October 16, 2020

Leading in a Time of Crisis

Leading in a Time of Crisis

It’s challenging to steer an organization through a crisis. And when several crises converge at once the challenge is even greater.

2020 has been a year, marked by unprecedented turmoil. Business leaders have grappled with a deadly pandemic, a sharp economic contraction, a dismantling of business norms, and a social reckoning stirred by the police killing of George Floyd.

In just the first six months of the year, organizations were forced to figure out how to keep their employees and customers safe while continuing to operate and stay afloat. Millions of workers coped with new anxieties and tried to focus on doing their jobs remotely, often while juggling home-schooling and other family responsibilities. Our routines were out; social distancing and face masks were in.

Then came Floyd’s horrific slaying, and a flurry of protests and activism that have spurred organizations to reckon with their own internal inequities.

2020 was only halfway over; already it was a lot.

Leaders were steering through it.

Maryland Smith professors and alumni share their stories of what it takes to hold the helm in uncertain seas.

Setting the course

To navigate a crisis, leaders must quickly assess and make sense of a situation, says management professor Gilad Chen, the Robert H. Smith Chair in Organizational Behavior. Next they must set direction, a clear path through the crisis. And throughout, they must provide unwavering support and empathy for the people they lead. “You need to make sense of it, and know where you’re going,” he says.

Speed and a leader’s conceptual skills – the ability to look at where the world is going and shift in that direction – are particularly important, Chen says.

“If you can make sense of where things are going and align your company so that you’re in the right place, then you’ll adapt quite well. You may even thrive.”

But no leader can handle everything themselves, says Chen. The most effective leaders are the ones that create a system of leadership.

“Part of it is empowering leaders at lower levels and creating a substantive place that brings more experts and functions into addressing the crisis,” he says. “You need to have more hands on deck.”

But it shouldn’t be a mindless delegation of authority, says Chen. Each level of leadership has a role to play.

Chen’s past research looked at U.S. Army units – which often work in crisis situations – finding it especially important that upper-level leaders, such as company commanders, provide direction-setting while lower-level noncommissioned officers provide important emotional support.

But, says Chen, good leadership still starts at the top.

“The leadership that people exhibit at the top sets the stage for the leadership that is possible and likely at lower levels,” Chen says. “That’s true for ethics, where if you have an ethical leader at the top, you’re less likely to have bad apples within the company. Same thing about creating empowering systems. If you have a leader at the top that is open to bringing in talent and sharing advice with other leaders, then leaders below are also more likely to follow suit.”

Into the Storm

K.J. Hughes ’14, EMBA ’20, saw a crisis on the horizon in February. Hughes is the founder and managing partner of Washington, D.C.-based Relentless Management Group, which provides tax planning and business management for professional athletes, entertainers and other celebrities.

When a musician’s huge March gig was cancelled with no talk of rescheduling, Hughes and his team quickly huddled to discuss how to meet client needs as sports and entertainment came to a standstill. A swift decision to defer fees, indefinitely, “felt right,” he says. “And we haven’t lost one client.”

Addressing the internal needs of the organization was more challenging, says Hughes. “We were not set up for remote work,” he says. “We’re still dealing with it.” That means rotating use of the office space and relying on a WeWork space. It also meant adopting new technology – Slack and cloud-based services – to stay in touch and share documents.

Hughes says the firm will emerge from the pandemic more efficient and able to spend less money on face-to-face meetings. Prior to the pandemic, he was spending at least 200 days a year traveling to see clients. “But with Zoom and virtual meetings becoming the norm, we’ll cut a lot of costs on travel, for sure.”

The Black Lives Matter movement that surged in May and June, sparking introspection for firms scarred with inequality, exacted no toll or cultural shift at Relentless. “I go to work with my fist raised every day,” says Hughes, whose clients and whose team of 60 all are Black.

“We’ve been walking the walk and talking the talk forever. But being Black in America shouldn’t be this exhausting.”

If anything, the social crisis swirling at other organizations has brought Hughes’ team closer together, inspiring deep conversations about race and belonging.

That closeness is helping his team weather the other storms.

Hughes worries about the uncertainties of the pandemic and its potential impacts, especially when it comes to his young daughters, one of whom has cerebral palsy. But he’s determined to keep moving forward.

“It’s what I would say to every leader: Be scared, be vulnerable, but also use that to fuel the changes that you know are necessary and make sure that you support those around you, those that you’re leading, with the proper emotional, physical and financial support.”

That’s what he’s focused on for now.

“My fear is not going to force me into inaction or denial. That is where we have to be really strategic as leaders and let it be known that we may not have the answers, but the reason why we lead, and the reason why we’re good at it, is because we are going to figure this shit out.”

Row together: Create space to speak

In a crisis, an open work culture, where employees feel able to voice their opinions, is the ideal, says Subra Tangirala, the Dean’s Professor of Management.

“Part of being a good leader is to encourage everyone to speak up and let them know they have forums where they can express their opinions,” he says.

Tangirala has extensively studied how organizations can create cultures where employees have agency to bring their whole self to work. He has found that when employees are given opportunities to share their thoughts and ideas, it leads to greater professional satisfaction. It also helps organizations innovate, correct problems and evolve.

“During a crisis, whether it’s about the Black Lives Matter movement or COVID-19, employees often cannot separate out personal anxieties from work anxieties,” says Tangirala. “They need to feel that the organization is a place where they can express those anxieties and, in expressing them, find that the organization will do things to help them navigate this.”

In times of turmoil, Tangirala says, people want to talk about what’s happening and what challenges they’re facing, without feeling pressure to compartmentalize their “professional” and “personal” identities.

How their employers respond makes a difference. When workers feel that their organization cares for them and is willing to take action on things they care about, they want to contribute more. “They want to be good citizens for organizations,” Tangirala says. “They do the right things for organizations, they become good ambassadors for the organization to the outside world, and overall, they can help an organization navigate a crisis.”

Leaders at every level can create a speak up culture.

“Managers at every level have a sphere of influence and can make a difference, especially with people who are reporting to them,” says Tangirala. “They can, in their own ways, provide opportunities for their employees to share their opinions and concerns about how events in the external environment are impacting them. ”

An even keel to weather the storms

The last cascading global crisis leaders had to navigate was the 2008-09 financial crisis, when banks’ risk-taking caught up with them and the subprime mortgage market cratered, leading to a global financial collapse, a housing market meltdown and a devastating recession.

Phyllis Caldwell ’81, MBA ’87,started her day then the way she does now, practicing yoga to stay grounded. Only these days, the executive in residence at Maryland Smith does it at home with her iPad.

During the mortgage crisis, Caldwell led the U.S. Department of Treasury’s program to keep people in their homes under the Troubled Asset Relief Program (TARP). Caldwell was appointed by President Barack Obama in 2009 as chief of the Homeownership Preservation Office, assigned to implement the mortgage modification and foreclosure prevention programs with TARP funds. She had previously spent 20 years in banking, often dealing with smaller crises. It was her “resiliency training” for the big test of the financial crisis.

“You had unemployment, you had a foreclosure crisis, you had under-capitalized financial institutions, and you had lack of consumer confidence – all at once,” she says.

She built a team and invented roles for them, responding to evolving demands. She had nearly 70 people at the Treasury Department, and a few thousand more at Fannie Mae and Freddie Mac. “It really was consequential and important work at a critical time. That is a natural motivator for people to take these kinds of jobs, including me,” she says. “Everybody was working until 11 o’clock at night and coming back in at 7 in the morning.”

Although the program faced intense criticism – government bailouts were deeply unpopular – it’s now largely recognized for helping stabilize the financial sector and the economy.

“What’s unique about this crisis is it’s so many crises at once,” says Caldwell, whose current portfolio has several non-executive appointments including board chair of Ocwen Financial Corporation, a publicly traded non-bank mortgage servicer. “And while the current health, economic and social crises are connected, they are also siloed. In times like these, some people shut down and feel stressed, others lead through it.”

Today’s business leaders are rethinking everything – their business plans, their revenue streams, their overhead and, after months of remote work, their physical footprint. “They are reimagining the workplace, not just chopping up the desk space and returning to normal,” Caldwell says.

They also are looking at new ways to address race, social justice and equality. They are rethinking the way they hire, how they deploy capital, and what they can do differently, specifically around diversity and inclusion.

Caldwell’s advice to leaders now: Understand what kind of leader you are.

“There are some people that run toward a crisis and thrive in a crisis. If that’s in your leadership DNA, this is the time to lean in – rise, do what you can do.”

And remind yourself to be tough and nimble, she says. “Go through the what-ifs, because you need the resiliency to fight, but you also need to be able to quickly pivot. Crises don’t follow a map.”

Fair winds, following seas, and steady at the helm

Guiding an organization through rough seas is easier when a leader has strong relationships, inside and outside the workplace.

It’s those ties – with colleagues, fellow leaders, and even family and friends – that can help a leader understand what people at all levels of their organization really need, develop the best approach to get through a crisis, and keep their head where it needs to be to lead, says Vijaya Venkataramani, who studies the impact of leaders’ informal social relationships and their impact on their teams.

In her research, Venkataramani has found that when leaders have strong ties to colleagues, even in an informal social context, it makes everyone more committed to the organization, more satisfied with the work they are doing, and more engaged.

In times of uncertainty, Venkataramani advises that leaders check in frequently with people at all levels by creating a network of influencers in different work groups, rather than relying solely on information flowing through the formal organizational structure. Ties to the front-line are especially crucial to get an accurate, current picture of what is happening on the ground.

During crises, while the instinct might be to consolidate decision-making authority, leaning on employees and lower-level managers more by reaching out to them and giving them the authority and agency to make and implement decisions can foster engagement and collaboration and allay fears, Venkataramani says.

“Especially in times of crisis, leaders need to provide inspiration for employees to see opportunities in everything,” she says. “When we are in the middle of a crisis, they need to be shown that they have many more inherent resources and skills that could be leveraged in such situations. It is when our ingrained ways of doing things are disrupted that creativity and innovation ensue. An important job of a leader in such situations is to provide employees at all levels the confidence to go to places they’ve not been before.”

Leaders also need to take care of themselves, says Venkataramani. And that’s where leaning on others becomes so important.

“As stress and uncertainty build up during a crisis, it is easy to lose one’s ability to remain levelheaded and to exercise good judgment. It is in such situations that their social ties to colleagues, family members and the community at large can be particularly beneficial.”

With the right mix of quick-thinking, course-charting, empathy, listening and relying on others, leaders can do more than just keep their heads above water. They can guide their organizations through to the other side of this storm, intact or even stronger.

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About the University of Maryland's Robert H. Smith School of Business

The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.

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