Leadership in a new light - how can businesses lead by example?

Written by
Changeboard Team

05 Apr 2010

05 Apr 2010 • by Changeboard Team

How should we define leadership?

The Oxford English dictionary defines a leader as a person that leads or a person that is the most successful or advanced in a particular area. It sounds simple.

However, the concept of leadership remains nebulous for many, and business responsibilities to people and the planet need to be taken much more seriously. There are vital Lessons about how we lead our businesses in future that we need to learn. Fast.

What does successful leadership look like?

In a recent poll* of Business in the Communitys leadership team members the board and chief executive-level leaders responsible for helping to shape and drive our national and regional campaigns and strategies respondents were asked to pick three statements (out of a given list of 13) that best described what responsible leadership meant to them.

The top five responses included:

1. Factoring social and environmental issues into commercial business model - 63%

2. Supporting future business leaders to have a wider appreciation of business responsibility - 36.8% 

3. Creating inclusive workplaces and removing barriers to progression - 33.3%

4. Supporting the most vulnerable communities in which you recruit, employ, trade and purchase - 32.5% 

5. Talking publicly about responsible business issues and your organisations response - 31.6%

The fact that so many identified integrating social and environmental issues into the commercial business model - way ahead of other options - is a real step change in thinking. Corporate social responsibility has come a long way; where once seen as an add-on to business, corporate responsibility is now high on business leaders agendas as a way of doing business, and is increasing in significance at board level.

* Methodology: All of Business in the Communitys 330 leadership leam members (the board and chief executive-level leaders responsible for helping to shape and drive its national and regional campaigns and strategies) were invited to participate in this survey in advance of BITCs Leadership Summit hosted by HRH The Prince of Wales, President of BITC. 115 responses were collected between 25 January & 22 February 2010.

The impact of the recession on leadership

The recession has had a negative impact on consumer perceptions of business and business leaders alike; although credibility of CEOs rose by 13 points on the Edelman Trust Barometer, it is still low in the UK overall at 33%. And while the barometer finds trust in UK business is stable at 49%, nearly 70% of the Barometer respondents said business and financial companies will revert to business as usual post-recession.

There is a strong consensus among business and the public that more visible leadership is needed to help restore confidence, with 97% of respondents to the BITC Responsible Leadership poll telling us that individual business leaders must be seen to act to restore confidence lost due to the financial crisis.

Andy Clarke, chief operating officer ASDA Stores and member of BITCs Race for Opportunity campaign Leadership Team puts it this way:

Business leaders need to be brave with the approach they take; its time to move from tactical into strategic leadership.

A major step forward in thinking is the recognition from leaders that they need to respond to this lack of trust and that they see themselves as part of the solution to the problem.

How can leaders prepare businesses for the upturn?

Although the operating climate has been tough, the recession provides businesses with an opportunity to be part of a more responsible economy, and the impetus to think differently about how they are doing business. Two in three (67%) respondents to the BITC poll told us they believe a more responsible economy is likely to emerge from the recession - their leadership will be more important than ever in making this a reality, and to avoid reverting to business as usual.

We all spend a huge part of our lives at work, so we want to be proud of our organisations and we want them to be successful. But we also have expectations, which go beyond pay and rations. We want businesses to be responsible, to be accountable, and to be good places to work, places where people care about others - be they customers, employees, or suppliers - and about the impact they have on the natural environment and wider society.

Business leaders need to be able understand and manage those impacts in order that they can begin to mitigate them through all business operations. When mainlined into the heart of business governance, policy, reward structures and reporting, this is a real driver for sustained success. For example, analysis of BITCs Corporate Responsibility Index participants, conducted by Ipsos MORI and Legal & General between 2002 and 2009, revealed that those companies managing and measuring their social and environmental issues on the Index bring in higher total shareholder return.

A need to lead by example

We cannot continue the way we have been going; we must take our responsibilities to people and the planet seriously and learn from the mistakes that brought us to the greatest crisis in confidence in business and market capitalism since the 1929 Wall Street crash. Representatives of some of the UK and the worlds most recognisable and powerful companies have told BITC that they want to be a part of that solution, and indeed that they must lead by example.

We will support those companies in doing more to ensure that, working collaboratively, we can restore consumer confidence in our organisations, while challenging those who lag behind to step up and take action.