Share
Facebook Facebook icon Twitter Twitter icon LinkedIn LinkedIn icon Email
Crisis management leadership - new generation of managers

Human Resources

The new CEO’s guide to crisis management

Published 28 November 2023 in Human Resources • 5 min read • Audio availableAudio available

Leading an entire company through a crisis will test your leadership skills like nothing else. Thankfully, others before you have faced similar challenges. Here’s how to learn from them and emerge stronger

As baby-boomer CEOs retire, a new wave of leaders is taking over. These new CEOs are full of fresh ideas and perspectives. However, many inevitably will face their first time leading a large organization through a crisis.

This is a tough but unavoidable challenge. Even if these leaders have experienced crisis management challenges earlier in their careers, managing a crisis as CEO is a different order. Most of the incoming millennial CEOs are well-versed in technology and change. They’ve dealt with market ups and downs, tech shifts, and cultural changes.  

But leading an entire company through a crisis is a unique challenge that tests leadership skills in a way nothing else does. The responsibility is greater, the attention more intense, and the risks higher. As a CEO in a crisis, you’re tested in ways that require both managerial and visionary leadership skills. 

This article serves as a guide for these new CEOs facing crises. You’ll find advice here from experienced leaders who have faced similar challenges. The aim is to provide clear direction for what lies ahead. The challenge for this new generation of leaders is tough, but it’s also a chance to show strong leadership and come out even stronger. Here are seven pieces of advice to guide you through these challenging times. 

1. Rapid response: The first line of defense 

The first and perhaps most important challenge arises in the immediate aftermath of a crisis breaking. “The first few hours after a crisis breaks are critical,” says John D Rockefeller, “How a company responds can mean the difference between a quick recovery and a prolonged disaster.”

talent management
“Good judgment comes from experience, and experience comes from bad judgments.”
- Aphorism attributed to various sources

As a CEO, you must swiftly assemble a crisis management team with clear roles and responsibilities. This team should be a cross-functional group that can make quick decisions based on available data. Speed is of the essence, but so is a calm and measured approach to avoid knee-jerk reactions that could exacerbate the situation. 

2. Transparent communication: Building trust in turbulent times 

Warren Buffett famously advised, “Get it right, get it fast, get it out, get it over.” In a crisis, the way a company communicates can either restore confidence or destroy it. Transparency is your ally. Regularly update your stakeholders, admitting what you know and what you don’t. This level of honesty can build more trust than pretending to have all the answers. Moreover, a single source of truth, like a dedicated crisis webpage, can serve as the official medium for updates, preventing misinformation and speculation. 

3. Stakeholder prioritization: Understanding and addressing concerns 

In a crisis, not all stakeholders are affected equally. It’s essential to identify who is most impacted and tailor your communication and response strategies to their needs. This doesn’t mean other stakeholders are less important, but it does mean some require immediate attention to mitigate impact. As management consultant Peter Drucker said, “The most important thing in communication is hearing what isn’t said.” Listening to your stakeholders, understanding their concerns, and responding accordingly can turn critics into allies. 

4. Strategic planning: Steering the ship away from the iceberg 

While immediate actions are critical, one must not lose sight of the horizon. Strategic planning involves crafting a dual-focused plan that addresses both the immediate crisis and the path to long-term recovery. “Plans are worthless, but planning is everything,” Dwight D. Eisenhower noted, highlighting the importance of the planning process in navigating uncertainty. Establishing clear KPIs to monitor the effectiveness of your response will help you to make data-driven decisions and pivot as necessary. 

Transparency is your ally. Regularly update your stakeholders, admitting what you know and what you don't. This level of honesty can build more trust than pretending to have all the answers.

5. Legal and regulatory compliance: Safeguarding against secondary crises 

Every crisis has legal and regulatory implications. Non-compliance during a crisis can lead to a secondary crisis, often legal, that can further tarnish the company’s reputation. Consulting with legal counsel is not just a step in the process; it’s an ongoing requirement. As said the saying goes, “Good judgment comes from experience, and experience comes from bad judgments.” The guidance of experienced legal professionals can prevent the repeat of past mistakes. 

6. Emotional intelligence: The human aspect of crisis management 

A crisis is not just a business challenge, it’s a human one. Employees and customers alike are looking for strength, empathy, and leadership. Daniel Goleman, the father of Emotional Intelligence theory, argues, “Leadership is not domination, but the art of persuading people to work toward a common goal.” During a crisis, showing that you care can foster a spirit of teamwork and dedication that can see your company through the toughest of times. 

7. Learning and adaptation: Turning crises into opportunities 

After the storm has passed, the learning begins. A crisis should be a catalyst for growth, not just a badge of survival. Analyzing what went wrong, what was handled well, and how processes can be improved is critical. “We are too much in a state of perpetual preparation, always reading, never doing,” said management thinker Peter F Drucker. Take the insights gained and turn them into action. Adapt your crisis management plan and educate your team so that the next time a crisis arises, your company is even more resilient. 

In conclusion, your role as a new CEO in a crisis is akin to that of a captain in a storm. You must be decisive, yet adaptable; strong, yet empathetic; strategic, yet tactically aware. Remember, crises are not just tests of your business acumen, but of your values, your team, and your company’s culture. Lead with integrity, and you will navigate not just to safe harbor, but to new horizons. 


Authors

Konrad Lenniger

Konrad Lenniger

International Executive Coach

Having served as a long time CEO and MD, Konrad offers world class expertise and experience in Executive Coaching, Onboarding and Transition Coaching in a Global Context. His expertise is built not only upon academic Master’s and Bachelor’s degrees in education (social psychology) and economics, but also years of International business experience (United States, Africa, Europe – EMEA and CEE, Middle East, Japan and China). After retiring from his MD / CEO / Board positions in 2001, Konrad focuses exclusively on Executive Coaching on a Global level for Top and Senior Managers of Fortune 500 and Professional Service companies in 9 different Global industries.

Michael Watkins - IMD Professor

Michael D. Watkins

Professor of Leadership and Organizational Change at IMD

Michael D Watkins is Professor of Leadership and Organizational Change at IMD, and author of The First 90 Days, Master Your Next Move, Predictable Surprises, and 12 other books on leadership and negotiation. His book, The Six Disciplines of Strategic Thinking, explores how executives can learn to think strategically and lead their organizations into the future. A Thinkers 50-ranked management influencer and recognized expert in his field, his work features in HBR Guides and HBR’s 10 Must Reads on leadership, teams, strategic initiatives, and new managers. Over the past 20 years, he has used his First 90 Days® methodology to help leaders make successful transitions, both in his teaching at IMD, INSEAD, and Harvard Business School, where he gained his PhD in decision sciences, as well as through his private consultancy practice Genesis Advisers.

Related

Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
 
Read more 

Explore Leadership

What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
 
Read more

Join Membership

Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
 
Sign up
X

Log in or register to enjoy the full experience

Explore first person business intelligence from top minds curated for a global executive audience