The great pandemic of 2020 has brought to the surface the issue of crisis management. Especially with nationwide business shut downs in the last eight months, many companies are on a rocky road of uncertainty. Entrepreneurs are unsure of what the future holds after seeing revenues slow or halt in some cases. Layoffs, RIFs, budget cuts, departmental downsizing; all inevitable.
Way too many startup founders aren't equipped or experienced when it comes to crisis management. "In order to keep your startup going, you have to know how to identify a crisis before it spreads like a cancer and how to make big changes and big decisions fast and often," says Gael O'Brien, the ethics coach for Entrepreneur.com.
"Any time in which the world stops functioning in a way we're used to, a deviation from the norm, that might be the biggest early sign of a crisis about to rear its head," she continued.
Admitting you have a problem
O'Brien stresses that a leader should create an easy process whereby one can identify a crisis in its infancy. The key here, she says, is to make sure to recognize a crisis before it starts to consume your company. You'll have to learn how to contain the crisis by leading the charge in rapid decision making. Many entrepreneurs simply refuse to admit there's a problem at hand. Many times, admitting there's a crisis means admitting one was wrong. It also means they may have been wrong for years.
These entrepreneurs that refuse admitting there's a crisis often do so with common refrains like "I didn't want to scare anyone" or "if I admit I was wrong this whole time I'll lose respect."
"Great leaders aren't afraid to put their company first, even if it means a blow to the ego. These leaders are not afraid to inform everyone that might be affected know there is a crisis," O'Brien explained.
"They contain the problem and prevent it from becoming unmanageable. Good leaders don't opt for a temporary Band-Aid-like fix either. They aim for a permanent solution."
Casting for a crisis management team
There are two common mistakes startup leaders make when it comes to crisis management. The first is that they can miscast a crisis management team. Meaning, they put the wrong people in decision-making roles. You want people on your crisis management team who are not going to feel they will be blamed for a crisis or for controversial decisions.
When one is afraid of being blamed for something, they are more likely to obstruct and lie so that the team's focus is diverted. "These are people that will omit objective and relevant information if it means saving their own reputation or job. You want people that put the team first," said O'Brien.
Communication during a crisis
The second common mistake startup leaders make during a crisis is that they tend to under-communicate. It becomes habitual to keep things close to the chest. To become secretive during a crisis. Managers might feel that the less people know, the less chance there is of panic. However, doing this opens your company up to wild speculation among employees. Assumptions. And these assumptions are never good.
"You have to be forthright. It's not just that people have a right to know what's going on in their own company. It's also that if you leave yourself up to speculation, people will grow frustrated and worse, scared. Scared people make crises worse," said O'Brien.
This article originally appeared on the University of Houston's The Big Idea. Rene Cantu, the author of this piece, is the writer and editor at UH Division of Research.