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Manana KharkheliGiorgi Morchiladze
ISSUES TO BE CONSIDERED IN COMPANIES DURING CRISIS SITUATION

Summary 

The spread of the pandemic around the world has significantly changed the rules for doing business in many companies. Organizations in the services, construction, or other sectors faced serious problems, and some of them stopped working altogether. The reality is that many organizations have turned to a crisis. In turn, in a crisis situation, companies need to rethink their strategy and change, in order to survive and adapt to a changed environment. Making changes is often difficult because, among other reasons, the interests of interested parties (employees, suppliers, customers, etc.) overlap significantly. That is why this article discusses the importance of using the practice of “procedural justice” in organizations, which are in crisis situation, because it helps companies to implement the changed strategy effectively in a difficult condition.

Creation of term "procedural justice" is related to two social scientists: John W. Thibaut and Laurens Walker. Their research determined, that humans care as much about the justice of the process through which an outcome is produced, as they do about the outcome itself. People’s satisfaction with the outcome and their commitment to it rose when procedural justice was exercised [J.Thibaut, L.Walker“, 54].

In our opinion, the practice developed by W. Chan Kim Renée Mauborgne, is quite interesting, which are based on the research of  J.Thibaut, L.Walker.

This practice is based on three elements, namely: Engagement, Eplanation,  Expectiation.  To explain one by one:

  • Engagement means involving individuals in the strategic decisions that affect them by asking for their input and allowing them to refute the merits of one another’s ideas and assumptions. Such practices promotes the spirit of teamwork and mutual respect,  and obviously, made decision  will be more synergistic and effective.
  • Explanation means that everyone involved and affected should understand why final strategic decisions are made as they are.   An explanation allows employees to trust managers’ intentions even if their own ideas have been rejected.   
  • Expectation clarity requires that after a strategy is set, managers state clearly the new rules of the game. Although the expectations may be demanding, employees should know up front what standards they will be judged by and the penalties for failure.   Related to many  researches[1],  Creating clear expectations is essential, because it is causes increase of  profits (from 14% till 29%), (from 10 till 19%) revenue and  other indicators.

In conclusion, we can say that in a crisis situation, companies should be careful when working with interested parties, because if they make a mistake, correcting the situation will be much more difficult than in a situation when the company grows. In turn, implementation of procedural justice will help Management, to reduce the risk of mistake during co - working with stakeholder.

Keywords: Crisis Management, Change Management, Fair Process