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Crisis management: the acid test of leadership

October 5, 2015 by Jonathan Hemus

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"The test of a company’s leadership, and of a CEO in particular, usually comes during a crisis,"
- Richard Branson, September 2015

Our latest white paper outlines the ten leadership principles for successful crisis management: you can download the full report by clicking the resource on the bottom of this page. 

In this blog we summarise the principles and share the words of leaders at the frontline to illustrate how the principles have influenced their crisis response.

1) Create a crisis resistant culture

In July 2015, Toshiba’s chief executive Hisao Tanaka was forced to stand down when it emerged that the company had significantly overstated its profits for the previous six years.  The official report into the issue stated:

"Within Toshiba, there was a corporate culture in which one could not go against the wishes of superiors. Therefore, when top management presented 'challenges', division presidents, line managers and employees below them continually carried out inappropriate accounting practices to meet targets in line with the wishes of their superiors."

Leaders have ultimate responsibility for creating and embodying a culture which will minimise the potential for crisis.

2) Beware denial

When asked about corruption in 2011 FIFA President Sepp Blatter said:

“Crisis? What is a crisis? Football is not in a crisis.”

To manage a crisis requires a leader to be aware that they are facing one. Denial is the enemy of crisis management.

3) Be true to your values

Jeni Britton Bauer, owner of Jeni’s Splendid Ice Creams, who had to recall 265 tons of contaminated ice cream in April 2014 said:

“Values exist in the great times, but they also exist in the shitty times. If you abandon those during the worst times, then they’re not yours really”.

Leaders must live, breathe and embody their corporate values in a crisis or risk reputational disaster.

4) Set the communication agenda

When AirAsia’s CEO Tony Fernandes heard that Flight QZ8501 had gone missing on 28 December 2014 he began Tweeting straight away. Later he gave his personal mobile phone number to the families of all victims. His approach to setting the communication agenda was neatly encapsulated in one of his Tweets:

“We never hide”

Effective crisis leaders seize the opportunity to set the communication agenda.

5) Take responsibility for decision-making

In the immediate aftermath of the Smiler crash at Alton Towers in June 2015, Nick Varney chief executive of parent company Merlin was quick to state his position:

"Irrespective of the outcome of the current investigations into the causes of the accident…we have accepted full responsibility to those who have been injured in the accident and confirmed that we will ensure that compensation will be provided to them”

A leader’s responsibility is to make the best decision they can with the information they have at that time. And to do so without unnecessary delay.

6) Never hide behind your advisors

Michael McCain, CEO of Canadian food manufacturer Maple Leaf which endured a major product contamination in 2008, was unequivocal in his attitude towards advisors during a crisis:

“Going through the crisis there are two advisors I’ve paid no attention to. The first are the lawyers, and the second are the accountants. It’s not about money or legal liability; this is about our being accountable for providing customers with safe food”.

Advisors – lawyers, communicators, technical experts – all play an important part in shaping an organisation’s response to a crisis. But the bottom line is this: advisors advise; leaders decide.

7) Be visible

Richard Branson’s decision to go straight to the scene of the Virgin Galactic accident in the Mojave desert in 2014 was no surprise. In his own words:

“When the chips are down and your company is about to make headlines for the wrong reasons, there is nothing more important for a CEO than being present”

Leadership means being visible, inspiring confidence that the organisation will get through this terrible event, and showing support for those affected.

8) Be personal

When TSB Bank suffered a major service outage in 2014 its CEO Paul Pester engaged in one to one conversations with customers via Twitter. His tone was human and authentic, an impression emphasized with his initials as the sign off for each Tweet. For example:

“My apologies to TSB customers having problems with their cards. I’m working hard with my team now to try to fix the problems. PDP”

Leaders who allow genuine emotion to come through in their face, body language and tone of voice, those who literally roll their sleeves up in a crisis and who let their personality come through in the midst of a crisis will be more likely to succeed.

9) It’s not about you

To understand the perils of ignoring this principle, one need only consider the impact of the words of ex-BP CEO Tony Hayward in the aftermath of the Gulf Oil spill:

“I want my life back”.

In a crisis, leaders must demonstrate humility and empathy, qualities which require self-awareness and flexibility of leadership style.

10) Do the right thing, say the right thing

On the day of the Alton Towers’ Smiler crash Merlin CEO Nick Varney communicated exactly the right messages when he said:

“I would like to express my sincerest regret and apology to everyone who suffered injury and distress today and to their families”

In September 2015, Victoria Balch who lost a leg as a result of the accident, confirmed that she had received weekly visits from Alton Towers staff following the crash and told the BBC:

“I do think they’re doing everything they can for the families”

Being an effective crisis leader requires the instinct to know in your heart what the right thing to do and say is. And having the courage to act on it.

Passing the crisis management test

Crisis management is indeed the acid test of leadership, and some leaders will fall short, resulting in damage to them and their organisations. However, those who apply these ten principles to crisis management will be rewarded with enhanced trust, respect and a stronger personal and organisational reputation.