At first glance, these comments appear to be sentiments leaders are expressing during the coronavirus (COVID-19). However, they have been said before—they were made during three previous major crises: the 1997 Asian Financial Crisis, the 2003 SARS Crisis, and the 2008 Global Financial Crisis. Catastrophes of this magnitude test leaders on their ability to manage through uncertainties and come out stronger on the other side. In hopes of building on past experiences, Egon Zehnder interviewed senior-level executives from a range of industries who have weathered major crises in China and the Asia Pacific region. We asked them to share what they have learned and offer insights to leaders navigating the coronavirus outbreak.
Don’t put your bottom line above your people.
Executives we spoke with who led organizations through the SARS pandemic pointed to the importance of putting the health, safety, and well-being of employees above all else. One leader of a global hotel chain said, “Focus on the most important asset that any business has—the physical safety of people first –and then worry about collateral damage and the P&L next.”
One way to do this is to extend the standard employee benefits package. One CEO of the Asia-Pacific region of a consumer products company shared that his company is shouldering the additional medical costs of three employees who are infected with the coronavirus and whose medical insurance only covered certain costs. Another company that had to place 25,000 people on unpaid leave during a previous crisis paid employees back once the company rebounded.
Leaders must also strive to instill a sense of calm and stability. “It’s important to keep conversations focused on facts and data,” explained the Managing Director of a global supply chain and logistics corporation. “Once you open the door to speculation, irrational behavior and panic sets in.” Another executive of a heavily staffed, people intensive company echoed the need for security. “My number one priority has been to make sure the teams are stable. One of my employees is confirmed to have the coronavirus,” he said. “I cannot have my team panic. I am working with my management team and working with the government to make sure I have a stable team.”
As part of creating that security for employees, leaders should be in the trenches with the team. A leader during the financial crisis and the SARS outbreak said working directly with the younger team members who had not weathered such a crisis was an important step in making them feel safe. “I went to the front line… so that they felt comfortable,” he said.
For MNCs, showing a commitment from the leadership team to remaining in China and working through the crisis is reassuring to employees. A former CEO of a major logistics provider in China during the SARS outbreak—an expat who had moved his entire family to China—shared that the entire leadership team remained in the country during the crisis.
People saw that I had my family—wife and a baby—and I was staying behind with the team to show solidarity and confidence.Former CEO of a major logistics provider
Find and leverage the opportunities hiding within the crisis.
Maximizing future benefits means looking for opportunities amid the chaos. One executive we spoke with said that during the SARS outbreak one of the company’s businesses in Hong Kong that improved environmental hygiene grew by 400 percent. He noted that another period of growth is likely coming tied to coronavirus and the need for enhanced monitoring. “These business opportunities are important, as people worry first about the virus and second about their job security,” he explained. “My job is to bring them as much safety as possible.” Just as important is the need to be agile in terms of excess capacity arising from business disruptions. This will test the ability of executives to think creatively to reorient assets and resources in ways not thought of during normal circumstances.
A crisis is also an opportunity to identify high performers who work well under pressure and amid ambiguity. “I absolutely use crises to identify those whom you could trust to get things executed,” a former aviation industry CEO said. “EQ and IQ come out during these times of struggle.”
The People Aspect: Crisis and Opportunity
When we at Egon Zehnder interview and assess people, we focus not on what people have done, but how they have done it. Behaviors and traits exhibited in real life work are the best indicators of an executive’s future capabilities. More often than not, it is in situations of great stress and crisis that we are able to gain a deep insight into capability.
One of the assessment tools we use in our work is our Potential Model, which focuses on how to predict development of executive ability and the speed of that development. We think that the four key elements of our Potential Model have particular relevance to this crisis, and provide a good framework to use for self-reflection and to observe your own people. Past performance and current capabilities offer no guarantee that an individual will succeed dramatically in environments of high velocity change such as a crisis, and the current coronavirus outbreak is an opportunity to uncover real promise in your people and develop them for future roles. The four elements of Potential are Curiosity, Insight, Determination, and Engagement.
- Curiosity: Individuals with a high degree of curiosity proactively seek new experiences, ideas, and knowledge. They solicit feedback and are open to learning and change. They are energized by constantly refreshing themselves on an intellectual and personal level.
As you work your way through this crisis, consider how you view the unknowns, how you seek to inform yourself, and whether you ask those around you to give you feedback on how you are managing the situation. In the same way, observing how those around you use their curiosity to their advantage may allow you to identify interesting talent for future development.
- Insight: People who exhibit great insight will be able to gather and make sense of a vast range of information, transform past views (including their own), and set new directions. They will switch effortlessly between the conceptual level and the intelligent analysis of granular data. That means that they are likely not only to discover new insights but to apply them in highly productive ways.
Lack of complete information and unpredictability as to future impact will be the reality we are all dealing with both during and post-Corona crisis. Agility with respect to insight, in the face of massive ambiguity, will be the challenge for you and those around you. Related to this, the ability to promote open exchange and discussion will be important to have in your toolbox.
- Engagement: The ability to connect on an emotional and logical level with others, not just one-on-one. People high on engagement will be able to communicate a persuasive vision and help others feel more connected to their organization and leader. They will pursue self-awareness, demonstrate empathy, and be able to inspire commitment.
We sense this may be one of the most important elements of potential for executives during a time of crisis. Uncertainty can lead to anxiety, and the ability to empathize and convey a vision of successfully working through the crisis can lead to emotionally charged higher performance.
- Determination: This trait encompasses a combination of attributes. The courage and willingness to take intelligent risks, persistence in the face of difficulties, and the ability to bounce back from major setbacks or adversity. Deeply determined individuals will also continue to look for disconfirming evidence, and they will be willing to change direction when necessary.
As we work our way through the crisis, many leaders will be “crossing the stream by feeling for the rocks with their feet,” as the saying goes. Those that can renew themselves to press forward and unite people in a time of stress are more needed than ever today.
In addition, companies can use this time to build their brands internally and externally, and many do this by giving back to the community. “We have organized a donation of about RMB $3M, not only from current employees but also from senior leaders who have left the company,” explained a senior vice president of a pharmaceutical company. While giving back is certainly admirable, companies must also be cognizant of commercial overkill—be sure your motives for giving are pure and not simply a brand-building mechanism. “Don’t build your personal pride through overplay in donation,” the CEO of a solar company cautioned.
Build preparedness plans for the next emergency.
While not every crisis can be predicted—it’s much more difficult to predict a public health crisis than a trade war—many of the executives we spoke with said that a major learning was that their preparedness plans were not as thorough as they had thought. “We should have been better prepared for more complex situations,” said an executive who was a leader during the SARS outbreak. “It took us forever to get things in place.”
A major part of preparedness is financial stability. A former aviation industry CEO said one thing his company did right amid several crises they faced was to establish “a financial war chest.” “We gathered all of the financial reserves that we could—bond issues, credit lines—so that we had resources when issues arose,” he explained.
Another executive suggested that leaders see “paranoia” as a means to better disaster preparations. “Think about black swans, think about scenario planning, build safety systems, invest resources, and train managers on how to speak to the media,” he said.
Communicate regularly with transparency and authenticity to all stakeholders.
All of the leaders we spoke with emphasized the need for frequent communications during a period of crisis. In the coronavirus situation, walking the halls and hosting in-person town halls is not possible, but there are many additional communication tools available, such as WeChat and other social media channels. The most important thing, said one executive, is “to be first, to be right, and to be credible in communications with employees so that they are not panicked, or get conflicting or incorrect information.”
The timing of communication also matters. “It’s important to set up a cadence and structure of communications, as this frees up your people to focus on the tasks at hand. It avoids a deluge of requests for information which can clog up the system at a time when executional focus is critical,” explained a managing director of a global supply chain and logistics corporation.
For multinational companies, leaders must also think about how they communicate with headquarters. It’s critical that communications do not make employees in China feel isolated and that the real story of what is happening on the ground is being told.
Unite in a common purpose.
The Coronavirus outbreak has united much of China in ways not seen since perhaps the 2008 Wenchuan Earthquake. While employees are working at their stations or remotely, the societal focus has been on the brave medical personnel, uniformed services, and volunteers who are working to bring the situation under control. “Don’t forget that we live, work, and profit within this society which is now under unbelievable stress” is how one of our executives put it. Finding ways of contributing to the societal effort to combat this virus also was suggested by several of our executives as a way of being responsible corporate citizens.
A leader of a global hospitality company who managed through the Sichuan earthquake said that one of the positive outcomes for employees was that they were able to find a stronger connection to the company. “It raised the morale of our people to come together for a common purpose,” he said. “The efforts we organized to give back to those on the front lines also had a deep impact on positive attitudes among our staff toward our commitment to China.”
While the end of the coronavirus may not be in sight and the full extent of its impact remains unclear, leaders must embrace this time as one that will help them be better prepared for future hardships. As one former CEO we spoke with put it, “Don’t waste a crisis. Learn, restructure, build systems, and give back to your community.”