How leaders can learn to manage crises and uncertainty

role models. female leaders, group of women

By Prof Vivian Riefberg, Darden School of Business

As we watch events unfold in Ukraine, we’re reminded of how much uncertainty there is in the world. And it’s not just geopolitics: a viral pandemic, supply chain woes, extreme weather events.

Leaders are facing an inordinate number of crises today that create challenges for day-to-day decision-making. 

But crises and uncertainty have always been a part of life, and good leaders can learn to anticipate and manage these phenomena. Fortunately, there are some best practices that can be followed to help get through them. 

Leading in a crisis

Decision-making under substantial uncertainty and crisis is different from daily management and leadership decision-making. The magnitude of the impact is often substantial and the situations you encounter are not things you ordinarily face, so you may not have a lot of experience to draw from, and you have to make decisions more rapidly. 

Crises can build exponentially. For example, COVID-19 has added an inordinate number of additional challenges, both exacerbating existing issues and creating whole new sets of decisions we need to make. Workers cannot go to work, hospitals get overrun, people have mental health challenges, so all these issues get layered on top of each other and create more challenges.

Global 24/7 environment

We operate in a 24/7 world, in which any member of the public can comment on what you are doing and influence the perception of your company. In a world of email and texts, more is written down, and the idea of what is confidential has changed, meaning that much more information about your enterprise gets out into the marketplace. As a result, you have many more things coming at you from a greater variety of people, so multiple narratives start to be developed that you are less able to shape.

How to manage a crisis?

When a crisis first emerges leaders must develop good “situational awareness”. They should ask: “What do I know for certain about this situation, and about what am I uncertain?”. Not “what do I wish was true, or what was true in the past”, but “what do I know now?”. There is a tendency when uncertainty arises to throw your hands up and say, “I can’t handle this.” But in fact, you can often narrow it down to predictable scenarios in which there are two or three different possible outcomes. You need to handle different uncertainties differently during a crisis. 

It is also very important to figure out which constituencies are involved, and what comes first, second and third with those constituencies; for instance, employees, customers, investors, regulators, or law enforcement. 

Leaders must recognise that they don’t have all the answers, and that they need to reach out to find others who can help. They may also want to create a specific team to focus on the problem, while the rest of the enterprise continues with more usual business — so it’s not like a bunch of 8 or 9-year-olds at a soccer game with everybody chasing the ball. That’s not how you score a goal! 

Leaders should also take a ‘bifocal’ view, so they are not just looking at the end of their nose at what they are going to do today, tomorrow, or next week, but also thinking about the medium and longer term. 

Finally, it’s essential to prioritise communication. Even at times when you can’t move quickly, it’s important that you communicate with the various constituencies involved and share the processes they are going through, so everyone understands how they are proceeding.

Human error

Mistakes happen. Sometimes, leaders underestimate what the impact could be, or don’t fully consider all the parties impacting the situation – until they are surprised by a particular stakeholder’s actions. Another key mistake is not fully recognising the personal toll large uncertainties and big crises can have on them as a leader and as a human being.

Aftermath of a crisis

After a crisis, leaders should focus on their purpose, learn lessons from the crisis, and embed those in the enterprise. Hopefully, they will never have to face the same thing again, and they can build an even better company for the future. 

On an individual level, after a crisis, many leaders think that the business is going back to normal, and that they will be back to their old selves, without appreciating how the crisis has affected them. The way a crisis is handled can be talked about for years to come, and for some people, the emotional toll can be substantial. As we are being more honest and destigmatising mental health challenges, it is important that leaders realise they don’t have to be all-knowing or perfect. 

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