Is there a need for action on Leadership Capability?

After nearly 17 years of stability and relatively good operating conditions for businesses, our economy has now been in recession for 5 successive quarters. Economists are divided on whether it will be a ‘V’ or a ‘W’ recession but they are all agreed that the situation is improving. The evidence in the markets and for businesses up and down the country is that consumer confidence is slowly returning too. However, the big question is whether these businesses are ready to take advantage of the recovery and are the leaders capable of operating in the post recession market, where cash flow may still be tight but business opportunities may need investment.

To assess this for your company, you need to consider how the market place for your product or service may have changed. While there may be less competitors around, those who have survived will probably be leaner and able to operate on a lower cost base. It is true to say that the customer’s expectations will have changed too. They may still be feeling the pinch and approach the market looking for quality at a significantly discounted price. In other words, it will remain a buyers’ market.

Now is the time for leaders to make sure that they are setting the right course for recovery. There needs to be a strategy for dealing with the different phases of the recovery and this strategy need to align to the overall long terms goals of the business. It should cover overall vision and values as well as the essential financial plans.

It is also the time to make sure that the strategy is understood and aligned to the activities of all individuals in the company. In this respect managers at all levels of the business need to be acting as leaders. John Kotter defined the difference between management and leadership in the 90’s which still stands true today, it can be summarised as follows:

Management Leadership
  • Plan and budget
  • Organise and handle staff
  • Control and problem solve
  • Produce order and do things right
  • Establish direction
  • Align people
  • Motivate and inspire
  • Produce change and do the right thing

Adapted from A Force for Change: How Leadership Differs from Management by John P Kotter. The Free Press 1990

So a key question is, does your business have managers who need to develop the skills to be leaders, and are they capable of doing it? CEOs will tell you that developing people skills is as important as understanding the market factors in driving the success of their organisation and that building leadership talent is their primary capability challenge, yet many are failing to taking action on developing people skills.

Another key question is: Will you allow your managers be leaders, so they can help to lead your company to success during the recovery? The latter will only be possible if the framework around them supports and rewards this change. This includes a review of processes, to ensure they support the new direction rather than hindering it, and to ensure that the processes are lean and efficient. There must also be a genuine drive from the top to achieve sustainable ongoing change, with the CEO down, living and breathing the principles of leadership.

The choice on how to act on leadership capability is one for each business to consider but it is clear that failure to take action will leave them vulnerable during the recovery.

21st December 2009

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