Leadership Coaching Tips

Judith B. Kaplan, Ruby A. Rouse and Richard S. Schuttler

Gut-wrenching Decisions: How Ethically Do You Behave in a Crisis?

Judith B. Kaplan, Ruby A. Rouse and Richard S. Schuttler

Judith Kaplan

Ruby Rouse

Richard Schuttler


Being in charge is often uncomfortable and thankless. Nevertheless, customers and employees expect leaders to make the ‘right’ decision – even when times are tough.  A national study of leadership, funded by the University of Phoenix, found many supervisors often were at odds with their employees during the financial crisis.

Front line workers strongly focused on personal implications, such as downsizing, layoffs, and pay. In contrast, leaders were more concerned with ‘big picture’ issues, such as declining sales and consumer demand. Such disparities suggest the need for improved communication within organizations.

Under normal circumstances, sight variation in employee-leader perspectives does not cause problems. But the prolonged pressure of the financial crisis functioned as a catalyst, intensifying the gap between workers and their supervisors. When employee concerns were not addressed, stress increased. When workers are afraid, discouraged, or distracted, they often emotionally shut down, leaving them unable to focus effectively on their jobs and increasing disrespect for supervisors and senior leaders.

While news stories tend to sympathize with the plight of workers, the media tends to overlook leader fear and confusion. Senior leaders may unknowingly isolate themselves from their workers, adversely influencing the openness of organizational communication. Despite the fact that employees believed supervisors often stopped communicating, leaders who participated in the national study frequently described ‘no-win’ situations that required them to make gut-wrenching decisions.

What Would You Do in a Crisis?

As a leader, how would you react in a crisis? In order to get a reality check about your leadership ethics, consider about some gut-wrenching situations. What, if anything, would you say to your employees?

  • Your monthly reports indicate sales are down significantly, making layoffs inevitable.
  • Even though you are privately concerned about the economy and your organization’s performance, a professional colleague urges you to tell employees ‘everything is fine’ and ‘not to worry.’
  • Your corporate office directs you to announce 20% pay cuts at the end of the month for all your employees.
  • You’re tired and want to go home. But there is still significant work to be done on a major report that is due tomorrow.
  • You learn your organization’s budget will be cut by 50% next month.

What do Responses Say about Your Leadership Ethics?

Insight about how to handle such gut-wrenching situations can be found in leadership framework developed in the book the Laws of Communication: The Intersection Where Leadership Meets Performance. Dr. Richard Schuttler, author of the book, uses a stoplight metaphor to classify leader behavior.

  • Red leaders tend to be shortsighted and micro-manage employees. Occasionally arrogant and/or hot-headed, they may use threats and intimidation to control employees. Since such leaders appear to be concerned only about the ‘bottom line,’ employees often feel ‘thrown under the bus.’ Red choices warn workers of immediate, significant danger.
  • Yellow leaders are better communicators and appear more ethical than their Red counterparts. But Yellow supervisors tend to be reactive ‘fire-fightin’ managers who flounder – particularly during a crisis. Yellow behavior reflects limited, reluctant, or biased information sharing. Employees tend to be cautious of leaders who make Yellow choices.
  • Green leaders are active, open individuals who “walk-the-talk”—even during a crisis. Such individuals inspire employees to display innovative, imaginative problem-solving skills to help employees manage change. Green behavior signals workers that a leader is ethical and fair, signaling the organization that it is safe to proceed, but stakeholders should still remain alert.

How can You Lead Ethically in a Crisis?

Be open! While not sharing potentially concerning information may seem easier and less stressful, workers tend to discover the information through other sources (i.e., rumors, media reports, etc.)—even if you don’t tell them. Hiding information makes employees suspicious and compromises your integrity. Participants in the financial crisis study did not like being in the dark. They overwhelmingly preferred leaders who were transparent and willing to ‘put their cards on the table.’ Open book management practices should be considered to improve dialogue about strengths and opportunities for improvement.

Honesty is the best policy! While ‘little white lies’ might temporarily boost employee morale, bending the truth erodes your credibility. During the financial crisis, workers distrusted leaders who used biased or misleading information. When their jobs and families are on the line, workers expect the truth—even if the information is hard to hear. Being truthful allows people the opportunity to prepare emotionally and financially. So tell it like it is!

  • Look them in the eye! Saying nothing or delivering bad news in writing may be easier. But during the financial crisis employees complained about leaders that ‘hid’ in their office or behind impersonal email. Courageous leaders deliver important information face-to-face. Doing so communicates you care and shows ‘we are in this together.’ Leaders should remember that the manner and tone in which an organization communicates is one of the main drivers for how the business will perform.
  • Walk the talk! After record layoffs and downsizing, many employees during the financial crisis complained of being overworked. Struggling due to short staffing, employees want Green Zone supervisors who are willing to lend a helping hand. If employees feel they’ve been left ‘holding the bag,’ they perceive supervisors are insincere and hypocritical. Be willing to do everything you ask of your employees. If they are expected to accept a pay cut, then your pay should be cut as well. If they work nights and weekends, you should do the same. Roll up your sleeves and lead by example!
  • Ask for help! During the financial crisis, many organizations were forced to dramatically tighten their operating budgets. Rather than making ‘top down’ Red decisions that exclude employees from the process, leaders should be proactive and collaborative. Take the risk of sharing difficult decisions with employees. Even if you do not adopt all their recommendations, they will appreciate being heard. According to the national study, workers want to be a part of the decisions that influence their jobs. Just as successes are shared with employees, difficult decisions should also be brought to the table.

Lead from the High Ground

Paid to make tough calls, leaders confront ethical decisions every day. When times are good, choices are uneventful. But when ‘no-win’ situations develop that affect employees’ livelihoods and families, leaders must make ‘gut-wrenchin’ decisions. One of the best ways to make better decisions is to develop strong relationships and ask for feedback from all concerned.

Examples of the right—and wrong—way to make tough decisions were observed during the financial crisis. Study participants described Red, Yellow, and Green leader ethics. While Red tactics accomplished some short-term goals, heavy-handed leadership eventually reduced collaboration and injured employee trust. Regularly asking for feedback from employees allows them to ‘buy-in’ and support difficult decisions.

Employees expect their leaders to be fair and just. Particularly when stressed, employees want to know what is coming—good or bad. They must have faith that you care and will not ‘throw them under the bus’ when times get tough. As prosperity returns, you want employees to be supportive and appreciative—not upset and looking for new jobs.

About the authors

Judith Kaplan, DHA, Associate Faculty member for the University of Phoenix’s Graduate School of Healthcare Services, was an Advisory Council member for the study of crisis communication funded by the University of Phoenix. She can be reached at

Ruby A. Rouse, PhD, a research consultant and Lead Faculty member for the University of Phoenix’s School of Advanced Studies, is co-author of the financial crisis study of funded by the University of Phoenix. She can be reached at

Richard Schuttler, PhD, an international public speaker, consultant, and educator, is co-author of the financial crisis study of funded by the University of Phoenix. He is the owner of Organizational Troubleshooter, LLC and recently published a book with John Wiley & Sons (2010) called Laws of Communication: The Intersection Where Leadership Meets Employee Performance that examines the influence of supervisor communication on organizational performance. He can be reached at

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