by Erika H. James
Erika H. James is an associate professor of business administration at the University of Virginia's Darden School of Business. Here's her guest post on how small business owners need to be prepared in the event of a crisis.
This past summer the book that I co-authored with Lynn Perry Wooten, Leading Under Pressure: From Surviving to Thriving Before, During, and After a Crisis, was released with great fanfare and interest. The timing could not have been more perfect for its debut. It hit bookshelves and online outlets in the midst of the BP/Deepwater Horizon oil rig explosion and subsequent oil spill. The country was riveted by video of oil gushing endlessly from the debilitated underwater rig in the Gulf Coast, and we were drawn into the 24-hour news cycle reporting of the ineptness with which BP executive Tony Hayward handled the public relations aspect of crisis response. Technically, the oil giant may have done all the right things to stop the leak and contain the oil, but the public could not get beyond the PR gaffes to show much empathy for the firm. In the midst of this crisis comes Leading Under Pressure, and the need for such a book was crystal clear.
To be completely frank, however, we wrote Leading Under Pressure with the Fortune 500 firms in mind. The executives leading those firms were our intended audience, as we felt they needed the most help. Interestingly, however, over the past several months, we have received more speaking requests from small to medium-size firms and from government agencies or other non-profits. In preparing for those talks, we realized that the core principles of the book apply, regardless of one's profit status or size. Although the consequences of crisis for the small business may be less dramatic, and therefore less public, they are no less severe and painful for the people working for and leading those firms. With that in mind, I present the "Top 5 Things a Small Business Owner Should Know About Successfully Leading Under Pressure":
1. Effective crisis handling requires more than good PR. In fact, in the book we rarely use the term crisis management, preferring instead to highlight the importance of leadership during difficult times. Crisis leadership encompasses PR, to be sure, but it necessarily goes beyond the communication side of crisis handling to include key leadership capabilities.
2. Not all crises are the same. A simple but effective way to distinguish crisis types is with the labels Sudden Crisis vs. Smoldering Crisis (terms introduced to me by my colleagues at the Institute for Crisis Management). We are all familiar with the natural disasters, acts of terrorism, or workplace violence that constitute the sudden crisis category, but did you know that nearly three-quarters of crises are smoldering in nature? Smoldering crises are the small internal problems in a firm that, if ignored, can become a crisis. Labor complaints leading to class action lawsuits or product defects leading to recalls are two common examples of smoldering crises.
3. Leadership under pressure is a state of mind. Those managers, owners, team leaders, etc. who are able to scan the environment and see problems on the horizon as well as possibilities for a greater tomorrow are more likely to eventually reap the proverbial opportunity from a crisis situation.
4. Specific competencies are particularly relevant for leading under pressure. These include the ability to make quick and ethical decisions and to take risks even in the face of a threat in addition to possessing a passion for learning and a capacity for building trust across all stakeholders. Over time, leaders who do these things well ultimately help prevent crises.
5. Pay attention to impact on and input from all stakeholders. It is all too easy to become blinded by those stakeholders with the loudest bark or who have the most power or control over the organization (e.g., regulators, lending institutions, activists, or private investors) and to lose sight of other stakeholders who may actually need leadership's attention more. Certainly, you cannot ignore the powerful groups, but neither can you cower to them at the expense of employees and customers, who, at the end, of the day do more to keep the small business alive then almost any other group.
Erika H. James is an associate professor of business administration at the University of Virginia's Darden School of Business.
This article was originally posted on the blog, The Business of Being Monique.