In the March 17 article 'Silence and noise during the Corona crisis', Nyenrode gave an overview of spontaneous steps that have been taken to mitigate the effects of the crisis. Experience shows that after a creative phase a structural phase will follow during which the top level of management will lead in solving the crisis.
Our leadership paradigm, strengthened in times of crisis, is that the head of the company has the primacy to make decisions. Given the urgency in those days, the call for strong leadership is loud and decisions can only be taken with incomplete information. This places high demands on organizations and their leaders and the way in which the team is managed and business is conducted is crucial for success.
On March 16, 2020, Het Financieele Dagblad published a study on the effect of the 2008 financial crisis on leadership behavior. More than 20,000 executives in 980 organizations from 36 countries were included in the research. The results show that managers became more direct towards their employees, navigated more tightly, making decisions themselves whilst exercising more control. After all, directive leadership decreases ambiguity and uncertainty among employees and provides clear guidelines. The downside is a loss of flexibility and appetite for risk, and therefore creativity.
At this moment we are witnessing beautiful initiatives born of spontaneity throughout the world and in workplaces. The risk of directive leadership is that we kill these initiatives and diminish the energy level of employees within the organization. Executive leadership means that employees are slowed down in the search for new and innovative solutions. Finding (new) solutions to problems requires leaders who want to see opportunities and are open to ideas from others, in other words, participative leadership.
A recent example of a crisis that I have personally experienced was with a large infrastructure project where at a certain point it turned out that a blind spot in the design would cause a huge loss. Revealing this fact would cause serious damage to the company's reputation and its stock market value. The deadly response from top management would be denial (it can't be true, think and fix it) in addition to shoot from the hip advice. Higher management is instructed to deal with the project on a daily basis. The project staff, feeling guilty, ashamed and struggling for a long time to find a solution to the disaster, do not feel taken seriously. They return to the project and staff frustrated and with the message "we must look even further for solutions". The whole project gets completely out of control and fear becomes prevalent. This leads to even greater damage, reinforced by the arrival of senior management, who will "solve" it with very limited substantive knowledge.
Turning Point The turning point comes when top management accepts that there is a big problem and makes this public. The loss is added to the project as an extra budget, so that within a new reality, the project organization can use all their creativity to get the job done. The assistance and direction of higher management is replaced by specialists brought in to strengthen the organization. Communication is not focused on the great mistake that has been made, but instead to the fact that history has been written, which brings back the feeling of pride and confidence.
Motivated Decisions with Incomplete Information In the current the corona virus crisis, we saw our Prime Minister in his recent historic speech addressing the nation doing the right things. He was vulnerable and mentioned that people do not know everything, and that decisions might have been made based on incomplete information. He mentioned various scenarios and substantiated the choice that was made. He gave the experts all the credits as well as the people in the field. In his body language, he emphasized his message by showing himself as a vulnerable leader with compassion.
Tackling the Crisis Which useful lessons can we learn for managing a crisis:
Nyenrode shares knowledge with interested professionals. Apply to news@nyenrode for al news of Nyenrode.