A crisis is the truth of today’s fast-paced business world. Rapid organizational change, changing economic conditions, problems with personnel, unexpected technological changes, and political effects cause instability in today’s business world. This instability appears out of state control as economic disruptions that result in crisis. The process approach to crisis management builds on the concept of crisis incubation, that crises evolve within organizations, they do not simply appear, and they are not divorced from the actions of those managers who may ultimately be required to deal with the management of such events.
The role of the leader, especially in crisis cannot be diminished, due to all of the responsibilities being on the shoulders of the leader and the cost of loss being too high. In a period of crisis, a leader should not only be a person who leads and inspire people but a person who can efficiently fix a problem, in that case, a person is not only a leader but a fixer – a crisis manager. Crisis management can be defined as the sum of activities aimed at minimizing the impact of a crisis. The impact is measured in terms of damage to people, critical infrastructure, and public institutions. Effective crisis management saves lives, protects infrastructure, and restores trust in public institutions. The work of a crisis leader is harder than the work of a leader in normal conditions, due to there is a high probability of negative outcomes and a leader-crisis manager should be able to face them. Negative outcomes are often related directly to ineffective crisis management. Mega-crisis’s such as Hurricane Katrina, the BP oil spill, the 2008 financial crisis, and the nuclear disaster in Fukushima have been followed by scathing assessments of crisis management performance. Consequently, a professional crisis leader should understand all of his duties to the company and society, six core leadership competencies identified as: building a foundation of trust; creating a new corporate mindset; identifying the (not so) obvious organizational vulnerabilities; making wise and rapid decisions; taking courageous action; and learning from the crisis to effect change.
Crisis environments require immediate decision-making and implementation. Therefore, crisis management requires leader managers with a vision. In a modern world, leader management includes foresight for the future, identification of realistic vision and objectives for the future of the organization, and motivating people to the realization of these. Consequently, the abilities and competencies that a leader demonstrates affect a group of people to obtain a vision or a created set of objectives, additionally, leadership is concerned duplicating with transformation and vision creation for inspiring individuals. The successful and efficient leader, particularly the authentic leader, is expected to display not only integrity and sincerity but also courage and honesty. On the conceptual level, the first two challenges, the complexity of the business environment and the imperative of diversification strategy, can be treated as rational (complexity) and emotional (diversification) areas of involvement. The third issue, the matter of security, encompasses instincts and personal courage which are particularly important elements of the overall personality of a leader.
There are several rules for effective crisis leadership:
- Effective leadership is effective to overcome the crisis;
- Leaders should be visible during the crisis;
- Leaders should work to develop a positive company reputation during normal times to build a reservoir of goodwill;
- Leaders should be open and honest following a crisis;
- Leaders who manage crises successfully may create opportunities for renewal;
- Leaders should cooperate with stakeholders during a crisis and should work to build a consensus;
- Poor leadership can make a crisis much worse;
- Leaders must adapt their leadership style and contingencies during crises;
- A virtuous response to a crisis by the organization’s leaders may be the most effective in generating support and renewal;
- Leaders have specific communication obligations for managing and learning from crises.
It is highly pivotal not to lose time, because time, especially in a period of crisis, is the most important point. In a period of crisis, time is the main enemy of the leader, due to if he misses the time, he will concede to the crisis. That is why there is a special term for the time in the crisis, which is named – ‘golden hour’. Crisis management professionals speak of the golden hour of crisis response, invoking a metaphor from emergency medicine. The golden hour refers not to a particular period of time, but to the observation that incremental delays in responding to a crisis – whether a medical emergency, a flood, or a more routine corporate setback – have greater than an incremental impact on the outcome. A leader in crisis should do the following activity: firstly, understand that there’s a problem; second of all, take it seriously; and finally, take steps to address the problem. But many leaders recognize too late that business-as-usual practices have to be suspended. Take McDonald’s case as an example, when the CEO of McDonald, James Cantalupo, died of a heart attack, the company’s officials immediately made a public announcement that Charlie Bell, President and Chief Operating Officer, would be the new CEO, they had announced it before the stock exchange markets have been opened, so it is not influenced on the price of the stocks of the company.