Will the corona pandemic lead to an economic and social crisis rivaling to the Great Depression of the 1930s? What can organizations and, especially the CEOs, do about this? The outlook is bleak. Germany’s GDP is expected to shrink by 20%, in the worst case. The US is projecting a very deep recession for the second quarter. The president of the Central Bank of St. Louis even expects unemployment to rise by 30% (Het Financieele Dagblad, March, 2020).
What are the predictions for the Netherlands? Cautious estimates are that the economy will shrink by 3 to 4 percent, although the percentage will probably be much higher. We do not know yet what the consequences will be, but it is clear that the social and economic impact will be significant. How should you, as CEO or chairman of the board, deal with these developments? What are the best practices and what can be learned from current and past crises?
During times of crisis there might be a strong need for a more directive leadership style, resulting in one-way traffic from the management, for example, a leader who tells employees what to do in order to achieve certain goals. In an acute crisis, directive leadership can be very effective. In the event of a fire, it is desirable that immediate and adequate action is taken and that one person is in charge and says what needs to be done.
Is a directive leadership style the right answer to minimize the impact of a long-term global coronavirus crisis for society or organizations? Does directive leadership offer prospects for a way up?
Directive leadership presupposes that the leader thinks for others. The directive leader provides direction and tells others what to do. This may be possible in a simple situation, but not in a dynamic setting such as the coronavirus crisis. In a dynamic crisis it is mainly about collaboration, improvisation, empathy and offering frameworks in an adaptive way.
What can we learn from Dutch Prime Minister Rutte’s television speech on Monday March 16 in which he addressed the nation regarding the corona crisis?
Leadership is a complex interplay between a CEO, executives who set frameworks and networks of teams that provide advice and ensure implementation. Directive leadership is not the answer to a dynamic and complex crisis. What is needed is an enabling and promotion of cooperation in and between teams, a show of empathy and a setting of frameworks. Furthermore, make clear what the boundaries are and maintain them. However, above all, show adaptivity in an uncertain and dynamic context.
Jaap van Muijen is professor of Psychology, especially leadership development and personal development.
Nyenrode shares knowledge with curious professionals. Subscribe to News@Nyenrode for all Nyenrode news or the L.E.S. Newsletter for news about our core values Leadership Entrepreneurship Stewardship.