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Does Crisis Crowd Out Leadership?

Leadership in hard times is not all that different from leadership in good times. It’s just that the stakes seem higher.

No one needs to be reminded that the current economic downturn is global.  Interestingly, when it comes to leadership at this time, it appears that important questions are universal as well.

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I recently responded to a set of questions sent to me by a reporter for a Chinese business magazine.  The first question that he asked was the first one that I often hear from people in the US and Europe as well.  Specifically: “In times of crisis, what changes do you observe in leadership style and substance — is leadership less important than it was before?”  Basically is it more about execution, with the needs of the people and preparing for the future taking a distant back seat?

 

This question from China is highly relevant.  We have heard many examples of senior level people who have in effect abandoned their leadership responsibilities to hunker down and “do what needs to be done.”   They ignore the needs of the people upon whom they depend, the larger organization, even the future in the name of exigency. 

 

Leadership is important at all times, even in good times, because the ability to think and plan ahead, to really know what customers want, to get ahead of change, to sensibly manage resources and coordinate execution, to engage people today and around their own futures will keep those good times going.  If we had had good leadership in key institutions over the past few years, we would not be in the fix we are in today.   Imagine, for instance, if leaders in certain US financial institutions had said: “It runs counter to our values and our collective long term benefit to focus only on short term profits.  We must only sell instruments and securities that we understand, and that accurately reflect risk as well as return.”  Look as well as the companies whose leaders had the wisdom not to over-extend themselves during the good times in order to have sufficient resources to weather the downturn today.  Those folks can even position themselves better for the recovery because they can make smart investments in the business and talent that the competition can’t.

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That said, nothing heightens the sheer drama around the role of leader more than a crisis.  In tough times, people need leaders who are visible, who engage with their people, and who are willing to take action.  Employees need leaders who reduce their sense of insecurity, and who give them confidence that they will live in a safety and prosperous future — eventually.  They need leaders who are as honest as they can be about what they face, and who have a plan for moving forward.  When anxiety runs high, leaders need to communicate with those around them more than before, and be prepared to listen to the concerns and ideas of others.  When leaders do that, they will find that the people needed to do the work will be better able to focus on the tasks before them with energy and goodwill.  

 

Psychologists will tell us that the hardest emotion for people to live with is uncertainty. Leaders need to reduce that feeling in their people.   Even bad news is better than no news.  If you happen to be in a business for which 2009 is going to be really tough, acknowledge that.  Then engage in the dialogue around how to move forward from there to succeed.  If you are in a business that should do fine in this downturn, for heaven’s sake, say that as well!  The psychology of this downturn, at least in the US, is far more negative than it needs to be.  Help your people live in as positive a reality as you can.