My effective leadership style in times of crisis

What do I have to be prepared for as a manager in a company crisis?

In a company crisis, I have to change my leadership style in order to avoid lasting negative effects on myself and my team. The first step is to understand my own previous leadership style and then adapt it to the psychological and social challenges of my team.

Rising raw material costs, hybrid work environments, a lack of skilled workers and much more are currently a challenge for many companies. The challenge is not the same for all companies, but some companies are severely weakened or come under financial pressure because of it. Then the management is challenged to do something. Often, the necessary measures are perceived negatively by most managers and employees of a company – everyone involved feels equally in a crisis!

How do we define a crisis?

Basically, we have to understand a corporate crisis as a time-limited period that mainly serves to remedy a crisis, but can also lead to insolvency. Thus, the insolvency itself as well as a crisis that can no longer be controlled (i.e., the approaching insolvency) no longer fall within the time period of a corporate crisis. This is important to understand, as management and its internal as well as external communication in the event of a (potential) insolvency are subject to clear legal frameworks, which are not covered in this article.

Crisis periods are therefore transitional phenomena, even though they may last for several months or even years. In such times, it is not only the company’s management that has to take appropriate measures, but also all managers within their sphere of influence and expertise. The specialist measures will naturally vary from crisis type to crisis type and from company type to company type. However, when it comes to managing employees, there are fundamental things to keep in mind in order to get the team through the times of a company crisis intact, effectively and motivated.

Why do I need to change my leadership style?

In times of crisis, organizational paralysis usually occurs. As far as possible, day-to-day business continues as before. Even if with observably less drive and less self-confidence at all levels. Most people just try not to make any mistakes, not to stand out and to withdraw into their comfort zone to some extent. If I, as a manager, maintain the management style that I have practiced for many years and that my team is accustomed to, I confirm or even reinforce the passive behavior of my employees.

But especially in times of crisis, when there are new tasks and challenges to be mastered, this is a completely wrong signal. I have to show my team, both in terms of content and through my personal behavior as a manager, that we are now facing special times and tasks that are often outside our comfort zone. An organizationally anchored “more-of-the-same” will neither lead the company out of the crisis nor support my reputation as an energetic leader.

This is true even if my department, team or project is not directly related to the causes of the company crisis. For example, if I head up technical customer service or a quality project, my team will not be directly affected by rising raw material prices. However, sooner or later a general uncertainty will spread and some “accompanying measures”, such as a general cost reduction or a recruitment freeze, will also affect my team.

Then it will be necessary to adapt my own management style in order to avoid lasting negative effects on me and my team. And the closer my team is to the immediate source of a corporate crisis, such as the purchasing department when raw material prices are rising, the more quickly and clearly I have to adapt my leadership behavior to the crisis.

What do I focus my leadership on in times of crisis?

In recent years, a number of different leadership styles have become established. After the consistently hierarchical or even patriarchal understanding of leadership from the time of industrialization, several, mostly people-centered leadership doctrines have developed. Which of these leadership styles is used under normal operations depends on the one hand on the personality and the manager’s own work experience, and on the other hand on the constraints of the particular task of a department, team or project. Creative tasks require a different leadership style than, for example, quality assurance activities.
In the first step, it is therefore important to understand and be able to classify one’s own previous leadership style. Do I usually lead more democratically or “laissez-faire,” meaning-oriented or group-oriented? This helps me to better understand how my employees normally know and assess me. Only then can I consciously decide which part of my previous leadership behavior I have to adapt or change in a crisis and which parts I can keep.
Because just as different tasks and activities require different leadership styles, managers must also adapt their behavior to the respective crisis situations in order to be able to cope with the psychological and social challenges of a crisis. However, we can basically focus on two typical behavioral patterns that are usually caused by corporate crises:

1. Uncertainty becomes a central and constant behavioral motive in times of crisis.

The sources of insecurity cover a broad spectrum and can range from fear of losing one’s job or being overwhelmed by complex tasks to the loss of familiar and familiar processes and team colleagues. Regardless of the cause, however, insecurities lead either to an increasingly reserved, defensive behavior pattern (the “inner resignation”) or, in some people, to a demanding and aggressive behavior, which often results in a real resignation. Uncertainties prevent us and our employees from accessing our rational behavior, which we so urgently need to master crises. As a manager, you must therefore adopt an individualistic and personality-centered management style in times of crisis in order to adapt to the emotional situation of each individual person in the team. In this way, you will be able to recognize individual uncertainties early on, address them and eliminate them in the best possible way.

2. Retreating to one’s own expertise is safe territory

Experimental approaches, where new skills are tested and new insights are gained, are not in high season in times of crisis. A team is more likely to apply what it has learned well in a crisis than to take new risks. The departments retreat to their safe territory. This is exactly when we need new perspectives, bold views and fresh ideas to address the causes and effects of a business crisis. Here, as a manager, you cannot simply carry on as before, but must take on a – presumably outdated – directive and more dominant leadership role. With well-founded factual arguments and in small steps, you get your team to put “safe everyday tasks” on the back burner and take up new, uncertain tasks to remedy the crisis. Even if you and your team are only indirectly affected by the corporate crisis, your new, self-confident approach to such situations has an encouraging effect on your team.

Conclusion on leadership style in times of crisis

As soon as you can recognize and decode your “usual” leadership style, you will be able to adapt it in times of crisis. Read also the numerous explanations of the individual leadership styles on the Internet or on Wikipedia. With the understanding that there is no one and right leadership style “for all cases”, you as a manager will consciously pay attention to which leadership behavior will bring your team through the crisis as intact, effective and motivated as possible. By actively tracking down the individual uncertainties in the team and at the same time clearly and stringently motivating them to tackle new tasks, you can already score very well in times of crisis.
Karl Hitschmann ist Autor und Leadership-Experte und teilt neues Wissen, persönlichen Erfahrungen und Empfehlungen zur Stärkung der eigenen FührungsKRAFT in Artikeln, Beiträgen und Newslettern, sowie in seinem aktuellen Buch über „Die sozioökonomische Transformation“. Als systemischer Geschäfts- und Organisationsentwickler begründete er mit BUSINESS DESIGN im Jahr 2008 eine Agentur, die für namhaften Banken, Versicherungen und Industrieunternehmen neue Produkte und Services, schlagkräftige Geschäftsmodelle und leistungsfähige Organisationen entwickelt.

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