Leadership in risky times
As the global economy reels from the effects of high risk corporate strategies, how are leadership roles and attitudes changing towards managing organisational risk?
Many leaders are showing a renewed purpose but is this just a passing fad or is risk management the new key to success for leaders? How do employees pose risk to an organisation and what are the potential pitfalls? Also, how is HR addressing risk in terms of employment law, bonus culture and recruiting during a recession and how can this be measured in terms of ROI?
Is unclear leadership the biggest risk of all?
The biggest risk in leadership is that we are not clear, and being clear on one overriding direction or goal or strategy feels risky to us because people might relax on all the other things that are seemingly equally important.
Its the classic Boston Triangle question do we want customer intimacy, or lowest cost production or operational excellence? Of course, we want all of them but that's not the point. The point is which one takes priority over the others? However, to be truly successful, we need everyone in the organisation to be clear on the vision and the direction, so that they instinctively know how to behave when faced with a dilemma.
If we are a hotel, should we spend money on putting flowers into our guests bedrooms if it means we have to put the price of our rooms up? If we are a retailer, should we allow our employees total flexibility in handling customer enquiries, if it means that we cannot therefore have strict adherence to a company-wide brand experience consistency? If we are a manufacturer, should we lower the product quality reject rate if it means we have to increase the unit cost of production?
These are the classic business dilemmas, and the biggest risk we actually face is to have employees who are confused about the right answer. If our hotel is based on lowest priced rooms, then we should not buy the flowers but if it based on customer intimacy then we should. If our retailer is based on customer intimacy then we should allow employees flexibility. If its based on operational excellence then we should have consistent adherence to a company-wide process. If our manufacturer is based on operational excellence then we should increase quality and allow the unit cost of production to rise. If its based on lowest cost production, then we should not spend the money on raising quality.
Why is our lack of clarity the biggest risk?Because the people following us get confused and then make up their own goals and strategies, and then we get frustrated with them. Then the whole organisation spends millions on unnecessary management, and becomes inevitably doomed to a mediocrity of performance. And everyone gets very stressed.
Integrity and leadershipFocus on Results and at best nothing will change. At worst, peoples performance will be damaged as they become stressed, but if we focus on change and trust, the Results will flow. Maybe it won't be necessarily as you planned, but they will be the best possible. Our fear of not being able to prove that we did everything possible is mostly what drives us. Standing up to the boss, or the non execs, or the investors when it has all gone wrong and saying: I was working on a strategy of trust, in that I believed I was doing the right things and that the Results would flow from that is not going to save us, but then surely we are worried about the wrong thing. We spend more time worrying about how we will look if it all goes wrong, and less time focusing on inspiring people so that they can perform consistently at their very best.
Its why we don't celebrate. Its why we don't habitually praise people. We believe if we focus on problems - if we focus on what's not going well then we have the best chance of succeeding; that if we focus on positives that people will relax for a split second and the world will fall apart. Its a control thing, and it breeds intense pressure and stress. We don't trust that people will be inspired by our optimism, our appreciation, and our recognition - inspired to work even harder, but most importantly be refreshed and reinvigorated leading to them raising their commitment to the cause.
Why did so many banks have such high risk strategies strategies that in the cold light of day in 2010 were clearly insanity and pure gambling? Because the riskier thing for a senior bank executive at the time was to be perceived as falling behind the competition.
What the world needs now is leaders who have integrity and who are not afraid to stand up to the herd mentality. And that is actually only possible when all stakeholders are agreed on the vision and the direction.