Linking Crisis Management and Leadership Competencies: The Role of Human Resource Development
“Linking Crisis Management and Leadership Competencies: The Role of Human Resource Development,” by Lynn Perry Wooten and Erika Hayes James, shows the importance of building skills in executives for leading during a crisis. Human resource development can prepare leaders to handle the various stages of an organizational crisis. Typically, there is no formal training or on-the-job experience to prepare a leader for crisis management. The authors emphasize the importance of having a system in place to guide leaders through crises such as accidents, scandals, and product safety and health incidents.
This study uses archival data sources (e.g., media accounts) to identify leadership competencies at each phase of a crisis by examining a sample of crisis situations from the Institute for Crisis Management database. The authors examined business crisis data from 2000 to 2006. Examples from the database include the Alaska Airlines crash of 2000, the Morgan Stanley Dean Witter gender discrimination lawsuit of 2001, and the Tyco financial fraud of 2002. The authors suggest that organizations focus on the competencies they outlined as a strategy for preventing and resolving organizational crises.
First, the researchers looked at the five phases that represent a business crisis:
- signal detection
- preparation and prevention
- damage containment
- recovery
- learning
Signal detection requires leaders to identify warning signals of a potential crisis. During preparation and prevention, there is an expectation for leaders to plan for and avert a possible crisis situation. In damage containment, leaders should keep the crisis from expanding to other parts of the organization or outside it. The recovery phase involves the implementation of strategies to help the business return to normal operation. Finally, the learning phase is a time to examine lessons learned from the crisis. The data suggest that several key leadership competencies emerge during these phases.
During the signal detection phase, sense making, or fully comprehending the circumstances, is necessary so that appropriate action can be taken. Perspective taking, or the ability to empathize with those affected by the crisis, is critical so that those actions will be in the best interest of stakeholders.
A behavior exhibited in the prevention and preparation phase is issue selling. This requires a leader to be persuasive and influence the direction a firm takes, or sell the crisis management plan. Organizational agility is also important; a leader who has a thorough knowledge of the business and can work across all departments to accomplish a task is more likely to be successful. Creativity is useful competency, and includes thinking about new products, services, policies, and procedures in light of the crisis.
In containment and damage control, a leader has to engage in sound decision making under pressure. A leader must also communicate effectively, adopting a posture of acknowledgement and accountability. Taking risks during this phase allows the firm to break out of a narrow scope of thinking. Rather than being out of control, this means being innovative in the approach to managing a crisis.
Business recovery includes promoting organizational resiliency. Returning to business as usual, however, should not be the main goal. A leader will achieve more by improving the functions of the business in the face of adversity. Acting with integrity, or regaining the trust of stakeholders, is crucial during this phase. Trust in an organization is always important, but particularly following a crisis.
Learning and reflecting after a crisis can change the way a company operates. Using experience to develop new routines and behaviors can actually make the business better than it was before the crisis. The best leaders look at crisis as an opportunity for improvement.
This study adds value to practicing managers and crisis handlers because it identifies specific leadership competencies used by decision makers during a crisis. Furthermore, it offers a more comprehensive set of crisis handling skills than earlier research has provided. In addition to articulating critical abilities used in crisis management, it advocates the practice of human resource development such as training programs for executives to lead effectively during a crisis.