COVID variants, labor shortages, supply chain interruptions, the highest inflation rate in thirty years, volatile energy prices. These are scary times for many businesses, and the probability of facing a business crisis in the next year has never been higher.
A business crisis is defined as an event or series of events that cause a significant disturbance in a business. They often occur with little or no warning, thrusting a company into an intense and dangerous environment where decisions need to be made quickly, with little time to react.
If necessity is the mother of invention, crisis is the father of change. So how do we use crisis to affect positive change in our business organization?
In our company’s 53 year history, Paraco Gas faced many different crises, one that nearly bankrupted the company, while another almost forced the sale of the business. Each time we faced a problem, Paraco emerged as a better and stronger company and me a better CEO, no matter how painful.
Overcoming these situations starts with the basic understanding that a business can prepare itself for an unforeseen and unexpected event that can jeopardize its future if not handled appropriately. Just like firefighters train for fires and emergency responders prepare for all types of disasters, companies can plan for a crisis.
The first step is to identify those employees that have successfully navigated through a similar issue in the past, as well as the employees that have demonstrated calm under pressure and are quick to make decisions. This will be the pool of employees you will choose from to help overcome crisis when a crisis occurs.
Regardless of its nature, a crisis management team needs to be created immediately when a crisis arises.
Typically the CEO or business owner will head the team. His first responsibility is to be transparent and communicate to all employees the nature of the situation and instill confidence that the company will overcome the problem. He then needs to isolate the crisis management to his crisis management team. This will enable all other employees to focus on servicing their customers to maintain the business’s overall health.
When the crisis faced Paraco Gas, our crisis management team looked at every aspect of running the business, even those areas the situation did not affect. There became a sense of urgency to improve the company and strengthen it. Nothing was off-limits.
We looked at every department, every process, every manager. And we took a deep dive into the inefficiencies and weaknesses within our business. Problems within our company that were previously ignored became opportunities.
Decisions were made quicker, complacency was eliminated, and many positive changes began to occur because of psychology around survival. It took a business crisis to make changes that we should have made previously. It seemed that every employee became aligned and motivated to make our company better. Our employees learned many lessons about the problem itself, and weaknesses became strengths.
There are many stories of companies that have used a response plan to emerge successfully from crisis. I have witnessed within our industry companies that successfully overcame troubles with much respect. There became a culture where their management team truly believes they can overcome any crisis before them.
They may get knocked down, even take a few steps back, but eventually, they find solutions, make changes and emerge stronger and smarter.
Every company would prefer never to face crisis again, but they understand that it’s almost inevitable with time.