managers personally, establishing clear succession and leadership contingency plans is more critical than ever.
Leaders with experience in managing external shocks, such as the aftermath of the 9/11 attacks and the 2008–09 financial crisis, will be particularly valuable sounding leaders for a management team as it crafts response plans amidst high uncertainty. Leaders’ insights from earlier crisis situations can help them constructively challenge business-continuity plans. That said, the current crisis is uncharted terrain for all executives, making intuition and experience unreliable guides and cognitive biases particularly dangerous. As such, leaders should urge management to use techniques such as red and blue teams or premortems to ensure that their decisions weigh all relevant factors.
While a leader needs to protect all shareholders’ and stakeholders’ interests by weighing key operational risks and ensuring effective cash management and financial stability, it cannot lose sight of the organisation’s long-term priorities, even as it focuses on short-term crisis response. Preserving the foundation of the organisation’s competitive advantage, such as maintaining investments in a digital transformation or customer experience improvements, should be a key point of leader attention.