1. Crisis Leadership and the Learning Organization
Chapter 12
Crisis Leadership and the Learning Organization
Copyright © 2010 by South-Western/Cengage Learning
All rights reserved.
PowerPoint Presentation by Rhonda S. Palladi
Georgia State University

2. Chapter 12 Learning Outcomes
Explain why crisis leadership competence is an important consideration when hiring new leaders.
Identify the benefits of pre-crisis planning.
Identify the key components of the pre-crisis planning phase.
Describe the five-step process to crisis risk assessment.
Describe the role of the CEO and communication in managing a crisis.
List five or more attributes that can be used to describe the learning organization.
Distinguish between the traditional organization and the learning organization.
Describe the role of leadership in creating a learning organization.
Define the key terms listed at the end of the chapter.

3. Crisis Leadership Crisis
Is a low-probability, high-impact event that threatens the viability of the 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
While a pre-crisis response will not prevent a crisis, it can minimize financial loss and long-term damage to a firm’s reputation

4. Crisis Leadership (cont.)
Strategic crisis leadership requires three things:
Using environmental monitoring techniques to identify events that could trigger crises in the future
Integrating crisis management into the strategic management process so it remains a regular part of the overall strategy-evaluation process
Establishing a culture that embraces crisis awareness and preparation as a way of life

5. Crisis Leadership (cont.)
Crises come in many forms
Natural disasters
Terrorist attacks
Product failures
Human error disasters
Unexpected death of key individual(s)
System failures

6. The Impact of Environmental Factors
The importance of crisis leadership is intensified due to technological advances
The Internet and communication networks allow millions to analyze and critique virtually every aspect of an organization’s response to a crisis
A company today may have only minutes, not hours, to contain a crisis

7. Crisis Management Plan
An effective crisis management plan is one that is:
Comprehensive, with clear leadership, team, and individual assignments in the form of roles and responsibilities
Upgraded frequently and supported by training and periodic drill sessions
Coordinated and controlled across levels and units of the organization
A crisis management plan should address what happens before, during, and after a crisis

8. Pre-Crisis Planning
A pre-crisis plan is the best way to mitigate the negative consequences of any crisis
Pre-crisis planning entails three components that every organization (large, small, for-profit, or non-profit) should address when putting together a comprehensive crisis response plan:
Appointing a crisis leader
Creating a crisis response team
Assessing risk

9. Pre-Crisis Planning (cont.)
Crisis leader
Scans and monitors the internal and external environments for potential threats or warning signs of a crisis
Requires individuals or departments to keep logs of complaints or incidents
Monitors customer and employee complaints and behavior
Identifies emerging patterns or trends in the regulatory environment, competitive landscape, and social environment
Coordinates the activities of the crisis management team to ensure that the members work well together

10. Pre-Crisis Planning (cont.)
Crisis response team
Should involve a good mix of the representatives from all sectors of the organization
Diversity in the makeup of the crisis management team is emphasized
Members must be calm, self-confident, assertive, and dependable during a crisis
Leaders must develop comprehensive training programs for crisis response team personnel and engage them in frequent drills that simulate an actual crisis situation
An effective team functions as one unit with one voice under a single unit command

11. Pre-Crisis Planning (cont.)
Crisis risk assessment
Crisis teams set out to identify potential incidents that could hit the organization and then determine the degree of preparedness necessary
The crisis leader and crisis team members begin the risk assessment process by engaging in “what-if” scenario analysis that focuses on creating realistic incidents under each crisis category
Scenario analysis and planning is a tool that helps leaders prevent or respond to crises through decision-making skills based on possible outcomes of crises

12. Risk Assessment Model S W O T Criteria Risk Identification
(Risk Chart)
Risk Assessment & Ranking 1 2
Risk Reduction Strategies S W O T 3
Crisis Prevention Simulations 4
Crisis Management 5
Source: Based on Lawrence Barton, Crisis in Organizations, 2nd ed., South-Western/Thomson Learning, 2000, p. 19.

13. Pre-Crisis Planning (cont.)
Ultimately the best gauge to determine an organization’s readiness to respond to a crisis is how it rates according to the following five factors:
Quality of strategic crisis plan
Awareness and access to crisis management information
Readiness for a quick response
Effective communication plan in place
Effective crisis leadership

14. Pre-Crisis Planning (cont.)
A comprehensive crisis response plan based on risk analysis indicates:
Who is in charge of making key decisions
Who is on the team and what their roles and responsibilities are
Who is to respond to media inquiries
How the plan will be executed
What other employees are required or not required to do or say

15. Pre-Crisis Planning (cont.)
The benefits of a pre-crisis response plan include:
Faster response time
Better judgments
Ready and available resources
Fewer costly mistakes
Less panic
Quicker resolution of the crisis

16. Managing During a Crisis
An effective response in the event of a crisis is critical to an organization’s survival
An organization should make itself accessible as quickly and openly as possible
Such quick action can help to preserve the credibility and reputation of the organization and its leaders during the crisis

17. Managing During a Crisis (cont.)
The role of senior leaders
Employees will seek guidance from company senior leaders in terms of:
How business operations will continue
Ways to cope with the situation
It is the senior leader’s responsibility to:
Stay engaged and lead from the front
Focus on the big picture and communicate the vision
Work with the crisis management team

18. Managing During a Crisis (cont.)
The role of senior managers (cont.)
Effective leaders:
Remain focused on the vision and mission of the organization despite dealing with the reality of the present
Rely on the values and principles found in their mission statements to guide company decision making during a crisis
View crisis management as a team effort

19. Discussion Question #1
Describe why a senior leader’s physical presence is critical during a crisis.

20. Effective Crisis Communication
Can make or break a company reputation
Effective pre-crisis planning should designate who will speak for the organization in the event of a crisis
It is generally believed that it makes a difference whether the company representative or spokesperson is a senior-level manager or someone at a lower level of responsibility
Providing honest and accurate answers is the essence of effective crisis communication

21. Effective Crisis Communication (cont.)
Short-term benefits of an effective crisis communication system:
Well-informed employees will assist the organization in presenting the facts to the outside world
Employees may have excellent insight on the incident and valuable suggestions on solution alternatives

22. Effective Crisis Communication (cont.)
Long-term benefits of an effective crisis communication system:
The organization will have won over the confidence, loyalty, and commitment of the employees
Employees’ appreciation, sense of belonging, and self-worth is enhanced
A culture of teamwork and cohesion is created

23. Discussion Question #2
How important to an organization is internal (employee) communication during a crisis?

24. Guidelines for Effective Crisis Communication
It is generally believed that the first 24 hours of a crisis are crucial because of the media’s need to know what happened so they can tell their audiences
There is an information vacuum that, if left unfilled by the organization(s) involved, will be filled for them by others
Telling the truth up front is the simplest and most effective way of defusing public hostility

25. Guidelines for Effective Crisis Communication
An organization can use a number of avenues to disseminate its information or tell its side of the story to weather the storm brought on by a crisis
Press release
Is a printed statement that describes how an organization is responding to a crisis and who is in charge
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
News conference
One-on-one interview

26. Guidelines to Effective Crisis Communications and Management
Be present
Don’t “spin”
Communicate plan of action
Be sensitive with affected parties
Avoid conflicting messages
Show a plan for how you will avoid a repeat in the future

27. Guidelines to Effective Crisis Communications and Management (cont.)
Don’t make excuses for the leader
Go the extra mile
Go beyond the requirements of the situation
When things are going good, take credit for it without being self-absorbed
Remember that the media is your friend and link to the public
Be honest and straightforward with them

28. Managing After a Crisis
Top management should launch an evaluation (preferably by an objective third party) of the organization’s effectiveness in managing the crisis
The analysis should focus on the following questions:
How effective was the crisis team?
How effectively did the crisis management plan perform?
How effectively were victims and family members handled?
What worked the least in mitigating the problem?

29. What is a Learning Organization?
Is one that is skilled at creating, acquiring, and transferring knowledge, and at modifying behavior to reflect new knowledge and insights
Organizational knowledge
Is the tacit and explicit knowledge that individuals possess about products, services, systems, and processes
Is often codified in manuals, databases, and information systems

30. The Traditional versus the Learning Organization Culture
Most organizations today operate in environments characterized by continuous change
However, for some—like the high-tech companies—discontinuous change occurs when anticipated or expected changes bear no resemblance to the present or to the past
Given the realities of the current environment, the traditional organizational form is being replaced by the learning organizational form

31. The Traditional vs. the Learning Organization
Stable environment
Vertical structure
Strategy is formulated from the top and passed down
Centralized decision making
Rigidly defined and specialized tasks
Rigid culture that is not responsive to change
Formal systems of communication tied to the vertical hierarchy with lots of filters
Learning
Changing environment
Flat, horizontal structure
Strategy is a collaborative effort within the organization and with other employees
Decentralized decision making
Loose, flexible, and adaptive roles
Adaptive culture that encourages continuous improvement and change
Personal and group networks of free, open exchanges with no filters

32. The Traditional Organization Culture
Is based on the bureaucratic model that emphasizes a command-and-control structure, centralized decision making, highly formalized tasks, and a rigid, closed culture
Is oriented toward the individual, and rewards are individualized
Contains a mindset that there is a “right way” to do things, and only when that way is followed the organization will be successful
Is efficiency-driven
Deviating from standard operating procedures is frowned upon and mistakes are viewed as a symptom of poor performance

33. The Learning Organizational Culture
Abandons the vertical structure for a flat, horizontal structure
Teamwork is highly valued, and network systems facilitate open communication and exchange throughout the organization and with other external sources
Encourages innovation and creativity in meeting current challenges by designing tasks that are much looser, free flowing, and adaptive
Involves multiple learning processes that allow learning to feed forward to the organizational level and feed back to the individual
Embraces the idea that people will learn if encouraged to face challenges, experiment, fail, and reflect on their experiences

34. Discussion Question #3
What message does it send when the organizational culture encourages employees to view mistakes/problems as opportunities for improvement rather than reasons to blame or punish those involved?

35. Learning and Knowledge Acquisition versus Firm Performance
Research findings support the following:
A firm’s ability to create and share knowledge is positively related to new product development success
Organizational learning and knowledge creation have a direct positive influence on the level of innovation
The learning organizational culture has a positive direct impact on employee, customer, and supplier satisfaction levels
External knowledge acquisition has a positive impact on the processes of creativity and learning in problem solving

36. The Role of Leaders in Creating a Learning Organization
Knowledge management is a key leader function
Problems associated with failed efforts to create a learning culture are often attributed to poor leadership
Leaders face a dual challenge of maintaining efficient operations and creating an adaptive organization at the same time

37. Guidelines for Enhancing Organizational Learning
Encourage creative thinking
Create a climate in which experimentation is encouraged
Provide incentives for learning and innovation
Build confidence in followers’ capacity to learn and adapt
Encourage systems thinking

38. Guidelines for Enhancing Organizational Learning (cont.)
Create a culture conducive to individual and team learning
Institute mechanisms for channeling and nurturing creative ideas for innovation
Create a shared vision for learning
Broaden employees’ frame of reference
Create an environment in which people can learn from their mistakes