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Jim Citrin Leadership by Example

Jim Citrin, Leadership by Example

How to Lead in a Crisis

by Jim Citrin

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Posted on Tuesday, August 19, 2008, 12:00AM

The current environment presents us with new challenges and opportunities at an ever accelerating pace. While we are constantly in search of stability and predictability with which to base decisions, it has become evident that very rare events, such as the rise of Google, the collapse of Bear Stearns, and 9/11, just to name a few, occur without warning and obviate all of our assumptions and prior forecasts. This underscores the fact that one of the toughest management challenges is dealing with uncertainty.

So just how do you lead people, manage your investments, and handle yourself when you can't fall back on past experiences to deal with a situation that no one has seen before? Nobel laureates have wrestled with these seemingly unanswerable questions and have sought to model unpredictable occurrences, which have more popularly been termed "long-tail" events, or "Black Swans."

To look at these issues in a practical manner, I spoke with Robert L. Dilenschneider, a renowned strategy and communications advisor who formed The Dilenschneider Group in 1991, after having served as CEO of public relations firm Hill and Knowlton. Mr. Dilenschneider has advised major corporations on crisis communications and related issues ranging from mergers and acquisitions and to marketing, government affairs and international media. He has authored twelve books, including the best-selling Power and Influence.

Based on his work over the years and on recent conversations with the renowned financial markets guru and Nobel Prize winner, Myron Scholes, Mr. Dilenschneider has developed four simple rules for managing and leading in times of crisis:

1. Project a Sense of Calm

Just as panic is contagious, so too is a sense of calm, which when it kicks in can settle the frayed nerves of those around you. In a crisis, you should project a sense of continuity, of having managed through similarly difficult predicaments, and of applying the lessons learned in a calm and reasoned manner to the situation at hand.

Responding to such pressure in a cool, calm and collected way requires being guided by your mind rather than your emotions. There are different areas of the brain which govern us when we are thinking clearly and calmly on the one hand and when we are operating in a state of anxiety or fear on the other hand. When it comes to working in a crisis, we perform at our best when we are guided by the prefrontal cortex, the area of the brain that plans and reasons.

When we are scared or anxious, however, we are driven by the part of the brain that produces the fight-or-flight emotions. By simply deciding to project a sense of calm, not only will you be quelling the fears of those around you, but you will be consciously triggering the part of your brain that will enable you to problem-solve your way through the situation.

Whether it is the current credit crisis, the dot-com bust of 2000, the Asian debt crisis of 1997, or Black Monday in October 1987, Wall Street and the economy have been through many "sky is falling" crises. After this passes, the economy and markets will still function and survive, often, healthier than before. As Mr. Dilenschneider said, "Remember; this too shall pass!"

2. Take Early and Decisive Action on Personnel

If you are in a management position during a crisis or period of great uncertainty you should also create an immediate feeling of decisiveness and accountability, according to Mr. Dilenschneider. You need to decide early on which employees you need to let go and which you are going to keep. The goal is to reduce the sense of uncertainty as soon as possible and get everyone focused on the tasks at hand. One dilemma is that the very people who let you get into the current difficulty are often times the best-equipped to help you get out of it.

The analysis of what to do with the individuals involved must be objective and fact-based and must weigh the advantages to the organization of their departure in terms of morale, public perception or operations compared to the loss these individuals in terms of their expertise and relationships. If you decide to retain these individuals, you as a manager must make sure to align their incentives with those of the organization. Once you have decided who to keep, in order to calm down still skittish employees you should reassure them that their jobs are secure -- at least until the organization navigates its way out of the crisis.

3. Ensure That the Information You Receive is Accurate

Mr. Dilenschneider has advised scores of clients during many crises and has come to believe that the single most important thing you can do as a manager during a crisis is to ensure that the information flowing to you and your team is comprehensive and accurate. He says that under no circumstances can you delegate the collection of information to subordinates whose interests could diverge from yours or that of the organization. Recognize that they will naturally be focused on their own survival while your concern as a leader is the well-being of your organization. You must play a hands-on role in determining what information you need, how it will be obtained, and how and to whom it will be disseminated.

From a communications perspective, what you say publicly and privately must be consistent. The levels of detail you share may differ, but what you discuss publicly must be both accurate and consistent with what you are saying to your team and more broadly inside the organization. If you violate this rule, the inconsistency will find its way out, into conversations with others and with the media. That then would undermine everything else you are saying and doing and create more, rather than less, panic.

4. Manage Yourself First

Finally, Mr. Dilenschneider stresses that above everything else, the one thing that you must do when disorder replaces order is "seize control of your own head." In times of distress, it is often easy to get swept away in the flow of events. It is imperative that throughout the crisis, you as a manager take care of yourself, get enough rest, and keep stress levels as low as possible. It is well documented that you make poor decisions when you are tired and stressed. Yet many top executives ignore their own health and state of mind in times of trouble. As a manager, your job is to make good decisions. By taking care of yourself you are helping do your job by improving the quality of the decisions you will make.

To take care of yourself properly, follow the same advice that you surely give to others:

* Put limits on your workday. You can't function well in your job if you are fatigued. Cap the number of hours you work and carve out enough time to make sure that you get enough sleep and spend some time every day with your family.

* Practice deep breathing and take a nap. Both can be done in a few minutes and can be vital in maintaining your equilibrium.

* Maintain your exercise routine. When a crisis starts to fill up your schedule, the daily workout is often one of the first things to get pushed aside. Make it the last. Exercise keeps your mind sharp and routine helps you retain a sense of calm.

* * *

Keep Mr. Dilenschneider's four rules handy, because major uncertainty does characterizes the economic and political environment both for today and the foreseeable future.

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26 Comments

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  • Yahoo! Finance User - Friday, August 22, 2008, 9:44AM ET  Report Abuse

    • Overall: 3/5

    Good article but I have to echo what everyone else is writing. This doesn;t happen in the real world. Leaders basically take #4 literally and forget about 1-3. They make sure their job is secure then they cut back their staff or stop treating them with respect. I worked for a CFO who was treated like a king by the owners of the company yet he treated his people like dirt. The CFO also always made himself look good throughout the company and never gave any of his employees any credit. I attended a seminar for continuing education on how to motivate and get the most out of people. I was surprised to see the CFO there as well. So it was interesting to be at a seminar about treating employees well, as an employee, with my boss who was as cut-throat as they come. There was no way he would change so I'm not sure how uncomfortable he was or whether he knew he was a jerk but didn't care because if he was nice, he might not have advanced in the company.

  • Yahoo! Finance User - Thursday, August 21, 2008, 7:59PM ET  Report Abuse

    • Overall: 4/5

    These are good tips. Before I make a decsion at work I give myself the 10 second rule. That is long enough for me to sort things out and make a decsion from my gut . The hardest thing I learned in management is that you can't make everybody happy. Paul

  • Yahoo! Finance User - Thursday, August 21, 2008, 12:27PM ET  Report Abuse

    • Overall: 1/5

    1) Umm, advise from Myron Scholes, the once board of director member for Long-Term Capital Management, on what to do in a crisis? 2) How can you write this advise column, with advise from Scholes, and neglect to mention Long-Term Capital Management? 3) what did Scholes do when his company lost BILLIONS? 4) Maybe he followed the advice given in this column, and I quote, "take early and decisive action on personnel" and, of course, "practice deep breathing and take a nap." HORRIBLE.

  • Yahoo! Finance User - Thursday, August 21, 2008, 10:12AM ET  Report Abuse

    • Overall: 2/5

    TO: saver_investor - Wednesday, August 20, 2008, 4:20PM ET You'd rather elect to the highest office in the free world a man who's experience in leading is spending 143 days in the US senate??? A guy with no leadership skills desperately needed in an ever more dangerous world?? Come on, get real! I don't like a lot of Macains policy, I'll be the first to say that. Though as far as life experience and experience dealing with foreign governments he is highly qualified for the job. I see Obama offering nothing of value to America. We need strong leadership now more then ever. Not a guy who seems to not be able to give answers to simple questions. Party affiliation aside we need to ask ourselves what's best for America right now and stop with the self serving politics.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 7:52PM ET  Report Abuse

    • Overall: 5/5

    This would be great advice assuming upper management is honest and competent however present situations point to a different picture......why was airline stock sold just prior to 9-11? didnt the carlyle group have some bad business with bear sterns?.... Didnt the president order Greenpan to keep lowering interst rates and blow a wad of cash on a war for his own personal benefit? For now on lets just assume upper management is corrupt and indifferent to the common good. They follow tip number four only and fill their own pockets first. Its time to put our nations security first by limiting their powers and respecting the average working American. However it will take years to repair the damage already done. I personally think Mc Cain is too old and physically handicapped...melanoma is usually fatal and rarely cured. I am looking for a new country if he steals this one or a make believe pig farm to hide from the chaos that will occur after years of this BAD MANAGEMENT.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 5:32PM ET  Report Abuse

    • Overall: 1/5

    This country has too many lawyers, accountants, salesman, and bullshxt artists......... It is easy to say..... Who is going to pay my bill????

  • Yahoo! Finance User - Wednesday, August 20, 2008, 4:20PM ET  Report Abuse

    • Overall: 1/5

    Leadership forcaste for America: Obama is blowing the election and McCain will win by default. The country will continue in decline under McCain because he is even dumber than Bush. In four years a 64 year old leader named Hillary Clinton will defeat the burned out 76 year old McCain and the country will finally have someone in the White House who will lead us back to global dominence.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 3:45PM ET  Report Abuse

    • Overall: 1/5

    One of the main causes of serial underperformance, in my opinion, is a self-entitled inward focus. If you’re in hell, the last thing you should do is go to the gym or play with your kids. Task-switching has a much more deletirious effect on efficiency and output than people recognize. Yes, you need to make sure you get enough sleep, but the idea is to get out of hell as fast as possible and back to normalcy. Wasting time on self-centered “balance” is not what truly successful people do in stressful situations; they buckle down and tackle the issue head-on with laser-like focus.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 3:40PM ET  Report Abuse

    • Overall: 1/5

    This is great advice for most managers and VP's I have met. Since most of them don't know what the hell they are doing, they spend a lot of time in the crisis mode. I believe the collapse of Bear Stearns and a 9/11 type terrorist attack was predicted, but the leaders did not listen or really did not care. The reason even you have a crisis is because you do not have good leadership to begin with.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 3:34PM ET  Report Abuse

    • Overall: 3/5

    Don't forget to communicate using the appropriate colors. During a company merger where our benifits were cut the company newsletter changed to the ever soothing, be happy colors of Mc Donalds, Wendys, Burger King Etc. IT WORKED. The employees were dumped on but they enjoyed it.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 3:11PM ET  Report Abuse

    • Overall: 5/5

    Vote for McCain too. He will help us move toward John Hagee's mission. Furthermore, he will make more of us become proles. After this, we can ignore absolutely everything bad in the world.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 3:03PM ET  Report Abuse

    • Overall: 3/5

    Richard B Head the nail on the head. I'll like be laid off tomorrow from my well paying IT position. The company is being sold. If you follow the financial news, you'll know who. I will get a decent severance but nothing like the $50M the CEO will get. OH! His payment will be grossed up to cover the income tax. So, it's closer to $70M other benefits. He keeps his "job" also.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 2:57PM ET  Report Abuse

    • Overall: 4/5

    Interesting that the people who gave this story poor marks blame their upper management for doing the opposite of the above advice, and how they would be seen poorly by them if they followed it. If things are that bad, I suggest changing companies; never work for idiots.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 2:45PM ET  Report Abuse

    • Overall: 5/5

    Excellent insight. Now if we could get a few managers to read this, we'll be set.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 2:35PM ET  Report Abuse

    • Overall: 5/5

    Everything always looks good on paper, the real proof is in the day to day application of the process. Most upper level management people are not honest with the lower level workers. It is easy for someone who sits in a posh office pulling down six or seven figures annually to appear to be calm. Of course they don't have a thing to worry about even if the company folds they probably have suitable employment offers available to them. The people that have served in the trenches since they graduated from High School and only know the trade they have devoted their lives to have every right in the world to worry. Companies are not loyal to their employees. Companies are guilty of abusing their workers, slow to reward good work habits, and swift to terminate without just cause. Companies only care about one thing and that is the companies bottom line. I have worked in salaried middle management most of my life and if I have seen it once I have seen it at least a dozen times. The company wants to give the appearance of caring and team effort and all that comorodity, but in the end it isn't about the "team" it is about apeasing shareholders. In fact appeasement has come at the expense of closing facilities that were functioning well to take them to a country where language barriers and on time delivery were impossible. I have seen companies dismiss some of the best talent in the industry and keep a small crew on hand to repair and replace imported defective product rather than send the defecctive non compliant parts back to the overseas vendor. It is easy to appear calm and relaxed when you set at the top of the heap and you have your secure employment contracts with your board of directors. It still doesn't leave the average Joe with any warm fuzzy feelings. I have seen this over and over and what companies end up with is product of lesser quality for lesser cost. Remember you get what you pay for. And you had better teach your children and grandchildren to speak both Spanish and Chinese because by the time they enter the work force all that will be left will be jobs flipping hamburgers at a fast food chain. Things aren't ever going to be the same in business and industry. The political, social, and economic factors will continue to keep us committed to cheap imported products to good quality products that could and should be made in this country. In fact most of your military weapons components are outsourced to foreign countries (some which do not even reflect our capitalistic idealogies). It would be bad if we got on the wrong side of a war and our suppliers cut us off from something as simple as bullets. Keep your lying executives, senators, congressmen because there will come a day when the seeds this generation have sown will come back to be harvested. Our children and grandchildren will pay for the deficits we have created. I would find if most calming to meet a CEO/CFO Politician/President that could look you in the eye and be totally honest. I don't care how bad the truth may be at least it is the truth and not some fabricated BS like we are being fed today. What you say, works on paper...but the issues of distrust and inpropriety keeps it from working in the real world.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 2:34PM ET  Report Abuse

    • Overall: 4/5

    As I recall, most organizations I consulted to where in crisis all the time. People lived by and gained their stripes by being crisis managers. Now, to be fair most of that was product/operational crisis, not the crisis of job loss as stated here. When I was an executive in a Fort.500 co., I remember during one of the many crisis, I remained very calm and centered and will never forget one executive who said "you are either on something or do not grasp the severity of this crisis". Many executives see panic as a measure of appropriate concern and motivation toward the problem. Being calm is seen too often as lazy and uncaring. But I basically agree with the points here, just a tough sell in our world.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 2:07PM ET  Report Abuse

    • Overall: 3/5

    The whole calm thing is the reason why #2 won't work. All workers know that the majority of CEOs/managers lie to them. The fact that CEOs (and Presidents) constantly try to make it seem like they are in control when they aren't makes any assurances from step 2 worth about as much as Freddie Mac stock. Also, thanks to this article, I learned the source of a saying: 'Mr. Dilenschneider said, "Remember; this too shall pass!"' I had always thought the quote was older, but I guess I was wrong.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 1:26PM ET  Report Abuse

    • Overall: 5/5

    I faced a rather large crisis shortly after starting at my current company. Essentially, I followed these steps and gained the respect I needed to be effective at my job. I would not be as effective if I had botched the crisis.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 12:46PM ET  Report Abuse

    • Overall: 2/5

    Good advice but at the end day, it all depends on the ability and quality of the leader who calls the shots. I´ve seen the same approach gone terribly wrong due to poor leadership.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 12:41PM ET  Report Abuse

    • Overall: 3/5

    Interesting, in a "perfect universe" sort of way. Unfortunately, we live in the real world, with imperfect human emotions, and most management is only interested in their own skins. 'Project a sense of calm'--some top management are not happy unless they see emotion. It's unfortunate, but uninformed or ignorant managers will listen to who yells the loudest, or tells them what they want to hear. 'Take early and decisive actions with staff'. I've seen this done, and the problem is at the 'early' stage, you don't know enough. How many times do we see companies hiring back their staff at higher prices or with guaranteed contracts. I know I have. 'Ensure the information you receive is accurate'. Yeah, and motherhood is good, and Nazi's were evil. Talk about obvious. 'Manage yourself first'. OK, makes sense, but most of us, in the work environment, do not control the emotional and physical aspects of our jobs. Excitable managers absolutely hate to see their subordinates cool and calm when they are not. Overall, let's include some advice that deals with reality.

  • Yahoo! Finance User - Wednesday, August 20, 2008, 12:24PM ET  Report Abuse

    • Overall: 5/5

    Each point is clear and concise. Execution is key and becomes more critical as the threat increases.

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