Cand. Sc. (Ec) Fedorova A.E.

The Ural State University of Economics, Russian Federation

SOME ASPECTS OF CRISIS COMPANY'S PERSONNEL

A crisis is an objective phenomenon in the socio-economic system, the functioning and development of which is controlled by human activities. In many cases just this human nature of a crisis in a company is its reason and source.

All the human activities are based on the process of satisfying a person’s own interests that are changing unevenly and disproportionately. Every person has contradictory interests, not to mention social groups’ interests. This particular fact is the foundation of all crises in the socio-economic system.

While the socio-economic system is developing, the human factor is noticed to be increasing. This does not mean the crisis rejection or a struggle against it but prediction and confident, well-timed and, if it is possible, smooth coping to this crisis. That is why work with personnel is especially important in the process of overcoming the crisis.

From the human factor point of view, at least two factors are typical for a crisis situation. First of all, this is discrepancy between a company’s personnel’s professional skills and the skills which are essential for a new situation. Secondly, this is irrelevance of intra-organizational life, including norms and regulations, to new facilities. Thus coping to a crisis situation demands the personnel qualification level upgrade as well as the management culture change.

Personnel of the Russian companies face a crisis in such fields as political, economical, industrial and social ones. Employees lost their personal identification with the former companies they had worked for, and those companies’ values and planned economy rates (when the major target was not getting profit but performing a plan at all costs). There was a personnel socio-cultural crisis consolidating a complex of all social relationships as well as culture, i.e. all the ways of human activities.

Company’s personnel crisis is a situation when motivation among the staff, employees’ professional skills and working conditions contradict a company’s targets and tasks.

Professional life of employees working for a company which is going through a crisis is significantly different from professional activity of the personnel that suffer from occasional crises in a relatively stable company. Consequently, we should consider the notions of “company’s personnel crisis” and “bankrupt company’s personnel crisis” to be different.

The bankrupt company’s personnel crisis appears in the lack of economic benefits and personal moral satisfaction due to external and internal reasons which have caused the company’s bankruptcy.

Modern circumstances of the Russian business led to the emergence at least five types of a company’s personnel crisis.

Managerial crisis is characterized by acute psychological and moral incompatibility between managers. The managerial crisis features are the following: a high turnover of top and middle management and permanent conflicts among them. A company “runs a fever”, employees fall into groups that cut one another’s throats. Intelligence is sent out to the hostile camp. There are deserters being torn between the camps. People accuse each other of betrayal, treason and so on. In a word, the situation within the company looks like the theatre of military operations. Of course, it is difficult to speak about constructive performance in such conditions.

Reputational crisis might be associated with lawsuits against a company due to serious failures in its production or services provided. Mass media publish negative information based on the real and cooked-up facts about the company. Many employees start leaving the company. There are misunderstandings and conflicts. Profits are decreasing.

Transitional crisis can be considered as the company development crisis which takes place in a situation when the company’s administration begins building a clear authority – subordination interaction structure, introducing regulations concerning management and divisions within a company, developing guidelines for employees, which describe their functions, duties and rights in details. Of course, some employees don’t like it. Those who prefer informal relationships leave the company explaining it in different ways. Somebody doesn’t like his/her status which he/she is going to get in accordance with the new personnel structure. Another is offended. The other doesn’t wish to obey and sets up his own business. In any case, the aggravation of relationships, staff changes and dismissals may accompany a transitional crisis.

Crisis stability is a crisis when nothing is changing in a company. It performs successfully, has had its steady niche for a long period of time, has investors, reliable partners and regular customers. However, there are no innovations, people work without any enthusiasm, they don’t show high results in their performance and often require to increase their salaries and bonuses. There are frequent labour discipline violations and unjustified absences. If a new employee, who is focused on high results and promotion, starts his/ her work in such a company he/she either changes his ambitions and begins working as others do or quits due to the lack of possibilities. The company doesn’t develop, figures neither increase nor decrease. The employees make frequent breaks to smoke, drink tea and talk to each other. They hardly work or work reluctantly.

So-called crisis-manager, a leader who generates crisis situations, is one of the sources of crisis within a company.

A crisis-manager could be revealed if an employee’s personality traits and an effective leader’s professional and personal qualities are compared. Thus, for instance, the combination of willpower and intelligence play the leading role in a manger’s personality complex. This combination might vary (tabl.). It is obvious from the table that a disproportion in the combination of such personal traits as will and intelligence allows revealing crisis managers.

Crisis-managers are notable for their conscious or unconscious ability to initiate crises in the systems being managed by them. In order to reveal crisis managers in a company in proper time and to prevent the company from possible damage in the result of their activity it is necessary to be aware of their features. There are several types of crisis managers.

Various combinations of a leader’s will and intelligence and their influence on the management performance effectiveness

Traits complex	Manifestations and consequence
Dim intelligence – weak will	Leader: - problems in decision-making; - problems in executing the decision made; - vulnerability to external influence (no stable system of own principles and views). Personnel: - low performance discipline; - disrespect, a sneering attitude to the leader. Implications: - manager is not able to manage for a long time; - the company will be regressing.
High order of intelligence – luck of will, lack of confidence	Leader: - problems in executing of the decisions made; - strong vulnerability to external influence; - problems with personal leadership; - incapability to delegate tasks and authority (he is eager to do everything on his own). Personnel: - low performing discipline; - the leader is only respected as an expert. Implications: - low management efficiency; - low development rate.
Strong will – dim intelligence	Leader: - problems in the process of decision-making; - hard authoritative management style; - voluntarism, willfulness; - incapability to set up reliable relationships and effective collaboration with subordinates. Personnel: - visible behavior: respect, honoring, flattery; - hidden behavior: fear, alienation, distrust. Implications: - succeeding in a certain environment with appropriately selected personnel; - the success won’t be sufficient and lasting because the present-day management is based on deep understanding complicated development issues.
Harmony of intelligence, education and will	This is a type of an effective anti-crisis manager.

Classification of crisis-manager types

The unconscious crisis-manager seems to manage it at a sufficient professional level. But in fact, his activities get the system he manages into a sad state.

This type is not uniform inside.

The active type is extremely energetic and full of different ideas. Managers of this type often generate heavy activity. The problem is that the results of their activities are often found to be negative. They say about these people: “It would have been better if he had done nothing.” There are gifted crisis-managers having an ability to achieve quick negative results that destabilize the company.

The passive type gets an enterprise into a crisis because he uses the strategy of escaping decision-making. The strategy is extremely disastrous in the crisis situation which requires immediate and determined solutions. The passive manager hopes that the problem will disappear itself. But the problem does not disappear but it is becoming greater and uncontrolled.

The group crisis-manager concerns a managing team. This type of manager is related to one of the most wide-spread managing problems which are called poor collaboration among members of a leading team. The poor cooperation result a system into crisis.

Relations in a managing team should not compulsory become critical to make a company crisis. There is a socio-psychological law which can be called “mass of contradictions”. Poor concurrence of actions and low level collaboration effectiveness gradually or quickly lead to undesirable consequences. That is why some managing teams are less harmful to their company because their formal leaders manage to stop micro-crisis due to their colleagues’ wrong solutions or activities.

The conscious crisis-manager has a professional skill to destroy the managed system. This type is used in a competitive struggle. The role of the conscious crisis-manager is extremely difficult. On the one hand, he has to pretend that the process is developing in a proper way. On the other hand, he has to lead the system he manages to a crisis.

The evaluation techniques that allow defining the crisis situations reasons at various levels of management, including the government, regional and company ones, reveal the same management problem, which is insufficient competency of managers and specialists. So if there is a crisis should look for an incompetent manager.

Daniel Kahneman (the USA), psychologist, was awarded the 2002 Nobel Memorial Prize in Economics for his proof that business people often make irrational decisions, are often afraid to express their trust, underestimate their losses and postpone making important decisions or take selfish and personal ones.

Swedish scientists, Bengt Karloff and Sven Sederberg, decided to divide managers into two types: traditional and strategic. The traditional manager often makes personal decisions preventing successful business from development and realizing his fears and preferences. He asserts himself, strives for personal development and so on. The strategic leader follows business targets; and his personal and irrational influence is minimum. Thus, the traditional manager can be considered to be a crisis-manager.

Peter Principle should also be taken into account. Every manager, being promoted up to a career ladder, earlier or later achieves his incompetency level. In other words, having got a higher position, a leader seems to be able to mange as successfully as he did at his previous positions. But this is not so. Consequently, such a manager becomes an unconscious crisis-manager.

The anti-crisis type manager is a manager who possesses specific professional knowledge, skills and techniques and personal traits that are considered to be appropriate for the successful company development. We can sum up, any effective leader ought to be an anti-crisis manager.

References:

1. Mitin, A. N., Fedorova, A. E. Anti-crisis personnel management: the manual. – St. Petersburg.: Piter, 2005.

2. Kahneman D., Slovic P., Tversky A. Decision-making in uncertainty: how and prejudice. – Kharkov: Humanitarny center, 2005.