LEADERSHIP: Leading In Tough Times – How Things Change

Eion Edgar
Chairman, Forsyth Barr

Does your leadership style change during tough times? If so, how and why?
It does, in that you’re more conscious that your income is under pressure and therefore you take more conservative view. You control your costs and are more careful entering into new expenditure. You’re more cautious. At any time management has to make hard decisions. But in buoyant economy when your income predictions are very achievable, and you probably expect to do even better, it’s lot easier to commit to expenditure, especially capital expenditure, than when times are tough.
If there was style I’d recommend [for leading people], the style I would encourage is consistency. To get the best out of people they need to know where they stand, and if you’re consistent and they know they have your confidence, you get good results. The people who lose the confidence of their staff are people who keep changing the goalposts.

Who do you admire as good leader during hard times?

The leaders I admire, I think the admiration is the same when times are easy or tough. They’re prepared to make decisions and they’re prepared to make hard decisions. Most people at the top of their game in management are reading ahead, studying, and so are making those decisions sooner than the person who puts their head in the sand and hopes they go away. In the government sector I look at Bill English and John Key, who were very quick to recognise that things were going to get tougher than lot of people expected. In the big public companies there’s been the Jonathan Lings and the Stephen Tindalls who have shown they want to cut the cloth accordingly, and in the SMEs and the not-for-profits, they’ve adapted very quickly. On the Olympic Committee, Barry Maister is always on the ball.

Jo Brosnahan
Chair, Leadership New Zealand

Do you get more people coming on courses in difficult times, or are some businesses cutting back?
Our programme is year-long, so what I can tell you is that in September last year when our courses closed off we got whole lot of big international corporates saying “we can’t afford staff development now”. But our market is quite big so we went out more widely and focused on locally based companies. They have had different approach altogether and have been increasingly putting people on the courses. They’re saying “actually, staff development is important in this time and perhaps more should be trained”. I think personally that perhaps more than ever there needs to be focus on developing those capabilities to respond well in hard times. These are the very times we need good leadership. These economic conditions are not going to last forever and it’s the companies best positioned to look for opportunities in bad times that are going to last.

Do you teach different things?

We’re not skill-based course, we’re based around in-depth conversations with leaders, so I’m sure the conversations this year will focus more on what is leadership in difficult times. Whether that’s from corporate point of view or non-profit, they will hear from about 70 of New Zealand’s key leaders who will be dealing with exactly these issues. I suspect there will be some pretty core messages about the need to look for opportunities; the need to be strategic in your approach, not knee-jerk; the need to be fleet-footed and ready to change, the need to be flexible. But it’ll also be matter of being able to see that the world is long-term place, and it’s not just about the next few years. You have to think beyond the current crisis.

Phil O’Reilly
Chief Executive
Business New Zealand

Do leaders get blamed for the hard times and is that really fair?
Yes, they often do. But those are the breaks because they often get the praise for the good times too. If you’re going to be leader you’ve got to show leadership through the good times and the bad, so I’ve got no problem with leaders taking flak.
What’s very dangerous though is when bad times come you tend to think of yourself as victim. When bad times comes there are always opportunities and real leaders will look at what they can do best now to do well later. In that sense, if leaders go down the ‘woe is me’ track, I don’t think they’re demonstrating leadership. True leaders will say, ‘who cares, it’s not really about me’.

How should leaders respond?

They should clearly explain the facts. Some of the problems, well, in the clutch of the current crisis it will not just be what the leaders do, but what others are doing and have done that will be at issue. But if they explain the facts well and also encourage others to see through the crisis and figure out how they can be more successful as result, they’re likely to do better now and maybe even get recognition down the track.
They need to just put their head down and ask how they could do things better; you always can do better. The question has to be, ‘what are you going to do now?’. The thing is not to be defensive, but to be proactive and move to the ‘what’s next’ type of thinking. There are lot of things that we know about what’s going wrong now. Whether you get the blame or not… Whatever! Let’s focus on what you can do about it.

Lester Levy
Professor of Leadership
New Zealand Leadership Institute

What are the principles of good leadership?
Essentially there are two forms of leadership, individual leadership and collective leadership. The underlying principle of effective leadership is to have both, integrated and balanced.
Individuals do make difference but not without collective leadership within the organisation. This is even more important as the context in which all organisations operate has become dramatically more complex in recent times, particularly in the last year or so.
In terms of individual leadership, authenticity, integrity, the capacity to adapt, creativity and courage are critical, as are self-confidence, optimism, hope and resilience. Without these capacities, it is unlikely that any individual could be an effective leader and it’s also unlikely to result in the type of collective leadership that creates the multiplier effect so necessary for superior organisational performance.
In terms of collective leadership, the underlying principles relate to trust and reciprocity, sense of shared identity and efficacy as well as the state-like qualities of self-confidence, optimism, hope and resilience.
A critical principle of contemporary leadership is adaptive capacity. lack of it is the single-most common source of leadership failure in modern organisations and the likely cause of the current economic crisis. Adaptive capacity means confronting and accepting the reality that there are no simple, painless solutions for complex challenges – such as those now presented by the current recession. To solve these complex challenges requires organisations to learn in new ways, essentially demanding changes in our attitudes, behaviours and values.
Adaptive capacity is differentiated from the more ubiquitous technical capacity by distinguishing between what the work is and who does it. In the technical mindset, the work is about applying current know-how; the adaptive mindset creates novel solutions. In the technical mindset, management ‘does the work’ whilst in the adaptive mindset, the work is done by the people with the problem.

Do they change in tough times, and if so, how?

In tough times, systems fail, plans are inadequate, time pressure is brutal, authority is found to have limits and no-one quite knows what they are dealing with. The ability to adapt is exactly what leaders and organisations require in tough times. Disappointingly, too many individuals and organisations enter tough times not having developed this necessary capacity to deal with problems that are exponentially more complex than in good times. This is where many organisations are

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