Leadership In A Time Of Slower Growth
As we enter 2023, I think it’s time to talk about leadership, a topic filled with books, ideas, and consultants. And the theme I want to discuss, as we launch our new Irresistible Leadership research, is Leadership In A Time Of Slower Growth.
Here’s my thesis.
We Have Entered A New Era.
For the last 15 years since the 2008 recession, most companies have focused on growth. With near zero interest rates, the economy, stock market, and consumer demand steadily went up. Leaders focused on hiring, building, and selling. And topics like skills and transformation were framed in that context.
Then the pandemic interrupted this, creating a new set of business models and a focus on employee wellbeing. Companies had to transform their businesses, develop remote and hybrid work strategies, and invest seriously and strategically in employee experience, mental health, resilience, and flexibility.
Now, coming out of the pandemic, we will clearly see slower growth. Amazon, Wal-Mart, Microsoft, Disney, and even Google have slowed hiring, and we see consumer demand starting to wane. Despite strong black Friday numbers, the personal savings rate is 2.3% (17 year low), credit cards balances have gone over $1 Trillion, and 63% of Americans are living paycheck to paycheck (up from 56% a year ago). And I believe we’re in for higher interest rates for many years to come.
So productivity, a topic that is much more complex than you think, has become the word of the day.
Remember the recent Microsoft Work Trends study which pointed out that while 87% of employees feel highly productive, only 12% of CEOs agree. That, in a nutshell, is the new issue. How can companies continue to perform when growth is no longer guaranteed? The “productivity paranoia” is real.
How do you improve productivity when the workforce is just burned out?
This is the new challenge for leadership.
A New Set Of People Issues In Business
As I discuss in my article about the King and Queen of The Netherlands, workforce issues are complex. Young workers are the most upset, with upwards of 45% suffering from depression. I hear stories of high turnover among early career employees everywhere. These folks, who lost several years of their career during the pandemic, want connection and growth again.
On the opposite end of the age spectrum, older workers want engagement too. But many employers aren’t ready: AARP believes age discrimination is at the worst level in years.
And reskilling is a challenge in every company. Not only do companies want more engineering, technical, and digital skills, the tight labor market means companies have to invest in Career Pathways to build more talent internally. Our new GWI Healthcare research predicts a shortage of 2.1 million clinical workers by 2025, and our new research on banking finds similar gaps.
And a new social consciousness has emerged. Coming out of the pandemic ideas like sustainability, mission, and focus on “moral values” are becoming central. Is there a company in the world that doesn’t feel a responsibility to improve health, income inequality, climate, and the environment? (The EU will soon mandate this.)
This is a new world. Every leader today (even Elon Musk) must be savvy about people, and understand the world of a five-generation workforce, high levels of diversity, and the need for every employee to learn new skills.
How do you build a company that embraces these new ideas, yet grows productively at the same time? CEO’s have to be psychologists, business people, and organizational designers all in one.
Great Leadership Models Change Over time
While I don’t believe leadership has radically changed, “leadership styles” do change over time. In the 1980s we had the “Jack Welch” school, followed by the “Howard Schultz” school. Who are our leadership heroes today? Bob Iger? Elon Musk?
I think a new breed of leadership is emerging: one that embraces the empathy forged by the pandemic coupled with pragmatic business operations demanded by this slowdown. Great CEOs of today have to figure out where to invest and where to cut back.
What Is Irresistible Leadership?
Our new research is going to attempt to figure this out. We are now interviewing hundreds of companies, and we would love you to join us in this effort. (We are partnering with BetterUp in this program.)
Over the years I’ve looked at hundreds of corporate “leadership models.” Most are PowerPoint slides with 5-10 “leadership values” or “leadership attributes” the company believes are sacrosanct. They vary widely from “execution” and “quality” to “business acumen” and “industry depth” to “collaboration” and “empathy.”
What’s valuable about these models is not the words or the values, but the process the company goes through to figure this out. When done well, a great leadership model really embraces the company’s culture, strategy, and direction. And it’s simple, clear, and easy to embrace. So as we conduct our research we’ll show you all we’ve learned.
Let me point out another important point: leadership is a pointy and personal journey. Long ago I interviewed the head of leadership development at GE and she made a funny point. They wanted leaders to be “less General, more Electric.” In other words, they found out, after years of promoting job rotation and experience, that great leaders needed years of experience in the business. Taking a leader who knew how to run the GE railroad locomotive business into GE Capital, for example, did not generally work out. So this idea that we can build “leaders for all time” doesn’t work.
(Witness the return of Bob Iger to Disney.)
Our thesis, based on many of the meetings we’ve had, is that a new philosophy has emerged. As Nehal Nangia’s article points out, new models are focusing on care, empathy, and human energy as values. Sustainability now refers to our entire organizations, as we look at productivity, employee growth, and new business opportunities in concert.
I promise we’ll show you the way. Join us on this journey, we look forward to sharing more soon.