When hard times come, leaders are not expected to be perfect and know everything. They are expected to show courage, devotion and visibility of their actions.

The crisis caused by Covid-19 has led to awareness of the fact that the world needs real leaders. It doesn’t matter which sector is taken into account – the private sector, public or military. Crisis leadership has become a primary need in the fight for a better, safer future. Andrianna Bilash,  manager of the Center for Leadership of UCU, talks about how a true leader can identify all the concerned parties, provide them a value, and bring them to achieving the objectives.

Why is the crisis devastating and why is it so difficult to manage it?

There are many definitions of the term «crisis». But they will always possess two main points. The first one is always associated with the idea that all will be different. That changes and difficulties will appear. The second is that people realize that all might become worse.

It is impossible to predict future, but when we go through recession, the sense of safety and security which we have in a stress-free days is lost. «Today I managed to go through this difficult day and have overcome all the difficulties. So tomorrow I will be able to do the same». During the crises people lose this confidence.

When hard times come, leaders are not expected to be perfect and know everything. They are expected to show courage, devotion and visibility of their actions.

Crisis leadership is about engagement, understanding of all concerned parties.

The foundation stone in crisis leadership is meeting the needs and expectations of all stakeholders. And there are a lot of them. But there is a question: «How can one leader cope with this difficult task?»

Leaders must identify all those, who, to some extent, are involved in the crisis. Then prioritize, develop a plan, and try to meet the needs of all concerned parties or stakeholders.

The action plan in case «If the crises comes on» no longer works today. In the 21st century, the word «if» has been replaced by «when» by world leaders. This allows us to be more prepared for the crises.

The first difficulty that leaders face is to find out the stakeholders related to the organization, institution, enterprise. The second is how to bring them together and engage.  It is common that there are two separate departments in the company responsible for one or another group. For example, HR Department is responsible for the staff, the Sales Department – mostly for relations with customers, new clients and so on. It’s a real challenge for the manager during the difficult times to bring them all together and make the communication effective, increasing the chances of meeting everyone’s needs. It is equally important to provide each group a certain value.

To understand business means to see the relationships that arise between stakeholders.

The stakeholders will be motivated to be engaged if they receive some benefits, equal or bigger than the amount of the required fees. A clear distinction between benefits and fees allows you to master the art called «stakeholders management».

So, the rule works if both parts of the equation are met: fees = benefits.

It is the most important task to follow this rule during the crises. But one should remember that both benefits and fees are not just tangible things. When everything is according to the plan, these tangible objects will be the least valuable. Emotions, expectations, aspirations will play a key role. It will be correct to focus not on solving economic (financial) aspects, but to treat all stakeholders as a big organizational family.

It will be extremely useful to analyze crisis situation from the point of view of each stakeholder. Thus, leaders will understand that each group of stakeholders will expect from them such actions, which will contradict each other. For example, the clients will expect from the company to risk and make unpopular decisions, while the investors and authorities will hope for taking calm and risk-averse ones. So what is the solution? What the leaders should do?

What should the leaders realize about the stakeholders at the crucial moments?

From the clients’ (consumers’) point of view, it’s necessary for the leaders to possess such a virtue as accountability. Demonstrating responsibility for decisions and their consequences creates a sense of trust and therefore liability.

One of the companies’ big mistakes is situation if they don’t think in advance about the issues that affect the employees during the crises. As soon as the tough times come, it’s more important for the company to advocate interest of its clients, not its employees. The irony is that relevance for customers directly depends on internal team problems solving.

Besides, it’s necessary to take into account interests of such stakeholders as media and investors. They are completely different with different groups of interests. Some compete for the stories (especially for failure stories at the times of crises), others – for capital maintenance and profit earning. What unites them is the kind of relationship the company has built with them before the crisis.

Efforts to understand the situation from the point of view of competitors are not popular, but they are right. As far as a company, being a leader, is responsible for the consequences and their impact on the industry overall, which, therefore, affects rivals’ interests. Consequently, if the organization has already faced new challenges, let it act as a model for competitor companies.

So, in order to be effective in managing the stakeholders during the crises, the company and its leaders should stick with the following steps:

  1. Be sure to identify all stakeholders.
  2. Identify the interests of each of the stakeholder groups, summing up the situation from their point of view. This will help to understand which message should be got across to a particular stakeholder.
  3. Having prioritized, involve each stakeholder. Get the expected point across.

The author’s column is a reflection of the author’s subjective point of view. The «Tvoye Misto» editorial team does not always share the views expressed in the columns, and is ready to provide all dissenters possibility to advance the argument for their opinion.

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«Tvoye Misto» together with the Lviv Business School of UCU is implementing the project «Support for Ukrainian Business at Times of Crisis», running within the project «Reinforcement of public confidence» (UCBI II), funded by the United States Agency for International Development (USAID).