Management in Crisis: 5 Important Fundamentals

The basic principles of business management have changed substantially in recent decades. As internet users increasingly access breaking news via social media channels and other frequently updated online sources, news related to corporate missteps has the power to travel more quickly than ever before. Effectively managing a business in crisis can help improve the success of a company and its public perception.

Business management professionals must master essential skills in order to manage crises. Learn about the five fundamental skills business leaders should employ to transform crises into more manageable situations.

Transparency Is Vital to Mitigating Crises Successfully

Uber has experienced numerous challenges in 2017. According to a series of reports from news sources ranging from The New York Times to The Information, Uber’s problems began with Susan Fowler’s public blog post alleging that her year as an engineer with Uber included repeated instances of sexual harassment and sexism. Uber continued to face a lengthy stream of negative press and myriad legal scandals, which ultimately lead to Uber CEO Travis Kalanick’s resignation.

For business leaders, one of the primary takeaways from Uber’s experience is that transparency and effective responses are essential. On the surface, many of Uber’s responsive actions appeared reasonable. After learning about internal issues, including Fowler’s blog post and accusations of groping and other instances of sexual harassment, Kalanick and his leadership team responded promptly. They pledged to terminate problematic employees and redirect company culture to prevent these issues from recurring in the future.

However, according to Biz Carson and Skye Gould’s timelines in Business Insider, the issues did not end promptly. As the company became more beleaguered with various issues, Uber’s managerial team neglected transparency, so Kalanick doubled down on his control. As Reuters explains, Uber is a founder-controlled company, and Kalanick had almost complete oversight over the business.

Ultimately, Uber’s issues and the accompanying loss of confidence that plagued investors, top-level employees, and consumers resulted from a long-standing lack of transparency on the part of the company. Instead of creating a transparent work culture that encouraged disclosures and discussion, Uber had a tendency to close ranks, according to Reuters. This lack of information and constructive response ultimately contributed to Uber losing $700 million in the first quarter of 2017 and lead to Kalanick’s resignation.

Uber’s experience can serve as a painful lesson for companies and management teams that favor avoiding disclosure over straightforward communication with employees, investors, and customers. Transparency is vital to mitigating crises effectively.

Management Must Support Open Internal Communication

A crisis management meeting takes place.

Once a crisis emerges, management teams may find it necessary to keep communication strategies flexible in order to manage expectations and mitigate concerns. Refusing to change management strategies when new information arises or insisting on keeping employees and customers uninformed can result in negative consequences.

Contributors to Forbes, CNET, and The Wall Street Journal cite communication as one of the most important components of crisis management. In some cases, revealing unnecessary details can exacerbate a crisis, but declining to communicate can spur rumors and suspicions that may derail attempts at crisis management. Whether managers gather their employees for in-person meetings or provide regular updates via email, frequent open communication is important.

Context Should Support a Crisis Situation

Writing for the Harvard Business Review, Teresa Amabile and Steven J. Kramer support the idea of management teams taking the time to understand the situation completely. Amabile and Kramer propose that managers should research the details surrounding an issue carefully so that they can respond appropriately.

A Deloitte Insights piece published in The Wall Street Journal explains that crises can take the form of two distinct categories: novel and routine. Routine crises are predictable issues that companies can prepare for ahead of time, such as recalls or security issues. Novel crises are rare and unpredictable.

Much like Uber, United Airlines has also experienced numerous crises in 2017. In April, a video showing a passenger being violently removed from a United Airlines flight went viral. According to Alanna Petroff of CNN Money, United CEO Oscar Munoz swiftly responded, “I apologize for having to re-accommodate these customers.” The response from United resulted in further outrage, as Munoz apologized for “re-accommodating customers,” not for the violence that left a passenger bleeding and traumatized. United’s response suggested a hasty address that, at best, misunderstood the situation’s severity, or at worst, ignored it.

Creating action plans for potential novel crises ahead of time can give leaders a template for reacting to unpredictable situations. For example, giving management a timeline for devising a detailed response and communicating it with the public can help companies avoid further exacerbating a crisis.

Stakeholders Should Remain Positive and Practical

The crisis management team should do its best to respond to crisis situations optimistically and practically, without setting forth unrealistic expectations. Staying positive during times of crisis may seem impractical at times, but small gestures can reassure customers and employees.

Amabile and Kramer recommend celebrating small accomplishments during difficult times to create a culture of hope and optimism within the company. Praising incremental milestones can not only bolster confidence but may also create a more accepting work environment.

Responses Demand Decisive Actions

Management teams should identify crisis leaders by carefully considering their abilities to communicate effectively and diffuse potentially volatile situations. They should have the ability to advance a crisis plan calmly and strategically, without overreacting to problems or unnecessarily dismissing issues as they arise. As the Deloitte Insights piece in The Wall Street Journal discusses, crisis leaders should deploy bold, deliberate actions. These decisive actions are part of a comprehensive and direct approach to addressing the crisis effectively.

Learning to deal with management crises is an important part of being an effective leader. Aspiring business leaders with an interest in advancing their experience in management should consider exploring the New England College – Master of Science in Management Online degree program, which can prepare professionals for management-level career tracks in healthcare administration, non-profit leadership, project management, and real estate management.

Sources

http://www.businessinsider.com/uber-scandal-crisis-complete-timeline-2017-6/#february-19-the-beginning-1

https://www.cnet.com/news/how-to-manage-a-crisis-any-crisis/

http://deloitte.wsj.com/riskandcompliance/2015/07/06/crisis-leadership-five-principles-for-managing-the-unexpected/

https://www.forbes.com/sites/dailymuse/2012/07/05/4-steps-for-managing-a-team-during-a-crisis/#750ca95a6eed

https://www.theinformation.com/why-ubers-investors-ousted-travis-kalanick

https://www.theinformation.com/at-uber-waymo-lawsuit-brings-new-risks (please note: The Information sources need a log in/subscription)

https://venturebeat.com/2017/04/13/uber-searches-for-a-coo-but-ceo-travis-kalanicks-sweeping-authority-looks-to-be-a-problem/

https://hbr.org/2011/05/the-power-of-small-wins

http://money.cnn.com/2017/04/11/news/united-passenger-pr-disaster/index.html