Leadership in Crisis, Research Paper Example

Leaders are usually defined by their capability to influence, guide, and direct others. While many believe that this is a clear cut definition, defining what leadership is requires much more thought. These days leaders are a critical piece of any association. In these past few years, there have been many highly publicized crisis on both the international and domestic scale. We have seen many organizational crisis that have included financial mismanagement, scandals, acts of terrorism, technology disruption, and natural disasters. Those that have been in these positions to lead in times of crisis have excelled, while there have been others have failed. According to experts, “Many organizational leaders have a laissez faire attitude toward the possibility of a crisis happening in their firm, despite the high probability that every business leader and every organization will experience a crisis of some significance.” (James and Wooten 3)

There are individuals who lead the entire association in attaining the objectives set and they guarantee long haul effective execution of the organization. These type of leaders follow the leadership styles of transformational and transactional in which possess the attributes a willingness to set pride and ego aside to create a great change, fearless, and humility.  Their determination, vitality and enthusiasm sway others to strive for achievement and ceaseless change. (Speier et al., 2006). It is essential for a leader to recognize the leadership style, as indicated by which he will support and persuade his subordinates. There have many publicized crises, one in particular was the case of Johnson & Johnson and the Tylenol Murders, and the way in the Vice President of Public Relations, Lawrence Foster, helped steer the company through the serious organizational crisis.

There have many more examples of in the recent years that conclude that crisis are inevitable, and the way in which leaderships handle them can have long-term consequences on the profitability as well as the trust in the organization. According to experts,

“Crisis management is broadly defined as an organization’s pre-established activities and guidelines for preparing and responding to significant catastrophic events or incidents (i.e., fires, earthquakes, severe storms, workplace violence, kidnappings, bomb threats, acts of terrorism, etc.) in a safe and effective manner.” (Lockwood 2)

More essentially it also impacts the organizations’ human resource management systems, market position, and their reputation. While the reality is that no organization is able to prepare for each type of crisis. It would be a tremendous misappropriation of human and financial resources, as well as an impossible task. The formal training and on the job experiences do not prepare executives adequately on how to handle crisis, as they focus on handling the communication of public relations and stakeholders. “Conventional wisdom regarding crisis management leads managers to believe that a crisis plan and monitoring industry events can provide the proactive planning needed to avoid false first steps in responding to an industry event.” (Schoenberg 2) However, in crisis situations leaders need to be able to communicate not only to their stakeholders but to the general public in which they can properly manage to provide solutions. Prepared with knowledge and insight for responding to a crisis it permits leaders in to be prepared for a crisis when they occur.  When dealing with crises in an organization, there are two different phases that occur, the emergency phase in which the leader stabilizes the situation in order to buy time. “Strategic planning without inclusion of crisis management is like sustaining life without guaranteeing life. One reason so many companies fail to take steps to proactively plan for crisis events, is that they fail to acknowledge the possibility of a disaster occurring.” (Kash and Darling 183) While the second is the adaptive phase in which the leader tackles the underlying causes of the event and tries to rebuild the organization in light of the new reality. Former CEO of Medtronic points out, “Widespread recognition of reality is a crucial step before problems can be solved.” (George) Attempting to find fixes that are short-term to solve crisis only warrants the organization will be right where it started. Leaders aren’t able to solve problems if they do not acknowledge their presence.

It is critical to know that there are numerous investigates led and numerous examinations on leadership, which may help to enhance the leadership knowledge of every director. Notwithstanding, the best leaders can be just those, who lead basing all alone vision, individual qualities and trademark. As we all know, leaders are comfortable obviously in regular situations, at the same time, even when leaders are experienced, they may confront troubles with their problems in unforeseen circumstances. Many leaders have been ill-prepared in their leadership positions to properly manage their organization. That is the reason; leaders need to guarantee that there are fit for managing such circumstances and don’t fall apart their heading picture. Notwithstanding, any change inside the organization is a danger of losing trust among the representatives.

The Tylenol Crisis

One of the well-known cases in which leadership was an integral part of the aftermath of a major crisis has been the case of Tylenol. Gaining certainty from their consumers is the path for an organization to be aggressive in business. Therefore, this is truly essential issue; however hard to perform for the organization. Especially, it is sure that to recover certainty from the consumers is most likely prickly on the off chance that they have been harmed by an organization or a result of an organization. According to Mitroff et al (1996), “We have also learned that it is no longer a question of “if” a business will face a crisis; it is, rather, a question of “when,” “what type” and “how prepared” the company is to deal with it.” (Mittroff et. al., 1996). Be that as it may, there is an organization, Johnson & Johnson, which succeed to re-secure certainty from general society. The organization Johnson & Johnson endured an enormous crisis which can make individualsnot trust the company. Three decades prior in Chicago, seven individuals died in the wake of taking Tylenol extra-strength that was laced with cyanide. A still obscure offender had taken the bottles Tylenol off the store shelves, tainted the containers with cyanide, and placed the bottles back on the shelves. At the time the Tylenol Extra Strength accounted for 17 percent of the net income for Johnson & Johnson, which was the best selling product of the company. This is a worst case scenario for any company obviously. Keeping up trust, making the best choice, and sparing the brand picture were all concerns for Johnson & Johnson. The success of the company in managing the crisis at the time highlighted numerous types of benefits and ethical reasoning in the business world.

When the crisis occurred, Johnson & Johnson made a connection the Tylenol capsules and the deaths. The company put out announcements that warned the public about the dangers of potentially using the products. James E. Burke, the CEO of Johnson & Johnson had to make a play call that was monumental given that its most profitable product and the organization’s reputation were each on the line. In order for this occur, he had a few different certainties to weigh. The primary factor was that the cost of a recall would be over $100 million, and this loss would not be insured. The news would hurt the product potential if they was a recall, and they would not be able to regain the drop in the company’s stock where a market share of 37%, or the public confidence. Finally, Johnson & Johnson had industry competitors to worry about exploiting the crisis any way they could. In the option of weighing these possibilities, Johnson & Johnson made ethical decision that line up with the organization’s core values. Their decisionthe public’s welfare and their reputation. 31 million bottles were recalled, which cost the company over $100 million, and all advertisements for Tylenol were stopped. Although they were not accountable for the tampering, their decision was that were ultimately responsible for the public’s safety. Action was immediately taken by Burke without the government’s interaction. Whether Burke was aware or not, he incorporated numerous approaches to ethical reasoning and leadership crisis management in his actions in the history of consumer recalls.

The events of crisis management for Tylenol was as much as team effort as it was a singular leader that stood out. The president of the company had to rely on their vice president, as well as Lawrence Foster, their vice president of public relations in which help guide the candid and swift response to the crisis. His leadership actions are considered as a guideline for managing corporate crisis. Foster worked closely with Burke, in helping to create a strategy devised to inform the public, inviting the media, and Burke’s presence constantly in front of the cameras. (Friedman) After recalling over 30 million bottles, they returned the bottles back with tamper-resistant packaging, and recovered as the top over the counter selling pain reliever.

The actions of both leaders helped the consumers regain trust in the company. Their main credo entails that the organization had four responsibilities, the consumers, the employees, the communities, and to their stockholders. (Johnson & Johnson) At the time the company didn’t have crisis communication plan to deal with this event, just like other companies at the time, they had a call list and an emergency plan for natural disasters. As pointed out, “it is a process to alert management to emerging political, social and economic trends and controversies, and to mobilize the company’s resources to deal with them. “ (Kash and Darling 180) In their first phase of action was to alert the chain of command. Their meeting consisted of Burke, Forster,  the president and chairman, David Clare, president of McNeil Consumers Products Company, Joseph Chiesea, and the chairman of McNeil, David Collins. They were impacted by the fear of spreading panic in the public, and the consequences to the company, as well as what was happening. Kamzicakova defined that leadership was, “the behaviour of an individual…directing the activities of a group toward a shared goal ” (Hemphill and Coons,1957:7, cited in Yukl, 2006) to “ a process of giving purpose (meaningful direction) tocollective effort, and causing willing effort to be expended to achieve purpose”(Jacobs and Jaques, 1990:281, cited in Yukl, 2006). (Kamzicakova 9) The concept of the leader’s roles had shifted from instructional to being able to influence and guide people to a successful goal. This is instrumental for leadership in crises in which the leaders have to guide their teams through the crisis events.

Burke set up a 7-member crisis team immediately, with the first task out why the individuals was dying. “The crisis team handled decision in the area of communications and was in charge of all strategies and tactics.” (CIIP Leadership 89) With the approval of Burke, they decided to recall the capsules. While there no certainty that the criminality was not in the company, they were uncertain of how the cyanide ended up in the bottles. The overriding priority of the company was to warn the public, be cooperative with the media, and be completely open. Foster believed the factors of; “the company was open to the media; it was willing to recall the product no matter what that meant to the company; it appealed to the American sense of fair play and asked for the public’s trust.” (CIIP Leadership 89) It helped the company and the public cope with the crisis. Foster in his leadership position to work as the company’s communicator, worked alongside the authorities and the Food and Drugs Administration (FDA) in finding the party responsible. The crisis team identified the key factors in dealing with the crisis which were the consumers, the medical profession, the employees, and the FDA. Once their first phase of handling the actual crisis, they were starting on their second phase in which they would work on their comeback. The second phase involved their plan for public relations, and was in the works as they dealt with the first phase. The outcomes from the first phase in their decision, was their market share dropped to 7 percent, as well as their stock price which dropped from their 52 week price high. (Krehmeyer) However, after two months it increased to the same price, as well as gained more market share. They regained back the public trust by re-introducing the product to the market with a $2.50 off coupon off every purchase, as well as tamper-resistant packaging, presentations to the medical community from salespeople, and new pricing program that gave consumers 25% off their products purchase. The company received positive coverage in which pushed their comeback, and helped restore trust in Johnson & Johnson company.

The role of leaders in crisis is essential to the overall success of the company. Organizations need to be well-prepared for handling unforeseen events that could cause irreparable or serious damage. In the event of a crisis, the leader’s roles is to sustain and develop the trust and credibility or an organization in dealing with the special interest groups, government, media, investors, communities, partners, suppliers, customers, employees, management, and stakeholders. The decisions of Johnson & Johnson was to stay true to their mission and credo, as well as take action unlike in other situations in adequately dealing with the crisis. The leaders while not equipped in handling this type of crisis, pooled together in order to manage the ethical and correct response. It is imperative overall to sustain and protect the organization’s value, brand, and reputation in the marketplace. Thus the leader should possess the qualities of integrity, trust, empowerment, communication, and strategic thinking in handling crisis. In the case of Tylenol, their leadership helped facilitate a major crisis, and provided a benchmark for other leaders of major companies to follow suit in dealing with a major crisis.

Works Cited

“Chapter Six. Case: Johnson & Johnson and the Tylenol Murders.” CIIP Leadership. N.d. Web. 10 October 2014. http://www.ci.uri.edu/ciip/CIIPLeadership/Docs/Tylenol%20Case.pdf

Friedman, Alexi. “Lawrence Foster, who helped guide Johnson & Johnson through ‘Tylenol cyanide crisis,’ dies.” The Star Ledger. 18 October 2013. Web. 10 October 2014. http://www.nj.com/business/index.ssf/2013/10/lawrence_foster_who_helped_ste.html

George, Bill. “Leadership in a Crisis – How To Be a Leader.” Wall Street Journal. N.d. Web. 10 October 2014. http://guides.wsj.com/management/developing-a-leadership-style/how-to-lead-in-a-crisis/

James, Erika Hayes, Wooten, Lynn Perry. “Leadership in Turbulent Times: Competencies For Thriving Amidst Crisis.” Social Science Network. N.d. Web. 10 October 2014. http://www.theicor.org/art/present/art/AROB00052.pdf

Kamzicakova, Jelena. “Crisis Leadership.” Academia. Edu. May 2012. Web. 10 October 2014. http://www.academia.edu/4843979/Crisis_Leadership

Kash, Toby J, Darling, John R .“Crisis management: prevention, diagnosis and intervention.” Leadership & Organization Development Journal 19.4 (1998): 179-186. Print.

Krehmeyer, Dean. “The intersecting interests of business and society.”Washington Post. 14 October 2012. Web. 10 October 2014. http://www.highbeam.com/publications/the-washington-post-p5554/oct-14-2012

Lockwood, Nancy. “Crisis Management in Today’s Business Environment: HR’s Strategic Role. 2005 SHRM Research Quarterly. 2005. Web. 10 October 2014. http://shrm.org/Research/Articles/Articles/Documents/1205RQuartpdf.pdf

Mitrof, I., Harrington, L. and Eric, K. and G. “Thinking about the unthinkable.”  Across The Board. Pg. 44-8. September 1996. Print.

Schoenberg, Allan L. “What it Means to Lead During a Crisis: An Exploratory Examination of Crisis Leadership.” Syracuse University. 3 May 2004. Web. 10 October 2014. http://trevorcook.typepad.com/WEBLOG/FILES/CRISIS_LEADERSHIP_ALLAN_SCHOENBERG.PDF

Spreier, Scott W., Fontaine, Mary H., Malloy, Ruth L. “Leadership Run Amok The Destructive Potential of Overachievers.” Harvard Business Review. June 2006. Web. 10 October 2014. https://www.haygroup.com/Downloads/sg/misc/Leadership_Run_Amok.pdf