Every nation can point to a particular time in its history when events and circumstances were of such magnitude that individual considerations became secondary to the imperative of the common good.
"Ask not what your country can do for you, but what you can do for your country", pleaded John Kennedy when he became President of the United States in the 1960s.
What is it that unites us? More importantly, how do we as a nation, as individuals, as a boardroom react when faced with a crisis?
Australia is currently facing a leadership crisis. The prevailing management fashion among governments on issues such as tariffs, taxation, unemployment, industry and media policy is to pass them through the filter of political expediency.
The paramount question under which many politicians seem to operate is to ask not what to do for their country but how to please this or that constituency and get re-elected.
The recent Federal Government decisions to extend tariffs to the textile, clothing and footwear industry and the $500 million welfare package for the farming community are two decisions which a number of observers view as politically expedient.
The sad reality is that some of the above issues which politicians keep skirting are not of sufficient severity to be classified as a "crisis" – or at least not yet. But many would claim that issues such as tax reform and unemployment have already reached crisis point.
Government reaction on these perceived "crises" has not been timely or on a scale which provides any comfort level for the community or for business. The result is a prevailing mood of pessimism which is undermining confidence.
On a company or corporation level, a crisis and the reaction to that crisis is as varied as the nature of the enterprise. As with governments, directors must first be convinced that a crisis exists.
And like governments, there can be a tendency to opt for the expedient response that appears to please the relevant constituencies such as shareholders, stakeholders and investors.
There is also a demarcation split on who should make the appropriate response to a crisis – the management or the board.
There have been a number of instances where the response to a crisis was left to divisional managers to handle rather than the CEO, the chairman or one of the directors. Sometimes this is unavoidable because the appropriate person may not be in the country.
Crises seldom wait until an appropriate person can come forward to handle the media, shareholders and investors. In today's corporate environment, a timely response is not only necessary, it is mandatory.
A recent example is BHP. When two managers and one director resigned, BHP was faced with a crisis which required an immediate response. CEO John Prescott and chairman, Jerry Ellis made themselves available to the press, analysts and brokers to explain the situation and chart a path ahead.
Similarly when Jerry Ellis recently took responsibility for the problems at the Magma copper operations in the US (he persuaded BHP to buy Magma when he was head of the minerals division), it signalled to the investment community that BHP had recognised its problems and its leaders were in charge of the situation.
There are also many cases where neither management nor the board have acted either quickly or strongly enough when faced with a crisis situation. The 1980s was a veritable treasure trove of badly handled corporate crises.
When Westpac was confronted with the spectre of the so-called Westpac Letters, the events were not recognised as a crisis which had the potential to damage the company's image, according to The Bank That Broke the Bank. Author Edna Carew, points out that the initial response by the Westpac board was less than timely or appropriate.
There is little doubt that the Australian business environment has changed dramatically. The level of accountability to shareholders and investors has imposed new disciplines on directors and boards.
When a crisis eventuates which requires a company response, the line between what is a management issue and what is a board issue has become increasingly complex and often blurred. It is not only the CEO or the chairman who faces this crisis but the entire company including the board of directors.
The response to that crisis from either the CEO or the chairman is how that company will be ultimately judged by its stakeholders as well as its shareholders. Why would anyone invest in a company which does not exhibit the type of leadership that instills confidence in the short, medium and long term future of that enterprise?
It is a lesson which has the same implications for the nation's politicians.
Disclaimer
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.