Solved by verified expert:Use the following Harvard Business case study for this Critical Thinking assignment:Pin, J. R. (2012). Leadership under pressure: Communication is key. HBS No. IIR086. Boston, MA: Harvard Business Publishing. Retrieved from https://cb.hbsp.harvard.edu/cbmp/pl/72033374/72033535/a8f67440a3a7c03a8499cdb2811b5e5cFor this assignment, you are required to analyze and critique the Pin (2012) case using the following format:Case overviewAnalysis & implication of the caseLimitation of the casePersonal perspective of the caseCase summary.please see attached additional requirements.
screen_shot_2018_01_19_at_8.43.16_pm.png
a8f67440a3a7c03a8499cdb2811b5e5c.pdf
Unformatted Attachment Preview
IIR086
DEEP
insight
GUIDE TO TAKING THE REINS
Leadership Under Pressure:
Communication Is Key
By JOSÉ R. PIN
E
verything was in place for the New
York City marathon. The 2012 event
was supposed to be the largest in
history, with 47,500 runners from
around the world and an estimated $340 million
in revenues forecast for the city. But then the
unexpected happened: Hurricane Sandy. The
storm pounded the United States’ eastern seaboard, leaving hundreds of thousands without
electricity or running water. Although thousands of volunteers joined city authorities to
help clear debris and save the race, the ravages
of the storm proved too much. Mayor Michael
Bloomberg was forced to announce the cancellation of the marathon.
Let’s not kid ourselves: crises happen, even
28
with contingency plans in place. The day comes
when the unthinkable happens. What then?
When a crisis hits, regardless of what form
it takes, the most important thing is to remain
calm. The uncertainty of the situation must
not be allowed to cripple the organization. To
stop this happening, two key ingredients are
required: leadership and communication.
This article examines the role of a leader
during a crisis, and how that leadership must
be delivered through proper communication.
I will draw on crisis communication and management principles, as well as use real-life examples, including those from IESE case studies,
of companies that have experienced crises and
come out the other side.
insight
This document is FOURTH
authorized
for use only
in Kris
Michaelson’s
MGT579 – WIB17 course at Colorado State University – Global Campus, from NovemberIESE
2017 to May 2018.
QUARTER
2012
ISSUE
15
Leadership Under Pressure: Communication Is Key
The first thing a good leader must do is assume
responsibility by acknowledging the seriousness
of the situation, while at the same time projecting
confidence in an eventual resolution.
Leadership: An Exercise
in Responsibility
The first thing a good leader must do is assume
responsibility by acknowledging the seriousness of the situation, while at the same time
projecting confidence in an eventual resolution. If it is a crisis that poses an existential
threat to the organization or key stakeholders,
upper management must step up without hesitation, demonstrating their full commitment
and accountability.
The CEO of Apple, Tim Cook, did just that
in February 2012 when it was discovered that
Foxconn, the company’s main supplier in
China, was violating labor laws by employing
children as young as 14 to produce the iPhone.
He reacted promptly and resolutely, asking the
Fair Labor Association to conduct an inspection at the manufacturer’s plants and allowing
television cameras full access. Cook also responded publicly to accusations, saying: “It’s
extremely rare in our supply chain, but our top
priority is to eliminate it totally. We’ve done
that with our final assembly vendors and are
now working down into the supply chain. If we
find a supplier that intentionally hires underage labor, it’s a firing offense.”
EXECUTIVE SUMMARY
Let’s not kid ourselves: crises
happen, even with contingency
plans in place. And it’s in
high-pressure situations like
these when true leadership is
tested. Citing numerous case
studies, the author provides a
guide to help managers lead
their companies when the
unthinkable happens.
It starts with taking
responsibility and assembling
the ideal management team
insight
for the crisis at hand. This
means communicating
in a personal way, with
transparency, consistency
and a long-term vision, so as
to prevent uncertainty from
crippling the organization.
Companies also need to
learn from a crisis, in order
to prepare for the next storm
brewing on the horizon –
because, like it or not, other
crises will inevitably arise.
It does not necessarily have to be the CEO
or president of the organization who steps up:
It depends on the type of crisis that arises and
its degree of seriousness. But it does need to be
someone sufficiently high up in the organization. Otherwise, it will look like the company
does not take the matter seriously enough.
Sometimes, stepping up means being physically present at the scene, since that demonstrates commitment and a connection with
those affected.
On one occasion, New York Police Chief
William J. Bratton, who transformed the law
enforcement agency during his tenure as
commissioner from 1994 to 1996, stood up to
a group of corrupt agents. He personally confiscated their badges, announcing that they
would never work again for the department.
Having the head of the NYPD on the scene
showed the media, and other police officers,
that the issue was being taken very seriously
and needed a tough response.
Such action must be taken as soon as possible, not just to safeguard one’s image, but to
prevent further damage.
The Japanese car manufacturer Toyota
knows this all too well, having suffered one of
the worst product recalls of recent years. In
2010, accelerator defects in a number of models caused a series of deadly traffic accidents.
Despite the subsequent recall of millions of
its cars, the company was accused of reacting
too late, as well as underestimating the initial
customer reaction. Toyota was also accused of
covering up the problem. Toyota’s credibility
and reputation suffered a tremendous blow,
as did its financial performance. Its stock price
plummeted, wiping billions off its market value.
Who Takes Charge?
Aside from upper management, there must
also be operational leadership to coordinate
the crisis response. Choosing the right person
for this depends largely on three factors: the
29
This document
is authorized for use only in Kris Michaelson’s MGT579 – WIB17 course at Colorado State University ISSUE
– Global
November
2017 to May 2018.
IESE
15Campus,
FOURTHfrom
QUARTER
2012
Leadership Under Pressure: Communication Is Key
Multinationals tend to nominate a senior executive to
assume the role of Chief Crisis Officer, who is tasked
with preparing the organization to deal with crises and
coordinate the collective response.
type of company, i.e., its size, activity and management model; the type of crisis, e.g., faulty
products, reputational issues, negligence or
environmental disaster; and the degree of exposure.
TYPE OF COMPANY. At a small business, the
crisis manager is usually the chief executive,
supported by the team already in place. At a
mid-sized organization, the responsibility is
typically taken by a member of upper management. Multinationals, large organizations
and government agencies tend to nominate a
senior executive to assume the role of Chief
Crisis Officer, who is tasked with preparing the
organization to deal with crises and coordinate
the collective response.
The recent scandal involving the cyclist
Lance Armstrong is a good example of how the
vested nature of the organization conditions
a manager’s role in different ways. The U.S.
Anti-Doping Agency’s decision to charge Armstrong had three different kinds of fallout, each
requiring a different level of response depending on the nature of the organization.
The organization most directly affected
ABOUT THE AUTHOR
José R. Pin is a professor in
the departments of Managing
People in Organizations and
Business Ethics at IESE. He
leads the International Research
Center on Organizations
(IRCO) and is the José Felipe
Bertrán Chair of Governance
and Leadership in Public
Administration.
Holder of a Ph.D. in political
science and sociology from
the Universidad Pontificia
de Salamanca and an MBA
30
from IESE, he has extensive
experience in teaching,
research, consulting and public
management.
His areas of expertise include
leadership skills development,
career management, workplace
organization and motivation,
change management and public
administration. He has authored
numerous books, research
papers and case studies
on leadership and people
management.
was the Livestrong Foundation, which was created by the athlete himself to fight cancer. To
insulate that organization from reputational
damage, Armstrong resigned from the board.
The second organization drawn into the
scandal was the International Cycling Union.
This agency is directly responsible for controlling and overseeing possible cases of doping
in cycling. As the fight against doping forms
part of its core mission, commitment and purpose as an organization, its response had to
be spearheaded by none other than its most
senior representative – ICU president Pat McQuaid – in order to protect its credibility and
legitimacy as an organization. Recognizing
that this was “the biggest crisis cycling has ever
faced,” McQuaid did not mince his words when
he said, “Lance Armstrong has no place in cycling.” He announced that a lifetime ban would
be imposed on Armstrong and that he would be
stripped of his seven Tour de France titles.
The third party to be drawn into the scandal
was Nike, one of Armstrong’s main sponsors.
While Nike may have been less directly implicated, its reputation could still be tarnished
by association. At first, the company stood by
the athlete. However, as the unfolding scandal
became more serious, Nike published a statement on its website announcing that it would
be ending its sponsorship deal with the cyclist.
TYPE OF CRISIS. The type of crisis an organization faces also has a bearing on the choice of
crisis manager.
If it is a product crisis, like food contamination or a manufacturing defect, responsibility should be assigned to the production or
marketing department. If, on the other hand,
the problem is a case of negligence, such as
a security breach in a network, responsibility for the management and coordination
of the response would probably lie with the
IT department. In the case of a reputational
crisis, such as an ethical scandal or a case of
insight
This document is FOURTH
authorized
for use only
in Kris
Michaelson’s
MGT579 – WIB17 course at Colorado State University – Global Campus, from NovemberIESE
2017 to May 2018.
QUARTER
2012
ISSUE
15
Leadership Under Pressure: Communication Is Key
It takes a team to resolve a crisis. Organizations that
understand this usually have contingency plans for
setting up a crisis committee comprising a diverse
range of departments and roles.
corruption, the crisis management coordination efforts are normally handled by the institutional communications and public relations
department.
Obviously, managing a natural disaster
is not the same as responding to a financial
scandal. The human and technical skill sets
needed to handle each situation are completely different, as are the groups of people
targeted by the crisis response.
In August 2005, when Hurricane Katrina
devastated the coasts of Louisiana, Mississippi and Alabama, Michael D. Brown, director of
the Federal Emergency Management Agency
(FEMA), was responsible for coordinating the
response. Regrettably, the agency dragged its
feet. Forty-eight hours after the storm hit, it
had yet to articulate an effective federal and
state response. By then, New Orleans was already descending into a state of civil unrest
due to extensive flooding and lack of available
supplies.
Given the scale of the disaster and the
widespread criticism of FEMA’s response,
then-President George W. Bush had to intervene. In the aftermath of the crisis, FEMA,
and in particular Brown, took the brunt of
the blame for the slow response, although the
Bush administration was also heavily criticized for its handling of the crisis.
A very different approach was taken by Société Générale in 2008, when one of its brokers, Jérôme Kerviel, was discovered to have
committed large-scale fraud. The role of crisis
manager was given to Jean-Martin Folz, former president of PSA Peugeot Citroën and an
independent board member of the corporation. His outside perspective, familiarity with
the institution and wide-ranging experience
made him the ideal candidate to coordinate
the bank’s response to the scandal.
Besides costing the bank 4.9 billion euros,
Kerviel’s rogue trading also seriously tarnished the bank’s image, given that shortly
insight
before the outbreak of the scandal, Société
Générale had reassured the market that its
exposure to the credit crunch was limited.
In the wake of the scandal, some alleged
that Kerviel could not have acted alone without the support and knowledge of his superiors, calling into question the credibility of the
entire institution. As such, choosing a person
from outside the entity, someone with experience and a certain degree of moral authority, was a wise move, particularly when public
trust in the organization was at rock bottom.
Ultimately, to whom or to which department an organization chooses to delegate
crisis management responsibilities depends
largely on how the organization views the crisis, as well as which members of the public it
most wants to reach out to.
Internal Coalition
It takes a team to resolve a crisis. Organizations
that understand this usually have contingency
plans for setting up a crisis committee or unit.
Such groups normally comprise a diverse range
of different departments and roles. They may
include a team leader, director of operations,
legal counsel, communications officer and customer service manager.
However, generally speaking, the final composition of the committee is not decided until
the problem faced by the organization is clearly
understood. The company may even decide to
bring in outside specialists or advisers.
The goal is to have enough competent individuals from different areas to cover a wide
range of possible eventualities, while keeping
the group small enough to respond in a swift
and agile manner.
The crisis committee must be in constant
communication through frequent meetings.
Most importantly, it needs to act in unison, for
which the roles must be explicitly defined in
advance.
Aside from its composition, the individuals
31
This document
is authorized for use only in Kris Michaelson’s MGT579 – WIB17 course at Colorado State University ISSUE
– Global
November
2017 to May 2018.
IESE
15Campus,
FOURTHfrom
QUARTER
2012
Leadership Under Pressure: Communication Is Key
The leader and crisis committee must work hand
in hand to restore confidence in the company. This
requires skillfully managing the perceptions of those
most affected.
entrusted with managing an institutional crisis
must have the authority to make binding decisions. If the head of the crisis committee is not
a member of senior management, then he or
she should have direct access to it. Whether or
not the CEO should be involved in crisis management is unclear. The important thing is that
the CEO’s presence is felt.
Even though a crisis brings on a siege mentality, the company must still go about its daily
business. As such, contingency planning must
be compatible and synchronized with routine
operations.
In 2005, a fire at the Windsor building in
Madrid left the consulting firm Deloitte without its Spanish headquarters where more than
1,200 employees worked. The fire broke out on
a Saturday night, yet by Monday, Deloitte employees were working normally, albeit in separate, ad-hoc locations. No important information was lost, and the company continued to
offer customers service without interruption.
Communicate, Communicate,
Communicate
During crises, information is in high demand.
Uncertainty increases the need for knowledge;
if that need goes unmet, the company can become victim to heightened uncertainty, rumors and chaos. Hence, all institutional crises
pose major communication challenges.
Once a crisis breaks out, besides trying to
fix the disaster – a task usually assigned to specialists and experts – the only choice is to communicate, communicate and communicate.
The company’s communications strategy must
go beyond the immediate situation to include a
long-term vision.
The leader and crisis committee must work
hand in hand to restore confidence in the company. This requires skillfully managing the perceptions of those most affected.
This is precisely what PepsiCo did back in
1993, when it had to deal with a scandal after sy-
32
ringes were found inside cans of its soft drinks.
The crisis communications team acted swiftly
and decisively. They immediately launched an
investigation into the claims. Within a matter
of days, they were able to report their findings, which appeared to indicate sabotage. At
the same time, the company released a video
of the canning process, depicting how impossible it was for a syringe to somehow end up in
its soda cans.
It was the president of PepsiCo himself,
Craig E. Weatherup, who personally made
the announcement that a person had been arrested and charged with sabotage. Other security camera video footage emerged showing a
woman inserting a syringe into a can. Eventually, more than a dozen people were arrested
for tampering.
PepsiCo not only got through the crisis, it
came out stronger as a result. It had shown customers that it had been the victim of sabotage,
and that PepsiCo’s quality control processes
were rigorous. Thanks to its effective handling
of both the crisis and customer perceptions,
Pepsi sales, which had dropped during those
critical first few days, not only rebounded, but
actually ended up climbing, making it the company’s best summer in five years.
As this example illustrates, the ability to
make an impact with effective communications during a crisis is vital. It also underscores
the value of having your communications director on board the crisis committee (see
What to Expect From the Communications
Director).
Contact, Clarity,
Vision & Consistency
Crisis communication demands a personal
touch. For this reason, e-mail is not the ideal
medium, because it offers only one-way information and lacks a human dimension. It’s
also open to misinterpretation. People tend to
trust those whom they can see, and a person
insight
This document is FOURTH
authorized
for use only
in Kris
Michaelson’s
MGT579 – WIB17 course at Colorado State University – Global Campus, from NovemberIESE
2017 to May 2018.
QUARTER
2012
ISSUE
15
Leadership Under Pressure: Communication Is Key
A crisis presents an opportunity to draw upon
reserves of social capital. It should not be used to win
brownie points. It’s the respect you’ve earned prior to
the crisis that will win you respect during it.
What to Expect From the Communications Director
A crisis can reveal whether or not the communications director is an
ideal ambassador for the company. These are the qualities he or she
must have.
CONFIDENCE. In order to communicate effectively during a crisis, the communications
director must be up to speed on every aspect
of the evolving crisis. For that to happen, he or
she must have the complete confidence of the
management team and be part of their inner
circle. Such confidence cannot be taken for
granted. The communications director’s role
as media spokesperson can sometimes make
him or her seem too chummy with journalists, raising internal suspicions that they have
divided loyalties.
LEADERSHIP. Crisis situations test the ability
of the communications director to focus on
the big picture and pursue larger strategic
aims, while at the same time maintaining proactive communications with various internal
and external groups.
RELATIONAL ABILITY. A crisis presents
an opportunity to draw upon the reserves of
social capital that have been built up over the
preceding months or years. The communications director must leverage all the personal
relationships he or she has cultivated to reach
out to the various stakeholders in the organization. A crisis should not be used to win
brownie points. It’s the respect you’ve earned
prior to the crisis that will win you respect
during it.
ECONOMIC SENSE. The communications director must be capable of viewing
the communications strategy in economic
terms, quantifying and optimizing avai …
Purchase answer to see full
attachment
