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In times of crisis you need to regroup

Times of crisis are good times to regroup, even though it can seem brutal to those involved, claims BI-researcher Jan Ketil Arnulf. He gives five tips to leaders during times of crisis.

Leading the regrouping

Several Norwegian companies, with long histories filled with rich traditions, have to lay off several of their employees due to lack of orders.

Several media groups have stated that they have to downsize their staff because fewer companies are paying for advertisements.

The international financial crisis does not only affect the financial sector, it actually affects most businesses as well. However, a few businesses are still hoping for better sales during the crisis. Companies like the Norwegian Orkla hopes that more people will stay at home and eat frozen pizzas instead of dining at restaurants.

Most businesses, however, have a “darker” view of the financial crisis. The Confederation of Norwegian Enterprise (the NHO) is greatly concerned about the situation.

- The Norwegian government has not fully realised the severity of the financial crisis, claims the president of NHO, Paul- Chr. Rieber. He is asking for immediate governmental intervention to help prevent further escalation of unemployment.

Crisis as a means to regroup
How serious is the financial “storm” which dominates the media these days? May it also be partly psychological? Is it easier to regroup and cut down on employees during times of financial crisis?

-The human brain prioritizes negative information; we know that from neural biology, and from the daily news, says Prof. Jan Ketil Arnulf, who is an associate professor in Organizational psychology at BI Norwegian School of Management and Academic Dean of the BI-Fudan MBA programme.

Businesses that fail to adapt to modernization and the society they serve, go under. Those businesses that are left are the ones able to adapt to change.

According to Prof. Arnulf that times of crisis are good times to regroup, even though it can seem brutal to those affected by the downsizing.

- Of course several businesses, and private persons, will be in trouble, but it is also clear that this is a time when new opportunities are made, and someone will come out of this crisis a winner.

- The winners will not necessarily be the ones who saved all their money, but the ones who saw which way the dynamic was going to go, says the BI- researcher.



Demand of leadership

- In times to come now we will see the good leaders separated from the bad ones, challenges Prof. Jan Ketil Arnulf.

In good times people believe that there will be no limit to the economic growth, and will then loose out because they can not handle the pace.

In bad times people will be too anxious about the future to spend too much money.

- Businesses are risking saving themselves broke, saving too much during the times of crisis so that they are not ready to catch the economic growth and clients when the times changes, further warns Prof. Arnulf.

True leadership is, according to the researcher, to maintain people’s interests in a way that makes difficult choices possible.

- The central leadership task for both politicians and business leaders in the coming times is to communicate optimism and common values, while getting rid of some of the old structures, says Prof. Arnulf.

He is not denying that it can be hard for the politicians to make positive comments to the public on the current financial situation, with statements like “this is good, this is an opportunity”.

- But that is exactly what this is. The challenge will be to keep the expenses for the common people as low as possible, and I see this as a political and socio-economic leadership task, says Prof. Arnulf.

Five tips to leaders in crisis

1. Decisions you can live with (and adapt to) are much better than decisions which leaves you cornered.
2. Find your friends first: Leadership is about having strong ties to the people that you work with. In times of crisis, people will closely consider who their allies are. Make decisions that will safeguard the people you depend on.
3. “Lies have short lives”: Make difficult decisions openly and honestly, and invest in your own ethical reputation. Even if you loose now, you will still have a reputation for being honourable in times of crisis, you will always have more chances.
4. Involve more people in giving advice, but involve less people in feeling uncomfortable. Keep your negative feelings to yourself as much as possible.
5. Take responsibility for your own decisions, and realise that you are the most important contributor in your own reality.