How to keep calm in a crisis

It is a vital step for MBAs to learn how to make good decisions under pressure

There's no denying that it's tough at the top. "I spent 30 years in business, including time managing some FTSE 100 companies, and I wouldn't care to tell you the number of crises I've had to navigate," says Dr John Colley, director of MBA programmes at Nottingham University Business School. "Business leaders need to know how to deal with those crises – how to pull together a management team and how to stop paralysis and inactivity running through their organisation."

Such scenarios require a level-headed approach – something Colley believes MBA programmes can help teach. "Business leaders need to find a way of getting people involved very rapidly in constructive solutions, managing both short-term and long-term solutions – not to mention dealing with the press. I suspect there are relatively few MBA programmes that give training in how to deal with that."

"We aim to produce leaders," he explains. "Crisis management is an integral part of that, because if a leader fades at the critical point then, frankly, there's no one to pick up the pieces. It's the one time the leader seriously has to step up to the plate. I think it's very important that our budding leaders know and understand that – especially in the current economic situation."

"Business leaders need a strategy for dealing with potential crises and failure," agrees David de Cremer, professor of management at China Europe International Business School (CEIBS). "Quite often, they don't have one. Just look at the eurozone crisis. Leaders too often react at the moment. If you do that, you're not influencing, you're being influenced."

Businesses face challenges on a daily basis, says de Cremer, so tomorrow's leaders must learn how to cope with them. "The profile of MBA students is that they're very competent and competitive people who want to strive for the best," says de Cremer. "Their mindset is on opportunities and possibilities rather than restrictions and boundaries. From a motivational point of view, this is a good thing – but from a realistic point of view, you need to be able to manage both perspectives.

"Crises will always be there. Business will be a bumpy road and business leaders need to be able to manage the ups and downs. There's not enough attention given to that."

However, it can be difficult to find industry support for academic programmes that address business problems. De Cremer notes: "In business, no one likes to talk about failure and crisis. We prefer to emphasise the recovery. Because of that, it's difficult for business schools to get leaders in to talk about the detail of crisis stories." Colley agrees: "I think businesses don't like admitting there are crises. They generally like to give the impression that everything's under control all the time."

At Nottingham University Business School, students learn to accept crises as an inevitable part of leading a business, and prove they can manage them. Their final module involves a fictitious case study of a failing retail business. In groups, they develop sustainable strategies to save it, but their task is complicated by a series of crises that threaten the operation and their reputations. Students must prepare a press release, hold a press conference for professional journalists, and present their proposals to a board of senior business figures, who have included Steve Russell, former chief executive of Boots.

"In our scenario, we were a high street fashion retail chain and one of our suppliers was using child labour for certain lines of clothes that we'd sold," explains Neil Riley, who will graduate in December. "Consumer groups were planning to demonstrate outside the stores. We had to think about how to handle the situation and we had to come up with a solution very quickly, thinking quite deeply about all the groups of people that would be affected by the crisis – such as our employees and other suppliers in our chain."

The students benefited not only from the long-term view they were encouraged to take, but also from the pressure of the project. "It's good practice for crisis management. I came out of it stronger. You have to think quickly, on your feet, and the crisis is brought in just at the worst time, when you're already incredibly busy and tired." That's life, says Colley. "Crises always hit a person when they're down – especially in business."

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