Saving a Crisis-Ridden Company

After massive fraud was discovered there, Satyam Computer Services survived by helping its employees focus on their emotional trauma.

A senior executive of a scandal-rocked multinational computer services company broke down in tears during a session with his leadership coach, devastated that he had given more than 10 years of his life to a company whose CEO had been caught in massive fraud. With just a year to go until reaching mandatory retirement, he had invested most of his savings in the company’s stock, which was now worth next to nothing. Another of the company’s managers, 50 years old, received a call from his father urging him to leave the company before his own reputation was further tarnished. A young supervisor realized his impending wedding was at risk when it appeared he might lose his job because of the scandal. “The rug was pulled out from underneath us all,” one of the executives said. “We felt forced to heal rapidly so we could help others to heal. I broke down and wept; not once, but several times.”

The company was India’s Satyam Computer Services Inc. Founded in 1987, Satyam grew to be the fourth-largest IT services firm in India, with more than 53,000 employees in 60 countries. In January 2009, Satyam’s founder and CEO admitted to falsifying and overstating the company’s financial position. Arrests followed, and news accounts referred to Satyam, once a respected brand, astainted, disgraced, beleaguered, fraudulent, and crisis-ridden. It became common to refer to Satyam as “India’s Enron.” The CEO was featured in Business Week with the headline, “From Icon to I Con.”

Executives faced with a legal and public relations disaster of this magnitude are likely to think in terms of damage control and rebuilding the brand. But those responses are focused on merely repairing the company’s reputation and perhaps addressing the internal problems that caused the debacle (although, unfortunately, in many cases that is a secondary concern). In thinking this way, leaders neglect the aspects of company life that may well determine whether and to what degree the business will emerge from the crisis: healing the pain of the organization’s people, who undoubtedly feel betrayed, fearful, and uncertain about the company’s survival — and motivating them to take on the task of making the business whole.

We had already been at Satyam for four years when the crisis hit. Priscilla Nelson was global director of people leadership and Ed Cohen was chief learning officer. But our roles changed overnight. Immediately, we were asked to take significant responsibility for creating and managing new strategies to heal the deep wounds in the organization.

Fortunately, the leaders who remained at Satyam were determined to produce the best outcome they could. Although saving the company would be difficult, they developed a rigorous plan to help leaders deal with employee fears, concerns, and disruptions so that productivity would remain as high as possible while the company explored its postcrisis options. As part of this process, Satyam turned to a pool of professionally trained coaches to work with the company’s managers to make sure that these executives did not allow a single employee to withdraw or lose hope without having tried hard to engage him or her. From this unforgettable team effort, all of us came away with a lifetime of ideas about dealing with disaster primarily by focusing on employee well-being. The key lessons are summarized here.

• Communicate broadly. Too often, managers assume that a single written communication — an e-mail or a bulletin — about a facet of the crisis is enough. But in reality, high visibility, though it takes courage, is essential. Nothing beats face-to-face communication. Employees are hungry for information when a company is under siege, and leaders must not assume that because they said something once, they have communicated it clearly and to everyone who ought to hear it. A lack of information feeds the sense that things are out of control, and elevates system-wide fear.

Leaders must talk with employees even when they don’t believe there is much to say. Lacking hard information, people usually tend to make up their own stories or rely on public media. When they fabricate tales, they tend to assume the worst. And from the press they often hear half-truths or distortions. For example, Indian publications reported that Satyam had no cash and would be unable to cover its payroll. But the company’s executives knew that Satyam would have sufficient money to cover expenses if customers sped up payment, and they had already taken steps to make that happen. Rumors must be faced and addressed.

• Admit ignorance. When you have nothing new to say and no answers to give, it is best to tell employees so, and instead listen to employees’ concerns and address their questions with candid responses. Leaders typically want to appear knowledgeable, but crises have many known and unknown variables. When circumstances are fluid, managers must become comfortable saying, “I don’t know.” Honesty can be a powerful antidote to fear.

• Respond to the raw emotions that inevitably arise among employees by not denying your own. During a crisis, employees will often feel extremely vulnerable and express this with words like hurt, worried, cheated, afraid, andshocked. Leaders frequently are struggling with the same emotions and should not be afraid to say so. Speaking about and openly listening to fears can help reduce them. And managers who can acknowledge those feelings in themselves have a much better chance of being able to understand them in others and to respond empathetically.

The Satyam story does not have a fairy-tale ending. Although management was diligent about protecting its employees, the company’s reputation and financial situation were compromised savagely. And in April 2009, some three months after Satyam’s fraud was revealed, the company was acquired for US$580 million by Tech Mahindra, a joint venture of British communications giant BT Group and the Indian IT outsourcer Mahindra & Mahindra. Soon after, thousands of Satyam’s employees were let go or chose to leave.

Satyam has many legacies, most of them troubling. But the company’s leaders can hold their heads high for one significant achievement: They left behind a slew of thoughtful ideas about saving a crisis-ridden company by making employees’ best interests the centerpiece of the response. And in the end, because of that, some 25,000 people still had jobs — and many of these workers were looking forward to a bright future at a company that had once disappointed them.

by Priscilla Nelson and Ed Cohen - Strategy+Business