Effective crisis management for business recovery and growth | Sunday Observer

Effective crisis management for business recovery and growth

26 September, 2021

The Covid-19 pandemic that has swept through the world since late 2019 created an acid test to all communities, political leaderships, and businesses, in a world upturned. In the light of the huge challenge, organisations throughout the world started looking for answers to confront the gruesome situation. 

The unprecedented pandemic has placed unparalleled demands on businesses and their leaders, and beyond. The humanitarian toll has created immensely damaging fear psychosis among employees and other stakeholders. The magnitude of the outbreak and its utter unpredictability produce a tremendous challenge to businesses and decision-makers throughout the world. 

A ‘Washington Post’ analysis revealed that 45 out of 50 biggest US companies thrived during the pandemic period. It was a common phenomenon in many other countries as well, including Sri Lanka. 

The reason perhaps is that the larger organisations applied crisis management methods as soon as the pandemic broke out. Several business leaders have revealed that they were prepared for a crisis long before the emergence of the pandemic and they were able to face it successfully in a business context.  


In Sri Lanka, most of the small and medium-scale organisations were not fully aware of the subject of crisis management. Therefore, the decision-making may have been slow and less effective, at least at the beginning. A well-known, top rung business leader in a television program recently divulged that they were prepared for such a crisis and applied the predetermined methods to face the challenge, immediately after the breakout.

What is crisis management? Investopedia describes that crisis management refers to the identification of a threat to an organisation and its stakeholders in order to mount an effective response to it. They say that even the best-managed businesses can be hit by a crisis caused by external or internal events. Crisis management, therefore, is a strategy of anticipating crises in businesses and planning how to manage them effectively.

Modern organisations attempt to identify potential crises before they occur and sketch out plans to face or counter them. It does not have to be a specific and precise emergency, yet if or when it occurs, the organisation is prepared to act and change course if required.   

Any type of business, large or small, may run into crises that negatively impact the normal operation. These situations can come in many forms such as natural disaster or manmade disaster, breach of information, demise or incapacity of a leader, civil unrest, or health calamity such as Covid-19. Any of these situations can lead a business to fail or even bankruptcy if the crisis is not managed efficiently.  

The coronavirus pandemic that has impacted the world in a big way since January 2020 is one such mega-crisis and has become a textbook example of crisis management. Businesses around the world were compelled to close down; millions of workers lost jobs, essential services were disrupted, world trades were affected extremely negatively due to multiple reasons.


Those businesses that adjusted themselves by using crisis management practices are the fastest to recover according to the information available. Businesses that deployed contingency to mitigate the negative event with continuity plans and action succeeded and perhaps improved revenue during the crisis.  

Even if a company has no pre-strategised crisis management plan, the leaders’ prompt understanding of a suddenly emerging crisis is imperative. Witnessing slow-developing situations and acting swiftly without normalcy bias and without underestimating the challenge can prepare the organisation to overcome a bad situation.  

A crisis situation is different from a routine emergency and cannot be responded to similarly. Most often crises arise with unfamiliar and uncertain conditions. Therefore, the counter-actions must be largely improvised, perhaps with a wide range of temporary moves or adjustments. Some of the adjustments may be beneficial in the long run even after the emergency has passed.   

Crisis management since the breakout of the Covid-19 was merely reactionary to many organisations in Sri Lanka. Sri Lankan entrepreneurs, particularly small and medium-sized businesses, have not experienced a crisis of this magnitude previously. Hence the reaction and response naturally were based on their limited experience and without any scientific basis. Hence, the preventive measures were mostly inadequate. 

Effective crisis management has the potential to largely and significantly reduce the scale of damage the organisation has to bear in a crisis. Therefore, a good knowledge of various models and developing methods of crisis control can be exceedingly useful in time to come. 

Understanding warning signs of a crisis before it occurs is important to a business. The first step is to prepare for possible negative impacts. When the signs of a crisis appear, preparing with a proactive approach and planning to modify, amend or adjust the existing system with possible brainstorming can produce results when the crisis actually hits. 

Not complex

Creating a response plan is not a complex process. The leaders of businesses are familiar with the operation and can contribute immensely to a simple crisis response plan. The operational and communication components must be clearly defined and delivered to the stakeholders effectively with credibility.  

Communication in a crisis is one of the most important tasks of management. Delivering the message about the plan of action to those who are identified in the initial crisis control plan quickly is critical. In an emergency swiftness of response is crucially important. 

If the business is with a large customer base, identifying an effective communication team is vital. A small selected team of executives can deliver the required responses to the situation to those who are outside the business effectively and productively.    

However, the impact of an unexpected crisis is more extensively damaging for small and medium-sized enterprises. If not managed promptly and efficiently, the crisis may wear down trust, destroy organisational values, threaten business agendas and goals, exert undue pressure on ownership, and may even lead to complete business failures.    

Therefore, the leadership approach of an SME is critical in a crisis. The efficiency of nippy decision-making and effectiveness of teamwork is the top priority of an organisation. As mentioned earlier, internal and external communication effectiveness is also another extremely important element during a crisis for SMEs. 

Small business owners think that their small operation is simply too minute for a crisis. Nevertheless, Covid-19 breakout amply displayed that such complacency opens gaps during a crisis. For example, at the initial stage, everyone assumed that coronavirus will be confined only to a region and will fade away in a short time. That was not so and the businesses that took it marginally seriously suffered. 

In contrast, the large companies with ready-made crisis management plans with survival strategies remained as is or grew their businesses more. The smaller organisations underwent many hardships during this period. Most often, the crisis plans of SMEs were formulated later than required.

The more important factor is that small business owners usually have additional responsibility due to the volatile nature of their business with comparatively limited resources than large organisations. Therefore, being confident in their business in an emergency is vitally important. The good leadership behaviour and approach of an entrepreneur at a critical time is transferred down to the staff to boost them up.   

Competency in managing is another main element of crisis management, both for small and large organisations. Proactive, confident, and intelligent moves towards the internal and external resources can be exceedingly productive. Also, being compassionate towards all stakeholders is vital. In a crisis, if the empathy of the leaders can give the extra mile to an organisation as the others are more likely to listen to the message of such a leader.    

It is important to remember that crisis management is an ongoing process. Continuous improvement by applying learned lessons can minimise the risk next time around. Therefore, organisations should endeavour to enhance resilience and renewal strategies to recover fast from any possible future disastrous event.