Leadership in the crisis

26. October 2022

Yes, the last few years (with corona, supply chain problems, and a war in Europe) have been and continue to be stressful for entrepreneurs and managers, for employees and for every citizen. To speak of crises from the perspective of the global economy would not be appropriate. There have been three global disruptions in a row – something that has not happened for a long time. The states have tried to cushion these disruptions for the economy and consumers with a lot of new money. Nevertheless, the last three years have been exhausting and anything but normal for all of us.

The real crisis in the form of an economic crisis with a recession is coming now and can no longer be prevented. The central banks must not and can no longer avert it, because the only way to curb inflation is with a real crisis. Everything is actually clear and economic researcher Manfred Hübner said in an interview: “We are heading for the best-announced recession of all time.” 

But what exactly does this mean for executives, entrepreneurs, and managers? What exactly needs to be done in a crisis?

In the Anglo-Saxon-driven capital market companies, the matter is clear:

  • Tough cost-cutting, everything is called into question. If sales collapse or threaten to collapse, then costs must be cut. This is the only way to get the key financial figures back under control.
  • Marketing and other areas that are not needed directly and in the short term for the result feel it the most. Freelancers usually fall victim to the first waves of red pencils.
  • And employee benefits are being reviewed and cut.

This logic is met with incomprehension, especially in Germany, which is driven by SMEs and family-run businesses. Actionism is often questioned and the negative medium and long-term effects of cost-cutting activities are pointed out.

Status quo, inaction as an entrepreneurial option and hope for all

But what does it mean if many companies decide not to change anything and calmly head towards changes in external influences?

What does it mean for us as a society as a whole if our state has been telling us for three years that it will take care of everyone in response to massive disruptions in our real world and that no one will fall through the cracks?

Does this really keep our society together or does this behavior get us used to the idea that there are no longer any real crises and that the state will take care of us all?

Is it really the right way for entrepreneurs and managers to try to get through disruptions and crises with as little change as possible?

When in the last three years have politicians dared to announce cuts or demand changes, regardless of party or government?

Nature and the world work in cycles

In nature, there are stable balances, but even these balances – such as between predator and prey – work in cycles in terms of populations.

Our state does not have the task of acting as an insurance policy for each individual for all changes in nature and geopolitics. Our state has the task of establishing rules and orchestrating coexistence in such a way that we can develop as a community and are positioned for the future.

Every individual must be willing to leave the status quo and comfort zone and change.

And yes, we (fortunately!) live in a social market economy and aim to support the weak and those who are unable to cope with change. But we can expect the will to change.

Nature, ecosystems, geopolitics, the economy, the business cycle, companies – all these things work in cycles, with ups and downs. All these environmental realities require a willingness to change and the will to change from each and every one of us.

We have no right or claim to the status quo! We have the task of adapting to the realities of our environment.

Basic human needs and principles of leadership

Two basic human needs lie dormant in each of us:

  • We want to protect ourselves from danger (safety) and
  • we long for confirmation and attention, which our fellow human beings give us through appreciation.

The task of leadership in times of crisis is therefore above all to provide security. In a crisis, security cannot be a promise of no change. Security cannot be a job guarantee for everyone. This would jeopardize the security of the collective. In a crisis, entrepreneurs and managers must focus on security for the company and clearly work out and communicate the impact for each individual.

Leadership in a crisis means changing the focus and adapting it to reality. Leadership in a crisis means understanding cyclicality and understanding that there is hopefully a short period of time in which the security of the organization, i.e. the survival and future viability of the company, is paramount. Even tough decisions can be communicated in an appreciative manner.

Of course, the concepts of New Work still apply: self-determined and autonomous work, a sense of purpose and personal development in the workplace and the aspects of flexibility and sustainability in our dealings with one another.

However, it is precisely in times of crisis, this window of opportunity to adapt to a new reality, that a leader can and must put the security and prosperity of the entire organization before the interests of the individual.

Managers who fail to do this are wasting at least one opportunity to adapt and perhaps causing greater damage.

Even achievements of appreciation from the world of benefits “may” or “must” be renegotiated and adapted, even in a crisis.

It is okay for people to feel that a crisis is a threat to their job. Younger employees in particular, who entered the world of work after the 2008 financial crisis, are no longer familiar with this feeling. This affects more than 30 percent of current employees.

A final (winking) argument 

If, as a manager, entrepreneur, founder or executive, you still can’t come to terms with the fact that your team is being prepared for a new era with a crisis mood and crisis measures, I would like to give, with a wink, another reason for this.

Since politicians do not want to worsen the mood, entrepreneurs and managers obviously have to take over. Otherwise this inflation will not pass.

In the West, we have got ourselves into a situation where inflation can only be combated with a recession. For this to happen, the mood and fear among all of us must become so great that we buy and invest less.

Without widespread fear of the future, we will not be able to put an end to this inflation and its destruction of our prosperity.

As long as the majority still hope that the crisis will pass them by, inflation and therefore the real crisis will continue.

Former US President Harry S. Truman once said: “It’s a recession when your neighbor loses his job; it’s a depression when you lose your own job.” Let’s hope that we, as informed, intelligent citizens of prosperity, can clearly interpret the signs in this way: Only if we live through the physical and emotional phases of the crisis now will it remain a recession. That is the uncomfortable truth for entrepreneurs, founders, and managers.

Source: https://www.pexels.com/de-de/foto/stadt-geschaftsmann-mann-anzug-7925807/ (excerpt)
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