Dealing with a Crisis

By Richard Branson of Virgin Group

You can’t protect yourself against the unexpected – but you can take control of your internal business risks. It’s how you deal with them that matters, argues Virgin Group CEO Richard Branson.

An entrepreneur has to make tough calls

“If someone else is better than you at dealing with it, then for goodness’ sake delegate it. And equally for goodness’ sake, don’t jump down their throats if they fail.”
-Richard Branson, CEO of Virgin Group

I don’t think a chairman need fall on his sword if someone messes up in the company. Chairmen must learn from the incident and try to make sure that particular mistakes are never repeated. An apology on behalf of the company – perhaps in a public forum, sometimes in person to the individual who has been messed up – is an appropriate starting point. I know business books that say you should never admit to failure, but I would not tolerate such an attitude among my people. I see nothing wrong with admitting a genuine mistake.

An entrepreneur has to make the tough calls. Some say it requires a ruthless streak. I don’t agree. I don’t think I’m ruthless, although I have been portrayed that way by a few people who don’t really know me and have never met me. There are some things in my business life that I regret – and I have made mistakes about people. One of my faults is that I have often been so focused on a business project that I have been unable to appreciate what was going on in someone’s life right in front of my nose. I’ve tried to learn from this, taking extra time to listen. Actually, I think it is counterproductive to be ruthless. You’ve got to treat people as you would yourself, or better.

Let’s be clear about the manager’s responsibilities here. There’s an idea abroad that people no longer resign when they should. To hear some people spin it, you would think that resignation is the only effective action the manager of a troubled company can take. This is patent rubbish. And for the record, there never was a time in history when talented people resigned over trifles, or out of some notion of honour. It’s a myth.

If something catastrophic happens to a company, and the chairman actually appointed that person who caused the failure of the business, then the chairman certainly needs to consider his or her position. If a major bank does not have the security systems in place to protect itself from a rogue trader, and that trader does immense damage to the company, then, yes, the chairman or the chief executive should probably consider resigning their position. They are ultimately responsible. In most other cases, managers should stay where they are and sort their messes out. It’s what they are paid for, after all. Most importantly, someone should apologize for the mess happening in the first place.

If someone else is better than you at dealing with it, then for goodness’ sake delegate it. And equally for goodness’ sake, don’t jump down their throats if they fail.

From “Business Stripped Bare: Adventures of a Global Entrepreneur” by Richard Branson, published by Virgin Books in October 2008. Reprinted with kind permission.