LEADERSHIP IN THE AGE OF DISRUPTION
LEADERSHIP IN THE AGE OF DISRUPTION
Leadership in the age of disruption ‘Disruption’, the buzz word of 2016, continues to be a driving force in business and political circles in 2017. We’ve recently witnessed dramatic changes in politics around the world with the election of President Trump, an unexpected Brexit outcome, and the resurgence of Australia’s independents and One Nation Party here at home. Whether voters are disenfranchised with the status quo, uniting behind a clearly articulated vision, or rejecting leaders that don’t represent them, the end results have surprised many. Commentators are sharing opinions on what has changed and why, but ultimately for me, the success of these political movements serves as an important lesson for business: fail to engage with your people at your peril. Our people are our greatest asset — and as leaders it’s our responsibility to bring our people on a journey of change. In recent times, I’ve seen a shift in the traditional makeup of the Australian workforce: the growth of the knowledge economy, increased automation, and the decline and offshoring of manufacturing jobs to name a few significant factors. Australian business leaders are faced with the challenge of transforming their organisations, to retrain, upskill and develop an increasing proportion of their workforce — and this means uncertainty for our employees. So how can we model our leadership styles to respond to the disruption and unpredictability we’re seeing? We need to change the way we lead, manage and communicate with our people. If we’re to learn anything from global changes, it’s that we need to be prepared for employees who demand transparency, action, and equality from their leaders. The reality is that those who don’t adjust their leadership style will be faced with increased staff turnover from employees who believe them irrelevant or out of touch with today’s workplace. To better understand the evolving demands of business leaders, Chandler Macleod surveyed 970 leaders, managers and supervisors, and 1,084 employees to ask what they believed to be the most critical factors for successful leadership, and conversely, what were the outcomes of poor leadership. Perhaps the most telling factor is how employees respond to problems with their leaders; more than 1 in 3 employees don’t address issues directly with their leader, and almost 10% would leave their job — without their employer even knowing there is a problem. In this report we aim to not just give you the results of our research, but to give you some tips and strategies for successful leadership in the age of disruption. When employees are disengaged and dissatisfied, they are now more likely than ever to vote with their feet and seek employment elsewhere.
Foreword by Tania Sinibaldi Chief Operating Officer, Chandler Macleod Staffing Services 1
LEADERSHIP IN THE AGE OF DISRUPTION
don’t address issues directly with their leader, and almost
without their employer even knowing there is a problem.
2
LEADERSHIP IN THE AGE OF DISRUPTION
10 leadership lessons 1
Leaders are often not aware of their employees’ concerns. 1 in 3 employees don’t talk directly to their leaders about their concerns — 20% will instead talk to a colleague or HR when they have a problem with a leader.
2
Employees vote with their feet when there is a problem. Almost 10% will start looking for another job or resign without addressing leadership issues. For an organisation of 500, that’s 50 people!
3
Generation X are the most likely (52%) to have left a job due to problems with a leader. Almost half (45%) of all employees had moved on due to leadership issues.
4
Generation Z avoid confrontation with leaders. 12% choose to do nothing about leadership issues — representing an invisible productivity risk if their problems are not addressed.
5
Employees are more sceptical that leadership issues will be resolved if they’ve had problems before. Employees who have left a job due to leadership issues are more likely to start looking for a job if they encounter issues in the future. 14% of employees would start looking for another job if they had an issue with a leader at work.
3
LEADERSHIP IN THE AGE OF DISRUPTION
10 leadership lessons 6
Leaders may be missing essential change management skills. Only 12% of employers believe that the ability to adapt and lead organisational change is the most important skill for a leader.
7
Leaders must communicate well. 41% of employees and employers rate strong communication skills as the most important characteristic of successful leaders.
8
Leaders must walk the talk. It’s not enough to just say the right thing — authenticity and trustworthiness is an essential characteristic for 36% of all respondents, rising to 40% for Generation X.
9
Confidence and charisma in leadership appeals to younger generations. Almost 1 in 5 Generation Y and Generation Z rate personality as a critical success factor, compared with only 7% of Generation X and Baby Boomers.
10
Employees want leaders who understand the challenges of their role. 2 in 5 employees rated the importance understanding employee issues as almost equal to uniting a team with a shared vision. However, more than half (55%) of leaders saw vision casting as the primary essential leadership trait.
4
LEADERSHIP IN THE AGE OF DISRUPTION
Costly leadership: avoiding the issues Responsive leadership requires recognising people’s fears and anger as legitimate. Responsible leadership means providing inspiration and constructive plans for building a better future that is more inclusive.1 World Economic Forum Report 2017.
It’s often quoted that employees leave managers, not organisations. Our research supports that sentiment, with almost half (45%) of all respondents agreeing that they had left a job due to leadership issues. The typically anti-establishment Generation X was most likely to resign, with 52% taking final action on their leadership woes. But worryingly for leaders, nearly 10% of employees across all generations report that they would move on without leaders even being aware of a problem. Most concerning is that an even higher number of the experienced Baby Boomers (12%) say they would look for another job or resign rather than address the leadership issue directly — leading to a potential loss of corporate knowledge and increased employee turnover. The costs are staggering: employee turnover could easily be costing Australian businesses $83bn every year.2 Conservative estimates of turnover costs is 75% of the role’s annual salary1, which includes the direct costs of advertising, screening and onboarding a candidate, along with the hidden costs of lost productivity during the termination period, while the role is vacant, and while a new employee is inducted and brought up to speed. Meanwhile, Australia’s newest generation of workers, Generation Z, were the most likely of all generations to become disengaged and do nothing (12%) about leadership issues. They were the generation least likely to speak to their leader or manager about their issue (55% compared with 66% overall), instead preferring to speak to a colleague or HR. This avoidance of confrontation may be due to inexperience having in difficult conversations, a desire not to rock the boat, or differences in communication styles between generations. It’s well documented that happy employees are more productive — but leaders who fail to proactively communicate and address issues risk a double hit—a wider scale negative impact on culture and team performance from disengaged and unhappy employees. What have you done/would you do if you had an issue with a leader at work Resign Start looking for another job
1 World Economic Forum Annual Meeting 2017 Responsive and responsible leadership. Link.
Speak to family or freinds
Traditionalists
Speak to them
Baby boomers Gen X
Speak to someone else at work
Gen Y
2 Research reveals 80% of staff turnover is in the employer’s control. 3 Research reveals 80% of staff turnover is in the employer’s control
Gen Z
Do nothing Ask for a transfer 0
10
20
30
40
50
60
70
80
5
LEADERSHIP IN THE AGE OF DISRUPTION
Where are the change leaders? ‘Strategic planning has moved on from being an annual event to become an iterative dialogue across the C-Suite.’ Dana Mcilwain, PwC.4
The old adage ‘the only certainty is change’ remains true as disruption continues to be the norm. Strategic planning for Australian businesses must also include strategies to build and develop a flexible, agile and change ready workforce. However, our survey revealed that only 14% of employers rate the ability to adapt and lead organisational change as the most important skill for a successful leader. Furthermore, only 3% of employers view the ability to identify new trends or opportunities as most important. If change is a certainty, why aren’t more business leaders emphasising change management as an essential skill? Unfortunately, individuals who can effectively lead organisational change are in short supply, and not just in Australia. A 2015 study found that only 8% of the respondents turned out to be strategic leaders, or those effective at leading transformations.5 But the businesses that gain a competitive edge will be those with disruptive leaders — those who: avoid the status quo avoid comfortable leadership have a growth mindset have a vision of the end goal; and are open to outside thinking, influences, and the possibility of change.6 For executives who lack transformational leadership skills, the most reliable strategy is to create a team - based problem solving culture that rewards ideas, opportunities, and improvements, rather than being solely outcome focused.
A 2015 study found that only
of the
8%
respondents turned out to be strategic leaders or those effective at leading transformations.
4 Had enough yet? More disruption on the way in 2017. PwC 5 Principles of strategic leadership. strategy + business.com 6 Rules of disruptive leadership. Success.com
6
LEADERSHIP IN THE AGE OF DISRUPTION
The essentials qualities of leadership Communicate effectively and be authentic The definition of trust has changed — specifically, expanded… Today, executive teams need to fully grasp the ethical and moral implications of their decisions, and communicate their actions with integrity. Bob E. Moritz, Global Chairman PwC7
Unsurprisingly, our research shows that employers and employees agree that strong communication skills (41%) go hand in hand with authenticity and trustworthiness (36%) for successful leaders. These two characteristics stand out across all generations, however younger generations of employees also rate confidence, charisma, and personality and the ability to remain calm under pressure more highly than their older counterparts. The recent 20th Annual CEO Survey by PwC notes that one of the megatrends affecting business is the unprecedented degree of interdependency, connectedness, and transparency between people due to of the introduction of new technology.8 Social media in particular now enables instantaneous two-way relationships to be built. Leaders are now accessible 24/7 and have the opportunity to become thought leaders, engaging their followers with strategic communications, professional commentary, and personal insights. All of these things allow current and prospective employees to assess the leader’s authenticity and trustworthiness. Leaders will benefit from incorporating technology to tailor their communication with different employee groups. Our research shows that younger generations are more likely to utilise peer groups, digital networks, or HR to address leadership concerns when compared with their older colleagues. Likewise, leaders should be aware of older generations’ preferences for face-to-face communication and one-on-one meetings, while remote workers or different culture, gender or ability groups may change when and how different communications can be sent, received, and responded to. The recent McKinsey report The people power of transformation refers to the challenge of reaching front line employees with communications, particularly as part of change programs: ‘Companies of all sizes can benefit from creative, more digital approaches to engaging employees in a transformation. The use of social media, change management apps or games, and live feedback tools should support and complement the movement of information from the top to the rest of the organisation, rather than replace traditional method’s.9 What characteristic is most important for a successful leader 7 & 8 PwC 20th Annual CEO Survey
Remaining under pressure
9 The people power of transformation McKinsey & Co.
Strong communications skills
Traditionalists Baby boomers Gen X
Confidence, charisma and personality
Gen Y Gen Z
Authenticity/ trustworthiness 0
10
20
30
40
50
60
70
80
7
LEADERSHIP IN THE AGE OF DISRUPTION
Authentic leaders‌understand how their actions can affect others’ feelings, they manage their own range of feelings so they can remain constructive and not destructive, they learn through setbacks, they are able to genuinely show others they care.10
Care for individuals Genuine care from leaders makes a difference. Our research showed that almost 1 in 3 people view a disregard or lack of concern from leaders as having the biggest negative impact on their motivation and productivity. This is more significant than a lack of support for workplace activities or lack of recognition, both are the main detractors for 1 in 5 respondents. Employees need their work to be understood by leaders. 2 in 5 employees value leaders who understand their roles and the issues encountered at work, compared with less than a third of employers. Leaders are more likely to prioritise big picture vision casting at the expense of understanding the day to day issues faced by their team. This potentially creates a perception that they are out of touch with the challenges being faced at the front line of the organisation. For those who had left a job in the past due to leadership issues, we have identified three trends showing that character is key for this group of employees.
8
LEADERSHIP IN THE AGE OF DISRUPTION
Trend 1 Authenticity beats slick delivery For those who had left a job due to leadership issues, authenticity and trustworthiness was their top priority in a leader (42%), surpassing strong communication skills (40%). For those who hadn’t left a job due to leadership concerns, communication was the top priority (42%), while authenticity and trustworthiness was significantly less important (32%). This represents a 10% differential between the two groups.
Which characteristic is the most important for a successful leader? No
Yes
Authenticity/trustworthiness
32%
42%
Confidence, charisma and personality
12%
7%
Strong communication skills
41%
40%
The ability to remain calm under pressure
15%
11%
10
9 Powerful ways great leaders show real authenticity every day Inc.com
Using assessment, leaders can be aware of the leadership priorities of current and potential employees and use this information both to recruit employees with the right team fit and to manage the ongoing performance of teams.
9
LEADERSHIP IN THE AGE OF DISRUPTION
Trend 2 Show them how, don’t tell them how Employees who have left a job due to leadership consider integrity (27%) and respect (19%) as increasingly important behaviours for leaders working with their team. This group felt that guidance and direction of the team was far less important compared with those who had not left a job due to leadership (47% cf. 37%). Additionally, those who had not left a job due to leadership rated integrity (19%) and respect (13%) as much less important. Leaders who are able to guide their teams by ‘walking the walk’, rather than simply being directive or ‘talking the talk’ will achieve increased motivation and productivity from both employee groups.
When working with their team, which behaviours are most important for a good leader?
Acting with integrity
No
Yes
19%
27%
Providing guidance and direction to team members
47%
37%
Providing training/mentorship opportunities
13%
10%
Recognising quality work
8%
7%
Showing respect
13%
19%
10
LEADERSHIP IN THE AGE OF DISRUPTION
Trend 3 Once bitten, twice shy Employees who have experienced previous leadership issues are much more likely to take action without directly addressing their concerns by either looking for another job (13.6% compared with 3.5%) or resigning (2.4% compared with 0.2%). This group is also much less likely to speak to their leader about the problem (61%), compared with employees who have not left a job due to leadership concerns (71%). Those who have previously acted on leadership concerns may be more sceptical that addressing the issue will create change. Leaders can manage this mindset through regular checkins and informal meetings with individuals to identify and quickly respond to any areas of concern.
What have you done/would you do if you had an issue with a leader at work? No
Yes
0.7%
1.0%
Do nothing
1.8%
0.9%
Resign
0.2%
2.4%
Speak to family, friends or social networks
2.8%
3.6%
Ask for a transfer to a different department
Speak to someone else about it (e.g. HR)
20.2%
17.6%
Speak to them about it
70.8%
61.1%
Start looking for another job
3.5%
13.6%
11
LEADERSHIP IN THE AGE OF DISRUPTION
Strategies for developing leadership 1. Go deeper - assess leaders for values as well as leadership skills. When recruiting or promoting new leaders, look for authenticity, integrity and respect to ensure a good fit with the agreed vision and values of your organisation. 2. Be real – remove all roadblocks to open and honest communication and feedback. By sharing a variety of strategic business content, adding their own insights into relevant issues and being responsive to their team, leaders can build an authentic, trusted relationship with their employees. 3. Drive leadership accountability – measure leaders against employee satisfaction and turnover. Utilise quarterly reviews and 360 surveys to ensure ongoing alignment to workplace activities, culture, and vision to prevent employees from becoming disenfranchised with leaders who don’t reflect organisational values and goals. 4. Mobilise networks – offer both offline and online communication channels to encourage employee feedback from individuals who are less likely to address issues with leaders and managers directly. Internal social networks, digital collaboration spaces, employee mentoring relationships, and traditional one-on-one feedback opportunities can increase overall engagement. 5. Strengthen relationships with HR - work together to ensure induction processes articulate a clear purpose for the team and organisation, and engage new employees in idea sharing and problem solving. Ensure there are clear guidelines and standards for handling issues up front, so that employees are aware of expectations if and when a problem arises. 6. Look to the future – identify potential leaders who may not currently be in leadership positions. Build a leadership profile and identify people within your organisation who embody traits and values such as curiosity, creativity, problem solving, self-improvement, drive, and who thrive on working in diverse teams. 7. Strive for variety – build diverse teams and a senior leadership team that reflects the diversity of your organisation. Build innovation and diversity of thought into your business by ensuring your sourcing strategies are designed to attract, recruit and retain a diverse workforce of varying cultures, gender, age, and ability.
12
LEADERSHIP IN THE AGE OF DISRUPTION
About the research Chandler Macleod’s latest research paper ‘Leadership in the age of disruption’ evaluates the macro trends affecting leaders in Australia and reports on the current attitudes toward workplace leadership. Powered by our leading edge technology, Gateway, and driven by the psychologists in our People Insights team, it’s exactly this type of insight that allows us to help you plan for tomorrow’s workforce, today. To discover how Chandler Macleod can unleash the potential of your business, visit chandlermacleod.com or call us on 1300 722 123.
EMPLOYEES
EMPLOYERS
Between December 2016 and January 2017
FEMALE - 43% - (465)
FEMALE - 39% - (380)
MALE - 57% - (612)
MALE - 61% - (589)
13