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Dr. Lynn Wooten discusses the concept of ‘Frames’, which re-fers to the different perspectives that help the leadership of an

Leadership in a Crisis Situation

For executives, much of their formal training and on-the-job learning ex-periences emphasise the importance of

human resource management, the company’s market position, its competitors, and the value of collaborative partnerships. In many instances, however, these learning experi-ences neglect to address the importance of managing Organisational crises, even though executives are expected to take charge during a crisis situation and are aware of the negative consequences of a mishandled crisis situa-

tion. However, without learning experiences, how can leaders develop a frame that serves as a reference point for understanding and preventing Organisational crises?

Frames are lenses that bring the world into focus. They can be built upon simple gener-alisations or complex theories and represent knowledge about a given concept. Frames filter Organisational knowledge by helping managers make sense of experiences and pro-vide a road map for decision-making actions. Hence, frames are mental models that help

organise leaders’ thoughts and suggest ap-propriate action. Frames are powerful mental models because they reflect our viewpoint of the world and shape behaviour.

Because of the nature of Organisational cri-ses, and the serious threats they pose, making sense of them requires framing through mul-tiple lenses. Crises are often surprising and deceptive, the result of complex systems and environments filled with ambiguous informa-tion. Even when crises are not a surprise to management, the ramifications are difficult to predict. In a crisis situation, the behaviour of Organisational members is also more difficult to predict, and interactions among groups add to the complexity. During a crisis, stakehold-ers tend to provide incomplete information and try to camouflage mistakes. As a result of this complexity and ambiguity, managing becomes more important, but more difficult, during a crisis. Framing enables executives to make sense of the complexity and ambi-guity of a crisis situation by bringing order to chaos. Through the reflective process of framing executives can explore the origin of the crisis, identify the Organisational impli-cations of the crisis, and develop an action plan for resolving the crisis.

Drawing from Organisational theory and management practice, I propose four frames

that can help leaders manage crises. First is the strategic design frame, which explores the fit between an organisation’s strategy, struc-ture, and the environment. Leaders viewing crises from the strategic design frame strive to resolve crises by bringing the organisa-tion back to a steady state, in which it can achieve efficiency and effectiveness. Second is the Organisational politics frame, which considers Organisational crises to be the result of power concentrated in the wrong places or too broadly dispersed, making crisis

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77 | An IIPM Intelligence Unit PublicationNovember - December 2007

Lynn Perry Wooten, PhDRoss School of BusinessUniversity of Michigan

how ‘You’ can be a better leader in times of crisis

• Manage organisation crisis through a structured framework• Making sense of organisational crisis through multiple perspectives• The 4 lenses that give a leader insight to the crisis are : Strategic De-

sign, Organisational Politics, HR Practices and Organisational Culture• Frames will make executive leadership proactive rather than reactive• Structured crisis management helps leaders to rebuild organisations

management a challenge. Third is the human resource frame. The fundamental assumption of this human resource frame is that when managing crises, leadership should be able to understand the capabilities and limitations of their employees. An additional perspective of this frame is that crises may someitmes escalate because of the prejudices, needs, and feelings of an organisation’s human capital. The fourth and final frame looks at crisis man-agement through the lens of Organisational culture. This frame views crises as a function of deeply ingrained values and rituals. De-pending on the Organisational setting, cultur-al values can prevent the organisation from moving beyond crisis mode or provide the tools for doing so. The next sections expand on the description of each of these frames and provide examples of how leaders can utilise each as a crisis management tool.

Strategic DesignThe strategic design perspective views or-

ganisations as systems constructed to achieve goals, and it assumes the overarching goal is to create value for stakeholders. Even in a crisis situation, the organisation’s value proposition serves as a guideline in deciding what activi-ties management will implement to achieve its strategy. These patterns of decisions define objectives and produce plans for allocating and aligning resources to meet the needs of competitive pressures, customers, sharehold-ers, and employees. Crafting strategies to mi-nimise costs or provide a differentiated value

to stakeholders is the essence of the strategic design approach. Leaders framing the man-agement of a crisis through a strategic design lens perceive the business world as rational, calculative, and mechanistic. This mindset prevents crisis preparation because leaders have difficulties creating plans to manage the unexpected. However, when confronted with Organisational crises, the primary goal is to resolve the crisis and get back to “business as usual” as quickly as possible. In other words, management works to develop a strategy to bounce back from the crisis; but to overcome a crisis the quest for resilience cannot con-template only past mistakes. Instead of an integral part of the strategic design frame assumed after a crisis, leadership will concen-trate on the future and shift its paradigm to re-structure processes and resources.

For example, Martha Stewart Living Omnime-dia (MSO) approached its management crisis from a strategic design frame. In March 2004, the firm’s founder and CEO, Martha Stewart, was convicted of lying to investigators and con-spiring with her stock-broker. In the temporary absence of its leader, the company had to reevaluate its dependency on a single person to market ideas, products, and services. This resulted in changes to the administrative structure, a refocusing of the company’s core competency, and contempla-tion about its future without Stewart. Con-fronted with this crisis, the firm’s rhetoric

and actions were orchestrated to convey to stakeholders that the company could not only survive but also continue to create value without Stewart. The communication strategy entailed sending a letter to shareholders, en-suring them that the board of directors and employees were competent to manage the firm in her absence and that the “Martha” culture and way of doing things would per-severe. The company’s administrative team moved quickly to make the brand resilient by launching a food magazine and a natural life-style magazine that reflected Stewart’s style, but did not use her name, thus extending the brand beyond Martha Stewart’s image. Also, domestic experts appeared on the television

show and in Living magazine to substitute for Stewart.

The management of MSO’s crisis reinforces the significance of thinking strategically about crises. Management at this company was ef-fective in establishing an action plan for sur-viving the crisis by minimising the damage to

Strategic Design

OrganisationalPolitics

Human Resource Management

Practices

Organisational Culture

FramingCrisis

Managment

Thinking and framing crisis management:a multiple Lens Perspective

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the company’s image and recreating its share-holders’ value proposition. Furthermore, the organisation developed new strengths. All these strategic decisions resulted in a com-pany that not only weathered the storm of a crisis, but in the long term is in a stronger competitive position.

organisational PoliticsLeaders often allocate a large proportion

of their time to strategic planning and spend little time worrying about Organisational politics. Many leaders perceive politics as the “dark side” of Organisational life, constructed by the selfishness and dishonesty of others. They do not want to play politics, and become handicapped by their unwillingness to un-derstand the role of politics in organisations. However, most Organisational crises have a political aspect—politics can cause crises and be the means of resolving them.

Thus, thinking about Organisational crises from a political frame is a necessary manage-ment skill. When leaders think about crises through a political frame, they acknowledge that Organisational behaviour is not always deliberately constructed to achieve strategic goals. Instead, it can be dictated by conflicts among individuals, power structures, and competing interests. Framing crises from a political perspective requires in-depth knowl-edge of the organisation’s political terrain. Leaders must be able to identify the strengths of key power brokers, determine channels of communication, and understand networks of relationships. Moreover, when an organ-isation’s political system dominates business practices, leadership must comprehend how it creates crisis management barriers and then craft a plan to work around these ob-stacles. Not taking into account the political system can prolong the crisis and damage the organisation.

Consider what happened to Arthur An-dersen, the accounting firm that had been number one in its industry and known for its excellent human resource management and client service practices. In 2002, this im-age became severely damaged when Arthur Andersen was accused of failing to detect fraud and report the improper accounting practices of firms such as Enron, WorldCom, Waste Management, and Sunbeam. The col-

lapse of Arthur Andersen represents a crisis rooted in a political system that leadership ignored. In the previous decade, prior to the crisis, the firm’s structure changed from a unified system to a loose confederation of fiefdoms intent on maximising billable hours. As the fiefdoms grew, so did power struggles within and between local offices. The power brokers were the partners who produced revenue growth at the expense of quality, retaining high-risk clients with questionable accounting practices. Partners at Arthur An-dersen speaking against these practices were removed from the firm’s oversight commit-

tee. Also, the power brokers developed a system to ensure the top management team never received detailed information about problem clients.

The Arthur Andersen crisis emphasises not only the importance of leadership’s role in understanding the organisation’s political terrain, but also the significance of leaders’ ability to navigate Organisational politics. Joseph Bernardino, worldwide CEO of Arthur Andersen at the time of the scandal, had in-herited a crisis-prone political system, but he was unable to comprehend the complexity of the problem. He needed to understand the reality of the political system and correct that system to protect the firm. Preventing and managing crises through a political system requires an ability to build healthy networks, negotiate with power brokers, and refocus the values of the dominant coalition when it jeopardises the organisation’s well-being.

hrm PracticesLike the Organisational politics frame, the

human resource frame directs leaders to think about the “people” side of crisis man-agement—more specifically, the relationship between an organisation’s employees and a crisis. An organisation and its employees exist in a relationship of mutual exchange, in which they interact not only with each other but also with the economic environ-ment, demographic patterns, and socio-cul-tural trends. Organisations need employees for their talents and ideas. Employees need employers to provide monetary rewards, meet their affiliation needs, and allow them to achieve self-actualisation. An imbalance between Organisational goals and employees’ needs can produce a crisis.

Frequently, such imbalances are the result of human resource management practices, such as discriminatory behaviour in the workplace and union disputes. In 2003, the Institute for Crisis Management estimated that crises resulting from discriminatory practices increased by 110% over the pre-vious year, and combined labor disputes and employee discrimination accounted for 14% of business crises. Yet, executives seldom make the connection between busi-ness crises and the organisation’s human resource management practices. Execu-

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Thoughts on Leadership in Times of crises

“Whether or not the CEO is leading the company during the crisis, it is the board’s responsibility to maintain effective over-sight of how the crisis is being handled, and to either make critical deci-sions or ensure that they are being made.”

- Report by National Asso-ciation of Corporate Direc-

tors, Washington

“Crisis craves structure. Visual leadership in a crisis is the most critical action, even if leadership is not at first certain what all the steps need to be.”

- Richard S. Levick, CEO of Levick Strategic Communi-

cations

“The real leader or a man of action in a crisis almost always acts subconsciously and then thinks of the rea-sons for his actions.”

- Jawaharlal Nehru

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tives are more likely to blame employees and deny the existence of human resource management problems.

Consider Wal-Mart, which has been accused of discriminating against women, ethnic mi-norities, and disabled employees. For years Wal-Mart denied there were problems with its human resource management practices, despite the fact that the company was losing lawsuits and receiving negative media atten-tion. Wal-Mart’s denial of the crisis placed it substantially behind in the diversity man-agement learning curve. Now the retailer is spending money to rectify its human resource practices and restore its image.

Labor disputes also can send an organisa-tion into a crisis state. General Motors cites the cost of healthcare benefits negotiated by the union as one reason for the company’s current financial problems and competitive disadvantage. Employees expect a certain level of health benefits, but the rising costs of these benefits conflicts with the goals of shareholders.

Furthermore, external factors can cause an employee-centered crisis because of dispari-

ties in labor markets or economic conditions. Labor shortages in certain industrial sectors il-lustrate crises resulting from human resource management imbalances. For example, the labor shortages in nursing have created a crisis for hospitals. Fewer college students are choosing nursing as a career, while many veteran nurses are retiring or leaving the pro-fession because of working conditions. This shortage threatens the quality of patient care and the ability of hospitals to serve communi-ties, which are demanding increased health-care services, especially for aging populations. However, most hospitals did not exercise the foresight that could have helped prevent this crisis. In the 1990s, managed healthcare pol-icies led to the downsizing of the nursing workforce without regard for maintaining a pipeline of nurses for the future. Nurses remaining in the field experienced stressful work environments with mandatory overtime. The industry is now being forced to solve the nursing shortage through public relations campaigns, partnering with nursing schools, innovative recruitment and retention policies, and flexible work arrangements.

When dealing with crises grounded in human resource management practices, leaders should reflect on how the organi-sation can change its routines to achieve balance between the organisation and its employees. This entails creating a work en-vironment where the needs of employees are not neglected and are aligned with the organisation’s goals. Environments in which labor and management work as partners to achieve the organisation’s mission can go a long way toward achieving this balance. Avoiding employee-centered crises also calls for planning that forecasts labor needs and macro-environment trends.

Framing crisis activities through a human resource management lens should encourage executives to create a system for developing crisis leadership competencies. Through train-ing activities, human resource management departments can focus on crisis prevention and planning so that executives are prepared for a crisis situation. In addition, the human resource management department can help managers develop the communication and damage control skills needed during the

Framing Lens Crisis Management Actions

Strategic Design Resolve crisis by returning organisation to a steady stateCraft future strategic plans to build resilienceDevelop new strengths to compensate for weaknesses exposed during the crisisImplement an action plan to address the concerns of stakeholdersShift managerial paradigm to restructure processes and resources

Organisational Politics Map the organisation’s political terrainDetermine if the organisation’s political system is a crisis hazardIdentify power brokers and assess their role in the crisisDevelop networks of supporters to help manage the crisisRefocus the values of the dominant coalition

Human Resource Manage-ment Practices

Understand the linkage between business crises and human resource management practicesAnalyse the capabilities and limitations of the organisation’s human capitalEvaluate if there is an imbalance between the organisation’s goals and its employees’ needsAssess if work practices, labor shortages, or disputes make the organisation susceptible to a crisisScan external environment for conditions that could threaten the organisation’s HRM needs Develop training programs that develop crisis leadership competencies

Organisational Culture Develop a culture prepared to manage crisisRemove cultural barriers that contribute to the Organisational crisisCraft a mission and symbolic behaviour to lead Organisational members through the crisisLeverage crisis situations to renew Organisational culture

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actual crisis. This requires identifying and working with managers who are skillful in high-pressure situations and can communi-cate effectively with the organisation’s various stakeholders. Moreover, as an organisation recovers from a crisis, the human resource management function should be involved

as a strategic partner by assisting in the re-deployment of resources and the revising of policies.

organisational cultureCulture is the glue that holds people in or-

ganisations together. Organisational culture provides direction and purpose, and defines what is appreciated and rewarded. Because of its unique and valuable attributes, an or-ganisation’s culture designed specifically to manage crisis can be a useful asset. A crisis situation heightens anxiety, but when organi-sations have a culture prepared to manage and learn from the crisis, the resolution will be less difficult. There are some symbolic lessons to be learned from organisations that are in the business of crisis management, such as the Red Cross and Doctors without Borders. In these organisations norms and work procedures facilitate crisis management. Leaders are ready to help when a crisis strikes. Their mindset is explicit in the organisation’s mission and ingrained in how its executives utilise financial resources and mobilise staff. More important, organisations in the crisis management business value learning from cri-sis incidents. Explicit learning is documented in policy manuals, and tacit learning is in-corporated into the organisation’s culture. Hence, each crisis incident develops into a potential opportunity for cultural renewal if leadership reflects on the exposed weaknesses and creates new managerial practices.

Crisis situations are also a defining moment for an organisation’s culture since these in-cidents bring to light the organisation’s core value. In other words, during a crisis, cultural

rhetoric becomes apparent not only through words, but also by leadership’s behaviour. For its members, a crisis can regenerate an emotional connection to the organisation. Thus a crisis incident provides an opportu-nity for leaders to positively influence and reemphasise the core values, symbols, and

norms that serve as the foundation of an organisation’s culture. This is accomplished by leaders demonstrating ethical behaviour, building trust, and acting in the best interest of employees.

conclusionIn conclusion, this paper introduced the con-

cept of framing crisis management through multiple lenses. It proposes four general frames—strategic design, Organisational poli-tics, human resource management practices and Organisational culture—that are helpful for managing crises. The frames are based on traditional models of Organisational theory, but can be applied to the context of crisis management. For optimal crisis management the frames are not stand-alone perspectives. Instead, the frames complement each other and should be integrated by leaders for ef-fective crisis management.

Applying the frames as tools moves execu-tives beyond the reactive firing squad mental-ity to proactive thought leaders. The strategic design frames encourages leaders to develop an action plan for bouncing back from crises that takes into account the needs of the vari-ous Organisational stakeholders. This action plan should Analyse the organisation’s post-crisis position in the marketplace to minimise its weaknesses and rebuild its strengths. Also, framing crisis through an Organisational politics lens requires managerial analysis. However, the focal point of this analysis is mapping networks and identifying power bro-kers with the goal of mitigating the negative energy in the political system that led to the crisis. Similar to the political system frame,

the HRM perspective emphasises the impor-tance of a strategy for realigning the organi-sation’s goals with the needs of its employees and labor market environment. Finally, the Organisational culture frame serves as a lens for transforming an organisation from crisis-prone to crisis-prepared. It advocates leaders build a culture that is prepared for crisis and excels at quickly adapting to crisis situations. This is accomplished through an integrated set of shared values, tacit norms, and explicit work procedures that facilitate the organisation flexibility, resourcefulness, and responsiveness during a crisis.

Framing Organisational crisis through mul-tiple lenses is a new mental model and a new tool for executives. Well-prepared and capable managers have the capability to look through all four frames when managing a crisis. Moreover, these leaders have the abil-ity to be both reflective and forward thinking about the crisis situations. As a result, a crisis that initially threatens an organisation may, in the long term, give leaders the opportunity to rebuild and renew their organisations. l

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• Hamel, G. & Valikangas (2003). The Quest for Resilience, HBR, Sept 2003: 52-65.

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The power brokers developed a system to ensure that information on problem clients is never sent to top management