Moving Beyond Reactive Firing-Squad Mentality
Company leaders can learn from organizational missteps and make faster recoveries by framing crisis management through multiple lenses.
ANN ARBOR, Mich.—Organizational crises can spell disaster for many companies. However, bumps in the road also can provide executives with valuable opportunities to learn from missteps and take strategic measures to rebuild and renew their organizations.
New research by Lynn Wooten, clinical assistant professor of corporate strategy and management and organizations at the University of Michigan's Stephen M. Ross School of Business, suggests that company leaders can benefit from framing crisis management through multiple lenses. She outlines four general frames based on traditional models of organizational theory—strategic design, organizational politics, human resource management practices and organizational culture—that complement each other and should be integrated by leaders for effective crisis management.
"Applying the frames as tools opens up a new mental model for managing crises and moves executives beyond reactive firing-squad mentality to proactive thoughtful leadership," Wooten said. "Well-prepared, capable managers have the ability to look through all four frames at once and can utilize both reflective and forward thinking about crisis situations."
The strategic-design frame explores the fit between an organization's strategy, structure and the business environment. Leaders viewing crises from this frame strive to resolve crisis situations and get back to "business as usual" as quickly as possible.
Martha Stewart Living Omnimedia utilized this frame following the conviction of founder Martha Stewart, Wooten said. The company's management successfully established an action plan for surviving the crisis by minimizing damage to the firm's image and recreating its shareholders' value proposition.
The organizational-politics frame views crises as the result of power that is concentrated in the wrong places or too broadly dispersed. Using this frame requires understanding how the domination of business practices by an organization's political system creates crisis-management barriers, and then formulating a plan to work around these obstacles.
"Leaders must work to build healthy networks, negotiate with power brokers, and refocus the values of the dominant coalition when it jeopardizes the organization's well-being," Wooten said.
Company executives who utilize a human-resource frame focus on the "people" aspect of crisis management, particularly the relationship between employees' capabilities and limitations and the crisis situation. Many organizational imbalances are the result of faulty HR practices, such as discriminatory workplace behavior and union disputes, or are attributable to external factors associated with disparities in labor markets or economic conditions.
Crisis resolution may require changes in routines to achieve balance between the organization and its employees. Often this entails creating a work environment where the needs of employees are addressed and aligned with the company's goals. Proper planning and forecasting are also important.
Through the lens of organizational culture, crises are viewed as a function of deeply ingrained values and rituals, she added.
"Depending on the organizational setting, cultural values can prevent the organization from moving beyond crisis mode or provide the tools for doing so," said Wooten, who cites the American Red Cross and Doctors Without Borders as organizations where norms and work procedures facilitate crisis management.
Each crisis incident develops into a potential opportunity for cultural renewal if leadership reflects on the exposed weaknesses and creates new managerial practices, she said.
Written by Claudia Capos
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