A CEO's Guide to Preparing for the Next Crisis

Executive leaders operate in the gray space, between the known and the unknown. Their job is to design an organization's future using today's materials.

The pandemic turned that gray space pitch-black.

The unknowns vastly outnumber the knowns. And today's materials -- an organization's labor supply, vendor resources, customer base, local COVID-19 rates, and even legislation -- are changing by the hour.

Meanwhile, executive leaders must keep building the future of their companies -- despite their stress and fear, without the materials they need, and without knowing what the next day will bring.

Many have done incredible work and CEOs all over the world are marveling at what their executive teams have accomplished. As well they should.

But CEOs must also empower executives to operate in gray space better -- with less anxiety and more success during a crisis -- and after.

The following five tactics are drawn from Gallup analytics and can help any CEO disaster-proof their most important teams now, while preparing for an increasingly uncertain future.

1. Know your team -- intimately.

Executives are usually chosen because they proved their mettle in their functional or departmental spheres. They are functional experts.

But the true measure of an effective executive team is how they operate collectively.

One very telltale mark of a high-performing team is the value they place on the diversity of their collective strengths. Gallup leadership research finds that great executive teams actively embrace their differences in various leadership dimensions because they don't think any one executive has all the answers. They openly discuss roadblocks and barriers to success, including the obstacles their functional focus might inadvertently create, such as policy or process bottlenecks.

They're aware of sources of potential conflict before any occurs and operate with transparency and fairness. This allows them to rely on the collective wisdom of the team -- and allows their CEO to rely on all of them at once.

To that end, CEOs must know the strengths and weaknesses of each team member very well so they can deploy people tactically -- and effectively. Clarifying the task at hand and articulating expectations is a second-order necessity because it streamlines the application of individual and collective strengths, reduces friction, speeds up progress, and reduces factionalism.

In a crisis, that is critical. Even on great teams, executives get defensive about the efficacy of their response to an emergency. And territorialism and parochialism are natural.

But that behavior can make a crisis response slower and ineffective.

The 2011 Fukushima nuclear disaster was caused, in part, by a lack of clear communication, role clarity, and marginalized experts who could have reached better decisions.

2. Set up key partnerships.

CEOs need to know if their top team is a real team -- or merely a collection of different groups and functions.

It's often the latter. The fact is, most executive teams are a loose confederation of functions promoting their own goals.

Their KPIs may or may not align with the company's objectives and very few employees see leaders as aligned, collaborative, or unified -- only two in 10 employees in a recent Gallup survey are happy with the cooperation they receive from other departments.

Disunity may result from structure and geographical dispersion, but proximity will not fix a lack of mutual accountability and trust.

For that, CEOs need to create a culture of "mutuality" on their executive teams -- the conditions that nurture real partnership. Describe executives in terms of their strengths and their unique contributions. Delegate power and promote transparency. Foster and reward selflessness, which is the hallmark of a true partnership.

In fact, Gallup's study of powerful partnerships found that the most effective partners take as much satisfaction in seeing the other succeed as they do from their business' success. They are also certain that their partners would risk a lot for them, as they would for their partner.

So, to make a top team a real team, think about it in terms of a "power of two" (or three). The CEO-COO combination is obvious, but any combination of leaders can be more than the sum of its parts.

Think of CHROs tag-teaming with COOs to build a return-to-work operational framework using each person's unique expertise and talents. Or CLOs, CMOs, and COOs hammering out messaging for a product recall to protect the brand while meeting legal stipulations and customer needs.

These powerful partnerships can be faster and more agile, all while alleviating demands on the CEO and executive team's time and energy. That is powerful protection when a business is under threat.

3. Build your talent engine -- together.

Gallup research shows that intentional development of talent yields incredible benefits -- up to 11% in increased profitability and organizations are twice as likely to retain their employees.

But to effectively leverage talent, the executive team needs a unified talent strategy. Such a strategy should include accountability measures to ensure the development of more organizational talent assets, especially those of leaders outside their individual functions.

It's smart for executives to be deeply involved in functional talent reviews -- even if the review is for a different function.

Maybe that sounds like asking leaders to step on toes -- but, in a crisis, an up-to-date, organizationwide talent inventory is crucial. That big-picture organizational talent inventory allows executives to strategically deploy, redeploy, and reconfigure their talent assets for the biggest impact during challenging times.

That said, talent hoarding is real, and managers may not happily tolerate the loss of up-and-coming talent from their functional ranks. CEOs may have to make the final call or set up a system that enforces talent mobility.

One Gallup client has a "2+2 program" that enables employees who have been in a job for two years to apply for a new assignment in a new function. If the new assignment is a good fit, their current supervisor must release them to that new function within two years, allowing the associate to work in a role where they can create more value.

A well-executed talent strategy is always an asset, but it really pays off during upheaval: Every penny you put into developing your talent comes back in a better, faster response. But the crisis itself refines the talent of your staff -- watch them closely.

When the trouble is over, your team will have gained a rare and valuable education, and people who can successfully navigate a crisis are magnets for new talent.

4. Commit to a shared vision.

A 2018 Egon Zehnder survey showed that 68% of CEOs acknowledged that, in hindsight, they weren't fully prepared to take on the CEO role, and 47% said that developing their senior leadership team was surprisingly challenging.

As disasters rarely offer much time to prepare, establishing a leadership perspective -- the "tone from the top" -- is essential before a crisis occurs, so it can provide organizational stability during the crisis. And most companies should have started establishing that vision a long time ago: Gallup research shows that only 22% of U.S. employees strongly agree that their company's leaders have a clear direction for their organization.

Once workers are all aimed at the CEO's goals and traveling along the same path, that permits a more disciplined pursuit of strategic and operational targets.

But, to achieve that, executive teams must commit to the CEO's vision and convey it with one voice. CEOs must bring their teams into the vision and animate it by explaining the consequences of their collective actions on employees and customers -- and executives must hold each other responsible for the outcomes.

That level of alignment creates clarity and focuses managers, which is desperately needed -- Gallup research shows that 42% of managers say they have multiple competing priorities and 30% say they have a lot of interruptions in their work. An established, shared vision for the organization creates a hierarchy of purpose, tasks, and decisions across functions so that siloed objectives, insular thinking, and competing perspectives don't create an alternate reality.

Unfortunately, most executive leadership teams might not have a shared vision -- or they're not conveying it well -- when they need it most. In 2016, Gallup tested three conditions that define an effective executive team from the perspective of employees: leaders treating employees with respect, making employees feel enthusiastic about the future, and creating a high level of confidence in the organization's financial future.

Only two out of 10 U.S employees agreed that their leaders fulfilled each of these conditions.

That's bad. Employee (and customer) engagement is a leading indicator, and if those populations aren't familiar with the CEO's vision, executives are either not in alignment or not activating on it.

5. Do not wait for the next crisis to come up with a crisis plan.

A good crisis plan is not static. It must constantly evolve to prepare for new problems as well as unpredictable black swan events. That is, admittedly, a lot of grim work.

Perhaps that's why this 2018 survey found that though 95% of organizations have a disaster recovery plan in place, 23% never test their plan. And of those who don't test their plans, 61% say it's due to lack of time and 53% cite inadequate resources. Perhaps most troubling, 34% said disaster recovery is not a priority in their organization. This leaves organizations open to enormous risks. The Lloyd's Register Foundation World Risk Poll is the first-ever global study of risk and it discovered that one of the riskiest and potentially deadly moments in any day in a person's life is at work.

It is vital for the executive team to be fully accountable for effective business continuity planning. Delegating fully to central administration or risk managers is irresponsible (though better than having no plan at all).

Still, as noted, those plans must be fluid to meet the changing environment and flexible to capitalize on the talents of the team. CEOs should discuss the specific analysis, insights and talents each person brings to the table. Evaluate the potential lower-level employees offer the organization.

Do premortems to predict potential failures and their cause. Assess your resources and game out likely threats -- knowing that a neutral third-party can find your blind spots better than the team can -- and constantly reinforce your collective executive perspective.

This should not be a tabletop exercise. A crisis can be simulated only to a certain extent. It's the learning that executives acquire from the exercise that's invaluable.

Take stock of that, reflect on it and share your conclusions with the team. You'll show them things they didn't know about themselves and in doing so will strengthen their partnerships -- which will be a huge asset when the next catastrophe hits.

Getting ahead of the next crisis.

You may not be ready to think about the next catastrophe, not now when the unknowns outnumber the knowns, when the gray space is so dark. It may seem like now is not the time to disaster-proof an executive team.

It might feel like trying to change bald tires while the car is skidding on ice. But a crisis is exactly when CEOs and boards most need what a cohesive executive team offers -- strong partnerships, shared vision and mutual accountability.

The best time to disaster-proof a team is before trouble starts, but the second-best is during it.

And when you're on the other side of the crisis and the dust has settled, take a long look back with your team. Help your executives make sense of their experiences. The way they used their strengths, the unique roles they played, and what they learned will be applicable in the new days and new ways coming down the pike.

Of course, a new disaster is coming, too -- someday. But the lessons your people have already learned will help your organization through the next, unfortunately inevitable, crisis.

And the most important of those lessons is that your executive team can succeed together.