17/3/2021 Financial Review
Leadership and talent are well recognised as mainstays of successful organisations. Nobody doubts that they will remain so at a time of seismic change, but less certain is what leaders will look like as organisations adapt to the challenges of an environment that is both unfamiliar and in a state of flux.
For most organisations the much-touted “new normal” is a work in progress, but in the meantime uncertainty, complexity and ambiguity have become the norm.
Australian company directors ended 2020 with an uplift in sentiment as the worst of the COVID-19 pandemic appeared to be behind them, but according to the Australian Institute of Company Directors’ latest Director Sentiment Index, the impact of COVID-19 remains the top issue “keeping directors awake at night” for 41 per cent of directors. (At the height of the pandemic, 68 per cent of directors were losing sleep over COVID-19.)
The pandemic has tested the resilience of organisations around the world. Management consulting firm McKinsey & Company is heartened that “many organisations have stepped up to the challenge, adapting their businesses both to protect their employees and to continue serving their customers and communities”.
McKinsey surveyed 300 senior executives and, while noting that 80 per cent expressed confidence that their organisations had responded effectively to the pandemic, cautioned that “some companies have proven to be more resilient than others”.
The survey found business-model innovation was the most important “strategic lever” in addressing the crisis, with three-quarters of respondents reporting the adoption of “futureready business models”.
But McKinsey also notes a widening gap between the best- and worst-performing companies.
“As companies start to prepare for a postpandemic world, those that have fallen behind more resilient players will need to take fast, bold action to make up for lost ground,” McKinsey says.
“The COVID-19 crisis has created an imperative for companies to reconfigure their operations and an opportunity to transform them.”
A recent survey by the UK’s Chartered Management Institute and the Institute of Directors concluded that “highly skilled, capable and empathetic managers will be essential” in leading organisations in “an unprecedented era of change and unpredictability”.
The survey found that 74 per cent of managers and 63 per cent of directors identify either managing uncertainty, managing risk or leading change and innovation as important management competencies for driving organisational performance.
Jamie Sims, managing director of People Measures, an Australian firm of organisational psychologists specialising in leadership development, talent assessment and organisational performance, says organisations remain focused on identifying and developing leaders to drive success but adds that the attributes required of those leaders are shifting.
“Many of the core principles of talent and leadership haven’t changed, but there has been a change of emphasis and in many cases they are subtle changes,” she says. “But in these volatile and uncertain times, even subtle changes can have massive impacts." “It is no longer enough to rely on applying known solutions to the challenges we face because these are adaptive challenges, requiring leaders to quickly learn new ways of doing things.”
The four core attributes underlying leadership potential – emotional intelligence (EQ), intelligence (IQ), adaptability/learning orientation and drive/perseverance – remain, Sims explains, but adaptability and learning orientation have become more important.
“At a time of ... fast-moving change, the need for adaptive leaders is more critical than ever,” she says. “Adaptive leaders who are prepared to learn, engage with a diverse range of stakeholders and work collaboratively have done better in this environment. They will be the leaders that make the crucial difference to how organisations perform in future. Those organisations whose leaders have taken a ‘wait and see’ approach are the organisations that have struggled.”
People Measures provides advice based on the latest evidence and research. It uses its expertise and data-driven approach to design practical assessment, development and talent management solutions that improve business performance.
Sims believes using robust data has always been an important approach to leadership and talent development, but never more so than in the current environment. “Organisations that don’t have a rigorous process for assessing their talent and potential leaders risk damaging consequences,” she says.
“It is critical to be clear about what high potential looks like and to link those decisions to solid research and robust processes. How organisations go about identifying and developing their high-potential people is going to be a critical competitive advantage. If you’re not promoting or developing the right talent, that is going to have a significant impact on your organisation.”
Sims says the imperative of investing in people is well understood, but now the added priority is ensuring that organisations are investing in the right people.
“We work with organisations to help them understand the fundamentals of identifying and developing talent in this new environment and that includes understanding what the evidence is and how they can apply that in an organisational context,”