‘Poor leadership can cost 7% of a firm’s turnover, 4% lower revenue growth, lower customer satisfaction’
The world we experience today is not what it was at the turn of this new decade. Of course, you would argue that something or the other keeps changing daily. But this ongoing change is something different and it is affecting all of us. There is a global digital revolution that is changing the world and with it the dynamics and rules of business. Most of the values, principles, and competencies are being replaced by advanced sensibilities in step with the tech-led transformations. Leadership is no exception. In today’s knowledge-based, networked society, leaders are no longer individuals at the top of the conventional corporate hierarchy who simply pass down orders. Their roles have evolved in keeping with a smarter, faster, more agile, and democratic business ecosystem.
Why? Because the digital age has given rise to new forms of collaboration across verticals and functions. Against this backdrop, an organization can only move forward when the teams collaborate with each other, and the leadership collaborates with each of them. Consequently, a leader must possess the skills required for effectively developing and working with new-age teams. To understand how critical it has become for leaders to inculcate competencies attuned to the rapidly evolving digital economy, one needs only to look at what happens when this requirement is not met.
Research suggests that ineffective leadership can cost up to 7 per cent of a company’s annual turnover while also resulting in lower customer satisfaction, leading to almost 4 per cent lower revenue growth. Poor leadership practices also cause higher employee attrition. Conversely, better management can prevent up to 32 per cent of voluntary turnover. Clearly, modern leadership practices are still lagging the developments in the fast-changing business ecosphere. Here’s how leaders can ensure that they become “enablers” rather than those who “hobble”.
Become more versatile
With the advent of AI and allied technologies such as ML and data science, and practices like Development Operations (DevOps)—which combines IT operations and software development—organizations have begun tapping into higher work efficiency. With companies embracing agile and design-oriented thinking to achieve their objectives, cross-role work has become the norm. Hence, new-age leaders need to not only don multiple hats but also provide a work environment that seamlessly cuts across multiple functions and where diversity of thought and solutions is encouraged.
Work with agile teams and ad hoc executives
The corporate hierarchy is no longer rigid. With the advent of cross-functional teams, leaders are no longer in charge of managing a static group of individuals. Instead, they are required to lead cross-departmental or even global teams that are formed to carry out specific projects or tasks. After achieving an assigned set of tasks, the same leader then proceeds to oversee another team made up of different professionals put together for yet another project. Therefore, modern are required to be more connected and dynamic so that they can seamlessly work with new teams.
Monitoring executive work is no longer the core duty of leaders. Instead, they are required to be innovation-drivers. In the digital age, products and services quickly become obsolete, forcing companies to keep improving and reinventing their offerings to stay ahead of their peers in the highly unpredictable market. To stimulate and recognize promising new ideas in sync with the customers’ feedback and requirements, managers should know how to promote innovation among their employees.
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Focus on empowering rather than micromanaging
Micromanagement entails giving orders with dictatorial authority. This behaviour flies in the face of a flexible and agile work culture that is a prerequisite for enabling innovation as well as trust. Good leaders know that motivating and coaching the team to come up with solutions to roadblocks is much more effective and productive than controlling them at every step of the way. Instead of setting a definite roadmap beforehand, managers should guide the employees and empower them to achieve their goals on the back of collaboration and innovative thinking. Agile leadership instills mutual trust and fosters collaboration among employees, resulting in enhanced organizational performance. Individuals feel greater responsibility towards their work when the authority is not looking over their shoulders all the time.
Carry a contextual mindset
Organizations have to constantly deal with new demands emerging in a continuously evolving business landscape. Consequently, the skills possessed by a leader are often rendered incompatible considering the organizational needs. This is because organizations have conventionally focused on developing skills – and skills become obsolete faster than one can blink. Hence, organizations need to change the way they train their leaders. Learning new skills alone is no longer enough to succeed in a dynamic workplace. What organizations need to develop is a contextual mindset that empowers leaders to learn, unlearn, and re-learn as and when the need arises. This is another aspect of agility that modern leaders must possess because a static skill can be learned once but fostering a nimble mindset requires continuous learning.
Democratize management tasks
Flexible and diverse cross-functional teams are made up of skilled individuals who work together to accomplish a particular task. To make sure that such teams work efficiently, the development and training of managers at all company levels become necessary. This development is organic and ensures that employees are well-equipped to carry out decisions themselves instead of waiting for instructions from the higher management. This gives rise to a network-like system in the organization rather than siloed hierarchies where employee interaction is often fragmented.
Provide need-based learning opportunities
Organizations with their eye on the future have already begun “democratizing” their management programs. This entails providing leadership development training across all levels. However, the same study highlights, a major chunk of the budget for development programs for executives (at over 40 per cent of these companies) is still reserved for upper-tier executives. More than 61 per cent of the respondents believe that the development of executives in their companies will be more democratic in the next three years. This change falls in sync with the rising need for effective leadership at all levels. To meet this growing need, organizations will increasingly turn towards e-learning technologies that to access bespoke learning offers customized for the needs of a wide variety of employee groups. This transformation is no longer a matter of if but when.
Kamal Dutta is the Managing Director of Skillsoft and SumTotal — India and SAARC. Views expressed are the author’s own.