12- 1 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Crisis Leadership and the Learning Organization Chapter 12 Part Three: Organizational Leadership

12- 2 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Outcomes 1)Explain why crisis leadership competency is an important consideration when hiring new leaders. 2)What are the benefits of having a crisis management plan in advance of a crisis? 3)Briefly describe the three stages of a crisis management plan. 4)Describe the role of top management during a crisis. 5)Describe the five-step process for crisis risk assessment. 6)Describe the importance of effective communication during a crisis. 7)Describe the key characteristics of a learning organization. 8)Distinguish between the traditional and the learning organization. 9)Describe the role of leadership in creating a learning organization culture.

12- 3 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Crisis A crisis is a low-probability, but high-impact event that threatens the viability of an organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly. > Comes in many forms: o Natural disasters, o Mass shootings, o Product failures, o Human error disasters, and o System failures.

12- 4 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Crisis Leadership In planning for a crisis, leaders focus on five integrated tasks: 1.Formulate a vision of crisis management. 2.Establish strategic goals and objectives for crisis management. 3.Coordinate the creation of a crisis management plan. 4.Establish a communication plan. 5.Develop simulations and drills. These five tasks are essential competencies of crisis leaders, the ability to: Craft a vision. Set objectives. Formulate, execute and evaluate crisis plans. Communicate. Manage people.

12- 5 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Crisis Communication in the Age of Social Media Social networks must be a part of an integrated communication strategy. Technologies diminish an organization’s ability to control crisis communications. > A crisis is instantly visible, and viral. > Companies have only minutes to contain a crisis. > Stakeholders may have more information about the crisis than the company itself.

12- 6 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Formulating a Crisis Plan Better prepared organizations could reposition themselves and turn a crisis event into a strategic opportunity. Readiness to respond is a function of: > The skills, abilities and experience of crisis leader, > A trained and well prepared crisis team, > Organizational preparedness, > Adequate organizational resources, and > Top management support and commitment.

12- 7 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Benefits of a Crisis Plan Reduces duration of crisis Enhances corporate image Allows for quick and effective responses Improves communication Enhances coordination and cooperation Can lead to the accumulation of ready resources Can lead to fewer costly mistakes Creates less panic Leads to a quicker resolution Limits financial loss

12- 8 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Pre-Crisis Planning Pre-crisis planning addresses: > Do we have a crisis response team/who is on it? o Want a mix of people from all parts of the organization. > What is our crisis plan of action? o Should evaluate the worst possible scenarios. > Do we have all the necessary resources in place? o Both financial and nonfinancial resources are needed. > Another aspect is deciding on the appropriate communications strategy. See Exhibit 12.1.

12- 9 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Leading during a Crisis When crisis erupts, a rapid response is vital. The crisis leader must step forward and lead. > Focusing on three key elements: o Goals – define the ‘What’ o People – define the ‘Who’ o Resources – define the ‘how’. Effective leadership from the top is critical. > Basic lesson is prepare for crises, respond quickly, act with integrity, and disclose fully.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Adapting After a Crisis After a crisis, a review should include: > Effectiveness in stakeholder communication, > Effectiveness in addressing the root cause, > Crisis team effectiveness, > Leadership effectiveness, and > Effectiveness in dealing with victims. Information gathered in the post-crisis evaluation helps prevent future crises.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Five-Step Risk Assessment Model Ultimately, these five factors determine readiness: 1.Quality of crisis plan, 2.Awareness/access to crisis management information, 3.Readiness for a timely response, 4.Effective communication plan in place, and 5.Effective crisis leadership. See Exhibit 12.2.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Effective Crisis Communication Leaders must be able to communicate quickly and effectively during crises. > Four questions often emerge: 1. What happened? 2. How did it happen? 3. What’s being done to address the crisis? 4. What has been done to ensure it never happens again? Providing honest, accurate, and timely answers is effective crisis communication.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Guidelines to Effective Crisis Communication The first 24 hours of a crisis are crucial. Organizations can use media and tools to inform the public. > A press release is a printed statement that describes how an organization is responding to a crisis and who is in charge. > A press kit is a package of information about a company, including names and pictures of its executives, a fact sheet, and key milestones in the company’s history. See Exhibit 12.3.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Learning Organization and Knowledge Management Organizations are increasingly dependent on innovation to create value for customers. In a knowledge-based economy, learning and creativity are key to competition. Leaders must develop knowledge- integration capabilities. Organizational learning is the pathway to knowledge-creation – a strategic resource.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Organization Characteristics Learning organizations have the following: > Continuously adapted and improved, > Everyone engages in continuous learning, > The culture supports creativity and innovation, > Knowledge creation is imperative, and > Decision making is informed by facts/analysis. A learning organization is skilled at creating, acquiring, and transferring knowledge, and at modifying behavior to reflect new knowledge and insights.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. What is Knowledge Management? Organizational knowledge is the tacit and explicit know-how that individuals possess about products, services, systems, and processes. > Explicit or formal knowledge is often codified. > Tacit knowledge is the instinct and intuition an experienced practitioner possesses. > Also referred to as intellectual or human capital.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. The Learning Organization Culture and Firm Performance Key differences between the traditional and the learning organization. See Exhibit Higher levels of learning/knowledge creation relate to higher firm performance. > Firm’s ability to create/share knowledge is positively related to product development. > Productivity and profits increase. > Team creativity and innovation increase. > Direct positive impact on employee, customer, and supplier satisfaction. > Increased organizational citizenship. See Exhibit 12.5.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Key Terms benchmarking crisis discontinuous change learning organization organizational knowledge press kit press release