By Frank Gallo

General

Leadership is always important, but during a crisis, leadership is critical. This is where leaders truly earn their pay. Any crisis is very distracting to workers. In an economic crisis, workers worry about many things – What about me? What about my job, my salary, my benefits?

In China, the leadership challenge is more complicated than in other places around the globe. Despite the short-term gloom, the long-term future in China remains quite bright. Unlike the United States and Europe, where the corporate focus is on layoffs and other reductions, China will be making their cuts more strategically – not wholesale like in the West. Furthermore, the crisis is making more foreign companies continue to look at countries like China for investment. Even though costs are growing here, it is still a less expensive place to do business than in the West.

Therefore, a particular challenge for leaders in China is that, even though they need to focus on streamlining costs, they still need to help drive growth. These two goals require different leadership skills. In a crisis, a leader needs to be very focused on short-term fixes. Today’s performance is more important than tomorrow’s development. In a growing economy, the leader can afford to be more strategic. In a less urgent way, the leader can balance short- and long-term goals. Every company and every leader must realize that leadership styles need to be modified in an economic crisis.

What Can a Leader in China Do?

First and foremost, a leader needs to be visible, clear, honest and transparent. This should always be true, but particularly so in times of crisis. Workers are worried about their jobs, their pay, their training and their performance. They will depend on the leader to help them understand how these things may have changed in the crisis. It is not necessary that the leader has all the answers – you just need to tell what you know now and what you don’t know yet.

The leader’s communications can take many forms. Walking around, visiting plants, sending emails and memos, and delivering web casts are all important vehicles. The main point is to show employees that the leader is there and the leader cares about them and their futures.

Leaders should remember to reinforce company values and continue to articulate the long-term strengths of the firm – not just the short-term problems. A leader needs to keep focused on the big picture. The current crisis needs to be viewed with the longer-term goals in mind.

A crisis is also a great time to get the “house in order.” Assuming that business may slow temporarily, everyone can use this time to focus more on the customer. This is the job for the leader as well as all of the client-facing employees. In doing so, everyone should have their ears and eyes open for potential opportunities. Many customers, especially those in the West, may be looking for investments, mergers and takeovers. While every opportunity needs to be examined closely, we can expect that more of these will become available in the coming year.

Finally, the top boss needs to make sure that all the other leaders are held accountable to do the same type of communications. It should become a very clear requirement to the senior team that this is their job, too.
There are still more questions to answer. How can a company be sure that its leaders are best prepared for the crisis? What are the specific leadership skills required in an economic crisis versus those needed in a growing economy? Are there things that the human resources department can do to help the company handle the crisis better? This problem will be with us for a long time. Making our business modifications now will have very long-term benefits.

Frank Gallo, Calypso Consulting