A crisis is a low-probability event or situation with extreme consequences, for which there are no proven patterns or experienced managers. It can arise because of unexpected situations, but it can also develop slowly over a longer period, because of the accumulation of small unresolved problems. A crisis often affects the whole organisation, so no single leader can deal with it alone, and the whole management team needs to be mobilised. What factors can lead to crises and how does the interim manager contribute to the effectiveness of crisis management? In our current article, we answer these questions!

What can trigger a crisis?

There are two main ways in which a crisis can arise. It can be caused by a sudden shock, e.g. force majeure, pandemic, supply chain collapse, chip shortage, etc. These are usually obvious, immediately recognisable crises, where there is no question of taking immediate action.

However, there may also be a situation where the crisis is caused by a sustained crisis of long-lasting, escalating problems. This type of crisis can arise from a variety of sources, for example:

• Management shortcomings, burnout
• Human laziness, negligence
• Poor decisions, mistakes, mismanaged problems
• Business-as-usual completely distracts from the crisis (can't see the wood for the trees)
• Failure to recognise or denial of early signs of crisis

Crisis management led by an interim manager

In a crisis, the company is forced to take unplanned measures not included in the strategy to avoid disaster. Responding to the crisis requires a radical change from the previous "norm". This requires a leader who has extensive experience in implementing radical change quickly and successfully, and who can lead the company outside its comfort zone with calm and confidence. Speed and focus are the keys to solving crises.

As organisations are not usually prepared to deal with crises, the necessary knowledge and experience are not available in-house. Often external help needs to be brought in, which is where an interim manager can step in.

The most important task of Interim Ltd. is to diagnose such requests. It may be that the company itself has not reached the stage of recognition, does not know that it is in crisis, or knows but is in denial. In such cases, our primary goal is to build trust, to be able to talk honestly, and to think with the client.

The interim manager, who starts work within days of defining the problem together, focuses only on the crisis. He actively explores the root causes and validates all assumptions. We have had situations where our interim manager has gone underneath the production machines to record the malfunctioning of the machines with his digital camera. Often it is only then that the true extent of the problem becomes clear.

Fact-finding is followed by the preparation and implementation of a transparent, practical action plan. It is worth bearing in mind that introducing radical changes often leads to conflict. Crisis management is therefore often also conflict management, in which Interim Ltd's senior consultants assist the interim manager and the client.

Crisis management: real examples from Interim's portfolio

The case of a medical technology start-up

A Hungarian start-up company developed a new medical device that attracted investor interest and was acquired by a Scandinavian company. The new owners' goal was to mass produce and sell the product.

Production problems and quality defects were occurring, which undermined the company's reputation, so Interim Ltd. was brought in to deal with the situation. Our firm assessed the extent of the problem and found that the equipment was not yet ready for mass production and product development was not up to scratch. 

Interim prepared a programme to make the product manufacturable, to change the development approach (with personnel consequences). At our suggestion, the production of the product was transferred to an experienced subsidiary, the Hungarian company closed and the product still exists today in a manufacturable and marketable state.

The case study is available at the following link: Product from medical technology idea

Case study of an automotive parts company

The Hungarian subsidiary of a well-known automotive safety products manufacturer faced the following problems: difficult communication between the parent company and the subsidiary; problems with the technical condition and availability of production equipment; and questionable production discipline. Together, these problems led to delays in customer service and a deterioration in quality. 

Interim Ltd was contracted to detect the defects and improve production efficiency. Our survey highlighted the main problems, such as lack of information, inadequate functioning of production equipment, lack of maintenance, and managerial demotivation.

Under Interim's management, we improved the capabilities of production equipment and all three factors of OEE, made work instructions more accurate and accountable, put maintenance on a new footing, introduced a management accountability system, and improved staff motivation. We also proposed to improve communication and cooperation between headquarters and the subsidiary. 

Production efficiency increased, one manager who was not sufficiently cooperative left the company shortly afterwards, and another who took advantage of the change was on an upward trajectory, as was the plant's performance.

The case study is available at the following link: Resolving a sustained crisis

What can we learn from all this?

The experience of Interim Ltd's interim managers and senior consultatn confirms that prolonged crises are difficult to manage because they also develop over a long "latency" period and are often not independently of flawed or inadequate decisions by previous managers. This is why it is also difficult to identify protracted crises from the inside, most often in the form of some kind of accompanying phenomenon, and often only the "outside eye" can bring the underlying causes to the surface.

This is where the interim solution has a big role to play: we usually encounter clients in the context of one of these "crisis events", who are focused on solving an immediate, obvious crisis. However, it can be seen from the case studies presented that some more or less hidden cause is at the root of the crisis, which does not necessarily require an immediate, ‘Gordian’ treatment. 

This can come to light because our managers work as outsiders, objectively, and independently, but with 100% commitment and loyalty to the client, to find the real solution to the problem.

Using Interim Ltd's crisis management services to resolve crises is an effective way to do this.