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Business Crisis or Mistake?
April 3, 2023

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Founded in 1996, CareerNet is a world leader in recruiting, training and educating top employees for the world’s economy. Our goal is to bring our clients the best available talent. Our world wide mission is to match talent and skills with economic opportunity.

This post is designed as an adjunct to our Layoffs post.

Business Crisis or Business Mistake. That is a question no one in management wants to address. Want to know if you have responsibility in the current (or a future) business crisis, or mistake? You’ll need to do two things now. First, look at the situation objectively. Second, take responsibility. Regardless of the origin, this is now your business crisis. Who ever said managing was easy?

Does the Business Crisis/Mistake Matter?

The reality of layoffs hits people hard. No one likes them.

We’ve been on the inside and outside during layoffs. Here at CareerNet, our staff members have plenty of experience facing a business crisis.  None of them are good.  In varied roles (as rank and file employees, managers, advisors, Board Members), and through any number of events (think about 1986 to the present day), we’ve seen a lot that might qualify as a business crisis.

Looking back at our collective, multi-role, multi-crises experiences we’ve had ample time to learn a lot and to think a lot, primarily about what we could or should have done. And, we learned to question: whether we encountered business crisis or a management mistake? The distinction matters in your response.

Real Causes vs. Excuses

Here, we attempt to determine what is and is not a real business crisis as well as what can and cannot be prepared for in advance.

Classic Crisis – or Force Majeure

We’ve read and written any number of force majeure exceptions throughout our varied careers. All other crises are excuses for lawyers to defend. Force majeure events are typically events or circumstances that are outside of the control of the parties involved in a contract, and that make it impossible or impracticable for one or both parties to fulfill their obligations. Here are some examples of actual force majeure events:

  1. Acts of terrorism, war, civil unrest, or political instability that make it impossible to perform a contract in a specific region or country.
  2. Natural disasters such as hurricanes, earthquakes, floods, or wildfires that make it impossible to carry out a construction project or fulfill a supply chain contract.
  3. Epidemics, pandemics, or outbreaks of contagious diseases that require businesses to close their operations and prevent them from fulfilling their contractual obligations.
  4. Government action such as expropriation, nationalization, or regulatory changes that make it impossible or impracticable for a business to operate.
  5. Strikes, labor disputes, or other forms of industrial action that disrupt the supply chain or prevent employees from carrying out their duties.

These are just some examples of force majeure events, and the specific events that constitute force majeure may vary depending on the context and the terms of the contract. It’s important to review the specific language of the force majeure clause in a contract to determine what events are covered.

The Real Causes

Here are a few examples of a business crisis even the best managers cannot effectively foresee:

  • Fraud at the Executive Level
  • Geo-Political conflict
  • An epidemic requiring government action.

That’s it.  Notice our glaring omissions? Consider the following . . .

What Causes Are NOT Really out of our Control?

Cyber Security Attacks – Consistent daily backups, cyber security training at the individual employee level, a top server host. Enough said.

The Economy – If you are unexpectedly laying off people because the economy is changing due to systemic shifts in things like the cost of capital, guess what? You as a manager or an executive dropped the ball– your mistake led to the business crisis.  In the modern world economy information and lead time is all around you and easily accessible. Do not ignore it.  

But you are where you are and it happens to all of us at least once. So bite the bullet and start fixing the problems you denied were on the horizon.

A Business Crisis by the Books

It begins with transparency and support from the top.  There are tomes written about crisis management fixes. Best Sellers even. These best sellers are filled with examples of crisis management strategies, crisis management strategies for employees, and crisis management strategies in public relations forums. They may even offer a crisis management strategies ppt to follow – as if any single set of steps covers all crises.

They are usually written by CEOs of massive multi-nationals that participated (by action or inaction) in a business crisis. Then ran to banks with a restructuring plan to bail their company out. Afterwards, they generally declare themselves heroes.

In reality, a recent company crisis offers banks or funding sources a simple choice, loan us more and take on more risk, or let us fail and take the losses on your loans. Sure that’s a bit of an over simplification, but not really.

This being said, there is one great book on managing a corporate crisis that is honest, direct and a fun read. “From Worst to First: Behind the Scenes of Continental’s Remarkable Comeback” by COO turned CEO, Gordon Bethune  written in August 16, 1999.

Can you Prepare for A Business Crisis – Day to Day?

Use your best resources to identify potential business crisis and stay ahead of them. Suggestions include:

#1 – Useful, relatable, short weekly reports sent to the inbox of all employees that informs industry metrics and the potential impact on the company’s future business prospects. Employees on the front lines – and the managers that oversee them – should be too busy developing, servicing and managing clients and products to do their own research on these trends. At the executive level you are already doing this. Distil it into bite sized paragraphs and send it out weekly. Say Friday. Give your people the weekend to read it and think about it. Keep is short and to the point. That way they’ll read it right away every time.

#2 – Post the KPIs for the company (internally). Notify the entire staff on any amendments or changes. Empower frontline managers to make decisions for their team to meet these KPIs. (You might audible Measure What Matters by John Doerr)

#3 – When a concern for the company’s strategy or future arises, communicate it. But we would suggest this is done verbally to managers then to staff / team members by managers. Not in writing. Why? Emails and posts have a habit of finding their way to people you don’t want to worry. Like customers, media, and stakeholders. Worries and concerns are not crises. They are not even alarms. They fall into the category of “Things to look out for.”

We would remind you

Your front line people and the talented professionals you promoted to manage them are your best source for identifying oncoming problems. They see it first from the behaviors of the clients and customers they deal with every day. They are the best people to know how to deal with crisis in the workplace. As an executive or manager, your job is to empower your front line people so they can perform, see, and communicate, and by extension, your company can perform.

Conclusion

A Crisis is a crisis. A poor strategy or refusal to adjust to visible economic forces is a mistake.  How you handle either one will define your company, its success and its longevity.

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