Today, a new hierarchy of needs in crisis management is catching out companies all over the world, spanning established entities like Target in the US right through to Nestlé in India, warns Brian West
In 1943, Abraham Maslow proposed his theory of human development psychology, tapping into what motivates people and characterizes their personalities. Maslow’s Hierarchy of Needs, as it has come to be known, stated that people and their decisions were driven by five key traits: physiological, safety, love/belonging, esteem and self-actualization. We can take this hierarchy and effectively appropriate it to corporations and their response to sudden disruptions to their businesses.
Corporations are finding that their traditional, tunnel-visioned ‘command and control’ siloes are no longer the successful path to growth. While there are countless real-world examples of contrasting approaches at work, siloed business unit structures act as a poison pill in a crisis.
There are, of course, exceptions. Companies like Cadbury in Malaysia and medical insurance company Anthem Blue Cross in the US (to name a couple), have successfully managed to use crises as opportunities to restate and reinforce the values they stand for. These players are demonstrating capable management in a crisis and authentic leadership. Their action is guided by an overriding organisational cultural strategy, communicated early and constantly throughout the period of turbulence.
Other companies have fallen through the gaps.Target in the US delayed announcing a data breach by hackers destroying trust with its key stakeholders. Compared this with Anthem Blue Cross. When hacked in 2014, they seized control of their reputation by announcing the breach immediately and talking about what they were doing to support their customers. It was praised across the board for its handling of this crisis, actually building goodwill through authentic leadership.
Cadbury in Malaysia, confronted with a government study suggesting traces of pork were present in their chocolates, immediately recalled the product and then set about establishing that the report was wrong . This highlighted Cadbury’s commitment to quality assurance. In contrast, when Nestlé was faced with a similar situation in India this year, it decided to tough it out. It did not recall the product and argued the government report was wrong. Nestlé might ultimately win this war of attrition and detailed argument, but at what long-term cost to its consumers’ trust? These running battles are now being reported globally.
Cadbury and Anthem Blue Cross understand the new hierarchy in crisis management, with authentic leadership at the top guided by the values they purport to hold dear in their many public reports.
The foundation of this new hierarchy is an estimated 1.82 billion social media users. In this new world order – where everybody is a publisher, propagandist and marketer there is tremendous transparency and a voice for those that may never have been heard in traditional media.
In the same way Maslow’s theory suggests that the most basic level of needs must be met before the individual will focus attention upon secondary or higher level needs, new crisis management hierarchies progresses in the same way.
The C-suite and its chief risk officers start with a logistics-focused crisis manual and regard the crisis management ‘box as ticked.’ It operates at the base of the pyramid and involves a series of lists: who does what in a crisis, or who needs to be contacted. While this form of preparation is a practical and essential part of addressing a problem, the focus remains passive, simply managing a crisis. At a time of a significant reputational challenge the enlightened quickly realize this is not enough.
Developing crisis scenarios and strategizing how the organisation would respond in such a situation, along with draft responses, moves an organisation to the next level – a ‘Playbook’. However, a Playbook cannot predict the pressures from different stakeholders in a crisis, where expedient or ad hoc decisions are often made.
In a time of immense pressure, with limited facts at hand and events accelerating, the organisation’s leadership therefore needs a Guiding Light Strategy.Creating a Guiding Light Strategy gives the company a real chance of emerging from a crisis stronger than before. This is where the company moves from reacting to proposing; from following to leading; from defensive to assertive – they are in fact reaffirming what the company stands for, bringing its values to life in a crisis via its actions. The Guiding Light Strategy takes management from managing a crisis to leadership during a crisis.
However, leadership can only occur if the organisation’s leaders are equipped with the necessary skills, the training and then regular practice in crisis situations. These leaders need to be tested under pressure while learning to be genuine in their approach and response in a crisis. In short, they must build their confidence and strengthen their capabilities in managing and leading in difficult situations.
The Hierarchy Charts:
At the highest level of Maslow’s hierarchy was self-actualizing needs, where people seek to achieve their highest potential – essentially, to be all they can be. This is the embodiment of the new crisis management order.
Authentic leaders in a crisis step away from the traditional style of leadership.Top-down, one-way, public information communication models are abandoned in favour of two way symmetrical models. A handful of great executives have managed to do so successfully in their handling of recent air disasters, such as Tony Fernandes of Air Asia and Thomas Winkelmann at Germanwings. Both CEOs showed authentic leadership under tragic circumstances. Their communication was personal, highly-involved, compassionate, transparent and empathetic.
Reputational damage in a crisis is now often directly proportional to the organisation’s progress up the new hierarchy. Where authentic leadership in a crisis garners benefit-of-the doubt commentary or even goodwill, the authentic leader, appropriately motivated, knows not to destroy trust in a crisis.
Brian West, FPRIA, is Senior Vice President & Senior Partner, Global Crisis Lead