Effective Leadership in Times of Crisis

April 29, 2020
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By Eduardo Ortega and Oscar Maril, leadership consultants at Equation Partners Chile / AltoPartners Chile

On the occasion of the pandemic crisis generated by Covid 19 and our mandatory seclusion in Santiago and Madrid, respectively, we have had the opportunity to speak extensively with corporate clients in executive positions and with colleagues in the academic and consulting world. We have also had the time to review a lot of literature and documents on leadership and crisis management.

Encouraged by what was gathered in those conversations, the reading and by our long experience in corporate life and as international consultants, the decision emerged to share our reflections with our clients, reflections related to what we have called Effective Leadership in Times of Crisis.

We are facing what will be, according to all forecasts, the greatest global economic, social and geopolitical crisis of the last 100 years. This crisis affects - and is affecting - corporate life and the very survival of companies.

It is not surprising then that more than 3/4 of the Directors of Companies recognize that their companies were not or were only “somewhat” prepared to face this complex scenario, as confirmed by the EY survey presented in webcast last April 8.

As consultants, we have talked a lot with our clients, first and second level executives, during our exercises with them and their respective teams, about the importance of exercising effective leadership, knowing what their attributes are and what the derailers that affect them are. Today more than ever, these attributes and those derailers are enhanced as a consequence of this unprecedented crisis.

Communication with different stakeholders, empathy, motivation, energy transmission, knowing how to listen and how to influence, corporate social responsibility, decision-making and cultural sensitivity, that is, the elements that define how to effectively lead people and today, teams are of decisive importance for the mediate and immediate future.

In our reflection process we have questioned to what extent those with corporate responsibilities, starting with CEOs, are today willing to review their leadership styles, their attitudes and behaviors and, more importantly, to modify them given the circumstances.

As the philosopher Ortega y Gasset said “man is and his circumstances”. Well today these circumstances not only advise, but also force us to do things differently or to do different things. This is the real challenge that corporate leaders face.

In the near future, those who survive will be judged on their ability to adapt and the leadership style they have exercised, their ability to identify the obstacles they face, and their courage to remove those obstacles that may be removed or navigated. Among those obstacles that cannot be removed.

An additional complexity that should be mentioned, and about which we do not feel capable of dealing with it, is the remote communication that technology allows, but which is not a minor element in this equation.

Every crisis represents a risk, but at the same time an opportunity. We firmly believe that this is the case.

From this, some questions that we must ask ourselves then are: To what extent are our leaders prepared for this crisis? And especially, what are the really effective Leadership practices facing these circumstances?

Ronald Heifetz, (Harvard professor, author of iconic books and a reference in these matters) makes some very relevant distinctions to understand situations like the current ones. He differentiates two types of challenges that organizations can face at many times in their future: Technical Challenges, which are those that can be solved with the knowledge and processes that the organization already has. These can be extremely complex, (changing core systems; integrating an acquired company; entering a new business / market and so many others), however we continue to move within known territories. On the other hand, there are Adaptive Challenges, which are those that can only be addressed through a change in our paradigms, our beliefs, our way of seeing the world, (or at least our business), testing our mindset and radically changing our habits. These challenge our organizational structure, processes, power distribution, and decision making. None of this seems to respond to the urgent needs that are presented to us, (abruptly, as in the case we are experiencing). There is no longer what we know as business as usual. We are forced to enter unexplored environments. The Covid19 pandemic undoubtedly confronts us with a challenge that will test the adaptability of our companies.

Following Heifetz, to face the Technical Challenges, it is possible to do it from the authority that accumulated knowledge gives and the role that the hierarchical order of the organization gives. The problem is that crises like the one we are experiencing are characterized by high levels of instability and uncertainty, constant changes and unfolding of new and unknown scenarios in a fast and unpredictable way, (3). Put in these circumstances, clearly there are no leaders, who have all the appropriate answers for each new problem, therefore they also do not have the capacity to respond with the required agility. Everything learned so far is insufficient. The practices used up to now - and that have led us to success - are ineffective in facing the new demands.

Adaptive Challenges then require new styles of leadership.

What are the practices of Effective Leadership in times of crisis?

1. Focus on Our Purpose and Values - These circumstances should compel us to review, redefine or re-affirm our mission as a company. What are we here for? What is our role in society? In which direction should we move? From this it is necessary to define the priorities; what are the 3 or 5 most important initiatives on which we are going to focus, (and in consequence, which others we will leave aside). What is really important to us? (What are our real values). If our strategic plan was to gain market shares; increase profitability; improving our efficiency ratios, etc., will probably now be: how are we going to ensure the health and safety of our employees; how we are going to assure the attention of our clients, what are their new needs; how we are going to ensure operational continuity; how we are going to ensure the financial liquidity of our company. A good way to assess whether our decisions are being correct is to ask ourselves if the crisis is over, as an executive we will be proud of them.

2. Inspirational Communication - From the above, we must align our team. If effective communication is always a necessity across organizations, it is now critically important. All collaborators must understand and share the new roadmap. For this we must transmit clear, well-articulated messages: what are we going to do and what the logic behind this plan is. What are the values that guide our behavior. These must be simple and direct, demonstrating the maximum possible transparency. At the same time, it is very important to show signs of optimism and confidence; “Together we are going to get ahead”, and we must show the light at the end of the tunnel, “this is going to happen… then we will look back and we will realize what we have learned along the way… we will come out stronger from this crisis”, or as HM Queen Elizabeth II recently assured in her speech to her people “we will meet again”.

3. Concern and Care of Employees - For this it is essential that the leader shows sincere interest and genuine concern for his collaborators, empathy, (4). Confinement generates intense emotions such as anxiety, fear, anger, grief, insecurity, guilt, feelings of loneliness … According to “The Economist”, (5) traumatic events such as those we are experiencing can harm people’s mental health. Indeed, they add that 2/3 of the population declares that it is very difficult for them to maintain optimism, while a significant increase in cases of domestic violence and alcohol consumption is observed. On the other hand, people lose their orientation regarding the focus of their work, their sense and the sense of belonging weakens. For this it is necessary that the leader is permanently available and present, (11) through virtual team meetings and one-on-one, instances in which he must show respect, appreciation, understanding, empathy and interest in health, understand the state and needs of each one. Offer trust, support and recognition.

4. Decision Making and Empowerment - In crisis contexts, what is relevant is not to define a master plan to face it given the constant and unpredictable changes that occur, but to promote the conditions so that the employees who constitute “our first line” can solve problems and make the most appropriate decisions, given the information they have at that time. This “first line” will be made up of those who are in contact with our employees, clients and who maintain operational continuity. For this, Gemma D’Auria and Aaron De Smet, (6), (10) recommend creating a Team Network multidisciplinary that are responsible for managing priority initiatives. At the same time, effective two-way communication channels must be generated, allowing the relevant information to be received in order to make decisions and monitor their progress. Thus, the role of Senior Management will be to reinforce and secure the strategic directions and facilitate the work of these teams.

Control, excessive pressure and micro-management in times of crisis and especially in telework contexts only generate “passive-aggressive” responses, (say “Yes” thinking “No”) on the part of the collaborators, with the consequent drop in productivity and engagement. The recommendation is to listen, to promote disagreements, creating a “Safe Space” or a space for Psychological Security, in which employees feel confident to give their opinions and contribute. It is the opportunity to practice management by objectives, giving flexibility so that each collaborator adjusts his own schedules and organizes his activities, giving confidence and support.

5. Leading by Example - Effective leaders to face adaptive challenges serve as positive examples to model the attitudes and behaviors of their team members, (7). At this point, Gemma D’Auria and Aaron De Smet, (6) argue that leaders must demonstrate what they call “deliberate calm”, referring to the fact that they must demonstrate the ability to separate themselves from the contingency and think how to navigate these hectic waters. This capacity is largely based on humility to recognize that you do not have the answers for everything, but you do have the energy and conviction to face the storm. At the same time, leaders must adopt a positive attitude, express optimism and confidence, balanced with a good dose of realism.

The word Crisis comes from the Greek Krisis which means “to separate”. Indeed, crises establish a “before and after”… Our leadership will depend on the fact that “after” Covid19, our organizations will emerge stronger and that our ability to influence as Leaders will be more effective and powerful.

Finally, we propose an important topic for reflection: What is the legacy that we want to leave as Leaders and as a Company?