How to manage a crisis, any crisis

Crises happen to everyone and every company. They can change your life or your company's future. Here are five steps for effectively managing any crisis.

Steve Tobak
View all articles by Steve Tobak on CBS MoneyWatch »
Steve Tobak is a consultant and former high-tech senior executive. He's managing partner of Invisor Consulting, a management consulting and business strategy firm. Contact Steve or follow him on Facebook, Twitter or LinkedIn.
Steve Tobak
4 min read

Crises happen. They happen to all companies and to all people. They happen in our personal lives and in our professional lives. By definition, crises bring change, big change. They can change the entire trajectory of your life or your company's future. That's why how we behave in a crisis, how we manage a crisis, is such a big deal.

For example, Yahoo is going through a crisis right now. It's attempting to reinvent itself. Microsoft's bid to buy the company further complicates matters. The way Yahoo's board handles this crisis will determine the fate of the company and its thousands of employees and shareholders. That's a pretty big deal.

One company's crisis can have a ripple effect on others. You might say that Microsoft is attempting to capitalize on Yahoo's crisis. In so doing, the software giant has created its own. Negotiating tens of billions of dollars to acquire a large company and remake its Internet business is definitely crisis material.

The ripple effect doesn't only apply to companies in crisis; the same goes for individuals, industries, even nations.

In a crisis, not everyone rises to the occasion, so to speak. Some people freak out and do stupid things that hurt themselves or their companies. Their instincts sometimes cause them to react or overreact in ways that make matters worse instead of better.

Not to get too psychological here, but dysfunctional behavior--in the workplace and otherwise--is often a built-in reaction to fear and anxiety. And fear and anxiety can certainly be in play in a crisis.

CEOs are not immune to this phenomenon. The way executives and directors behave in a crisis can change the fate of thousands of people, entire companies, even an entire industry.

In any case, it's a good idea to seek objective guidance in times of crisis. That being the case, this is a good place to start. Here are five steps for handling a crisis, any crisis. They're derived from years of crisis management experience as a senior executive with various controversial and high-visibility technology companies.

They apply to all types of crises--personal and professional.

Assess. Take a reasonable amount of time to accurately assess the situation. Fight every instinct to react or overreact. First, take a step back; take a few deep breaths; whatever it takes to restore your calm so you can think clearly. Then get all the facts, get objective guidance, and develop a clear picture of the situation.

Engage. Engage all key stakeholders. Trust the insiders you should trust. Involve key insiders who either have a stake, have knowledge that will help in analysis or planning, or will be significantly impacted. That will make decision-making and internal communications far more effective. Moreover, those with a vested interest won't feel like they were kept out of the loop.

Plan. Once you have all the data and a team of key stakeholders, develop best, typical, and worst case scenarios and plans based on key variables and assumptions. You know, like if x happens, then you do y. Planning enables you to act quickly, confidently, and effectively when the time comes to act.

Act. Be proactive, not reactive--obvious in theory but difficult in practice. That's because the line between proactive and reactive isn't always clear. If you follow the above steps, however, you should be able to tell the difference. Objective assessment and planning leads to calm and confidence. You'll know when you're ready to act. Then it's all about execution.

Communicate. Communicate transparently and honestly, or at least appear to. I know that sounds squirrelly, but it's absolutely critical that you appear honest and transparent. Perception is everything, and you need to consider and respect your audience to know how best to tell them what they need to know, when they need to know it.

Bottom line
In a crisis, your instincts may be to react, keep things close to your vest, or even do nothing. You need to fight those instincts. Instead, take a deep breath, get the right people involved, plan, then act decisively and communicate openly.

There's obviously a significant degree of subjectivity to all this. But when it comes to crisis management, effectiveness comes with experience.

Don't forget that there's an emotional component to how you behave in a crisis. It's that whole reaction to fear and anxiety thing. After all, we're all human. And companies are made up of humans.

What you're made of, what type of person you are, impacts how you manage a crisis. The reverse is also true: how you behave in a crisis defines what type of person you are. And that's what people will remember most about you.