Strategies for Managing Organizational Crises

In times of a budget crisis, decisions must be made quickly and effectively. Some managers prefer to take immediate action based on their knowledge and instinct. But researchers found that bringing in middle managers who have expert knowledge leads to better outcomes.  

In a national study published in the Journal of Public Administration Research and Theory, researchers Hala Altamimi, University of Kansas; Qiaozhen Liu, Florida Atlantic University, and Benedict Jimenez, Georgia State University, studied the effect of centralized and decentralized decision-making during a budget crisis.  

“This subject is fascinating to me because it is an age-old debate. Is it better to centralize decision-making with a chief executive, or to decentralize it among middle managers and front-line employees? It may be possible to be successful with either approach during normal times, but how is crisis different?” said Altamimi. 

Altamimi, whose research focuses on improving organizational performance in local government, says that one of the main contributions of the study is that it views organizational decision-making is a continuum, and the opportunities to include a range of contributors are broad. Leadership has the opportunity to include unit heads, department managers, employees with expertise, or the whole organization, though that would likely be challenging, especially during a budget crisis where resources are scarce and time is of essence. 

“It's not black and white,” Altamimi says. “It's a matter of degrees.” 

The research found that consulting unit heads is crucial. Their influence ensures quick resource allocation, conflict resolution, and coordination, helping the chief executive make timely decisions.” 

“It’s better to lean more toward a centralized approach during crisis,” Altamimi says. “The chief executives don’t have the capacity to process all of the information in a short time. It’s better to include department heads and people who have expertise in the process.” 

In addition, the research revealed that if leadership enforces decisions without consulting managers, they may lose buy-in. Altamimi says the research showed it’s best to stay away from either extreme on the continuum and lean more toward centralization during a budget crisis. 

“The middle range provides the best of both worlds,” she says. “It combines expert knowledge to make quality decisions and ensures quick action.”