Test of Leadership: How does a good CEO lead effectively through a crisis?

Leader talking to her team while standing next to a whiteboard

The coronavirus pandemic has impacted businesses of all scales. One might think that crises bring out the worst in people but more recently, some CEOs have stepped up in support of their workforce by pledging not to lay off employees, including those who are unable to go to work. So, what are they doing differently than others aren’t?

Effective response measures fall into three categories:

  • Self-sacrifice
  • Giving with a larger purpose in mind
  • Aggressive transparency even when it’s hard

This can range from larger actions such as taking pay cuts, leave donation programs (i.e. taking some time off work and giving it to team members who need it more), to smaller gestures like delivering care packages to every team member.

Leaders are being put to the test as they must balance protecting the health of their people, maintaining organisation values, sustaining business momentum, managing demands, and tailoring their strategies to the new normal. During Covid-19, these must also be actioned remotely, imposing an even greater challenge for leaders.

In a recent study observing the tenures of 7,000 CEOs pre-pandemic, it was found that effective leaders have a long-term approach to business strategies that navigate complex systems. They also value financial and non-financial performance with an emphasis on good governance within a company, which is successfully evidenced by strong decision-making and acting upon them early on, especially in times of crisis. Results show that companies run by winning leaders generate more shareholder returns more than 20 times higher than those of weak CEOs.

In this article, we will tackle how leaders reflect on crisis and what crisis management truly looks like. Let’s see what we can learn based on these pointers:

Have a greater purpose that is beyond making more money. 

Purpose-driven businesses are full-proof in all ways possible, stretching day-to-day activities to a higher goal that covers the handling of a crisis. It’s best to remind teams of the company’s purpose and reiterate them especially in taxing situations – this enables a stronger reason for a company’s existence, which is to help an immense number of people belonging to different communities, locally or globally.

One CEO shared that “As CEOs, we need to think about how we can help societies and how giving our people a sense of power to create some good links to our value proposition.”

The organisation’s purpose must be articulated in the most human way possible, most often achieved by communicating effectively with your team by stating clear corporate social responsibility actions such as giving free learning tools for kids and providing resources to combat the setbacks caused by the pandemic.

Create strategies that will move the company forward to a post-virus world.

No matter the plans set and imagined for in the future, it’s important to remember that the future is now. And despite having companies face adversities, crises can still bring forth new opportunities.

For companies that didn’t have a clear direction prior to the pandemic or were forced to develop a new one, future planning is increasingly becoming focused not only on recovery strategies but on the longer-term growth as well, with goals more adaptable to frequent changes.

“We chose to narrow our focus to what you can control, such as digital penetration and other strategic priorities that will not be affected by the state of the economy,” one CEO said. “We then aligned with the board on our plan to have shorter, surer, and simpler goals.”

Be ahead of the curve and find new signals that predict changes.

Today, CEOs are forced more than ever to find new signals in market trends and the global economy given the various effects of the pandemic. Leaders should not only observe external forces, there should also be a close eye on what’s happening within the company as well, including employee health, business activity, and consumer changes, among others.

It’s important to accept change and temporary measures are here to stay for a while before everything goes back to normal.

Sacrifice along with your employees.

If you’ve asked your employees to sacrifice, make sure that you are willing to sacrifice as well – and show it. You can’t expect your workforce on the frontline to take risks while you watch everything in the comfort of your office.

In a Harvard Business Review article, Arne Sorenson of the Marriott International group waived his salary for the year to donate hotel rooms to frontline workers in response to COVID-19. Sorenson also asked his fellow executives to forfeit half of their salaries. And despite its urgency to lay off a portion of Marriott’s employees globally, the hotel group is still an employer of choice for taking care of its employees to cope during the pandemic according to Forbes.

However, not all CEOs can afford to take pay cuts. There are still many ways to support your employees like conducting a virtual video check-in per company department or ordering and sending lunch to your team.

Be authentic and transparent because employees deserve a human response.

Building a personal connection with your employees resonates now more than ever as people are more likely expecting engagement directly from their leaders. “A health crisis deserves a human response. People are looking for a vulnerable, calm, and clear-thinking leader,” one CEO said.

Another leader echoed this notion, emphasizing that this is not the time for corporate speech but more about reading between the lines and communicating comfortably with more clarity, even online. One of the most effective ways to do this is by setting virtual meetings every week getting to know and acknowledging you’re there for each other as you go through these difficult times.

As for addressing sensitive topics like layoffs, retrenchment, and the like, being transparent is the best way to communicate. While making any changes, leaders must also share the reasoning behind them.

For many winning and thoughtful leaders, the COVID-19 health crisis is an opportunity for them to be strong leaders and support their teams. They should aim to be rising to the occasion by deeply engaging with employees, giving back, and just simply embracing the challenge to be better prepared for the future.

 Reach out to John to discuss how you can take your leadership skills further.

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