Erika Hayes James
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  • Mary Barra and the GM Recall Crisis, Part II

    In Part I of this blog series, we talked about the importance of early verbal responses to a crisis as an acknowledgement. When the leader recognizes the situation and even apologizes for the negative impact on stakeholders, stakeholders perceive it as a firm’s willingness to take corrective action and is correlated with a leader and his or her organization taking on a learning orientation.

    Framing the issue as a threat vs. opportunity
    How a crisis is framed by leaders also matters to the subsequent handling of the crisis.  Crises are negative events that evoke an emotional response.  According to psychological research, events that are perceived negatively are interpreted as threats, and in turn spark negative emotions (e.g., anger, anxiety, and despair) and negative behavior (defensiveness, deception, paralysis).  Under these circumstances it is difficult for leaders to recognize the potential opportunities for positive change that can manifest from crisis.  In fact, there is evidence to suggest that in response to situations interpreted as threats, leaders become more restricted in how they process information and less generative and creative in identifying solutions.

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  • Mary Barra and the GM Crisis, Part I

    A few years ago a colleague and I conducted research that disturbingly revealed that the announcement of the appointment of a female CEO provokes significantly more negative investor reaction relative to the announcement of the appointment of a male CEO.  At the time, we argued that the status differences accorded to men and women, and the infrequency with which women are named to executive positions, made the appointments feel more risky to investors.  Risk translates into reduced confidence, and reduced confidence yields reduced investment, thereby negatively affecting the stock price upon news of the new executive appointment.

    Although in recent years, we have seen ostensible growth in women holding top leadership jobs (think Ursula Burns at Zerox, Ginny Rometty at IBM, and Indra Nooyi at Pepsi), the scrutiny of women in these positions tends to outpace that directed to their male counterparts.  Imagine, therefore, the pressure for recently appointed General Motors (GM) CEO Mary Barra.  The first female CEO to lead one of the big three U.S. auto manufacturers is now also facing a highly publicized crisis – something else that tends to draw scrutiny and invite reduced confidence in leadership and firm performance.

    GM is embattled in a significant recall for millions of cars with ignition and other defects dating back more than a decade.  The recall is both financially costly and damaging to the beleaguered automaker’s reputation.  For Barra, investors and other stakeholders are voyeurs peering into her crisis handling, prepared to comment (and criticize) at every turn.  Below the surface her gender may make this an even more intriguing case than your average corporate crisis.

    There are some things Barra can do to mitigate the threat associated with the recall, and potentially stave off some of the risk associated with the crisis.  Read More

  • What is a Crisis? Part II

    In Part I of this blog What is a crisis? I introduced the definition of crisis according to   The Institute for Crisis Management as any problem or disruption that triggers negative stakeholder reaction and that could impact the organization’s financial strength and ability to do what it does. This can apply to businesses, educational institutions, cities, governments, and even individuals.

    I told about the first of two crises in recent months in which I was personally involved,  the ousting and subsequent reinstatement of Theresa Sullivan, the President of my institution, the University of Virginia. And in this story, an account of  a personal crisis that shook not only a key element of my career, but my ability to recover and move forward.

    In October of 2010 I, along with my co-author Lynn Perry Wooten, published a book that included the phrase “leading under pressure” in the title. It was the culmination of our work on crisis leadership, on which we each built our academic careers. The book was necessary for progression in my academic career at the Darden Graduate School of Business at the University of Virginia, and a personal achievement. And it was launched to great acclaim and success!

    Several months later I was notified by the owner of the registered trademark for the phrase, “leading under pressure”––an expert in the field of strategies to avoid burnout, increase energy, and improve well being, along with work in leading through business crises––that this phrase was trademarked. We were under the impression that things like website URLs and book titles could not be trademarked, and we didn’t pay close enough attention to the breadth of her work to realize that this was a complete brand, so I wasn’t too concerned…at first.
    As a result of my oversight, we soon found ourselves in the middle of a dispute, with the owner enforcing her legal right to the trademarked phrase. This would involve us dismantling our book website, removing the book from circulation, and removing any reference to the phrase from my website. I didn’t want to put my family at financial risk by prolonging the dispute, and I wanted to be able to come to a swift resolution so that I, and we, could move on. I also wanted to respect her trademark and her work, and not contribute to any confusion.

    I must say, at first I was paralyzed. After years of teaching, writing, and consulting about learning from and finding opportunity in crisis, when I was faced with my own, I couldn’t do it. It took time. I had to dig deep. And I realized that in order to validate my work, I had to practice what I preached. Eventually, Lynn and I regrouped and began collaborating on our second edition book, with updated citations, a fresh, more universal and less academic writing style, and, of course, a new title. We expect to publish it in the coming months. We also learned from the experience about infringing on trademarks and will be more aware and more thorough in our research when choosing titles for future publications! In addition, I purchased The Institute for Crisis Management, where I could continue putting my research and theories into practice in providing crisis preparedness and consultation to companies and institutions.

    Did I experience tragedy? No. Was there a loss of lives or livelihood? Of course not. But in considering the definition of crisis—any problem or disruption that triggers negative stakeholder reaction and that could impact the organization’s (or person’s) financial strength and ability to do what it does—then my circumstances definitely fit this definition.  It became more apparent than ever that organizations and people alike should be prepared for unfortunate circumstances. Because even with careful planning, when the reality hits it can derail even the best prepared, much less unsuspecting institutions or individuals, as in my two examples.  And as we say on the ICM web site, “It doesn’t have to be shock and awe, it can still derail (you) or your company. Hopefully I’m a better leader and a stronger person because of my experiences; and although I wouldn’t wish it on anyone or any organization, I do believe in finding opportunities in and learning from crisis. I know I did.

  • What is a Crisis? Part I

    What is a crisis? More specifically, what is a crisis in a business context?  The Institute for Crisis Management defines crisis as any problem or disruption that triggers negative stakeholder reaction and that could impact the organization’s financial strength and ability to do what it does. This can apply to businesses, educational institutions, cities, governments, and even individuals.

    It seems to me that most organizations don’t see themselves as prone to crises. Leaders may consider an unfortunate event as a crisis only if it’s something like what we see in the headlines: a hurricane or tornado, the collapse of the financial industry, or a major shooting.  And then when such a dramatic event does occur, they tend to take the “it won’t happen to us” attitude.  But, as we say at the ICM, “It may not happen suddenly; it can smolder for years.  It may not be shock and awe, but can still derail your company.  It may not happen in a company or industry prone to crises, such as oil and gas or automobile; schools and universities might experience it, too.”

    I was personally involved in two occurrences in recent years that were not necessarily headline news, but that absolutely qualified as crises.  One involved the institution in which I work, the University of Virginia, and the other involved me personally.  In June of 2012, the UVA President Teresa Sullivan was ousted by the university’s board, setting off an unexpected chain of events that ended with Sullivan’s reinstatement. (For a thorough overview of these events, read this excellent article in the New York Times.) This was a many-layered crisis for not only UVA, but also for colleges and universities across the country. While the university systems are already in turmoil as a result of “state governments slashing funding, driving per-student spending to historic lows and forcing schools to raise tuition, they are all the while controlling costs through salary freezes and other austerity measures.” Sullivan’s sudden forced resignation raised concern by tenured professors everywhere that their tenures may not be secure, and by universities that are already under financial stress faced with a similar p.r. crisis affecting donors should a similar event happen on their grounds.

    I was of course close to this situation, and it affected me personally and professionally.  Right around the time that this incident occurred I heard president Sullivan speak at my church, and her words and presence had a profound impact on me. I blogged about it in my piece called A Sudden Departure.  And I was part of the crisis committee at the Darden Graduate School of Business where I taught.  I felt for Dr. Sullivan and I also was trying to help manage the situation from a p.r. and a business perspective with regards to the Darden School.

    This is an example of a crisis that may not have reached the dramatic proportions of an occurrence like, say, the BP oil spill in the Gulf of Mexico, or the various traumatic shootings; occurrences that tragically resulted in the loss of lives. But it did have a significant impact on the “business” of the university, the personal livelihoods, or threats to those livelihoods, and the image of the institution that could have long-lasting negative effects.

    In Part II of this blog series, I’ll tell you about my personal crisis, give some other examples of how no organization is immune to crisis, and reflect on the importance of being prepared.

  • Defining the “All” in Can Women Have it All?

    There have been some interesting perspectives in my Community of WE (Women Executives) discussion groups on both Facebook and Linkedin on the topic of Can Women Have it All? The comments have spanned everything from “Yes, look at Marissa Meyer, the new Yahoo! CEO who just had a baby” to “Are they expected to want to?” to “No, they really can’t.”

    This past year I have embarked on two new career moves that individually would have been a huge endeavor, and simultaneously have been quite the undertaking—I feel like I’ve given “all” in this case a whole new meaning! At the beginning of 2012 I became the new owner and president of the Institute for Crisis Management, a crisis consulting firm. ICM has been successful for over 20 years, but needed to expand its offerings to include products and services related to risk assessment, crisis preparation and prevention, and change management and resilience.  Taking over ICM was a fantastic opportunity to take my years of work in this field and have a more hands-on impact on real-world companies, both domestic and global.

    Then, later in the year, I was presented with an unexpected, but most welcome chance to become the new senior associate dean responsible for the Executive Education business unit of the Darden School, where I was currently serving as a professor in the MBA and Executive Education programs.  Read More