By Glenn Gow
Most CEOs love being CEOs. They love being a leader. What they don’t love is managing crises.
You can become very good at managing crises. I’d like to share a few tips with you so you can manage crises that may show up in your role as CEO.
Types of business crises you might encounter as the CEO
Recession
2023 could be a tough year for businesses, so it’s important to be prepared. Your business customers will be reducing their spending due to declining sales, layoffs, and growing debt. If you sell to consumers, they will be impacted by inflation, job uncertainty, and a general reluctance to spend in a downturn. This downturn is expected to last for several years, so businesses need to be prepared for a long period of decline.
Competitive threats
When you see . . .
- A sudden drop in sales
- A decrease in market share
- New entrants into your market
. . . you may be faced with a competitive threat. Once you sense this, it’s important to quickly determine whether or not a competitor is causing these challenges or not.
Losing a key employee
Just when you need them most, you can lose a key employee. Just when you are most worried about how your company will weather a crisis, they add to your crisis by resigning.
This can happen for a variety of reasons. Maybe they’ve been recruited by a competitor. Maybe they’re relocating for personal reasons. Or maybe they’ve just had enough of working for someone else and are striking out on their own.
Whatever the reason, it’s always a blow to lose a key employee. But in times of economic downturn, it can be particularly devastating.
Personal crises
Illness. When times are tough, our health often takes a downturn as well. When businesses are struggling, our own personal stress levels can increase. All of these factors can lead to poorer health.
Personal relationship troubles caused by:
- Financial problems. Financial problems can put a strain on any relationship, but they may be especially difficult to deal with during a business downturn.
- Communication difficulties. When stress levels are high, it can be difficult to communicate effectively with your partner. This can lead to misunderstandings and frustration on both sides.
- Parenting disagreements. If one partner is working long hours and the other is home with the children, it can be difficult to find a balance that works for both sides. This can often lead to arguments and feelings of resentment.
Are you really having a crisis?
When you think you are in a crisis, the first thing you need to do is to ask the critical question: “Is this really a crisis?” It may feel like a crisis at the moment, but is it really? Also, how important is this crisis in your life overall?
One of my CEOs lost a key executive on their team. At the moment, they certainly thought it was a crisis. They thought it was “game over.”
That person ran their sales organization. They were the company’s top performer. The CEO was worried that everything was going to fall apart as a result of losing this person.
But the CEO recovered. The company recovered. In fact, after a short while, the company was doing even better than before.
Perspective is important. Don’t assume it’s a crisis and panic. It may not be.
Steps to handling a crisis
If you really do have a crisis, you need to shift into crisis-management mode. Here are the four top tips for managing a crisis:
1. Acknowledge you have a crisis
One of my CEOs had lived through very significant economic downturns. They had been in situations where things changed rapidly from high-growth and high profits to almost running out of cash.
When the economic downturn happened, They didn’t want to acknowledge that the market had shifted. They wanted things to be like they were before. They wanted the company to continue along the same path, hoping that things would get better.
The hardest part for that CEO was that they believed in the current strategy. It was working . . . but then it wasn’t.
My CEO finally recognized they had a crisis. In staring at their revenue forecast and cash flow projections, they finally had to acknowledge that they were managing a crisis.
2. Change the plan
Now that the CEO acknowledged that things weren’t going the way they wanted them to, they had to throw out the old plan.
They had been hiring like mad to support their growth. They hired too many people too quickly. Their overhead grew faster than their revenue because they were betting on the continued expansion of the market. That plan wasn’t going to work anymore.
The CEO created a plan for a smaller, tighter, more focused company. It meant less office space, a cut back in spending, and layoffs. It was painful, but it was necessary for their survival.
3. Manage the grief
This is a step that is rarely spoken about. When you change your plan, the survivors need to grieve, especially if the new plan has resulted in layoffs. The survivors’ friends were let go and they feel bad for them. Some who are left will feel guilty that they didn’t get laid off.
Even if layoffs weren’t part of the restructuring, things that were anticipated will no longer be there. It could be a new office space or a favorite project. People will be disappointed and will grieve.
The best thing you can do is notice that grieving happens. Give it a little time and then shift to the next phase.
4. Get back to work
A crisis has occurred. You’ve done what you have to do. Now it’s time to get back to work.
This means that you don’t question the plan, you execute against it. This means that you finish grieving and move on to making things happen. This means you get everyone focused on just doing their job and not on everything else that could distract them.
The CEO needs to continue to point to the vision of the company, even if it has changed. The CEO needs to rally the team to perform against the new plan, and you will eventually get through the crisis.
About the Author
Glenn Gow was a CEO for 25 years and in venture capital for five years. Before becoming a CEO, he earned a degree in Quantitative Management from the University of Florida and his MBA from Harvard. He founded Crimson Consulting Group where he worked with big tech companies, including Apple, Facebook, Google, Microsoft, and Cisco, to help make them even more successful. Today Glenn works directly with CEOs as a CEO coach to help make their companies become more successful as well.
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