Insights

As the COVID-19 pandemic is sweeping the world, numerous businesses are hanging by a thread. Bankruptcy, layoff and furloughs are common around the globe; the global aviation industry has entered the darkest of times; even Airbnb, a rising star of the sharing economy, has to let go nearly 2,000 employees… In China, economic activity has resumed, but some businesses are struggling to stay afloat while some others seem to be doing well against the downward trend.

So, in moments of life and death like this, what did the survivors do to tide them over the crisis and even turn the situation around? And how did others collapse? Below professor Zhang Zhixue at the Guanghua School of Management, Peking University draws wisdom from historical events and how Chinese businesses fare amid the ongoing pandemic, and proposes eight golden rules for organizations to survive in a crisis from the perspectives of organizational behavior and social psychology.

I study organizational behavior and social psychology, in particular corporate leadership, negotiations, conflict handling and team process. I have also done research on several Chinese enterprises. Today I would like to talk about how enterprises and individuals respond to major crises and disasters, hence the title “Organizational Rules to Survive Crises.”

The outbreak of the coronavirus disease, or COVID-19, has dealt a heavy blow to Chinese economy and society and put mental stress on ordinary people in a way unseen before. At the height of the epidemic, the entire country was mobilized to fight the virus, the movement and activity of people were minimalized, and many businesses were shut down. Just a few days after the Spring Festival holiday, the impact of the epidemic on small and medium enterprises (SMEs) and Chinese economy was started to be felt. Even before the epidemic, the year 2020 was predicted to be a hard year for Chinese economy and businesses due to the structural adjustments to the Chinese economy and the changing international environment. The virus certainly did not help. But fortunately, the spread of the virus has been effectively put under control through concreted efforts, and work and production have resumed steadily and solidly. Here, I would like to share my views from the organizational behavior perspective, which I hope would be helpful for businesses at home and abroad to get through the current crisis with confidence.

Following the outbreak of COVID-19, I joined a dozen of human resources experts in sending messages about how to cope with the crisis. We are assigned different roles in the society, and it’s our role that determines how we think and our thinking shapes our behavior. Therefore, my advice is given from the perspectives of corporate leaders, employees and individuals, respectively.

Case 1: Successful leadership in the crisis

Before we move on to specific rules, let’s first review Ernest Shackleton’s South Pole expedition to see how he led the expedition group out of crisis.

On August 1, 1914, Shackleton joined a crew of 26 on a wooden vessel calledEnduranceand left from London for the South Pole. They left the South Georgia Island on December 5. On January 8, 1915, they were trapped among icebergs in the Weddell Sea at the southern edge of the South Pole. After drifting on the sea for ten months, the ship was crushed in the pack ice. On October 27, Shackleton ordered the crew to abandon the ship which eventually sank into water on November 21. They decided to go on foot, but walking on ice and snow was so exhausting that they could barely cover three kilometers a day. Exhausted, Shackleton ordered to camp on the ice floes. So for four months they camped in the world of ice and snow, subsisting on penguins, ice and snow, with only little food, clothing and sheltering. To keep up the morale, Shackleton always talked cheerfully and sometimes even danced on the ice. After they were carried by the ice floes to an open water in the north, they immediately jumped on the three lifeboats they took away with when they left the ship. After seven days of voyage, they reached the Elephant Island, a no-man’s land.

The crew was reaching the limit of their physical and mental strength. On April 24, 1916, Shackleton decided to take the lifeboat with four crew members to sail across the turbulent sea to go to the South Georgia Island which was about 800 miles away, but equipped with a posting station. Before his departure, he left a note to the remaining crew and asked them not to open it unless he could not make it back in twenty days. So, what did the note say? It reads:“I will definitely come back for you. If I didn’t, I must have everything I can.”

So after seventeen days on the sea, the five-man crew reached the southern coast of South Georgia, but it was too windy to land, so they spent another night tossing in the lifeboat. To get help, they needed to go to the whaling station on the northern coast. So Shackleton took two crew men with him – the other two were too sick to walk – as well as a rope and two crampons, and crossed 42 kilometers of alpine glacier and the interior of the no-man’s island. On May 20, 1916, they finally reached the whaling station. On May 23, still regaining his strength, Shackleton went back to the southern coast to pick up the other two crew men and decided to leave for the rescue of the remaining 23 sailors on the Elephant Island. He was advised to take more time until he had fully recovered, but he was determined to keep his promise. But his first three attempts were beaten by the stormy waves. Eventually, his fourth attempt on August 30 brought him back to the Elephant Island.

“They are all there. All of them!” Shackleton cried with joy after reuniting with the rest of the crew and finding all of them were still waiting for him. Later, when asked what kept them so long on the Elephant Island, a sailor said, “We firmly believe that Shackleton will succeed. He is capable of doing that. But if he failed, we knew he must have done his best.”What a remarkable echo with the still-sealed note. When asked why not open it after the promised twenty days, the sailor entrusted with the safekeeping of the note said, “Because all of us, me included, still believed Shackleton would come back for us and he would never leave us here.”



Eight rules to survive the crisis from the organizational behavior perspective

Now from the more common perspective of organizational behavior, based on research on disaster and crisis responses, I draw eight rules key for organizations to survive a crisis.

Rule 1: Mutual aid, which has to do with the organizational goal. In case of crisis, the organization should be able to quickly rally its members around its goal to form a community with a shared future. The goal should be clear and shared by all. It must also immediately adjust the original goal to the current crisis, and make it clear that the top priority is to survive, not to waste time debating which is the right way to handle the situation. The leader should rally team members and charge ahead. The direction should be correct and the team united.

Rule 2: Forward-looking, rational, strong leadership. From 1 August 1914 to 30 August 1916, Shackleton spent two years and one month trying to save all his crew members. Even when the chance of survival was close to zero, he did not flinch at all, but showed admirable perseverance, integrity and optimism. He led by example and kept his crew’s spirits up. All this made him a brave, strong hero in human history, and also a model leader.

For instance, when the ship was crushed, the crew had no way forward but to sledge all the way to the graham Land, the northern end of the Antarctic land. To minimize the weight of load that might slow them down, Shackleton ordered the crew to take with them only two pounds of personal belongings each, and leave everything else behind. A sailor recalled that to set an example, Shackleton threw off a golden watch, a fine necklace box and a few exquisite commemorative coins. It was indeed remarkable. By doing so, he was telling the sailors that the value of objects will change and sometimes gold is not treasure, but burden. So all the sailors did as he told, taking with them nothing but essentials.

But when Shackleton noticed the photographer dropped off his gloves in the freezing weather, he immediately took off his own pair and gave it to the photographer. His offer was declined at first, but Shackleton was insistent and later he got serious frostbite on one of his fingers.

Rule 3: Cohesion, which means members of the organization should trust each other and intentionally show optimism in the face of a crisis. It’s important to spread optimism and confidence inside the organization in the face of a crisis, but of course optimism should be realistic. It’s also important to strengthen the awareness of teamwork and let every member know that we are all in this together. Hierarchical difference should be eliminated if possible and respect should be paid to each other. It’s noteworthy that conflicts are inevitable when people are increasingly stressed. Therefore it’s important to learn how to bring conflicts under control and avoid escalation. Celebrations can be staged to boost the team morale.

Rule 4: Action, which means that you must look for tasks and stay active until the crisis is over. In time of crisis, people are stressed as their normal work and life are disrupted. It’s important to keep everyone occupied so that they can stay focused and away from fear and pessimism, and think and act with more agility. Throughout their voyage, Shackleton always tried to keep his crew busy. Even when they were floating on ice, he would organize the sailors to play football.

Rule 5: Branching, which means to break up into several teams in time of crisis and allow the teams to play their role. Do not expect to come up with some grand, holistic, unified response plan easily and quickly. Instead you should allow the organization to break up into smaller teams which can act independently. They are more sensitive to changes to the external environment, and sharp-eyed to find the way out, thus more capable to help the entire organization survive.

Rule 6: Agility, which means that every member should actively seek information that will help the organization or enterprise survive and not underestimate any slight thread of hope. While battling the virus, the enterprise should encourage employees to keep looking for information, customers and channels until the dust settles, and value every chance of survival found by the employees, no matter how thin it is.

Rule 7: External aid, which means to seek support and aid from outside and break the organizational boundary. In time of COVID-19, enterprises should find access to external support and aid, from the upstream and downstream along the supply chain, and strive to survive.

Rule 8: Mentality, which means to replace the formal structure with the psychological structure to support organizational operation. In time of crisis, the formal organizational structure is usually disrupted or even collapses, so it’s important to have a psychological structure to fill in the place and carry the organization on. If you find this point hard to understand, below is another case in point.


Case 2: The collapse of an organization in crisis

Let me start from another disaster. On August 5, 1949, a fire broke out in Mann Gulch of the State of Montana, the United States. Foreman Dodge led 15 smokejumpers to put out the fire.

The crew flew to the southern side of Mann Gulch at 16:10 that afternoon, but one of them was too sick to carry on, so there were 15 of them when they met ranger Jim Harrison. At 17:10, they set off to surround the fire. Dodge and Harrison left in advance to scout, and told the second in command, William Hellman, to take the crew across to the north side of the gulch and march them toward the river along the side of the hill. Dodge rejoined the crew at 17:40 and took his position at the head of the line moving toward the river. To his surprise, he saw the fire had crossed the gulch just 200 yards ahead and was moving toward them. Dodge turned the crew around and had them angle up the hill toward the ridge at the top. But they were quickly losing ground to the nine-meter-high flames that were soon moving toward them at 180 meters per minute. Dodge yelled at the crew to drop their tools, and then, to everyone’s astonishment, he lit a fire in front of them and ordered them to lie down in the area it had burned. No one did, and they all ran for the ridge. Dodged lived by lying down in the ashes of his escape fire, two other people made it through a crevice in the ridge unburned, and Hellman made it over the ridge burned horribly and died at noon the next day. All the rest died in the fire before 17:56.

From this story we can consider how an organization collapses in time of crisis. If the disaster is found to be seriously underestimated, the original organizational structure will soon fall apart. In this case, it took 450 men five more days to get the Mann Gulch fire under control, and the burned area was dozens of times and even more than a hundred times larger than the reported area. But the 16 smokejumpers sent to the gulch all believed they could put the fire under control before 10:00 next day. Since the fire was seriously underestimated, the moment when the crew found the reality, the original organizational structure just fell apart.

To make it worse, the smokejumpers panicked. They were never in a situation like this before, and were unable to understand and analyze it promptly. When Dodge found the fire was moving towards them, he turned the crew around but failed to explain why, which puzzled others. When they were surrounded by fire, he ordered everyone to drop off all the tools they carried. The crew was more suspicious: What would that make me? A firefighter with no tools? When the fire was closing on them, Dodge lit the escape fire and asked others to lie down in the burnt ground like him, but no one did as he said and instead they all ran up the hill. Clouded by fear and anxiety, no one listened to what others said; they all made their own call, without thinking properly. Most of them just ran for their own life, forgot to help each other and got killed in the end.

Based on the case study of the Mann Gulch Disaster, professor Karl E. Weick pointed out four sources of resilience for an organization in time of crisis. First, improvisation. It refers to the creativity to improvise with skills to handle the problem. Second, the virtual role systems in case of the collapse of the organizational system. In this case, even when the organizational structure fell apart, if the crew could remember the firefighting training they had received step by step and work with each other as they always did before, the disastrous consequence following the collapse of the organizational system might be prevented. Third, the attitude of wisdom. When you realize you have no idea what’s going on, you must keep an open mind, read information prudentially, make sound judgments quickly, and adjust your decisions and behavior promptly. Fourth, respectful interaction. In time of crisis, even when the organization falls apart, it’s important for members to maintain communication and interaction in twos and threes.

In the Mann Gulch fire, the smokejumpers were already in a panic and communication between them was made impossible by their distance from each other. Dodge, with his experience and improvisation, survived. Two other crew members made it through a crevice in the ridge together, highlighting the importance of mutual aid and support. Twelve of the smokejumpers had received military training and were in the prime of life, but they were task-oriented and failed to communicate with each other in case of emergency and too panicked to think clearly.

In the movie alive, the young football team of Uruguay forms a small community and breaks into several smaller groups where their personalities are shown. When the smaller groups and individuals of different personalities rise to tackle the problem facing the entire football team, it feels less panicked. That’s why it ends differently with the Mann Gulch Disaster.

Closing remarks

To sum up, in the face of a major crisis, be it a sports team, an enterprise, a hospital or a community, only rapid and effective organization will get you through it. Apply the above eight rules flexibly and your chance of survival will increase. On a wider scale, if an enterprise or organization can stay vigilant against risks and crises and follow these eight rules to a varying degree throughout their development, it will show strong resilience in hard times and eventually survive and thrive. I hope the eight rules will be of help to enterprises and organizations at home and abroad in the ever-changing world.

Apply
Follow Us

© 2019 Guanghua School of Management Peking University