Leadership for the New Business World

The worst economic recession for generations has caused a re-evaluation of business practices in many areas, and a call for greater corporate governance and oversight. Now that we’re officially reaching the end of the recession with many countries in Asia and the whole of the Eurozone, amongst others, officially out of it, it’s also time to look closely at leadership practices in business.

One thing’s certain – many changes need to be made, and recent surveys showing a significant majority of employees are planning to change jobs as soon as hiring picks up make this an urgent necessity if companies are to avoid the upheaval and cost increases associated with high staff turnover.

There are many reasons for this level of unhappiness, among them:

  • Severe stress at work – as companies cut costs and staff, those that remained found their workloads growing, often to a point of near-unsustainability;
  • Severe stress at home – really an extension of the added stress at work, compounded by longer working hours, and often less pay;
  • Lack of appreciation – many, if not most, companies overlooked the stress factors and showed no appreciation for the additional efforts of their staff, a situation worsened by cost-cutting which impacted the staff “welfare” programmes already in place;
  • Do as I say, not as I do – as the recession bit ever deeper, many executives seemed oblivious, continuing with executive perks, parties and benefits even as they were making deep cuts in employment and other areas (look at the scandals surrounding many of the bailed-out businesses for example);
  • Lack of direction – as companies cut, often in several waves, many seemed to have lost their direction. Although, as I pointed out in an earlier article, 93% of companies had updated their strategies and priorities to address the slowdown, the fact is that much of this work was done well into the recession and they were floundering for a good time (only half have a strategy in place for the upturn!).

As a result of these and other issues many have lost faith in their business leadership and this is the reason for the potential dramatic increase in staff turnover.

A recent survey by McKinsey, “Leadership through the crisis and after” points to the way forward. What’s interesting is that the top criteria for leadership during the crisis are the same as those for after it, with only minor changes to relative importance. In essence, leaders are expected to be:

  • Inspiring, creating a vision for all to see and aim for, and doing so convincingly and clearly;
  • Unambiguous, defining expectations and rewarding people appropriately for this;
  • Challenging, through encouraging people to challenge assumptions and take risks;
  • Participative, involving others in the decision-making process;
  • Above Reproach, acting as a role model, mentoring and teaching;

These are very much in line with what’s being said elsewhere and with what executives perceive as the most important criteria for organisations going forward: Leadership, Innovation, Clear Direction and an External (Customer, Supplier, etc.,) Orientation being seen as the top success factors.

It may not be too late. Employment typically lags an upturn by several months, so leaders still have a little time to restore the faith of their workforce. However, they cannot afford to delay any longer to address these issues of concern and need to clearly demonstrate that they understand the way forward for success. Failure to do so will almost certainly cost companies dearly.

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Postscript: Was pointed to an excellent presentation by Dr Tommy Weir on CEO Shift demonstrating how leaders will need to shift their thinking in 5 key areas related to talent. Well worth watching! See it at http://tommyweir.com/Video.aspx

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4 responses to “Leadership for the New Business World

  1. Good points and ideas, really hadn’t thought about many of those issues. Correction though, the recession is not over in the Euro zone. Unemployment is even expected to increase in Germany.

    Saab in Sweden actually cut executives during the last year and the smaller staff got more done than before. Would think that the number of staff will be kept at the current level from now on?

    McKinsey’s leadership report interests me since I wholehartedly agree. Probably would go even further than that. But whenever I publish something on leadership I get an abundance of, above all, Americans arguing that managers are more important than leaders. Presumably because most people are not able to lead, only manage, and they know it? Makes you wonder if the change from managers to leaders that we all would like to see will happen? Too many managers out there.

    • Thanks Catarina. On the Eurozone, I saw a financial report stating that Q3 showed overall postive growth (albeit very slight) which officially would mark the end of the recesssion.

      Employment upturn always lags financial upturn by several months so we can expect the final cuts in the next month or two before hiring starts. Of course, some individual economies within the Eurozone may be slower than the overall.

      I was interested to see your point about Saab’s producitivity rising after executive cuts. Wonder what is says about the quality of their executives…

  2. As always Guy very well written and right on the nail.

  3. Pingback: reBlog from guywhitcroft.com: Whit's End « MelCarlton's Blog

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