In every crisis, an optimistic view of the future should be combined with a bulletproof crisis plan that helps a business navigate the worst situations. A few simple tips help build a working strategy, said Grant Thornton Baltic's Managing Partner Mati Nõmmiste and Head of IT Arko Kurg who were guests on the Äripäev business daily’s radio programme “Kasvukursil”.
“Crisis management is all about mapping potential problems and later prevention of those problems,” said Grant Thornton Baltic lead partner and founder Mati Nõmmiste. The Head of IT for Grant Thornton Baltic, Arko Kurg, expressed confidence that problems can also be staved off by the existence of a definite plan. “Businesses are always trying to minimize risks, and that requires the organization’s people to know where they are heading, why they are heading and why something is being done. The way there is riddled with pitfalls but we have to be able to anticipate them – the clearer we see the future, the better prepared we are for war.”
Nõmmiste pointed out while crises are all different, all of them have common traits. “Lack of information, disruption of functioning business processes, but by preparing for these small crises, we actually get ready for solving major crises as well. A well-conceived plan for how to keep on functioning through process disruptions is the most important.” He added that the whole crisis plan essentially amounts to thinking through activities and strategy in order to identify the factors that could disrupt ordinary activities. “Depending on the company’s complexity, diversity, size and number of people, various scenarios must be thought through.”
The importance of competent leaders
What’s important is that the crisis plan can’t only exist in the leaders’ heads – all employees must be on board. “Everyone must take part in resolving the crisis situation; all the various scenarios must be written down and played out,” said Nõmmiste. “The executive’s task is to respond efficiently – the nature of a crisis is not known in advance and decisions must be made quickly, efficiently and in the right direction. To err is human, but the worst decision is the decision that doesn’t get made.”
Peeter Tohver, chairman of the board of Wolf Group, a construction foam maker, emphasized that crisis management has certain golden rules and if problems come up, it is a big help if the company has hired a competent executive.
“People who aren’t capable of managing a company in a crisis don’t become executives – the leader has to be aware that if they panic, so will their underlings.” So that could be one basic criterion for selection of a business leader, Tohver suggested. “In addition, an executive could be able to think outside the box and it is beneficial to bring new knowledge into the company, even if the executive comes from the outside world and doesn’t know more about the goings-on in the company than the company’s own employees, they might have experience to play through various situations. That’s valuable.”
Communication as the key
Besides the executive being able to make decisions in a fast, agile and localized manner, they should also be able to communicate the decisions to their team and the company’s interest groups – the customers. “For example, we’re currently communicating that we lost our business for some time in three countries and we also tell our employees that we need to reconsider plans, replace the lost volumes, find new sales opportunities, but also cut costs,” said Tohver regarding his current experience with the loss of the Ukrainian, Russian and Belarusian markets due to war.
A strategy is a journey that is agreed on in a company, a target to make progress toward. “That gives everyone knowledge about the where, the why and the how. At the same time, it should be remembered that values are a company’s lifeblood and they should be in place, immutable. Then all four employees in the same room see things the same way, what steps have to be taken together,” said Tohver. He added that values should also be described in detail. At Wolf Group, they are in fact visualized as a graphic. “For instance, explaining what it means to be innovative or fair, the journey has to be conceptually deconstructed.”
Tohver warns that communication has to be honest. “It can’t be that we tell customers one thing but employees hear something else. The only thing that can be considered is putting more emphasis on part of the talk for a given person.”
Tohver said that the company could agree how they want customers to think of them. “For example, it could be detailed what is necessary to be an expert in some field and what is necessary for us to be talked of that way,” he said.
There should also be readiness, being prepared mentally for the worst case scenario. “The worst that can happen today is that we lose our operations in Russia, that our assets are nationalized. We have to factor in the possibility that we will forfeit all of our income and won’t recoup our sunk costs. All our assets would have to be written off the balance sheet through the income statement,” said Tohver about the worst case.
Division of labour
Nõmmiste says it is important that the crisis plan clearly state what everyone’s duties are. “Who’s the leader, what the means of communication are and how the information flows between organization members – these questions should be answered early on.”
In addition, all aspects pertaining to information and systems should be laid down. “We’re more connected to IT than it seems on a daily basis. We have to run through what we do if, say, a server goes kaput,” Nõmmiste said. “If we have a crisis plan in our server but we can’t access it, we don’t know people’s phone numbers and email addresses, all that has to be considered.”
Kurg said as an example that Grant Thornton tests its systems twice a year. “This way we find what aspects actually work the way we conceived of them in our minds.” “We’ve tested how we can notify our employees if something happens to our data exchange centre. When we ran through this exercise, we found we couldn’t send emails and we had people going to the front desk seeking information, overloading it,” he said. The expert added that discovering the bottleneck allowed the plan to be improved with the addition of ordering mass messaging capability as an alternative way of sending notifications.
“A lot of hassle can be caused by something basic like a fibre-optic cable getting accidentally severed by a backhoe – we expect that everything will be functional, but it may not be that way – we have to be prepared for the unexpected,” Kurg said in closing.