I spent a significant part of my working life developing leaders in organizations. What strikes me is that during COVID-19 the demand for this type of work has not decreased; if anything, the demand for leadership development has increased. That is remarkable. During the financial crisis in 2007-2008, for instance, most companies tried to save money, and one of the first things they considered was decreasing the out-of-pocket costs associated with these, and other kind of developmental activities.
Recently I was asked why companies continue to invest in the quality of their leadership at all levels of the organizations, despite the economic uncertainty they are facing.
In my opinion, the reason is that companies have come to realize the growing importance of the quality of leadership at all levels of the organization. I believe that this is a good thing, especially because leadership roles have become more demanding in the last couple of decades, not only for senior leaders, but also for first, and second-level leaders in organizations.
Why leadership roles have become more demanding
There are six factors that made managerial roles more demanding in the past decades.
- Change – Without referring again to the term ‘VUCA world’, there is consensus amongst business leaders that the speed of change in our society in general, and, more specifically, in the world of business, is increasing. In the business world, this manifests itself for instance in technological innovation and the evolution of business models. Leaders at all levels of the organization are expected to contribute to ensure their companies innovate as well. The years that first and second-line leaders were mere ‘span breakers’ are long gone; almost every line manager is nowadays expected to come up with a 90 or 100-day plan when starting in a new position.
- Leadership style – In the last few decades, the dominant leadership style has evolved from ‘command and control’, to a more consultative and inclusive leadership style. There are several reasons for this: management theories demonstrated the advantages of this approach, Western societies have seen an increasing demand for participation in decision-making processes in almost all institutions since the 1960s, and a growing proportion of the workforce consists of knowledge workers instead of blue-collar workers. Whatever the reasons, leaders nowadays are more often than not expected to act as coaches. Although the long-term effect of a coaching leadership style is evident; at least in the short term this style requires more effort and skills than traditional, more directional ones. At the same time, leaders are still being kept responsible for the performance of their teams. Rarely has the desire for participation in decision making processes by direct reports translated itself in a desire from the same direct reports to personally suffer the consequences in case decisions do not work out. If decisions do not work out, the leader is usually still the one that has to face the music, not the team members.
- Compliance – Since the Enron scandal in 2001, the theme of compliance in business has become dramatically more important. This is not only true for financial compliance, but also for areas like data privacy, discrimination and sexual harassment. Wrong decisions and actions by individual managers in these areas can lead to negative publicity and financial damages for the entire company.
- Diversity – In most organizations, the days when teams consisted of homogenous groups in terms of gender, nationality, and ethnic origin are (fortunately enough) long gone. However, although, it makes work more interesting and can lead to higher performance, it has not necessarily made work for the leaders of these teams any easier. My personal experience as a leader is that the quality of the decision-making process is often higher in diverse teams and that this leads to better decisions. This stems from the fact that in diverse teams more aspects of decisions are taken into account, and that problems are observed from multiple perspectives. However, this often also means decision-making processes take more time. That is no problem if this time is available, but could become one when quick decisions are required.
- Purpose – More often than before employees require their workplace to provide them with a sense of purpose. Therefore, line managers need to create a connection between the work of their direct reports, the mission of their company and the needs of the society in which the company operates. That is easy if you are the line manager of a group of healthcare workers in a humanitarian crisis. However, it is a lot harder if you have to instill a sense of purpose with the staff of the accounting department of a fast-food chain.
- Humanity – In addition to introducing virtual working structurally, and on a large scale, COVID19 also added humanity to the portfolio of skills leaders nowadays need to master. Humanity, understanding and kindness towards other people, came on the radar screen as a result of COVID-19, and is not likely to disappear any time soon…
Why this matters
The question could be asked why the fact that managerial roles have become more difficult and demanding matters. One could argue that leadership roles in the business world are a matter of natural selection. Some people will be successful in leadership positions and will be allowed to remain and might even promoted; people that are not successful will be asked to step down.
However, in addition to the value leaders as individuals can add to organizations (for instance due to their capabilities to build relationships with key clients and effective decision making, as well as their technical, analytical- and conceptual skills), there are two reasons why the responsibility to leading others is to important to leave to chance or natural selection: compliance and revenue.
- Compliance – Investing in the quality of leadership helps to keep the company out of trouble from a compliance perspective. As I wrote earlier, behaviors from individual employees can cause massive and long-lasting damage to the reputation and financial performance of the entire organization (e.g. UBER, Wells Fargo and Oxfam). Ensuring leaders on all levels of the organization are aware of what they are allowed and what they are not allowed to do, and, obviously even more importantly, will act on that knowledge, is incredibly important for the long term success of organizations.
- Revenue – There is scientific evidence that the quality of leaders has a direct effect on employee engagement, which is directly related to revenue. Jack Zenger and Joseph Folkman performed an extensive quantitative study in this area. The conclusion of their research was that ‘effective leaders led to satisfied employees, which led to satisfied customers, which led to a direct and measurable increase in sales revenue.’ Their findings also showed ‘that poor leaders lost money; good leaders made a profit; and extraordinary leaders more than doubled the company’s profits in comparison to the other 90%!’.
How can companies improve the quality of their leadership?
The obvious question is how top leaders should increase the quality of leadership in their companies. The answer is simple: by enabling their leaders to learn. In the words of John F. Kennedy: ‘Leadership and learning are indispensable to each other.’
A proactive attitude to developing leaders is important because companies cannot afford to sit back and wait whether managers are developing themselves at the speed required by their environment or not. Instead companies will need to ensure this development is happening, both in the interest of the individual line manager, as well as the company.
That is the reason why I think leadership development programs are still highly in demand, despite, or perhaps thanks to, the dire economic circumstances many companies are facing as a result of COVID19.
© Dirk Verburg 2021
Illustration: Rembrandt Harmensz. van Rijn 1606 – 1669: Moses at the Burning Bush Hand .