Crisis-management essentials for coping with emergencies
As cases of COVID-19 continue to grow across the world, leaders in business, government, and other spheres face unprecedented challenges. The disease has encroached not only on public health but on global economic well-being and on some of the most fundamental practices of modern society. It has generated great anxiety and exacted an enormous and growing human toll. And it has required virtually every organization to reinvent its processes to cope with a world in which many people simply don’t feel safe being in the same room together.
Crisis situations can overwhelm even the most experienced leaders, presenting unexpected, complex scenarios that evolve at a fast pace and in several directions. Even in cases in which contingency plans have been prepared, those plans need to be adjusted to respond to rapidly changing circumstances. Fortunately, there are tools and perspectives leaders can use to help their organizations weather difficult times. By building trust, managing fear, and encouraging a sense of duty and community orientation, any leader—whether in business, government, or the nonprofit sector, and in organizations big and small—can better navigate the difficult path of crisis management.
Crises frequently happen without warning and require a response under extreme time pressure. Decision makers often find themselves drowning in data, yet truly vital information is not available. During these situations, leaders must continue to build trust, both internally and externally. Doing so generates much-needed room to maneuver and the goodwill that leaders will need to rely on when tough decisions have to be made.
Even though the desirability of trust is obvious, leaders often struggle with building and maintaining it, especially during high-stakes crises. Research has identified four major factors that influence the level of trust among stakeholders involved in a crisis, summarized in what I’ve called the Trust Radar:
Teaser Data: Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry's standard dummy text ever since the 1500s
Hero SectionFull transparency is reached when, in the mind of your audience, all relevant questions have been addressed. Your audience—not you—will determine what information is considered relevant. What is relevant will also vary for different audiences. What transparency means to an investor may not be the same for a customer. What is important to a faculty member may be irrelevant to the parent of a student. It is essential to understand what is in the heads of your respective constituencies and address those things in a language and style that resonates with them.
Transparency is not the same as full disclosure, and transparency may be reached without full disclosure. This will be the case if the leader conveys a rationale for limiting disclosure that reflects concerns shared by the relevant audience. For example, in the case of a health crisis, privacy concerns may limit what can be disclosed (e.g., not revealing the identity of an individual who has tested positive for COVID-19). Rather than simply declining to comment, leaders can emphasize the importance of patient privacy, a concern shared by the audience, as a clear and understandable reason for limiting disclosure. In other cases, relevant information may not yet be available (e.g., the number of people who may have had direct contact with an infected person or the likely infection rates). As a general rule, the rationale for limiting disclosure must pass the “reasonable person test,” meaning that it will seem justifiable to most people.
Transparency is not the same as full disclosure, and transparency may be reached without full disclosure.
It is also possible that transparency will not be achieved despite full disclosure. That will be the case when the leader, in the attempt to fully disclose an issue, fails to be understood. Technical mumbo jumbo, a complex explanation, or legalese—even if it involves disclosing relevant information—will not be considered transparent by the general public. Rather, an audience will assume that a leader or her organization is hiding behind incomprehensible jargon rather than speaking plainly and in a straightforward manner. This is a common trap for leaders who have highly specialized knowledge, including physicians. It is important to remember that what is obvious to you may not be obvious to your audience.
Further, trying to give the impression of full transparency while hiding salient facts can lead audiences to doubt the veracity of what they are being told. There may be times when leadership does not want to release known information. If this is the case, it is important to anticipate the reaction of stakeholders if the information is brought to light through other means. Will the rationale for not disclosing the information pass the reasonable person test? Most often, it is better to release bad information all at once rather than withhold information that will continue to trickle out over time, as an ongoing stream of bad news will undermine trust and raise additional questions about when the company knew of the new information.
A perceived lack of expertise can undermine trust quickly. This is particularly important during health crises and natural disasters. The reputational catastrophe suffered by the US Federal Emergency Management Agency because of their bungled response during Hurricane Katrina in 2005 was not driven by the belief that FEMA had bad intentions, but that it was incompetent.
Research by Stanford’s Jennifer Aaker, University of Minnesota’s Kathleen D. Vohs, and University of Pennsylvania’s Cassie Mogilner has found that in the United States, companies are usually viewed as competent, which is not generally true in other countries. On balance, this is a benefit to a company. The US public usually does not doubt corporate ability, but it often does doubt corporate willingness to do the right thing. That said, for companies, the expectation of competence often has a threshold structure: companies get little credit for exceeding expectations, but are heavily criticized if they fail to meet them. This is particularly problematic when the public has unrealistic expectations of what companies can do.
In contrast, nonprofits are usually viewed as less competent than profit-making companies, but more caring. This means that their audiences may be more forgiving when things do not work out as planned. However, this goodwill does not apply to problems within a nonprofit’s core competency. The Red Cross likely will be forgiven for a cybersecurity breach, but not for a contamination of its blood supply. Moreover, given their reputation for warmth and caring, nonprofits will experience a serious backlash if their actions are viewed as self-serving or financially motivated.
Leaders can address a perceived lack of expertise by bringing in third-party experts with high credibility. Experts with knowledge well outside the expected expertise of management will likely cause no perception of management incompetence. For example, a well-respected physician or public-health expert from the Centers for Disease Control and Prevention, a prestigious university, or the local health department will have medical knowledge about diseases that management typically would not be expected to have.
Crisis preparedness is a particularly important aspect of competence. The reputation of an organization and trust in its leaders will diminish significantly when the company seems unprepared.
First, stakeholders will ask, “What did the organization do to prevent this crisis?” When it is humanly possible to prevent or significantly decrease the likelihood of harm, the widely held belief will be that preventive action should have been implemented. If the company appears negligent, dismissive, or incompetent, outrage will occur. These concerns are less common during new threats, such as the COVID-19 pandemic, but are important for crises that are more familiar.
Second, stakeholders expect an organization to be prepared and “ever ready” to manage a crisis effectively when it does occur, especially if the crisis is considered foreseeable. The excuse that “we didn’t think it would happen to us” holds little credibility.
At the end of the day, your stakeholders want to make sure that a crisis is addressed and that they are not negatively impacted. One problem with this expectation is that early in a crisis, it is impossible to establish even the most basic facts, let alone find a solution. This is particularly true during pandemics, in which the situation is highly dynamic and fluid, and easy solutions are not available. This is why the third factor in building trust, commitment, is so vital.
The most powerful and direct way to signal commitment is for leaders to show up in a highly visible manner and take charge. This demonstrates accountability and sends the message that nothing is more important than resolving this particular crisis.
To an efficiency-minded leader, a crisis-response ritual may look like a waste of time, the most precious resource during any crisis. Ironically, it is exactly this “inefficiency” that creates the strong symbolic value. A leader signals that nothing is more important than taking care of this crisis by showing up with the full resources of the company. That creates a sense of commitment.
Does the company’s representative always have to be your CEO? No; the right level of commitment depends on the perceived magnitude of the crisis. If in doubt, use someone higher in your management hierarchy, even if the executive is not directing the operations. The importance of perceived commitment also casts doubt on the extensive use of public-relations professionals as spokespeople. The problem with spokespeople is that they do not have operational responsibilities—they are not in charge, and stakeholders know it. People want to hear from leaders in a crisis. Depending on the crisis, it is best to use skilled media spokespeople for ongoing briefings in conjunction with the highly visible presence of the leader of the organization.
The second important commitment device is process. The definition and communication of a decision process is particularly important during crises that may last a long time yet evolve rapidly. Examples include the establishment of a task force or an ad hoc committee of the board. Hiring external experts can also serve this purpose. In general, by investing time and resources, the company signals that it takes the crisis seriously and is working to find solutions. Ideally, the details of the process are clearly communicated to your audiences, followed by regular updates.
The final component of trust building, empathy, is often the most important factor of the four and the easiest to miss. Showing empathy is not the same thing as apologizing. Leaders show empathy with colleagues at work, neighbors, and family members even if they do not feel responsible for a problem. During pandemics or natural disasters, stakeholders do not see the company or organization as an anonymous provider of goods or services but as a member of the community. And a member of the community is expected to care and show empathy. This is particularly important for nonprofits.
In crises in which there is a perception that the company or organization mishandled a situation, stakeholders expect an apology, but the apology must be authentic. An apology that appears formulaic, insincere, or calculated is worse than useless.
Remember that caring is behavioral, not just a passive feeling.
A leader’s reaching out to perceived victims with warmth and authenticity can be very effective, even without an apology. In response to Virgin’s train accident, Sir Richard Branson expressed both sorrow for the loss of life and support for the driver who helped the vast majority survive the crash. People want to know leaders and their organizations care when there is real or perceived harm. Remember that caring is behavioral; it’s not just a passive feeling. An effective crisis manager engages in behaviors that encourage people to believe the organization truly cares.
A particularly challenging aspect of pandemics is the fear generated by a combination of dire consequences and a lack of information. Decades of psychological research have shown that the general public does not evaluate risk in a scientific manner. Sometimes fears are based on objective risk, but, in many cases, there is a large gap between objective risk and risk perception driven by certain features of the situation. These processes are particularly important in product-safety contexts and in the introduction of new technologies such as nuclear power, genetically modified organisms, and nanotech. But they also play an important role in the context of pandemics. The likelihood of fear increases in settings that are novel, have dreadful consequences and identifiable victims, and are highly salient, perhaps because of extensive media coverage, as well as in situations where the public lacks a sense of control. In contrast, a false sense of control will lower risk perception and lead to unsafe behavior (e.g., refusal to wear a seat belt).
To manage the COVID-19 pandemic, leaders need to tread a narrow path of encouraging safe behavior without creating panic. For example, young people may have a false sense of security given the prevalence of fatalities among older adults—among infected individuals, the case fatality rate appears to be much higher among seniors than those in, say, their 20s. However, low risk is not the same as no risk, and careless behavior stemming from a perception of effective immunity among the young could still result in unnecessary deaths (as well as a more rapid spread of the virus to populations at greater risk). Pointing to specific victims of younger age can counter such overconfidence. On the other hand, providing specific actions that individuals can follow to lower the risk of infection (e.g., social distancing) will lower the likelihood of panic.
Public-health crises, terrorist attacks, and natural disasters often require broad changes in individual day-to-day behavior for the common good. These challenges are particularly severe in the COVID-19 pandemic, as individuals who are asymptomatic or face low mortality risk are being asked to dramatically change their lives, often at substantial individual costs. In a situation where millions of people are asked to do what is right for the most vulnerable members of their communities, it is essential that the required sense of duty is articulated as forcefully as possible.
In such cases, an appeal to moral principles is vital. One such principle is the avoidance of harm. There is a moral and emotional response triggered by expressions of suffering and need. Its corresponding duty is care; its characteristic emotion, empathy. The do-no-harm principle is fundamental and universal. Even young children respond to suffering and try to end it.
But the emotional impact of the do-no-harm principle varies by context. For example, the sense of duty and the willingness to act will be more forceful when we emphasize that harm is intentional (rather than an unintended byproduct), causal (commission is worse than omission), or the consequence of a blameworthy action, such as drunk driving. For COVID-19, very little harm will be intentional, but community leaders and public-health experts can emphasize, as many have, the causal relationship between one person’s decisions and the well-being of those around him.
In any case, to establish the emotional underpinning of a sense of duty, the presence of identifiable victims is essential. Statistics do not generate empathy; people do. Leaders should also forcefully emphasize a strong sense of community. Community orientations are defined by need and caring: actions are intended to meet another person’s need without expectation of specific compensation. Community orientations tend to be highly ritualized and full of symbols, such as wearing an armband or lapel pin. Shared norms play an important role: mask wearing is common and uniformly accepted in East Asia but a contested and polarized issue in the US.
The shift to a community orientation also changes the perception of businesses and other organizations. In the context of natural disasters and health crises, the public views a company more as a community member than a business. Community orientations are driven by need and caring, not individual benefits. Organizations are expected to behave out of altruism and meet the needs of the community. Companies often struggle with this shift toward a community orientation, because their usual day-to-day interactions with customers are structured as market interactions. But once the public shifts to a community orientation, any perceived violation of the norms of that orientation—for instance, a concern for shareholder value—will lead to a severe backlash, as Starbucks learned when one of its stores in lower Manhattan charged first responders for water while they were treating victims of the September 11, 2001, terrorist attack on the World Trade Center.
Adopting a community orientation means:
In research I conducted with the Institute for Management Development’s Jennifer Jordan and Columbia’s Adam D. Galinsky, we called this approach the Good Samaritan Principle: caring combined with competence. A relief effort that meets these criteria can be much more valuable than financial donations of any size. Failing to meet them, no matter how genuine the intention, can do reputational harm. It is not just the thought that counts. Corporate caring is not a feeling; it is behavioral. Stakeholders must see and believe that your organization cares about the welfare of others by observing “caring behaviors,” not just empty public-relations statements of concern.
A textbook example of the Good Samaritan Principle in action is Walmart’s swift and comprehensive relief effort in the wake of Hurricane Katrina. Because Walmart understood the problem and delivered what victims needed, including water and nonperishable food, even faster than the government, the company earned significant goodwill with the public while serving an important cause.
Walmart’s actions and its ability to effectively communicate its efforts to help the hurricane victims highlighted the competence and warmth of the corporation, yielding large reputational benefits. It started with Walmart’s CEO, Lee Scott. He reported to his corporate management team, “These are extraordinary times, and I expect an extraordinary response.” He then empowered his store managers throughout the storm-impacted areas by saying:
A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that’s available to you at the time, and, above all, do the right thing.
As a result, the company supplied water and other supplies well before the relief efforts by the federal government took effect. Store managers and truck drivers talked directly to the media. The emotional impact of their personal stories of neighbors helping neighbors played an important role in boosting positive perceptions of Walmart and energizing the company’s employees.
Effective crisis-response strategies such as those of Walmart tend to resonate more deeply with the public and generate goodwill because they demonstrate a shift from a standard business approach to a communal mind-set. In the specific context of natural disasters, even a well-intended response may be viewed negatively if it is at odds with a community orientation. For example, if a beauty-products company were to send skin moisturizer to victims needing clean water, the public would likely pan that company for that behavior, seeing the move as self-serving. Companies also need to be careful not to overpublicize their efforts. Blowing your own horn too loudly leads the public to suspect ulterior motives.
Capturing decisive moments, as Walmart did in the aftermath of Hurricane Katrina, can create turning points that will positively shape how an organization and its leaders are perceived by the public.
Every leader dreads the late-night phone call that spells trouble. No matter how prepared and experienced we are, our heart rate and blood pressure will go up, our palms will start sweating, and even our muscles will tense. These are normal and expected stress reactions when we face a severe threat or danger. A natural response is to hope the situation will pass as quickly as possible. Yet leaders who focus too much on damage control miss an important opportunity for themselves and for the organizations they lead. In a crisis, people are paying attention; it is as if the company and its leaders are on stage, the lights are bright, and everybody is looking at management’s next move. Media coverage, whether traditional or social, will add more fuel to the fire.
How you and your company handle the decisive moment will have a lasting impact on the company’s reputation and your legacy as a leader. During a crisis, and especially during its darkest moments, your people will look to you to provide the necessary leadership.
Today, organizations are facing an unprecedented global health crisis. While the stakes are high, there is also opportunity for organizations to lead effectively, protect the health and safety of their stakeholders, and help stem the tide of the COVID-19 pandemic. Recognizing moments such as this as opportunities to rise to the most difficult challenges can energize you and your team and provide the motivation to lead through turbulent times.
Daniel Diermeier is the David Lee Shillinglaw Distinguished Service Professor at the University of Chicago Harris School of Public Policy and the College and special advisor to the university president. On July 1, 2020, he will become the ninth chancellor of Vanderbilt University.
The right partnerships offer opportunities for businesses to grow faster and more strategically.
One Underexplored Path to Entrepreneurship: Acquisition
Rather than build more warehouses, online retailers should focus on reducing costs by routing orders more cheaply.
How Online Retailers Can Fulfill Orders Better
AI won't kill you. But it will change your life.
The Robots Are Coming, and That’s (Mostly) a Good ThingYour Privacy
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.