How to Avoid Binary Thinking During the COVID Crisis

Thomas Frieden, M.D. is former director of the U.S. Centers for Disease Control and Prevention. In discussing the current COVID crisis (2020), he concludes: “Most people who get COVID-19 do well. 80 or 90% of those infected with the novel virus have mild, moderate, or no symptoms. Of those who get infected, 99 out of 100 will recover.

"It’s responsible to be proactive now to limit the harm of COVID- 19. It’s also good to keep in mind that this, too, will pass.”

We want to help Psychology Today readers manage their organizations through this crisis by focusing on three key areas: leadership as a performance art, setting the stage for recovery, and avoiding binary thinking.

Leadership as a Performance Art

During times of stress, children look to parents for stability and confidence. Even a disguised statement of confidence can positively “infect” children. Emotional contagion also applies in organizations.

During times of uncertainty, employees look to their supervisors as sources of stability and confidence. Just as parents routinely project more confidence with their children than they may privately feel, leaders need to project a sense of confidence with their teams.

In other words, during this COVID crisis, leaders may need to act with a greater sense of confidence than they feel. Emotions are contagious. You want to be known as someone who is infecting your people with calmness.

What about your real fears? Find someone outside your organization: friend, coach, psychotherapist, minister, or spouse.

Setting the Stage for Recovery

During a crisis, leaders are both theatrical actors and directors. The actor communicates an emotion and infects the audience. The director sets the stage. During this COVID crisis, it is the role of leadership to set the stage for quick recovery.

Writing in the May 2019 issue of Harvard Business Review, Walter Frick looked at research that covered business recovery from recent recessions:

"Seventeen percent of 4,700 public companies fared badly when the recession was over: They went bankrupt, went private, or were acquired. On the other hand, 9% of these companies outperformed competitors by at least 10% in sales."

What separates the 9% winners from the 17% losers?

Most of your competitors are focusing their attention on hunker down/cost savings. Once the coast is clear, they will focus on expansion. This is binary thinking: Hunker down or expand.

The winners will focus on hunkering down and expansion at the same time. We recommend the following:

1. Decentralize decision making.
2. Focus on alternatives to layoffs.
3. Invest in new technology if you can afford it.
4. Create growth planning teams.

Decentralize Decision Making

During a crisis, it is natural to centralize decision making. Across-the-board decisions such as corporate hiring freezes or uniform reductions in departmental budgets are easy to articulate and appear to be fair. Fair may not be effective.

Frick summarizes a 2017 research paper on how organizational structure impacts the ability to navigate economic downturns. The research examined sales, profits, and correlated it with the autonomy of local managers to make investment decisions. Decentralization was associated with relatively better performance for firms facing the toughest environment during the crisis. This makes sense because decentralized decision making is best equipped to grasp the implication of local information and to customize local responses.

Focus on Alternatives to Layoffs

The research shows that companies that are strongest to respond as economic conditions improve are the ones that rely less on layoffs. They can hit the ground running. Competitors who engaged in downsizing will be spending valuable time hiring new staff and getting them productive.

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Layoffs also hurt the morale of the remaining employees. Salary continuation that aspires to be average combined with check-the-box outplacement programs create ill will among former employees who are well-networked on social media. When was the last time you looked at your company's reputation on Glassdoor?

Look for Alternative Ways to Cut Labor Costs

Think about reducing the hours of employees. For every five workers who give up one day of work, one job is saved. Consider increasing furloughs. Hire a compensation consulting firm to investigate changing the pay structure to give more weight to performance-based incentives while lowering base salary.

Avoid across-the-board hiring freezes. Such actions affect every department indiscriminately, without weighting the value for company growth.

Invest in Technology If You Can Afford It

It is counterintuitive to think about a hunker-down time as the best time to invest in new technology. A spending budget is a finite pool of money. Once the economy returns to growth, there will be political pressure to use that budget to increase production. That translates into less time/money to spend on new technology and technology integration.

During this COVID crisis, if you have the cash, this might be the best time to improve your technology capabilities. You have the time to make smart purchase decisions at a discount and the time to integrate this technology into your corporate culture. When things improve, that opportunity will be lost.

Your using this dark time to invest in the future is a great message for your salesforce to be telling existing customers and prospects. It is a diplomatic way of saying, "We will survive and prosper!"

Focus your technology purchase decisions on data systems that help management make better or faster decisions. Focus on tools with rapid payoff once the economy improves. For example, look at task automation technology or robotics.

Banks might be more willing to lend you money dedicated to helping the company rapidly gain market share when the crisis is over.

Create Growth Teams While in Hunker-Down Mode

Cost-cutting may be fiscally necessary. It fails to inspire employees or customers. While you are cutting costs, create virtual employee growth planning teams tasked with reaching out to customers and potential customers. Have telephone conversations about what the world will look like when the economy recovers. Focus on the future.

Focus on what products/services they think they will need once the crisis is over. Focus on product and service development based on these conversations.

During this COVID crisis, leaders have time to talk with you. Once the economy recovers, they will lack both time and interest for conversations.

Your growth planning teams have a mission of reinforcing or creating business relationships now that will foster growth later. During this COVID crisis, we are all alone together. Use this crisis as an opportunity to get personal with key stakeholders through phone calls and Zoom meetings.

Leadership in Unusual Times

Leaders who engage in binary thinking are focusing their attention on cost containment. They will wait for The Wall Street Journal to publish the all-clear signal. By engaging in binary thinking, their organizations will lose first-mover advantage.

The growth planning teams you created in the middle of this crisis will help you glimpse the first light of recovery ahead of your competitors.

Setting up such teams demonstrates to the world that you agree with Dr. Frieden: “This, too, shall pass.”