Leadership and decision making in tough times

HR Magazine, October 2009
By Philippa Youngman

Moses led the Israelites through the red sea. Winston Churchill led Great Britain to help defeat the Germans. David Kirk led the All Blacks to win their first and only rugby world cup. These may all be ancient history, but they are still lessons in how inspiring leadership can help galvanise people to succeed against the odds.

In this time of global economic crisis can leaders inspire organisations to survive and thrive?

In many ways the recession has revealed a crisis of leadership in our organisations. The pressure has been brought to bear and too many leadership structures have been revealed as short-sighted and self-interested rather than visionary and selfless. The impact on staff engagement has been significant.

There have been lots of recent studies to back this up. A survey by the US-based Corporate Leadership Council showing the single most important factor affecting staff engagement is the quality of a person's manager. Or the Gallup poll that found a quarter of all employees wanted to fire their boss, and 51% of those who were classified as “disengaged” would fire their manager if given the chance.

In this context what role is the human resource function playing? Is it sponsoring the mentoring and coaching programmes and equipping managers to improve their performance?

A report released by the Economist Intelligence Unit last month, based on a survey of 199 senior executives, concluded that “human resources is confronting a continued perception problem in that many organisations view HR as a services provider rather than a critical business partner.”

That not all leaders are leading well, and HR is not seen as strategic is nothing new. Neither is the fact that the solutions to these key organisational issues are complicated.

One piece of this puzzle is the need to improve the quality and consistency of key people-decision making areas like remuneration and performance management. It is in these intensely human or emotional parts of a business that both managers and their HR advisers sometimes feel things are out of control, or at least out of their control.

HR plays a key role in giving managers tools that both help them become leaders, and keep them accountable. These tools can also free up precious HR resource so you can focus on the ‘grunty’ stuff and not be treated like a glorified personnel department.

The current environment doesn’t make it easy, where cost-driven behaviour is the norm.  Leaders are faced with the immense challenge of translating the “reduce/hold people costs” directive given by Boards and Stakeholders, into sustainable business direction. They must be able to collaborate with their people on how this can happen effectively, rather than falling back on a carte blanche zero salary increases, recruitment freeze approach.

For example how should the good leaders manage a reduced budget spend for salary review at a time when it is important to keep employee engagement high to ensure the organisation continues to perform (or even to stop it spiralling down)?

It is useful to look at how the best organisations are creating environments for strong leaders and engaged workforces. The recently released 2009 Hewitt Best Employers in Asia/Pacific survey has some interesting insights.

There was a real contrast between the ‘best’ companies, and those identified as ‘the rest’. Employee recognition, coaching and mentoring were most commonly cited as the top cultural values amongst the best employers. Control, bureaucracy, cost reduction and expense management were more typically mentioned as cultural values and organisational behaviours in the rest. 

Underlying this were several key trends they found amongst the strongest performing employers.

Firstly was a ‘relentless execution of programs’. They are focussed and disciplined in building and refining human capital programs and processes. A feature is their ability to build a framework that was strong and flexible enough to work in both good times and bad, and not have to be changed depending on the external environment.

It’s a good test of policies and procedures that have typically been written for business as usual – good policies and procedures should support good leadership whatever the pressures are for a business so that employees don’t consider the organisation as paying lip service to such things as “empowerment” and “freedom to make decisions”.  Changing things now smacks of “I know we said we trusted you, but now we don’t”.

The second key feature Hewitt identified was a ‘persistent empowerment of managers’. These organisations were very deliberate in giving more autonomy to managers ensuring they have the right tools and support to make good decisions.

This not only means having robust processes enabled by simple, useful tools for  managers, it also means good reporting mechanisms so managers who are struggling can get coaching or other support. Better businesses empower their line management, but also help them with tools and ways of measuring their accountability. Within ’best’ employers, there is a clear link between accountability and feeling valued i.e. people want to be accountable because it makes them feel valued.

Hewitt’s third key was ‘highly efficient HR functions.’ Typically these organisations had fewer HR resources but the businesses are much more satisfied with the extent to which their HR teams are delivering!

HR can only achieve this by delivering tools to managers that enable those people to manage key tasks like remunerations reviews and performance management. But they also remove a lot of the manual work required of human resource departments that consume resources and distract them from focussing on strategic, added value type of work.

Tough economic times are the time the real leaders stand up and stand out. But it is also an ideal time for the human resource function to strengthen its position in an organisation. When the pressure is on to maintain engagement while cutting costs, HR can only prosper by working smarter not harder.

A good start is looking at what human capital processes can be streamlined and automated. That may involve bringing in technology in to support managers and ensure they are accountable, and enable HR to focus on the strategic.

Reducing the cost and complexity of HR processes is even more critical in times of change. Leaders must be enabled to increase the “what”, and decrease the “how” – given the autonomy to be able to work through to the achievement of key business goals. As another great historical leader, to World War Two army general George Patton, great leadership means, “Don't tell people how to do things, tell them what to do and let them surprise you with their results.”