Chapter 12 Part Three: Organizational Leadership Crisis Leadership and the Learning Organization © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 1 Learning Outcomes 1) Explain why crisis leadership competency is an important consideration when hiring new leaders. 2) What are the benefits of having a crisis management plan in advance of a crisis? 3) Briefly describe the three stages of a crisis management plan. 4) Describe the role of top management during a crisis. 5) Describe the five-step process for crisis risk assessment. 6) Describe the importance of effective communication during a crisis. 7) Describe the key characteristics of a learning organization. 8) Distinguish between the traditional and the learning organization. 9) Describe the role of leadership in creating a learning organization culture. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 2 Crisis • A crisis is a low-probability, but high-impact event that threatens the viability of an 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. > Comes in many forms: o o o o o Natural disasters, Mass shootings, Product failures, Human error disasters, and System failures. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 3 Crisis Leadership In planning for a crisis, leaders focus on five integrated tasks: 1. 2. 3. 4. 5. Formulate a vision of crisis management. Establish strategic goals and objectives for crisis management. Coordinate the creation of a crisis management plan. Establish a communication plan. Develop simulations and drills. These five tasks are essential competencies of crisis leaders, the ability to: • Craft a vision. • Set objectives. • Formulate, execute and evaluate crisis plans. • Communicate. • Manage people. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 4 Crisis Communication in the Age of Social Media • Social networks must be a part of an integrated communication strategy. • Technologies diminish an organization’s ability to control crisis communications. > A crisis is instantly visible, and viral. > Companies have only minutes to contain a crisis. > Stakeholders may have more information about the crisis than the company itself. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 5 Formulating a Crisis Plan • Better prepared organizations could reposition themselves and turn a crisis event into a strategic opportunity. • Readiness to respond is a function of: > The skills, abilities and experience of crisis leader, > A trained and well prepared crisis team, > Organizational preparedness, > Adequate organizational resources, and > Top management support and commitment. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 6 The Benefits of a Crisis Plan • Reduces duration of crisis • Enhances corporate image • Allows for quick and effective responses • Improves communication • Enhances coordination and cooperation • Can lead to the accumulation of ready resources • Can lead to fewer costly mistakes • Creates less panic • Leads to a quicker resolution • Limits financial loss © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 7 Pre-Crisis Planning • Pre-crisis planning addresses: > Do we have a crisis response team/who is on it? o Want a mix of people from all parts of the organization. > What is our crisis plan of action? o Should evaluate the worst possible scenarios . > Do we have all the necessary resources in place? o Both financial and nonfinancial resources are needed. > Another aspect is deciding on the appropriate communications strategy. See Exhibit 12.1. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 8 Leading during a Crisis • When crisis erupts, a rapid response is vital. • The crisis leader must step forward and lead. > Focusing on three key elements: o o o Goals – define the ‘What’ People – define the ‘Who’ Resources – define the ‘how’. • Effective leadership from the top is critical. > Basic lesson is prepare for crises, respond quickly, act with integrity, and disclose fully. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 9 Adapting After a Crisis • After a crisis, a review should include: > Effectiveness in stakeholder communication, > Effectiveness in addressing the root cause, > Crisis team effectiveness, > Leadership effectiveness, and > Effectiveness in dealing with victims. • Information gathered in the post-crisis evaluation helps prevent future crises. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 10 Five-Step Risk Assessment Model • Ultimately, these five factors determine readiness: 1. Quality of crisis plan, 2. Awareness/access to crisis management information, 3. Readiness for a timely response, 4. Effective communication plan in place, and 5. Effective crisis leadership. See Exhibit 12.2. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 11 Effective Crisis Communication • Leaders must be able to communicate quickly and effectively during crises. > Four questions often emerge: 1. 2. 3. 4. What happened? How did it happen? What’s being done to address the crisis? What has been done to ensure it never happens again? • Providing honest, accurate, and timely answers is effective crisis communication. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 12 Guidelines to Effective Crisis Communication • The first 24 hours of a crisis are crucial. • Organizations can use media and tools to inform the public. > A press release is a printed statement that describes how an organization is responding to a crisis and who is in charge. > A 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. See Exhibit 12.3. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 13 The Learning Organization and Knowledge Management • Organizations are increasingly dependent on innovation to create value for customers. • In a knowledge-based economy, learning and creativity are key to competition. • Leaders must develop knowledgeintegration capabilities. • Organizational learning is the pathway to knowledge-creation – a strategic resource. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 14 Learning Organization Characteristics • Learning organizations have the following: > Continuously adapted and improved, > Everyone engages in continuous learning, > The culture supports creativity and innovation, > Knowledge creation is imperative, and > Decision making is informed by facts/analysis. • A learning organization is skilled at creating, acquiring, and transferring knowledge, and at modifying behavior to reflect new knowledge and insights. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 15 What is Knowledge Management? • Organizational knowledge is the tacit and explicit know-how that individuals possess about products, services, systems, and processes. > Explicit or formal knowledge is often codified. > Tacit knowledge is the instinct and intuition an experienced practitioner possesses. > Also referred to as intellectual or human capital. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 16 The Learning Organization Culture and Firm Performance • Key differences between the traditional and the learning organization. See Exhibit 12.4. • Higher levels of learning/knowledge creation relate to higher firm performance. > Firm’s ability to create/share knowledge is positively related to product development. > Productivity and profits increase. > Team creativity and innovation increase. > Direct positive impact on employee, customer, and supplier satisfaction. > Increased organizational citizenship. See Exhibit 12.5. © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 17 Key Terms • benchmarking • crisis • discontinuous change • learning organization • organizational knowledge • press kit • press release © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 12- 18