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Steering your organization through crisis
June 24, 2020 Featured Article

Leaders in government, business, and beyond are struggling to respond to the economic and health ramifications of the Covid-19 pandemic. Drawing on insights from his book Real Leaders Negotiate! Gaining, Using, and Keeping the Power to Lead Through Negotiation (Palgrave Macmillan, 2017), Jeswald Salacuse describes how leaders can use the tools of negotiation to react effectively to the crisis. Salacuse is a distinguished professor at the Fletcher School of Law and Diplomacy, Tufts University, and a faculty member of the Program on Negotiation at Harvard Law School.

Negotiation Briefings: What’s unique about leading during a crisis?

Jeswald Salacuse: As an unforeseen event of great potential danger, a crisis requires a swift response. In most organizations, the leader’s job is to see the crisis coming, convince the organization’s members of its dangers, and quickly set in motion a plan to cope with it. During the current crisis, many U.S. and foreign leaders failed this test, while Australia’s and New Zealand’s, for example, seemed to meet the challenge.

Leaders can be tempted to minimize the severity of an approaching crisis or its needed remedies to maintain their constituents’ approval. This seemed to be true for President Donald Trump as the Covid-19 crisis reached the United States. But that approach will only cause supporters to question your judgment or veracity when the real nature of the crisis becomes apparent.

A crisis may also cause you to lose your job. In 1991, Salomon Brothers, then a leading Wall Street firm, faced an existential crisis when federal, state, and local authorities began investigating the firm’s government bond trading violations. Its CEO and chairman, John Gutfreund, known as “the king of Wall Street,” tried to cover up the looming prosecutions from regulators, the public, and even the Salomon board. When the board finally learned of the matter, it fired Gutfreund and asked board member Warren Buffett to become interim chair. Buffett ultimately saved the firm by pursuing a policy over the next 18 months of complete transparency, candor, and cooperation in negotiations with the authorities, the press, and Salomon’s own employees and investors.

NB: What overall strategy do you recommend to leaders who are trying to hold onto their jobs during the current crisis?

JS: It’s important to keep in mind three fundamental principles. First, you are an organization’s leader because influential individuals or groups, whether inside or outside your organization, support your hold on that position. Second, those key players support you not because of your charisma or vision, but because they judge it to be in their interests. Third, their perceptions of those interests can change at any time, leading them to withdraw their support. As a leader, one of your basic tasks is alliance maintenance, which involves communicating frequently with supporters and moving quickly to deal with any sign of possible defection among them. During a crisis, however, allies may start to question whether supporting you has become too costly for them to bear.

NB: How can leaders address this concern in their crisis communications and negotiations?

JS: Don’t be afraid to say “I don’t know” or to refer to experts who do know. Neither will diminish your status, as some leaders seem to fear. Crises are volatile and unpredictable. It is better to acknowledge that fact at the outset than to give information to colleagues, employees, or customers that later proves to be wrong or potentially dangerous.

In addition, rather than struggling to resolve a crisis alone, organizational leaders should seek to build and enhance alliances of interested parties both within and outside their organizations to work on their common problem. It’s often been said that the United States, like other nations, is at war with Covid-19. Leaders of nations at war build alliances to win.

For example, President George H. W. Bush successfully built a 39-country coalition to overturn Iraq’s conquest of Kuwait in 1991. President Trump missed a valuable opportunity for strategic action when he failed at the outset of the Covid-19 crisis to call a White House conference of state governors to form a national alliance to develop and carry out a unified strategy for confronting the disease. Instead, in response to state requests for help, he chose a tactic of rewarding political friends and punishing enemies.

NB: How can leaders bolster demoralized employees in their organizations?

JS: Leaders should find ways to demonstrate that their interests during the crisis are aligned with those of their employees—that both leader and followers are truly “all in this together.” One way of doing this is for the leader to take a pay cut for the duration of a punishing economic crisis. Joe Foran, the chairman and CEO of Matador Resources, a publicly traded Texas oil company that was hit hard by the virus and falling oil prices, chose that approach in March. In response to plummeting profits, he cut his annual compensation by 25% and convinced his entire executive team to accept similar pay reductions.

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