Leadership in crisis and scandal

An organization that is prepared for crises is better able to maintain its operations and service levels - even when challenges arise. This leads to a sense of security internally among employees and externally with customers and stakeholders.

Leadership in crisis and scandal

When it comes to managing crises and scandals, it makes the most sense to distinguish between crises that come from outside the organization and those that occur within the organization itself. The external ones are caused by circumstances that the individual organization rarely has any influence over. Examples include a pandemic, war or financial crisis. Other crises arise from within the organization itself. They can be caused by abuse of power, insults, bullying, sexism, nepotism and unethical behavior.

These crises that occur within organizations themselves seem to be all over the media these days. While they're happening, the media attention is intense and sustained. The typical reaction as the crisis rumbles on is to look for the "bad guys". If it's possible to find those responsible or point the finger of blame, crises will pass more quickly, the reasoning goes. But by primarily seeing crises as something that must be overcome at all costs - and where the end justifies the means - you run the risk of crises recurring. And that the uncertainty and fear that a crisis can bring with it will spread throughout the workplace culture.

Behind the media headlines and sensationalized reports, there is also a deeper story, and the people directly or indirectly involved in the crises often experience them as painful. And crises can lead to anxiety, fear and personal downturns. So, as unpleasant, damaging and painful as they are, serious work to prevent, manage and learn from crises is necessary to avoid them - or prevent them from happening again.

Benefits of effective leadership in crisis and scandal

There are many benefits to be gained from being well equipped to prevent, manage and learn from crises.

Crisis prevention contributes to business stability and continuity. An organization that is prepared for crises is better able to maintain its operations and service levels - even when challenges arise. This leads to a sense of security internally among employees and externally with customers and stakeholders. Finally, crisis prevention promotes a proactive culture where the organization is open about mistakes and learns from past mistakes.

Crisis management

helps protect the organization's reputation and credibility, because a poorly managed crisis can damage the organization's image and lower trust with customers, employees and external stakeholders,
minimize damage and loss, and
fosters an organization that is able to learn from its mistakes and become more resilient.

Learning after a crisis promotes openness, accountability and collaboration within the organization, while ensuring that the valuable lessons learned from a crisis are ingrained in the organization so that it doesn't happen again.

LEAD's approach to leadership in crisis and scandal

At LEAD, we focus on preventing, managing and learning from crises that originate from within the organization itself. We focus on the psychological, managerial and organizational aspects of crisis management. And since no two crises are the same, we work closely with you on the best way to prevent, manage or learn from crises in your organization and nowhere else.

In a crisis situation, it's a natural reaction to try to establish responsibility and identify those involved. The media and public often search for heroes and villains in the story, while politicians and leaders want to identify those responsible. This can lead to independent legal investigations, suspensions and firings as an immediate solution to the crisis.

Post-crisis, additional regulations, control mechanisms and bureaucracy may also be put in place to prevent similar situations from happening again. Unfortunately, these measures can often have a negative impact on employees, making them feel suspicious and taking time away from their primary tasks.

We believe that this automatic response to crises can have negative consequences. It can create fear both during and after the crisis, which can result in employees and managers failing to actively participate or report issues for fear of being held accountable. We believe that more constructive approaches to crisis management need to be found that focus not only on blame, but also on learning from the situation and working together to prevent recurrence.

When the crisis is raging, it can be extremely difficult to keep an overview and act rationally. External assistance can help. We provide the rational overview and ensure that together we initiate the right investigations and that the design to prevent, manage or learn from the crisis is drawn up correctly and strategically. Among other things, we help with:

Strategic management and organizational consulting
Crisis psychological coaching
Psychological debriefing
(Re)building psychological safety
Presentations and workshops

Crisis management 5-phase model

Dealing with a scandal isn't just about putting out fires and keeping journalists on a short leash. It's also about exercising leadership in uncharted territory and learning from the experience - even if it can be painful along the way. This applies partly to organizational learning, where the organization, through the right efforts, can emerge more robust and resilient on the other side of the crisis. But crises can also be seen as a transformative human and leadership process where you as a leader can get to know yourself and your leadership better. The light that comes on doesn't always show beautiful things, but it's important to see what you're actually facing. This gives you the opportunity to work on the organizational and managerial behavior of yourself and others - and come through stronger as a leader in the long run.

Preventing and managing organizational crises in 5 phases

Organizational crises, scandals and incidents of unethical or abusive behavior can have major consequences for the organization and its members. But what can you as a leader do to prevent and manage crises in your organization?

Below we present a 5-phase model for crisis and scandal management that balances the focus on internal and external stakeholders. The model combines short-term operational management with a long-term strategic learning focus on building a preventive culture and management practices. In this way, the model links early identification of danger signals with prevention, management and learning.

Grant & Elmholdt (2022)

1. Spot the signals

In this first phase, the task is to keep a constant eye on internal risk factors that could grow without close monitoring. It's important to focus on psychological safety so that employees dare to raise the yellow flag early on before things get out of hand. At this stage, you should also establish a whistleblowing system and simple and transparent processes that prevent personal incompetence and disrespectful behavior. Signs of cultural risk factors include tendencies towards groupthink, where unethical and amoral behavior has become part of the norm in the organization over time.

Another danger sign is if management is only presented with the pretty results, also known as the "watermelon risk", where numbers and projects are green on the outside but bright red under the surface. Make sure to always test for pretty results: Can this really be true? What information am I not being presented with right now? At the same time, insist that errors and shortcomings can be discussed openly without negative consequences for employees.

2. Stop the bleeding

In this phase, the crisis has just hit the organization and the focus is on decisive leadership. As an organization, you should send a clear signal to both the outside world and the internal organization that the matter is being taken seriously and will be investigated thoroughly. Too slow and hesitant action can make the crisis worse.

It's a general point in crisis management literature that the way we handle the crisis matters more to the outcome than the crisis itself. Don't just focus on public relations and external stakeholder management. Communicate clearly and consistently on the inside as well: What do we know? What can we say something about? What don't we know? When will you hear more? In addition, a chain of management communication should be quickly established so that managers at each level feel well-informed about the status of the case and are equipped to communicate to their own team.

3. Limit the damage

Empathy and meaning-making should be the focus here. Remember that it's not only employees directly involved that may have reactions. Research shows that negative emotions associated with scandals spread to other team members, who may feel guilty, ashamed, angry, etc. Make sure each manager meets with their team regularly, taking stock and checking in: How are you feeling right now? Do you have any questions? Remember to be open and curious, as there can be huge individual differences in managers' and employees' crisis reactions.

The employees involved should be offered the right individual help, and colleagues who have been passive or unwitting witnesses should be offered collective and/or individual debriefing - preferably from professional external experts. Collective debriefing in particular can have a unifying effect while demonstrating an open and transparent approach to dealing with the scandal.

4. Rebuilding trust

This phase is partly about rebuilding trust between the organization and the outside world, but also internally between colleagues, managers and employees. Here, decisive leadership is less important - the focus should instead be on patience and inclusiveness.

Some relationships are damaged and it takes time to rebuild trust. The more employees are involved in the rebuilding phase and can contribute to how the matter is handled with customers or citizens, the easier it is to restore their trust and belonging to the organization.

5. Create learning

This phase is about developing a preventative culture and management practices. The focus is on building organizational capacity to emerge stronger from the crisis and prevent future crises that come from within. If we simply respond to the scandal by wrapping the organization in layers of bureaucratic control and governance, we have failed. The crisis is a golden opportunity to look at the values and ethics of the organization going forward. What leadership practices should underpin these values? How will ethics manifest itself in our interactions with each other, citizens and customers?

Involve the leadership team in the process and be open about what you as an organization and as a leadership team have lost sight of and what you need to reinvent. Remember to see past mistakes as a source of learning while looking forward to decide who you want to be as an organization in the future.

How we can help you

We offer you management and organizational consulting, crisis management, research-based training, presentations and educational courses. All with a focus on how to prevent, manage and learn from crises and scandals. We can help prevent crises, step in when crises hit the fan and assist when the crisis is over, but the aftermath is still evident in the organization and among employees and managers.

Presentations

Inspiring research-based presentations on leadership in crises and scandals.

Sparring

We offer advice, sparring and other consultancy services for crisis and scandal management.

Workshop

Facilitating workshops that focus on preventing, managing or learning from crises and scandals.

Meet the consulting team

Anika Mergen Hee

Management consultant

Betina Hansen

Senior Consultant

Cecilie Pedersen

Senior Consultant

Claus Elmholdt

Senior Consultant

Katrine Bastian

Partner

Laust Pedersen

Senior Consultant

Maja Bjerrehus

Senior Consultant

Contact us to learn more about what we can do for your organization

Are you facing an organizational change? Do you need strategic advice or a cultural development program?

Contact us and together we will tailor a process that develops the exact competencies and structures that strengthen and future-proof your organization.

Claus Elmholdt

Professional Director, Founder
Cand.Psych.Aut. & Ph.d.
Associate Professor in Management and Organizational Psychology, Aalborg University

Cell phone: +45 26 14 51 57
Email: ce@lead.eu

Leadership in crisis and scandal