Crisis leadership: What every CEO needs to know

No one wants to think about having to manage a crisis—but it all comes with the territory when managing a business.

Today, 79% of decision-makers believe their business is 12 months away from a crisis, and 50% have already experienced it on their own. No matter what industry you belong to, no one is safe from unforeseen events that may shake up your organisation.

But the bigger question is: if your organisation experiences a crisis today, would you be ready and, more importantly, would you know what to do next?

When a crisis happens, CEOs need to be able to act swiftly, do everything they can to preserve their company’s core values, and have the means to reassure their customers.

Every type of crisis is different—and every company is different.

Let’s take a look at how these companies managed to stand tall in the event of a crisis and how their CEOs handled the situation.

Tony Fernandes, AirAsia CEO

Most companies cut marketing during a crisis – adversity is a great time to build a business.

Under CEO Tony Fernandes, AirAsia was able to go from belly-up to becoming the world’s best low-cost airline ten years in a row. They are a perfect example of great crisis communication. Rather than hiding in the corner office and trying to enact cost-cutting measures, AirAsia CEO Tony Fernandes instead invested more into marketing and focused on connecting with his employees.

In December of 2014, AirAsia flight QZ8501 crashed into the ocean, killing 162 passengers and employees. Since then, there have been many reports about long-term mechanical issues with their carriers. This is the type of disaster that can easily damage an airline’s reputation and the air industry was already suffering huge sales declines.

Fernandes immediately responded to the event, working tirelessly to communicate and update the public, reaching out to the families of the victims, and working closely with the salvage crew.

This wasn’t the only crisis AirAsia has endured, but the company has been able to bounce back in large part due to how their CEO deals with each issue. When a crisis occurs, Fernandes increases his marketing spending rather than decreasing it. He sees marketing as a powerful tool to harness during difficult times.

Even when there was no crisis to be dealt with, Fernandes spent a great deal of his time walking the floor and connecting with his employees. He believes every employee is an important asset, and this respect for human capital has improved his operations. By improving upon his company culture and keeping staff turnover low, he has helped improve the resilience of his company during difficult times.

Interacting more with his employees has helped him understand the real issues that they face day-to-day, and it has given him key insights into how to improve the strength of his business. After all, only the strongest of businesses can best weather difficult times.

Key takeaways:

• Don’t panic. Advertise.
• Get out of the office.
• Talk with staff and exercise your emotional intelligence.
• Never lose sight that your biggest asset is your people.

Kevin Johnson, Starbucks CEO

When two black men were arrested at a Starbucks during a business meeting, the news immediately went viral, and it was a situation impossible to defend. It was every CEO’s worst nightmare, as it could have turned bad for a company that has been repeatedly boycotted in the past. However CEO Kevin Johnson was able to quickly turn it around.

It is important to remember that when it comes to one-off events at a company, it isn’t the actual event that most people remember. Rather, it’s the company’s response. The public wants to see how true a company is to its promises and values and whether or not it will respond appropriately.

Many CEOs have botched similar events by producing apologies that seemed insincere, trying to dodge responsibility, or attempting to eradicate the information altogether. An insincere apology has often been worse than none.

Johnson, however, was willing and able to take ownership, issuing a company apology on Twitter and personally releasing a public statement. He apologised on the Starbucks website and also offered a face-to-face apology: he did everything right. He couldn’t have anticipated what would happen, but what he could do and what he did was control his response.

In fact, he even shut down different Starbucks locations for additional training, something that visibly showed the public that Starbucks was serious and committed to making a change. It was highly publicised that Starbucks would be losing a significant amount of revenue while it was closed, which went a long way towards building up customer faith.

Key takeaways:

• Apologise, admitted your mistake when necessary, and take ownership of the problem.
• Acknowledge known issues and find an appropriate solution.
• Take steps in addressing the policy, practice, train, or re-train if necessary.
• Don’t break your promise. Pledge to take action and fix the problem so that it doesn’t happen again.

What you can learn about crisis leadership

In times of crisis, people look towards leaders first—and they set the stage for the entirety of the crisis.

Though these two examples of crisis management were very different, they underscored similar messages. Both CEOs reacted swiftly, took action, owned the situation, and focused on the people first.

In a time when critical events are happening more often, effective crisis leadership is a must.

In the case of AirAsia, the CEO knew that he needed to boost marketing and connect with the public to regain their trust. He had to get out of the office, communicate on the ground, and figure out what needed to be done. Whereas for Starbucks, the CEO knew that he had to take the situation seriously and commit to change. In doing so, he was able to restore customer loyalty and faith.

Anything can happen at any time. And though it’s impossible to predict a crisis, what you can control is how you reach and learn from experience. Leaders need to be able to make decisions quickly and decisively. A lot of good also comes from learning from other leaders and what they’ve done to counter difficult situations. Connecting with CEOs and entrepreneurs can help you gain the perspective that you’ll need when a crisis does occur.

Eager to learn more? Contact Vistage today to find out what you can do to improve your skills on crisis leadership.