By Brian West
In 1943, Abraham Maslow proposed his theory of human development psychology, tapping into what motivates people and characterizes their personalities. Maslow’s Hierarchy of Needs, as it has come to be known, suggested that people and their decisions were driven by five key traits: physiological, safety, love/belonging, esteem and self-actualization.
Today, we can take this hierarchy and effectively appropriate it to corporations and their response to sudden disruptions to their businesses. A new hierarchy of needs in crisis management is catching out companies all over the world, spanning established entities like Target in the US right through to Nestlé in India.
They are finding that their traditional, centralised, ‘command & control’ business unit structures – often operating as tunnel-visioned siloes with elongated review and approval procedures – are no longer the successful pathway to growth they once were. In fact, they act as a poison pill in a crisis.
This status quo, though, is not necessarily the norm, with companies like Cadbury in Malaysia and medical insurance company Anthem Blue Cross in the US (to name a couple) successfully managing to turn crises into opportunities to restate and reinforce the values they stand for. Not only are these players demonstrating capable management in a crisis – they are also showing authentic leadership, taking action that is guided by an overriding organisational cultural strategy and communicated early and constantly throughout the period of great turbulence.
There are countless real-world examples of these contrasting approaches at work. I alluded to Target in the US who delayed announcing its systems had been breached, destroying trust with its key stakeholders – those whose data had been stolen. On the other hand, when Anthem Blue Cross was also hacked in 2014, they seized control of their reputation by announcing the breach immediately and talking about what they were doing to support their customers. It was praised across the board for its handling of this crisis, actually building goodwill through authentic leadership.
Cadbury in Malaysia, when confronted with a government study suggesting traces of pork were present in their chocolates, immediately recalled the product and then set about establishing that the report was wrong and highlighting Cadbury’s commitment to quality assurance. In contrast, when Nestlé was faced with a similar situation in India this year, it decided to tough it out, to not recall the product and argue the government report was wrong. Nestlé might ultimately win this war of attrition and detailed argument, but at what long-term cost to its consumers’ trust during the running battles now being reported globally?
Cadbury and Anthem Blue Cross understand the new hierarchy in crisis management, with authentic leadership at the top guided by the values they purport to hold dear in their many public reports.
The catalyst for the emergence of this new hierarchy was born 31 years ago when Apple introduced the user-friendly Macintosh personal computer, but really took hold at the turn of the century when the internet took off, counting now an estimated 1.82 billion social media users globally.
In the new world order – where everybody is a publisher, a propagandist, a marketer looking to win hearts and in some cases mitigate unfortunate facts – there is now tremendous transparency and a voice for those that may never have been heard in traditional media.
In the same way Maslow’s theory suggests that the most basic level of needs must be met before the individual will strongly desire (or focus motivation upon) the secondary or higher level needs, the new crisis management hierarchy progresses in the same way, describing the stages of growth in enlightenment within an organisation.
The C-suite and its chief risk officers start with a logistics-focused crisis manual and regard the crisis management ‘box as ticked.’ It operates at the base of the pyramid and involves a series of lists: who does what in a crisis, or who needs to be contacted. While this form of preparation is a practical and essential part of addressing a problem, it focuses company management on simply managing a crisis, rather than leadership at a time of a significant reputational challenge. The enlightened quickly realize this is not enough.
Developing crisis scenarios and strategizing how the organisation would respond in such a situation, along with draft responses, moves an organisation to the next level – a ‘Playbook’. However, a Playbook cannot predict the pressures from different stakeholders in a crisis, where expedient or ad hoc decisions are often made, to the long-term detriment to the organisation’s ability to operate or its reputation.
In a time of immense pressure, with limited facts at hand and events accelerating, the organisation’s leadership therefore needs a Guiding Light Strategy. Creating a Guiding Light Strategy gives the company a real chance of emerging from a crisis stronger than before. This is where the company moves from reacting to proposing; from following to leading; from defensive to assertive – they are in fact reaffirming what the company stands for, bringing its values to life in a crisis via its actions. The Guiding Light Strategy takes management from managing a crisis to leadership during a crisis.
However, leadership can only occur if the organisation’s leaders are equipped with the necessary skills, the training and then regular practice in crisis situations. These leaders need to be tested under pressure while learning to be genuine in their approach and response in a crisis. In short, they must build their confidence and strengthen their capabilities in managing and leading in difficult situations.
At the highest level of Maslow’s hierarchy was self-actualizing needs, where people seek to achieve their highest potential – essentially, to be all they can be. It is exactly the same in the new crisis management order – authentic leaders in a crisis step away from the traditional style of leadership, in which a top-down, one-way, public information model of communication is the common method.
They adopt a two way symmetrical model of communication which encompasses a more personal, highly-involved, compassionate, transparent and empathetic communication. A handful of great executives have managed to do so successfully in their handling of recent air disasters, such as Tony Fernandes of Air Asia and Thomas Winkelmann at Germanwings. Both CEOs showed authentic leadership under tragic circumstances.
Reputational damage in a crisis is now often directly proportional to the organisation’s progress up the new hierarchy, where authentic leadership in a crisis garners benefit-of-the doubt commentary or even goodwill. The authentic leader, appropriately motivated, knows not to destroy trust in a crisis.
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January 13, 2017
January 12, 2017