The current credit situation clearly qualifies as a crises. Many corporations will fail due to a direct lack of credit--others due to an inability to meet loan covenants caused by sharply falling revenues or equity values or profit margins; with the same lack-of-credit-based-failure end result.
The word crises connotes negativity (instability, danger, stressful) but there can be a silver lining. An obvious crises tunes prime constituencies (employees, suppliers, partners) to the necesity for major change. The crises may allow management to take actions that it might otherwise neither have the courage, nor the environment, to effectively implement.
A sound and straightforward set of communication policies and actions to these constituencies is one key to success. When they fully understand the severity, when they see your recognition of the problems, when your pronouncements make sense; the acceptance of tough actions will be significantly improved. (A second key to success is to "step outside yourself"--next week's topic.)
When a crises is upon you, don't hide your head in the sand as has been recently practiced by some of our financial institution CEO's--get out in front and be a leader. Enlist the inputs and support of these same constituencies even if you might have to take actions they'd rather you wouldn't--like reductions in salaries, employment, bonuses, prices. You wonder at the recent, publicized management decisions at AIG: some of my business-experienced associates have said "sound management--they had to do these events to keep up morale". I couldn't disagree more. Morale is kept up when employees (and the other relevent constituencies) recognize their management has sound thinking and policies; when they believe in their leaders. Morale is diminished when employees (and the other relevent constituencies) think their management is out of touch. Most of those employees at AIG's celebratory and relaxation events and throughout the company, were highly embarassed--in my opinion.
See more thoughts concerning crisis issues posted in A. Positive Crises: Danger or Opportunity addressable in the upper right segment of this page.
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