In recent years, we have seen numerous business leaders navigate their organizations through some very tumultuous times. Some people and companies survived the storms and others did not.
Executives who succumbed to the perils of crisis leadership include memorable and notable figures, such as BP CEO Tony Hayward. It seems like only yesterday that we were waiting for the BP oil spill to end in the Gulf of Mexico, but the 2010 BP disaster disrupted and negatively impacted Mr. Hayward's successful career and image.
However, we have seen staunch public support for other senior executives, such as embattled president of the University of Virginia, Theresa Sullivan. Although the university's board of trustees originally voted for her ouster, she weathered the storm and continues to serve as president.
There are other examples of chief executives who did not survive the organizational crisis of their times, such as former Penn State University president Graham Spanier. And of course, the usual and standard discussions, analyses and conjecture exist as to why certain leaders persevere and others do not.
I assert that there is another phenomenon that contributes to successful and unsuccessful business leadership and organizational success or failure, and it is connected to the senior executive team culture. The SET is the highest management level within an organization. These leaders have responsibility for the day-to-day operations and, ultimately, the profitability of their company.
Although a higher layer of executive power exists in the board of directors and shareholders, those groups are not involved in the day-to-day decisions that affect the way the organization carries out its mission and achieves its goals.
The specific titles that comprise the SET may vary based on the type and size of the organization. Members of this team include the CEO, chief operations officer, chief financial officer (or their equivalent titles in smaller organizations) and other upper level management appropriate to the specific company.
Individually, SET members have specific duties and responsibilities for the functioning of their offices, departments or divisions. Collectively, they are responsible for the planning and decision-making within the organization as a whole. SET members must embody two main characteristics:
- They must be champions of their divisions or departments.
- They must serve as senior advisors to the CEO.
They are the inner circle of executives who determine the strategic and tactical plans for their organization. These leaders must not only be willing to step beyond their boundaries as senior division representatives to focus on the big picture or the overall vision and wellbeing of the company but also have the capacity to do so. SET culture is manifested as the CEO and the other cabinet members develop shared basic assumptions and beliefs.
If proper leadership is essential to good business, it is crucial during organizational crises. More important, proper leadership must be in place before the crisis arrives. Although numerous meanings and understandings of leadership exist, my focus is on leadership as a process of influence: over the organization as a whole, over specific aspects of the organization aligned with a leader's responsibilities and over other members within the organization.
Understanding the SET culture of an organization is the key to understanding and determining how mid-level managers will perform in crisis events. The underlying assumptions, espoused beliefs and values — the cultural artifacts — of SET team members provide a snapshot of the SET culture and are the foundation for the culture that exists within the organization as a whole.
SET members pass this culture on to the managers who report to them. That culture affects the way these mid-level managers make decisions. Because mid-level managers play critical, even pivotal, roles during crisis events, their decisions affect the success or failure of their organization in surviving the crisis.
During crisis situations, managers usually make effective rational decisions when a balanced SET empowers and trusts them to manage the crisis. Mid-level managers usually make constrained decisions when a fragmented SET is distrusting and does not give them the authority they need to manage the crisis. Consequently, the SET culture does affect the way mid-level managers make decisions that, in turn, produce either successful (rational decisions) or unsuccessful (constrained decisions) outcomes.
A strong top management team culture that embraces and fosters a culture of innovation is key to adapting to environmental change and is an important factor to consider when determining how organizations perform during crisis management. Top management teams that embrace a risk-taking and creative culture and supports and rewards innovation will achieve positive outcomes during crises.
This article originally appeared in the February 2013 issue of Food Processing Magazine.