What type of leadership is necessary for effective crisis management within an organization?

Introduction:

Why we need a crisis management plan in organizations?

First, crisis is defined as a sudden, unexpected event or emergency situation which disturbs the employees leading to major unrest amongst the individuals at the workplace and instability in the organization.

And Crisis Management is The art of dealing with sudden or unexpected events which disturbs the employees, organization as well as external client.

To answer the above question, we should accept that being prepared saves money, saves time, saves reputation, and can even save lives. Now here’s the long answer; The consequences of mishandling a crisis can range from the relatively minor (think needing to reply to an obnoxious number of negative reviews), to the utterly devastating (imagine a manufacturing plant going up in flames with no plan for response) but nearly every crisis situation shares a few risks in common. These include risk of litigation, operational disruptions, harm to reputation, and in the extreme cases injury, damage, and financial death which may potentially lead to inability to continue operations of business. This significant damage could be prevented or significantly reduced by having a crisis management plan that’s incorporated into daily business.

The following table will obviously show the importance of Crisis Management applying & it’s impact on the whole organization:

Companies with a plan recover faster, especially in short-term crises. Those with a plan are more likely to handle the crisis effectively:

(Burson-Marsteller / Penn Schoen Berland 2011 Crisis Preparedness Study.Interviews of 826 decision makers globally in May-June 2011.)

In the Egyptian context, it is clearly that the crisis management strategic point of view introduced recently in many examples like the way of handling global financial crisis in the second half of 2008.. another clear example is the Healthcare, Hospitality & Tourism management during the COVID-19 pandemic outbreak.

Problem definition:

So, Crisis Management is critically important from the prospective of foreseeing the future whether on the governments, organizations & even small businesses levels. We have to note that in the upcoming future there will be significant variance between organizations that will apply the crisis management strategy & those who will not apply it, this variance will reflect on their potentiality to continue and expand in the global market.

Importance of Crisis acts as it arises suddenly & unexpectedly on a short notice and causes major disturbances at the workplace, so the organization must be ready well to deal with & overcome it by the minimum levels of losses.

It occurs due to many reasons, externally or internally; like the following:

• Externally:

1. Global pandemics.
2. Global or National Financial depressions.
3. Implementation of new Regulations & Laws in the country.
4. Global or National Logistical problems.
5. Wars, terrorism, revolutions & instable political systems of countries.

• Internally:

1. Unclear vision or bad planning of the top management.
2. Poor management of organization.
3. Heavy recurrence of Human errors.
4. Unethical or dishonest behaviors.
5. Unresponsive or toxic culture.
6. Absence of Effective Leadership.
7. Judgment in advance without studying the issue well.

These reasons may lead to raising many types of Crisis, illustrated as following:

1.    Sudden Crisis:

Managers do not get warning signals and such a situation is in most cases beyond any one’s control.

2.    Financial Crisis:

When a business loses value in its assets and company can’t afford to pay-off its debt.

3.    Personnel Crisis:

When an employee or individual who's associated with the company is involved in unethical or illegal misconduct.

4.    Organizational Crisis:

It arises when management takes certain decisions leading to harmful consequences towards the stakeholders and external parties.

5.    Technological Crisis:

It arises as a result of failure in technology like Breakdown of machine, corrupted software and so on.

6.    Natural Crisis:

Disturbances in the environment and nature such as events that are generally beyond the control of human beings like Pandemics (recent example is COVID-19), Tornadoes, Earthquakes, Hurricanes, Landslides, Tsunamis, Flood, Drought all result in natural disaster.

7.    Confrontation Crisis:

It arises in any number of ways, such as when a disagreement of employees spirals out of control amongst senior leadership. The parties involved are looking to get their demands met. This may result in a public boycott or resignations.

8.    Workplace Violence Crisis:

occurs when a current or former employee commits violence against or beats other employees, superiors in the office premises itself. Unfortunately, these crises can come on suddenly, and it could be difficult to act before it escalates further or becomes fatal.

In our research, we will focus & give attention to the role of Leadership (Independent Variable) as one of the most important factors that impact Crisis Management significantly, when applied, in a positive way to overcome it.

Leaders and managers play an extremely important role during crisis, this duty aims providing a sense of direction to the employees. It can be showed through asking the employees not to panic at the time of crisis, encouraging them to face the tough times with courage, determination and smile, and also making them work as a single unit. Leader must teach them how to work hard, relive their organization’s image & adapt well to changes and new situations.

This can be impacted through the following factors (Moderating Variables):

• Leader should lead from the front:

1. Show confidence and steadiness.
2. Take complete charge of the situation.

• Managers should have full control on the employees.

1. They should know what is happening around.
2. Any issue neglected in the initial stage might be a major concern later.
3. Problems must be attended immediately.
4. One should not ignore even minor issues or wait for someone else to take the initiative.

• Leaders should be alert at the workplace:

1. A leader should be able to feel the early signs of crisis and warn the employees against the negative consequences of the same.
2. It is his duty to take precautionary measures to avoid an emergency situation.
3. A leader should be able to foresee crisis. Such a stage is also called as Signal Detection.

• Leaders must try their best to prevent crisis:

1. Encourage effective communication at the workplace.
2. Let employees discuss issues amongst themselves and come to the best possible alternative to overcome crisis.

• Leaders should interact with the employees more often:

1. Let them feel that you are there for them.
2. Impart necessary crisis management trainings to the employees.

• Planning is essential to avoid emergency situations:

1. Learn to take quick & right decisions.
2. Make sure everyone at the workplace is well informed about emergency situations.

• Identify the important processes and systems which should keep functioning for the smooth running of the organization & also develop alternate plans with correct and accurate information.
• Don’t let negative energy in the organization:

1. Motivate the employees to believe in themselves and the organization. It is essential to trust each other during such situations.
2. Be a strong pillar of support for your team members. They should be able to fall back on you.
3. Take strict action against those spreading negative energy and trying to tarnish organization’s image.

• Don’t avoid stakeholders, external parties and most importantly media:

1. Come out, meet them and explain the whole situation. Ignoring people makes things worse.
2. Develop strong partnerships with external parties and ask for help.

• Leaders should strive hard to come out of tough times as soon as possible:

1. Learn to take risks.
2. Clarify the roles and responsibilities of the individuals during this time.

• Once the organization is out of crisis, it is the leader’s duty to communicate the lessons learnt so that employees do not commit same mistakes again.

An excellent example for the impact of Leadership during crisis was the action that was taken by former U.S. presidents Obama, Bush and Clinton when they were the first volunteers to get coronavirus vaccine publicly on camera to prove it’s safe and promote public confidence in the vaccine (C.N.N Report on 3rd of Dec. 2020). That action encouraged many CEOs, Managers & Leaders of organizations around to world to take the same step, which reflected by a significant impact on the vaccination acceptability among organizations worldwide.

In the Egyptian context, a clear example is the decision that was taken by the Egyptian MOH during COVID-19 outbreak, through U.P.A, to control the procurement & supply process of the protocol medications to guarantee the fairness of distribution, delivering the medications to the intended persons and prevent monopoly or black market creation.

Conclusion:

Crisis is the true test of leadership, and 2020 feels a bit like the final exam. This year, we’ve weathered a global pandemic, widespread social unrest, environmental catastrophes, and unprecedented economic disruption. Leaders across the world have been forced to adapt to rapidly changing circumstances and support their teams to successfully navigate through disruption. 

During a crisis, the role of a leader shifts, and those that are truly great prioritize and respond to the needs of the people that follow them. If they get it right, they — and their people — will emerge stronger and more resilient on the other side. 

Before the pandemic, employee engagement was driven by experiences such as training and development opportunities, recognition, and an alignment between company and individual objectives. 

A crisis however, causes those driving factors of employee engagement to shift. In fact, employees were found that they are most engaged when they’re confident in their leaders’ decision-making, when their managers help them adapt to organizational changes, and when they know senior leadership takes their wellbeing into consideration.

In the upcoming future, leaders need to take responsibility for their employees’ wellbeing by supporting them, listening to them, and acting on their feedback. Crisis may be a difficult maze to maneuver, but it’s also an opportunity to get the basics right, and come out stronger on the other side.

Recommendations:

To improve the practices of Leadership during crisis & give best outcomes in the Egyptian context, Egyptian organizations should stake to the following:

1. Set a written policy (containing procedures) and orienting employees on it to be followed during crisis.
2. Setting a Crisis Management Committee in the board of organization to detect the problems early & set the appropriate preventive action.
3. Set a comprehensive training program for employees.
4. Give more attention to the Statistical Studies (Data collection & Market analysis) to get better forecasting about the future.
5. Enhancement of IT intelligence solutions in all sectors of business to reduce the human error & improve the management of unexpected situations more efficiently.

References:

https://www.tandfonline.com/doi/full/10.1080/23311975.2021.1878979

https://www.managementstudyguide.com/types-of-crisis.htm

https://techdayhq.com/community/articles/the-importance-of-crisis-management-plan-for-success

https://www.bernsteincrisismanagement.com/crisis-management/

https://blog.hubspot.com/service/types-of-crisis

https://www.continuitycentral.com/feature0224.htm

https://www.managementstudyguide.com/role-of-leaders-in-crisis-management.htm

https://www.managementstudyguide.com/role-of-employees-in-crisis-management.htm

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