Leadership challenges
What are the biggest challenges faced by business leaders today?
Andrew White, associate dean – executive education, Said Business School (AW): People used to think change happened periodically, but in many industries it’s continuous. Customers are also becoming much more powerful through social media and social networks.
Kai Peters, chief executive, Ashridge Business School (KP): Leaders are increasingly having to deal with issues such as sustainability, the need for creativity, ongoing economic uncertainty and the growing power of Asia. There is also a greater need for leaders who adopt the style of a steward and involve others.
Nick Bacon, professor of HR management, Cass Business School (NB): In recent years, many business leaders have increased shareholder value at their employees’ expense, typically by outsourcing work, off-shoring activities and holding down wages. They have neglected the need to boost long-term workforce skills, value-added jobs, living standards and job security.
This focus on reducing labour costs has failed to address the UK’s relatively low levels of productivity. Middle and lower income workers have experienced greater insecurity, growing wage inequality and cuts in pension benefits. Underemployment has increased thanks to a lack of high-quality roles, with more employees overqualified for their jobs or looking for overtime to offset low pay.
Kim Turnbull James, professor of executive learning, Cranfield School of Management (KTJ): If your organisation wants to deal better with global connectivity and competition, you need to question fundamental assumptions about how it operates. You cannot rely on your current winning formula to provide future success.
Nick Holley, director – centre for HR excellence, Henley Business School (NH): Customers have always wanted more for less and competitors have always been willing to compete in an illogical way. But the speed and scope for change is increasing. Big Data and social media are making a huge impact on the need for transparency and how quickly we (or our customers and competitors) can gain insights.
Dr Jonathan Trevor, lecturer in HR and organisations, University of Cambridge Judge Business School (JT): Greater financial constraints have led business leaders to focus on short-term gains to maintain cash flows, rather than finding long-term solutions. Also, customers are demanding more variety and personalisation of service and products instead of value for money. And there are many external factors influencing firms and speeding up the pace of change. Long-term investment is needed, but by its nature it is uncertain, inefficient and prevented by financial constraints. This creates a limbo.
Are executives suffering from a crisis of confidence in their leaders? If so, why?
AW: Particularly in industries that have got into trouble (such as financial services), the pressure on leaders is increasing.
As a society, we still have a need for leaders, but we project onto them a desire to serve a wider agenda. In some cases we have seen them as being very self-centred, for example in executive pay scandals.
KP: In times of uncertainty, people look for clarity and a distinct plan. Leaders are not in a position to offer the answers – but they can help ask the right questions.
NB: Employees need a pay rise. The public lacks confidence in business leaders whose incomes are increasing and where shareholders receive greater returns while employees’ living standards fall. This could be redressed by fairly sharing the gains of economic recovery.
KTJ: In a period of uncertainty you need to be able to channel people’s anxieties into productive, purposeful change. Leaders need to create environments where people can come up with new ideas and solutions.
People want leaders they can identify with, who walk the talk. We need much more than top-down visions and mission statements.
JT: If anything, there is too much confidence in leaders who are highly paid and therefore expected to have all the answers and lead their organisations successfully.
Leadership capabilities
What capabilities do leaders need to drive global business success?
AW: You must be able to go into another culture and see it for what it is. You need to stop letting your own culture act as a filter for how you see and work with the one you’re going into.
KP: Keen senses of observation – seeing, listening, trying to understand different cultures and markets – are important. You can develop these skills through job postings, creating mixed teams and designing management development in the broadest sense to encompass global mindsets and challenges.
NB: Companies need to pursue strategies and practices that raise productivity and generate high-wage employment.
High-performance work systems can help develop a more competitive and productive society – raising labour productivity by increasing employee skills, motivation and providing more opportunities to contribute.
KTJ: Interpersonal skills are not enough on their own. Leaders need to be able to do things differently themselves rather than persuading others to do the changing. This requires courage to take personal risks, work from a values base to practice ethical leadership, and collaborate rather than impose.
You also need a deep understanding of political and emotional organisational undercurrents, history, people and culture. Organisational leadership means creating collaborative practices, developing new solutions that people own, and enhancing a collective sense of purpose and identity.
NH: You need to let go of the urge to control and understand that it’s not about you or your ego. You must become better at listening, admitting when you are wrong, changing track and challenging your own assumptions about what works. It’s also important to improve how you engage with people outside your organisation – such as suppliers, partners, alumni and NGOs – which is tough to do.
To operate in this ambiguous world, you must change how you look at yourself and the world, and become more mindful and reflective about it. Organisations need to be clearer about this mindset when recruiting instead of being impressed by intellect, charisma and ego.
JT: You must be able to create a vision for positive change and inspire action in others by helping them understand their place in a global business environment.
It’s important to understand other cultures and how they prefer to do business, through education and exposure to experiences and people that can foster these qualities.
What role does HR have to play?
AW: You can help prepare the workforce to tackle the global environment. Rotate a senior or high-potential group through placements and secondments that expose them to customers and suppliers in other countries.
KP: You must understand where the business is and where it is going in terms of products, markets and services. Then you can align talent management, talent development and other areas of HR expertise to the challenges faced by the organisation.
NB: Rather than concentrating on cutting labour costs, facilitate dialogue to raise investments in employment practices that enhance labour productivity. HR also needs to help voice employee concerns at boardroom level to raise wages and improve job quality.
KTJ: Stop adhering to competence frameworks. This approach to leadership development breaks a complex process into elements that do not combine back into real leadership capability.
NH: HR needs to model the new behaviours itself and become more comfortable with ambiguity. We should also recruit and develop leaders who create an engaging environment and people who are responsive, flexible, passionate and focused on outcomes.
JT: HR must make itself redundant and enable managers and leaders to do the HR role for themselves. In the future, HR will oversee and nourish variety and connectivity so that the whole of the network is worth more than the sum of its parts.
Tackling the current business environment
How can HR leaders up-skill themselves so they are ready to tackle the current business environment?
AW: Take an active interest in the strategic conversations that happen in your company, build relationships with leaders in the business, and understand customers and what the organisation is about.
KP: View the world from the perspective of the CEO. Make time to reflect and engage with finances, markets and other business areas.
NB: Listen carefully to employee concerns and build support for introducing improved employment practices.
KTJ: Work with providers of leadership development as well as leaders in the business to tailor your approach. Begin to think about leadership capability as an organisational outcome of successful development.
NH: Rather than ‘doing’ HR, spend more time thinking about the challenges the organisation is facing and focus on engaging people in addressing these.
JT: Become a technologist, look at what capabilities are needed in the organisation, and work on managing the most important resource – people.
What are your predictions for the coming year regarding organisations’ leadership capabilities?
KP: I foresee a big – if patchy – improvement in business prospects in many sectors in the UK and Western Europe. A bit of optimism is a great way of developing leadership capabilities.
NB: Employees will expect leaders to recognise the sacrifices they have made and increase wages to deal with the rising cost of living.
KTJ: Many organisations have already decided that ‘leadership’ is the way out of the crisis that we have experienced in many sectors. I expect ethical leadership to figure much more centrally in leadership development.
JT: Leadership capabilities will continue to develop and improve. Leaders will be able to guide their organisations through challenges and changes.
What can leaders do to win the respect of employees, drive innovation & navigate turbulence?
AW: Understand who and what you are, what you bring, where you lead and why you have the authority to do so. Employees can spot leaders who aren’t authentic. Listen to the voices of those who challenge you and communicate a message that builds confidence.
Create space away from the day-to-day business. Visit different industries and see how they operate, get to grips with the world your customers live in, take an executive education course or hire a coach who will help you ask deep questions about your own leadership.
KP: Be available, listen and admit you don’t know everything. Colleagues will chip in with insights and ideas – and the organisation will be more successful.
NB: Leaders need to deliver earnings growth which outstrips the increased costs of living, and ensure a more inclusive approach to recruiting and retaining people traditionally disadvantaged in the labour market.
KTJ: Many people have experienced such poor leadership that they can’t trust anyone who has power and authority. When people are concerned about the future, you need to earn trust by repeatedly demonstrating your integrity.
NH: Welcome challenge. Listen more and speak less. Be willing to admit you are wrong and adjust what you are doing. Talk about outcomes, not yourself, and focus as much on the environment you will operate in in the next 5-10 years, as you do on your current reality.
JT: People can handle bad news better than no news. The bottom line of leadership is working out how you get people to do the right thing. As Herberg said: ‘If you want someone to do a good job then give them a good job to do.
Andrew White
associate dean – executive education & fellow – strategic management, Saïd Business School, University of Oxford
Andrew’s background is in the research of innovation management.
Kai Peters
chief, executive, Ashridge
Kai also writes and lectures on cognitive sciences, leadership and strategy for government, business and academic audiences.
Nick Bacon
professor – HR management, Cass Business School
Nick’s research explores the impact of HR management practices on organisational performance and employee outcomes in a wide variety of settings.
Nick Holley
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director – centre for HR Excellence, Henley Business School
Nick combines research into the latest thinking around HR with coaching, consulting & teaching in major organisations across the world.
Dr Jonathan Trevor
lecturer in HR and organisations, University of Cambridge Judge Business School
Dr Jonathan’s principal research area is the link between strategy, organisational development and capability.
Kim Turnbull James
professor – executive learning & director of faculty development, Cranfield School of Management
Kim’s work recognises that effective leadership requires an understanding of the impact of political and emotional dynamics.