Setbacks are inevitable in any organization.

Coming back from one is not.

The ability for a company to thrive after a crisis depends on actions of the leadership. The way we address setbacks can have lasting impact on people and performance and the long-term viability of our companies.

Last year, McKinsey research said 75% of risk managers within companies believe strengthening integration of resilience into the strategy process is an important action companies can take. (Source)

We talked about it in Culture Matters recently so our companies/employers/clients can be proactive when setbacks occur. We talked about three types/examples:

1.  Poor Communication. Companies reeling from poorly communicated RTO practices. Without thinking through their Return to Office policies, companies are jeopardizing employee retention and reputation. Some of the policies we’ve all seen publicized are so out of touch they could have been written 100 years ago. Or, even 10 years ago.

2.  Systemic Issues. Systemic issues challenge culture all the time, and those get magnified during a crisis. Boeing is a good example. The first plane crash was a setback. The second and third revealed a systemic issue that needs serious attention and oversight.

3.  Mistakes. Another recent setback shared today is being faced by Mattel this week. On Monday, Mattel pulled their new “Wicked” dolls off the shelves because the packaging on several character dolls includes a typo in the web address. Instead of the website leading to the film’s webpage, it leads to an adult website. (Source) There are setback like this which can be rectified relatively quickly; however, the financial implications could be felt long-term.

We talked about several other company cultures, setbacks, actions, and outcomes. Our hope was to talk through these so we could build or update actions we take when there are setbacks.

Here’s what we came up with, along with a few I’m adding to round out a process.

1) Admit It: The first step is to admit there is an issue. Not publicly, yet, but to yourself. There have been so many publicized and analyzed business setbacks over the years, one would think all the business leaders everywhere know what to do when one occurs. Yet, often, the leaders will not accept there is a setback, mistake, or issue. Their obstinance delays rectification, which can exacerbate the issue on people, the environment, and financials.

 2) Restore Trust: Leaders need to re-establish trust and openness with their direct reports, internal teams, and external stakeholders, especially when a setback erodes confidence in leadership.

• Acknowledge and Apologize for Mistakes: If leadership played a role in the setback, openly admit to errors and take responsibility. Authentic accountability demonstrates humility and integrity.

• Actively Listen to Employees: Hold listening sessions or open forums to hear employees' concerns and perspectives. This shows a commitment to understanding their experiences and needs.

• Follow Through on Commitments: Rebuild trust by setting realistic goals and delivering on them consistently. Small, steady wins help restore confidence in leadership.

 3) Strengthen Core Values: Leaders can ensure that core values remain intact and visible, even when morale and unity are low

• Connect Decisions to Core Values: When explaining recovery strategies, highlight how each action aligns with the organization’s values to reinforce their importance.

• Create Value-Based Recognition: Recognize and reward behaviors that exemplify the company’s core values, even during tough times, to reinforce cultural alignment.

• Incorporate Values into Daily Routines: Encourage teams to discuss how core values can guide their work during meetings or project planning sessions.

4) Rebuild Team Morale: Leaders can reconnect team members, especially if they feel disillusioned or uncertain about the company’s future.

• Celebrate Small Wins and Milestones: Highlight achievements and progress, no matter how minor, to remind the team of their collective capabilities and resilience.

• Provide Opportunities for Connection: Organize team-building activities or informal gatherings to rebuild camaraderie and foster positive relationships among team members.

• Reinforce Individual Contributions: Acknowledge and express gratitude for the unique strengths and efforts of team members to boost their sense of value and belonging.

5) Communicate Authentically in Times of Recovery: Leaders need to be transparent and effective when addressing setbacks with teams, even if they cannot reveal everything discussed behind the scenes.

• Be Transparent About Challenges: Share what you can about the full context of the setback, including its impact and the steps being taken to address it. Honesty builds credibility.

• Use Empathetic Language: Show genuine care and understanding of how the setback affects employees on a personal level, demonstrating emotional intelligence.

• Provide Regular Updates: Keep communication consistent with updates on progress and recovery efforts. Frequent touchpoints ensure employees feel informed and involved.

6) Take Practical Steps for Moving Forward: Leaders and culture advocates can take specific steps to bring the team back together and create a positive outlook after a setback.

• Co-Create Solutions with Employees: Involve employees in recovery planning and encourage their input, fostering ownership and engagement in the path forward.

• Focus on One Clear Goal at a Time: Simplify efforts by setting a single, achievable objective to give teams focus and a tangible sense of progress.

• Revisit and Reframe the Vision: Share an updated vision for the future that inspires hope and aligns with lessons learned from the setback.

Leadership is hard. It is even harder for leaders who do not learn how to recover after setbacks.

🐣If you're too chicken to face setbacks, step aside.

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