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Neil Davey

Spotted Zebra

Senior Content Manager

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How leadership can help the economic recovery


Leadership will be a key aspect when business seeks to recover from the recession. Experts in leadership including Ken Blanchard and Tom Peters share their thoughts.

Whether it is representing the brand’s values or inspiring and engaging staff, the role of leader has never been so important as it will be in 2010. The present corporate environment is characterised by several trends – consumers are more cynical about corporate agendas and are willing to put their money where their mouths are; staff are demanding more than just financial remuneration in return for their commitment to their employer; and of course the recession has put greater pressure on firms to be innovative and competitive within stricter financial constraints. Effective leadership is the only commodity that can provide a solution to all three of these challenges.
Indeed, leadership guru Ken Blanchard has spoken in the past of the four components that constitute a successful customer-centric organisation: treating customers right, treating staff right, having the right target and having the right kind of leadership. It is this final element that is the catalyst for all the others.
But Blanchard has also fired a warning about leadership: “In the past a leader was a boss. Today’s leaders must be partners with their people. They no longer can lead solely based on positional power.”
And the problem that organisations are experiencing now is that the character of their leaders may not have been tested until the present economic predicament – as David Fairhurst, senior vice president and chief people officer, UK and Northern Europe, at McDonald’s Restaurants explains: “Leaders are like tea bags. You only know how good they are when they’re in hot water.”
Some leaders have already been found wanting – most notoriously in the financial industry, where a succession of major figures have been shamed over their role in the banking crisis. "Leadership is a sacred trust – that is not extreme language. Leadership should be seen as an honour – you have an astonishing responsibility to those in your care," emphasises Tom Peters.
Employees and their relationship with the employee
Indeed, morals and values are now more significant than ever to both employees and customers. Scandals have rocked major institutions such as the banks, the BBC and the government in recent months, and there is growing cynicism of traditional business values. This is having huge implications for employers.
“I can remember when you were recruiting someone and they were just happy to get the job. As the years have progressed, employees have become much more demanding of the employer,” says Deborah Baker, director for people at BskyB. “They are looking at a company and saying ‘what is your stance on corporate social responsibility? Can I trust you? What are your values? What is your leadership style? Why should I be led by you?’”
And the jobs pool is perfectly entitled to demand answers to these questions.
“The problem with leaders who do not have a values-based business is that when the bottom line doesn’t look good, they care less about people,” warns Blanchard. “It is nutty that in hard times managers get more insular. It’s the people out facing the customer who know where the costs can be cut or the revenues raised. It is unbelievably naïve to think that in hard times people are unimportant."
The customer relationship is also at stake as the recession throws the business world into a state of flux. Tom Peters has written in the past of how organisations frequently revert to the command-and-control model of leadership during “crazy and chaotic times”, a model that not only serves to dent the potential of staff, but also the experience of the customer they serve. In the words of Blanchard: "If you don’t treat your people right, they will not take care of your customers."
”If you want to create legendary service that consistently delivers so that people want to come back to you, then you have to have ideal service, which is a belief; you have to create a culture of service which is setting the vision, values and the goals; and then you have to be attentive and use your information system to find out about your customers and what their needs are; and then you have to be responsive to those needs and create a culture where you can empower people to bring their brains to work.”
 New thinking
Fortunately, there are indications that organisations in this recession are becoming aware of these shortcomings and may sidestep the errors of the past. Peters is optimistic that change will come: "I find that people are more open now to new thinking in running business.”
Indeed, recent research by the CIPD revealed that over 80% of learning, training and development managers highlighted the development of management and leadership as the most important skill to embed in UK organisations in order to meet business objectives during the recession.
 “It is true to say that investment in leadership over the years has been sporadic,” Fairhurst says. “But there is now a recognition of the importance of leadership, and particularly where leadership hasn’t worked and where values have broken down. You only have to look at the banks. Integrity wasn’t part of what was trying to be achieved and they had lost sense of what the purpose was. Businesses are saying they don’t want that. So there is a move to consider expenditure on leadership as an investment not a cost.”
Nevertheless, leadership isn’t something that mere money will address. For a start there is no widely accepted method of leadership measurement, and new techniques are regularly coming on stream. Furthermore, there are a wide number of different leadership models to explore – none of which necessarily provides the silver bullet. Servant leadership, for instance, is the latest model to catch the imagination of many gurus – "Servant leadership is about setting clear vision and direction – what you could call ‘strategic leadership’,” says Blanchard. “The next stage is operational leadership where you serve the vision and not your own self-interest. This is the servant part."
But even outmoded models can have redeeming qualities – “Leadership per se implies a moral value,” says Peters, “and though the military model of leadership can often be misapplied, it does have a lot to teach us about the way people should be led."
Leadership may be the solution to some of the biggest challenges facing firms today, but it is not something to simply throw money at. It is reassuring to see leadership at the top of the corporate agenda – but there is still much work to do to translate this prioritisation into performance.
"To state the obvious, one’s mettle is tested in difficult times,” concludes Peters. “But I want to avoid like the plague that motivational speaker’s nostrum: ‘This is a time of great opportunity – get on your feet!’ There is a strong bullshit part of this. But I do believe you can treat this recession as one to be gotten through and one in which you can dig deep and think about the people to whom you are responsible. It is a chance to inaugurate a period of significant renewal. It is bloody immoral if you don’t." sister site delivers a monthly leadership bulletin featuring interviews with the likes of Ken Blanchard, Tom Peters, Garry Ridge, John Adair and John Kotter. To sign up, CLICK HERE.
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Neil Davey

Senior Content Manager

Read more from Neil Davey

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