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How to Improve Decision Making in a Crisis

 

 

~ By Walter Muzangaza 

 

The Importance of good decision making in a crisis.

 

 

If there is one thing that has been made abundantly clear by the Corona Virus Global Health Pandemic is that, a crisis can come from any direction and it never gives you advance warning or indication of its imminent presence. Many businesses had to close down due to the national lockdowns imposed in order to curb the spread of the virus. Overnight, they found themselves plunged deep in a crisis, the magnitude of which very few would have ever begun to anticipate and plan for in their extreme scenario planning exercises. Because of the crisis, many businesses had to close down and many have not recovered since.

 

A crisis, has the potential to bring your business to a standstill if not planned for. Global health pandemics are not the only kinds of crises forms businesses will have to suffer. Some crises will arise from political, economic, social, technological, environmental and legal & factors. It may be true that crises have a disruptive potential to affect businesses, but it doesn't mean that when a crisis arises, it should be the end of your business. In the crises, may also lie opportunities to improve, develop new competencies and resilience that would not otherwise be inspired in normal operational circumstances.

 

In dealing with different kinds of crises, it is important to draw attention to the uniqueness of the situation and emphasise that there is no ,"one size fits all", solution.

 

An Important part of risk management and risk treatment planning to navigate a crisis largely concerns the decisions that need to be taken in the context of a crisis. This is a high level executive function that allow for the preservation of resources & capacity in embedding a heightened operational agility in how decisions are made to identify the crisis, stabilize the situation and ultimately adapt and thrive.

 

For us to know whether we have made good decisions, we need to be clear what it is that we want to create or where we want to go – the change we are seeking or circumstances we are trying to avoid. We need to have markers and indicators of progress. If we are moving toward our end goal, we are taking good decisions. If we are moving away or remaining stationery, then we are not making the right progress meaning we are not taking the right decisions.

 

Quantity of decisions vs the Impact of decisions considerations.

 

Quantity and Impact: In any business there is always a set amount of decisions that need to be made for the organizations to run well under normal conditions. In the context of a crisis, the amount decisions will need to decrease so as to increase the focus on those decisions that will have the most impact in helping the organization navigate the crisis.

 

In the context of a crisis, there are two natures of decisions to consider. Important decisions of strategic importance. These are usually taken on a high level and their accurateness in achieving what they hope to achieve can materially improve or negatively impact the organization e.g. the choice to acquire a competitor or change the nature of the business. Second type of decisions are Routine or maintenance like in nature. Those that are routine and used to maintain the finer parts of operations going forward e.g. make a refill order of stock from a supplier. These are high frequency, but low impact decisions to the business.

In the context of a crisis, you need to reduce the amount of focus being given to the small impact decisions that are routine or those that only apply in the normal course of business.

 

Quality and the Impact Focus: You will instead need to put more focus on the high impact strategic decisions that have the capacity to help the organization continue even through the crisis. E.g., when restaurants had to close due to Covid-19. Under normal circumstances a regular restaurant would be hiring and spending on advertising.

 

Example: In Covid-19 pandemic lockdowns, many big businesses decided on taking higher level decisions to stop creating new advert campaigns and instead rather, diverting those resources toward public relations in performing their corporate civic duty by not advertising but instead supporting their employees that found themselves unable to work and earn a living. They also had to keep the investors and customers informed that they were observing the legal regulations and help spread credible information. By taking this strategic decision, the customers, suppliers, employees and other stakeholders would develop a strong level of trust and loyalty to the business which is ultimately good for generating more business and recuperate after the regulations have been lifted.

 

 

Image cred: afce4 (Unsplash)

 

Engage the Crisis Management Protocol Set of decisions and key areas of Impact:

 

Crisis Leadership according to Heifetz et al (2009:64) has two phases, however we will add another called the preparatory phase. The first is the Emergency phase, when the leader's task is to stabilise the situation and buy time. The second phase has to do with adapting the organization by getting rid of the issues that caused the crisis to occur in the first place.

 

Every business should have some form of basic crisis management plan in place as a risk management/reduction tool. However, though many business owners realize its importance very, few actually ever intentionally put one in place. They deal with the situations as they come. This is a very risky and inefficient way to manage an organization.

 

Successful business owners, as a form of risk mitigation strategy, hold sessions of scenario planning with their teams to anticipate likely forms of risks and create appropriate responses to them. Those that have the resources and can afford it, can conduct elaborate drills to stress test their reaction strategies and see if they will hold when performed in a virtual setting, preparing in the event of an actual crisis.

 

The Need For Flexibility

 

Planning around a crisis needs to be extremely flexible. This is becasue there is a high degree of uncertainty in the nature of  crises and how they unfold. When the plan is flexible, recognizing all business units, it will have a very low likelihood of requiring major modifications. Transformational leadership may also be used to reduce stress and ensure employee commitment.

 

While we are not going to be talking in depth about the Crisis Management Protocols in this article, it is relevant that we mention that it should also specify the kinds of decisions that will need to draw more resources e.g. toward surveillance, studying the crisis, stabilization of the areas of business that are most affected by the crisis as well as documenting and analyzing to adapt and come out stronger.

 

Monitoring & Evaluation of Decisions Taken

 

Crises, by nature are unpredictable and the truth is that, sometimes, even with all the planning that we can do, there is still a very high likelihood that some of the decisions that an organization will make will be either wrong, inappropriate or ill-informed in relation to the crisis. So what can we to do in such a case where even the best efforts of scenario planning either fail or only get us so far?

 

The organization needs to have monitoring and adjustment mechanisms put in place to help show whether it is making positive or negative progress. This will help inform what other decisions that need to be taken to redirect the organization toward achieving its intended goals of coming out of the crisis.

 

Furthermore, after the crises you will need to have the last phase, the preparatory phase which is a crucial stage of preparing for the next crises that it does not catch the organization off guard again. In this phase the forward looking leader needs to be aware that he needs to create an atmosphere in his organization that is supportive of moving forward in a crisis environment. The culture in the business needs to be geared toward active solution finding and taking initiative to tackle challenges. As these things are happening, the lessons that are learnt from these experienced need to be recorded and stored to become a part of organizational wisdom. Knowing how the organization solved the problem the first time will assist in cutting the learning curve, saving time and money, should the organization find itself facing the same issue again.

 

It is also at this stage that a clear communications plan needs to be developed. In the next crisis how will information be communicated and to whom? Who will have authority on what matters? Roles and responsibilities etc? In a crisis situation it is important that information be understood clearly. Therefore, it is highly advisable to use two-way feedback communication, to send, confirm receipt of message, understanding, level of importance as well as what must be done.

 

Last Tips

 

Crisis Leadership has to do largely with the recognition of looming problems, preparing for them, mitigating the negative impact they cause and restoring stability. After this to then strengthen the organization even further cognizant of the lessons learnt. While it is not possible to guarantee that even the best decisions taken in a crisis will get your business out of that crisis unscathed, you as a business leader still need to use the best practices when taking the decisions in such a situation.

 

Communication is one of the most crucial aspects of crisis leadership and risk management. 

 

Any leader can be capable in a non-crisis situation. However, not all non-crisis leaders are effective in crisis situations. This is highly evident in the level of decisiveness that is shown during it. Leaders in crises situations will need to be very alert and highly adaptive individuals in meeting the challenges pose by an evolving environment. Map out your planned response, practice, communicate with stakeholders, record actions taken and adapt. 

 

Image cred (cover): Fortune Viieyra (Unsplash) ; Armani Nation (Unsplash)