Crisis manager: how to save any company

The first material of this series of new professions. We examine crisis managers' work, duties, and relevance in large companies.

Inside, we have hidden a quiz with case studies that will help you improve your crisis management skills. Towards the end - regardless of your answers - we will recommend free courses to help you quickly develop your managerial skills.

At least once in our lives, we have experienced an economic crisis and its effects. Some have lost a significant part of their income; as a result, others have lost their jobs, and some have lost an entire business that they had worked on over many years. To avoid considerable damage, the profession of a crisis manager has emerged, and their main objective is to save a company at all costs.

A crisis manager is normally invited into a company because of their expertise. However, they can also be a permanent staff member, particularly if the company operates in an unstable area or has been through challenging times over a prolonged period. A crisis manager helps an entrepreneur avoid bankruptcy by identifying problems quickly and changing the business strategy. The job of a crisis manager can be divided into two stages:

Stage 1. They gather and process a wide range of information about the company. At the same time, you must remember that someone else's enterprise can be like the human soul and be dark. Therefore, the crisis manager must work with internal specialists who may not be interested, find inaccuracies in other people's documents and work in an extremely tense environment with strict deadlines and restrictions.

Stage 2. They analyse the state of the company and development measures to eliminate the shortcomings of their current strategy. As a general rule, the crisis manager can meet the team's resistance again because "eliminating shortcomings" could even include closing entire departments or reducing salaries.

The entire work of a crisis manager could take three months to a year. Afterwards, the manager moves to another company upon request and repeats the cycle.

To find out the causes of a crisis within a particular company, a crisis manager needs to know what is causing it. For example, in addition to an external market crisis, the need for crisis management may be caused by the following:

• Exceeding the budget allocated for solving certain tasks.

• A lack of effective management within a department or team.

• Mistakes in the organisation of business practices and lack of optimisation.

• Inaccuracies or a lack of information available to the company and the inability to work with it and to analyse it.

• Imbalances in the selected business model.

To summarise, the following basic tasks of a crisis manager are as follows:

• Guarantee the continuity of work procedures to increase transparency and quality communication between departments.

• Identify weak business links, areas, channels, assets, or practices, eliminate them, and retain and maximise the effective ones.

• Enhance the financial model, improve the business's profitability, and increase financial turnover and product sales speed.

• Make the business structure more "efficient" to facilitate internal management practices.

• Identify where resources are slipping away, save them and raise costs.

• Strengthen the existing leaders in the company and eliminate the so-called "marauder specialists" who undermine the efficiency of the business from within.

How crisis managers save companies: Judy Smith's Story

Judy Smith is one of the most famous crisis managers in the world. She has authored her own books about crisis management and is a frequent guest on professional talk shows. She solved a high-profile business collapse during the Sony crisis when their servers were hacked. In addition, she saved dozens of American companies from the aftermath of the coronavirus pandemic. Judy Smith's experience is rich and inspiring. Her story is the basis of the TV show "Scandal" with Kerry Washington.

Initially, Judy Smith did not aspire to work in crisis management. However, she was once an ordinary and successful manager. Then, received requests from business acquaintances and partners to help them solve challenging issues. At first, Judy Smith agreed to this out of friendship, but then she began to officially take "commissions". Eventually, following decades as a crisis consultant, Smith founded her consulting firm, which currently includes an entire team of crisis managers specialising in different areas and niches, from digital technology to medical.

Test how suitable you are for the profession and how ready you are to upgrade your vital skills. To achieve this, imagine yourself as the hero of three situations. Our website will randomly choose various situations for you, and you must find the right way out of the crisis.

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Quiz: how ready are you to become a crisis manager?

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Case 1. A major company has decided to build a huge production facility within 6 months, and about $500,000 has already been invested. However, only 3 months have passed since the start of construction, and almost $350,000 of the budget has already been spent. According to estimates, the structure will surpass the planned funding, nearly doubling costs, while the facility is only half built. There is no way to solve this situation completely, so your goal is to minimise losses. What are your actions?

• Implement a total audit of expenses, develop a strict standards system, and relocate those responsible for the project's financial health.
• Find a way to save costs for the second half of the construction, ditch some of the specialists involved and redistribute the investment.
• Change the construction plans for the facility to not exceed the available budget, redistribute roles within the team, consider their essential skills, and appoint a new financial analyst.

Next

Case 2. The investor community have decided to build a business centre on 3 hectares of land, which already has cost over $5 million. However, investors are unhappy with the ratio of this amount and the results because the business centre does not meet the projected costs at this point. As a hired crisis manager, you have identified the following mistakes during construction: marketing errors in positioning the business centre and ineffective planning in architectural design, exceeding the project costs. Your actions:

• Invite investors to change the centre's entire concept and planning.
• Suggest that the investors end the project or resell with a loss of $5 million to ensure you will not lose even more.
• Continue with the construction until a certain expenditure level is reached, hoping the following results will satisfy investors.

Next

Case 3. A company specialising in wholesale sales and franchising has been hit by an economic crisis. According to the latest figures, their revenue has fallen by nearly 40% over the past three months. Additionally, the level of competition in this area has increased dramatically owing to cheaper goods from China. As a result, the company fears that it will face bankruptcy. Your immediate action:

• Reduce the number of sales outlets, increasing the number of sales representatives and transferring some employees from the service sector to production
• Develop a more profitable system of wholesale and an incentive system for employees, abandoning part of the rental area and localise production
• Reduce the cost of production of goods to overtake competitors from China, invest in marketing and a reward system for sales staff.

Next

Case 4. The business is experiencing difficulties owing to rising prices for raw materials by 70-80%. Simultaneously, the government asks you to freeze the cost of goods for customers at this stage. As a consequence of this, the company may start to operate at a loss. Your actions:

• Find cheaper, lower-quality raw materials, and simplify the product line
• Stop the production of the most unpopular goods
• Raise the prices for luxury goods to offset the price freeze on the main range

Next

Case 5. There is a new cycle of an economic crisis. The company is in a more or less stable position. Still, their customers solvency has noticeably declined, and the company's income has also fallen. As a result, basic goods are no longer being purchased. Your actions:

• launch a line of more budget-friendly products and run a discount campaign to demonstrate that the company understands its customers problems and is looking for beneficial solutions for them
• Alter the target audience and marketing campaign, shifting the focus to the more affluent class of the population and the production of goods of appropriate quality
• Lower the prices of basic goods, and make up for them by lowering the costs of production and marketing costs

Next

Case 6. The company wishes to launch during a financial crisis when a major competitor already exists in this area. This is a rather risky strategy, but management will not be discouraged. Instead, they have hired a crisis manager to increase their chances of success. How can this be done? Options:

• Find a competitive advantage and invest everything into the development of an advanced version of the competitor's product
• Invest in the creation of your own raw materials to ensure independence from suppliers and reduce costs
• Invest in marketing promotion and brand placement

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