How Do You Respond in a Crisis?

I’m reminded of the announcement from an airline that said, “in the event of a sudden loss of cabin pressure, masks will descend from the ceiling. Stop screaming, grab the mask, and pull it over your face. If you have a small child travelling with you, secure your mask before assisting with theirs. If you are travelling with more than one small child, pick your favourite."

The word Crisis is derived via Latin from the Greek root definition, meaning a decision, a choice, a turning point for good or bad. It should strictly refer to a moment rather than a continuing process, so that uses such as a prolonged crisis are strictly speaking self-contradictory. However, a word as useful as crisis will not allow itself to be strait-jacketed in this way, and many examples of the disputed use will be found.

Crisis is often used with a defining word, either an adjective or an attributive noun as in economic crisis, energy crisis, financial crisis, food crisis, hostage crisis, identity crisis, midlife crisis, refugee crisis, etc.

It’s interesting that the Chinese word for crisis is written by joining two ideograms together. When these ideograms, are presented separately they stand for two different ideas or concepts. The first ideogram stands for danger and the second ideogram stands for opportunity.

What’s also interesting about the word crisis is that it relates to an unstable condition, as in political, social, or economic affairs, involving an impending abrupt or decisive change; and is usually linked with an emotionally stressful event or traumatic change in a person's life.

We, as individuals, will respond to a crisis in many different ways, as a ‘crisis’ is felt on a personal level. Even a ‘global crisis’ effects people in different ways, so the immediate response from individuals will be based on their perception about the ‘crisis’ (in respect of what they feel is at stake) and their ‘skills’ in dealing with it.

The two ideograms for the Chinese word for crisis give us a good indication of an effective approach to dealing with a crisis – first to appreciate the danger, but second to see the opportunity.

A crisis has the ability to bring out the best and worst in people (at all levels of an organisation). Some people simply cannot handle certain crises and will turn and run for the hills. This is often due to panicking about the perceived outcome from the crisis and its implications on the individual; and is also due to the person not having the skills to deal with the crisis in a timely and efficient way. These are the people that work on the principle that “eagles may sore, but weasels never get sucked into an airliners engine intake.”

In any crisis, business or personal, the most important thing is to remain calm. You must be strong enough to appear calm, regardless of how you might feel inside.

Effective leaders give inspiration in a crisis through their controlled approach, bringing calm to almost any crisis situation. They attract followers by having a confident plan of how to deal with the crisis and communicate this calmly and clearly to the whole organisation. This gives the organisation a confidence that the crisis will be averted and things will either return to normal or, in fact, get better.

Effective leaders vary their behaviour in a crisis, reacting to individual situations and use their words sparingly but clearly throughout the crisis situation. In fact maybe one of the true tests of an effective leader – is how they deal with a crisis – and how their organisation follows them through the crisis and comes out the other side.

In conclusion we should always remember that: Conflict builds character. Crisis defines it.

References:

Crisis: Definition, Synonyms from Answers.com: Found on 26th June 2011 at [http://www.answers.com/topic/crisis]

Wilken, T. (2001). Crisis: Danger and Opportunity. Uncommon Sense Library, Volume IV.

Does the Media Influence Our Future Leaders in the Right Way?

The media industry is a business, and like all businesses has a need to make profit to survive, but do they also have a responsibility, direct or indirect, towards the influence they have on the development of our future leaders – where our future leaders are effective and ethical, focusing on sustainable growth and continuous improvement?

The global media is so prevalent in our lives and has the ability to influence our thinking and perception, so what standards exist and how are they applied.

Most codes of media ethics, standards and good practice are directly applicable to the specific challenges faced by the journalists and reporters. Historically and currently, this subset of media ethics is widely known as their professional "code of ethics" or the "canons of journalism". While various existing codes have some differences, most share common elements including the principles of truthfulness, accuracy, objectivity, impartiality, fairness and public accountability, as these apply to the acquisition of newsworthy information and its subsequent dissemination to the public.

One of the leading voices in the United States on the subject of journalistic standards and ethics is the Society of Professional Journalists. The preamble to its code of ethics states that, “public enlightenment is the forerunner of justice and the foundation of democracy. The duty of the journalist is to further those ends by seeking truth and providing a fair and comprehensive account of events and issues. Conscientious journalists from all media and specialties strive to serve the public with thoroughness and honesty. Professional integrity is the cornerstone of a journalist's credibility”.

Yet, as with other ethical codes, there is a general concern that the standards of the media industry are being ignored. One of the most controversial issues in modern reporting is media bias, especially on political issues, but also with regard to cultural and other issues, including sensationalism which is often a common complaint. Also minor factual errors are also extremely common.

There are also some wider concerns, as the media industry continues to change, for example that the brevity of news reports and use of sound-bites has reduced the focus on the truth and may contribute to a lack of needed context for public understanding. From outside the profession, the rise of news management contributes to the real possibility that news media may be deliberately manipulated. Selective reporting and double standards are very common allegations against newspapers, which are forms of bias not easy to establish or guard against.

But in a world where one wants freedom of press; how should this freedom be used for the ‘good’ rather than the ‘sensational’ – where the sensational ‘sells’ and has that shock value. But where sensationalism diverges from true and ethical practices, and can give the wrong impression and create wrong perceptions about issues like effective leadership.

There appears to be a constant stream of headlines reporting on highly placed businessmen and women who have taken advantage of their leadership positions and associated powers to be unethical and poor models of effective leadership. Yet where are the pictures and stories of the effective leaders around the world, for today’s employees and students to see and aspire towards.

Looking at the media industry at it’s worst, Christopher Goodwin’s article in the Sunday Times reviews the incendiary new book by Benjamin Shapiro entitled “Primetime Propaganda: The True Hollywood Story of How the Left Took Over Your TV.” In his book Shapiro claims that “Hollywood, with its godlike power, has succeeded beyond its wildest dreams, shaping Americas styles, tastes, politics and even family structures” and what shapes the US often shapes other countries as well.

As Goodwin highlights, “it’s not exactly a surprise that most people in Hollywood are liberal or that conservatives are upset about it. What is shocking about the book is that a number of the most important players in US television openly admit to Shapiro that they have deliberately used programmes such as Friends, Glee, Will and Grace, Sex and the City, The Mary Tyler Moore Show, even The Simpsons and Sesame Street, to push their liberal agenda.”

If the media industry is prepared to push their own agendas, then the public have a right to voice a concern about this misuse of power and how this is the ultimate betrayal of trust and public manipulation. Don’t we need to take a good hard look at the media industry to ensure that power isn’t misused and that they focus on meeting the very standards and freedoms we have been so keen to defend all these years - so that they influence our future leaders in the right, rather than the wrong way?

References

Goodwin, C. (2011). The brainwashing machine in your sitting room. The Sunday Times, 19th June, news review, p.6.

How Do Effective Leaders Balance Risk and Sustainability?

“Even when the dust settles, economic downturns will not be a thing of the past. Business cycles - which entail ups and downs by their very definition - are here to stay. If companies are willing to accept that, the key question becomes: How can organizations adopt reliable risk management through the business cycle to deliver sustainable performance?” (Wim van der Stede, 2009, p.24).

Though organisations are often good at reacting to downturns, they can have a tendency to forget about them when times are good again. Business teams talk about times gone by as if they won’t return – as if some nightmare from the past.

Van der Stede raises an interesting point, that “the tendency inside many firms to investigate an unusual profit is smaller than the tendency to investigate an unusual loss. But, as post-mortems of crises suggest, unusual profits are often where the seeds of future distress are sown. The unusual profit may be a sign that managers have been too aggressive, been taking too much risk or been excessively short-term focused,” (p.25).

It takes an effective leader to balance the focus on risk and performance and to optimise the reporting and decision making process through the organisations business cycle.

For as van der Stede mentions “companies tend to oscillate between under and over-scrutiny triggered by strong versus poor performance, respectively. Under scrutiny often prevails during expansion times when there is a “top-line” focus driven by aggressive, rose-tinted growth plans, ‘can do’ attitudes, minimally required compliance and control weaknesses. It often results in ‘empire building’ through risky investments and ill-advised acquisitions. Over scrutiny, on the other hand, is manifested by tightening the screws during contractions through cost cutting, lack of investments (even worthwhile ones), balance sheet ‘clean ups’ and divestments (sometimes at huge discounts) driven by too much risk aversion, over compliance in the face of potential litigation and other stifling, protective attitudes,” (p.25).

Research by CFO Research Services and IDG Research Services in 2009 found that “to compete successfully, companies need to look beyond simply improving operating efficiency to improving their processes for managing performance. Now, high performance companies compete on their ability to identify emerging threats and opportunities and to respond to them quickly, with well-informed decisions. The challenge for senior finance executives is this: How to implement excellent processes for managing performance and, by doing so, institutionalize excellent managerial decision making?” (p.36).

Effective leaders ensure that their organisations have the right systems to give the right information, to the right people, at the right time. This helps the strategic leaders and business teams assess business risk from a position of ‘understanding’ and legitimacy – where decisions can be made with a strong degree of confidence (and a full understanding of the risk) which is often lacking in other poorer led organisations.

Van der Stede highlights how “research suggests that companies often still treat performance and risk management separately. For example, one study suggests that companies implement ERM (enterprise risk management) primarily as a reaction to regulatory pressures and corporate governance requirements. In other words, they don’t seem to do it primarily because it makes good business sense, but rather because they feel pressured to do so. But when asked about the benefits of risk management, these same sample companies hint primarily at performance benefits, such as allowing them to make better-informed decisions, to obtain greater management consensus, to improve management accountability, to better meet strategic goals and to use risk as a competitive tool. Not surprisingly, they also mention some compliance benefits such as better governance practices and better communication with the board. They even mention some ‘cycle busting’ benefits, such as reduced earnings volatility and increased performance,” (p.27).

One of the interesting conundrums of effective business and leadership is how a solid business principle, such as analysing performance and risk together, can be agreed in discussion, but can then fail to be implemented effectively into the business operation. It’s the old principle of ensuring you walk the talk.

The research by CFO and IDG concludes that “for a time, many companies were able to differentiate themselves through their ability to deliver goods or services faster, less expensively and more accurately than their competitors. High-performance operations are now more common place and as a result operating process improvements are less of a source of additional value for companies. Today, companies increasingly compete on their ability to identify market opportunities and risks, and their ability to respond to them faster than their competitors can,” (p.37).

So the two questions you should ask yourself are; do you agree that a source of competitive advantage is your organisations ability to respond to opportunities and risks quicker than your competition? - and if you do, what are you doing about it in practice?

References

CFO Research Services and IDG Research Services. (2009). Structured management processes lead to better business performance. CFO. Vol. 25, Issue 2, p36-37.

Van der Stede, W. A. (2009). Enterprise governance: Risk and performance management through the business cycle. CMA Management. Vol. 83, Issue 3, p.24-27.

How Does the Leadership Role Differ Between the Chairman and the CEO?

One interesting question that hasn’t received much attention yet is the leadership relationship between the Chairman and the CEO, (specifically in organisations where CEO duality does not exist). For example, what are the leadership roles of each and how do they differ? And what is the direct relationship between the two roles – or at least what should it be?

There are numerous definitions of what constitutes effective leadership within an organisational context. Some believe that effective leaders generate higher productivity, lower costs and more opportunities and others that effective leaders create results, attain goals, realise visions and other key objectives in a shorter space of time and with a greater degree of quality than ineffective leaders. Leadership is definitely about consistency of excellence and best practice. Consequently numerous leadership models have been developed, including transformational leadership, transactional leadership, functional leadership, situational leadership, charismatic leadership, path-goal leadership and authentic leadership.

But the leadership relationship between the Chairman and the CEO isn’t about theories but a practical relationship between two leaders, that influences organisational performance - so how should these leaders operate together in the best interests of the organisation?

There have been various attempts to identify the behaviour traits and skill set required to become a ‘great’ leader over the years; hence it would seem fair to assume that both the Chairman and CEO would already possess the following skills set (if they are effective leaders);

Honesty: Good leaders are honest with themselves and others. They know their strengths and weaknesses and aren’t afraid to openly discuss them.

Passion: Good leaders are passionate about what they do. This is often a sub-conscious rather than conscious behaviour, and is an attribute that is noticed and admired by those that work with them. This passion resonates itself through endless positive energy and apparent self-sacrifice.

Vision: Good leaders have a clear vision that they understand and are committed to. They can communicate it clearly and succinctly to all who follow them. This vision is never static, but is dynamic, exciting and very much alive.

Ethical: Good leaders have strong values and ethics which they proudly defend. They don’t sit on the fence or move the goal posts but have a set of values and beliefs that define them and what they do, and allows them to stand out from other leadership ‘pretenders’.

Set the example: Good leaders are not afraid to set the example for others to follow, and often get their hands dirty and muck in with the team to achieve the required results. They will often be perceived as part of a team by on-lookers and do not put themselves up on pedestals or use power traits to achieve results.

Inspire: Good leaders inspire others to be better and do better. Employees (at any level) with a good leader follow them because they want to and for no other reason.

Best practice: Good leaders embrace best practice by not only implementing current best practice, but by encouraging their organisations to set the standards for others to follow. They set high but realistic standards in everything they do.

Strategy: Good leaders are effective strategic planners and implementers. Good leaders do not just have the vision but have the foresight to develop the required implementation plans to ensure that strategic visions are translated into reality.

The relationship between the Chairman and CEO is unique to the specific organisation and the two incumbents of these key positions. The Chairman should be someone that the CEO can privately refer to for mentoring and support, but there appears to be little evidence that the CEO takes advantage of this kind of relationship – often feeling that they must put their own individual stamp on the organisation. So what should the roles and relationship be?

A best practice culture requires effective leadership from the corporate board of the organisation, where the leadership may come from an individual like the Chairman or CEO, or from the corporate board in general. This high level focus on leadership is commonly referred to as strategic leadership. As part of the continued research into effective leadership this area requires just as much attention as any other, (if not more) as it is here that the strategic direction and high level decisions are made that impact on the organisations culture and opportunities for sustainable growth. Yet, even at this level, not all agree on the best format for effective strategic leadership.

Reference

Brownbill, N. (2009) Be the Best in Business. Advanced Corporate Concepts: Cape Town.