Any company sooner or later goes through a painful period – a crisis. And reputation, the most valuable asset, is the first to suffer. It cannot be quickly restored or recreated: such factors take years, if not decades, to shape.
An example would be the authority of Nike. According to Forbes, the company’s brand «fell out» from the best in the ranking only because during the basketball game, one of the players injured his leg due to a broken shoe.
And at the end of the match, Nike’s shares lost 1% and its reputation fell to 15th position.
No one is immune from the crisis, especially a sudden one. These include, for example, the COVID-19 pandemic, which has made its adjustments in all areas of life. And how an enterprise responds to such a challenge determines its credibility and relations with consumers, partners and customers in the future.
Stages of crisis.
Pre-crisis Period. Usually, a crisis is preceded by a pre-crisis period. There are suspicions that something is wrong, but it’s just not clear what it is. This time segment consists of three distinct stages.
The first stage is simple – negligence. Certain groups in the company or its individual employee did not do the job. And this happens periodically. Failure to meet sales plans, production, quality loss, failure to meet production schedules… As a result, the market is lost, and then there is an excessive loss of valuable personnel. All these are examples of negligence. Senior management did not notice appropriate threats to business at this stage.
When the problem is finally addressed, it is the second stage: during which its management denies the existence of the problem. The management hopes that it will «resolve by itself».
When problems do not disappear, but only accumulate, the company moves into the third and final stage of the pre-crisis period.
Let’s take an example. The brewery Schlitz changed its recipe and therefore began to lose part of the market (the problem was not noticed in time due to the strike at the facility of industry leader Anheuser-Busch). The whole pre-crisis period was a typical sequence of periodic failures: unsatisfactory product promotion, frequent changes of management, mutual accusations, and general dissatisfaction at all levels of the enterprise. Even before the situation stabilized, the company was absorbed by a smaller competitor.
The pre-crisis period is only the beginning of the crisis, so it is usually not visible to others. And if top managers or executives are able to acknowledge the danger, they can still prevent a crisis from occurring.
The early detection of systematic non-performance is in fact one of the main factors of senior management responsibility. But in order to do so, managers must be aware of the quality of all operations at all levels.
Crisis Period. At this time, managers cannot hide problems either from themselves or from employees of the enterprise. The next stage of the uncontrolled crisis is indeed a period of crisis.
All crises harm business, and this damage can be expressed in a ruined career or a mental breakdown of the employee, in lost means.
When a crisis begins, there is no time for blame or reproach. All leadership can do is respond adequately to the challenges and try to minimize the consequences.
Post-crisis Period. The final phase of an unmanageable crisis is characterized by uncertainty and upheaval. Hopes for the company’s past success are lost. Banks are trying to recover at least part of their investment.
The last phase of an ungovernable crisis is going to foresee dramatic changes. If the company is lucky, another investor will take it under his «wing». But most often there is a restructuring of the company under the law on bankruptcy or financial insolvency. If one of these outputs is not used, the enterprise may be liquidated or absorbed by another company.
When a crisis is managed, the sequence of its periods is predictable.
In the post-crisis phase, radical changes are taking place in business, which entails a shift of control to new people. Therefore, the primary goal of crisis management is to change the sequence of events. The ways in which the sequence of events can be changed, and the program of successful crisis management will be described below. The right preparation for management usually prevents some crises or minimizes the impact of those that cannot be avoided.
How to stimulate sales to overcome the crisis?
There are many ways to encourage sales. The choice of the most optimal one depends on the type of activity of the enterprise.
So, if the trading companies need to increase sales, then selling-off shares is quite suitable.
If you need to improve the sales efficiency of the manufacturer, the following will do: discount cards; sending commercial proposals to potential customers (one needs to have such a base); comprehensive solutions for customer service; use crm-systems to process client requests.
How to analyze company objectives during crisis?
First of all, we need to start with a diagnostic. It will create an objective picture of the company’s activities. Upon completion of the diagnosis, it is necessary to draw up a report in which to present the main facts, conditions, and trends necessary for setting goals. On the basis of this, develop a strategy for the exit of enterprise from the crisis and operational solutions for management.
The quality of the outcome will depend on the clarity, relevance, and timeliness of the objectives. It is important to remember that the goals must be realistic and achievable.
The main characteristic of anti-crisis business planning is its short-term nature. This is not to suggest that anti-crisis business planning is by no means long-term, but it will have to be revised and adjusted more frequently.
Therefore, the business plan should be drawn up for the minimum possible period, with monthly analysis of the achieved goals and adjustment of further tasks according to the results and the state of the market. It is important to note that although the implementation of the overall strategy is divided into several stages, it remains the same, and only the intermediate goals and plans are adjusted.
Business planning is often discussed in the management environment in the context of an unstable Ukrainian economy and a rapidly changing social and market environment. But it is at such times you need to be able to plan your business correctly in accordance with the economic realities.
Adjust strategy to keep the company afloat during the crisis
The fundamental advantage of crisis planning is that it is possible to regulate and adjust the actions to keep the company on a given strategic course of activity.
If we compare actual and planned indicators, we will identify the factors of deviation. They will help diagnose problems now.
Once the strategic and operational objectives have been defined and the problem points have been identified, an anti-crisis business plan can be drawn up.
Personnel management during business crises and conflicts
By «personnel management» in a company one should understand both the actions of the personnel service and the system of work with employees as a whole, that is designed to ensure their compliance to their roles (functions) in business processes. First of all, these are the actions of the line managers.
Management of an enterprise means control over all factors of production and all types of resources used. But, of course, the first priority is personnel management.
Each crisis is a unique phenomenon, so effective management requires considering the ongoing processes inside and outside the company. There are also a number of crisis management techniques: they are applicable in general but can be used in each particular case. Such methods include the following:
- Everyone should understand that the leader really controls the situation. This is the main thing for the manager when managing staff in a situation of a crisis.
- Select a professional team to work in a crisis situation, optimally assigning roles, tasks, and responsibilities. Each staff member must be given an assignment.
- Do not panic and lose your cool, do not react too violently or hysterically to the situation, as subordinates will do the same.
- Deliberately act in a slow motion so that subordinates think everything is under the control of the supervisor and goes according to the plan.
Personnel policy is also an important component of personnel management. The aim of this policy is to ensure an optimal balance between the preservation and renewal of personnel in accordance with the needs of the enterprise and the state of the labor market. In the event of a crisis, the company applies four types of personnel policies.
- Passive personnel policy. The management of the company does not have a well-defined algorithm of actions in relation to personnel. Therefore, in a crisis in the company, human resources activities are reduced at best to eliminate negative consequences of work.
- Reactive personnel policy. The company’s management monitors the staff for the symptoms of the crisis (lack of adequate motivation for high-productivity work, as well as a sufficiently skilled workforce to solve the problems, the emergence of conflict situations) and, by necessity, takes measures to address the crisis.
- Preventive personnel policy. The management of the company has a reasonable vision of the development of the situation, but it does not have the means or management tools to change it.
- Active (rational) personnel policy. The management of the company has objective data and a reasonable vision of the development of the situation, as well as the means and management tools to change it.
