Leading organizations through disruption of the magnitude and frequency that we see today is a monumental task and, while charting the course for success starts at the top, it will require the engagement and effort of everyone in a company to achieve the mission ahead.
This was a challenge widely acknowledged by leaders from PE firms and portfolio company CXOs in our Seventh Annual PE Leadership Survey, to be released next week. Inspiring and motivating others to high performance was the CEO/CXO competency stated as having the greatest impact on generating higher returns. The business world today is beset by examples of burnout, the war for talent, and the trials of retention and turnover, so it’s little wonder that people remain the most critical ingredient for success.
That said, our survey revealed that neither PE sponsors nor corporate executives are confident that, behind closed doors, employees are making good decisions that will benefit the business. This constitutes an all-too-regular insecurity of leadership that puts most of the onus on employees to figure out how to make the business successful.
Diving a little deeper into the potential root causes of this scenario, there is every chance that leadership may not have effectively exemplified and communicated the correct behaviors for success. It is also entirely possible that company leadership itself has yet to rubber-stamp key decisions on what the direction of their business should be, and therefore has yet to establish full clarity in the expectations of others on how they should behave.
PE respondents to our survey believe that leadership effectiveness is the top lever for value creation, echoing findings in last year’s survey. Therefore, engaging employees with where the business is going is critical – building believability and desirability through careful communication of the goals, how they will be achieved, and what behaviors are required to drive the desired values of the company.
This is not a one-way street, though. Employees must personally commit and buy into the strategy laid before them. Success can only truly be driven when people align their personal values with the values of their organization. In practice, this will necessarily mean the loss of some talent, but it will also serve to clarify a recruitment strategy for bringing in new talent that is attuned to these values and behaviors.
Establishing guiding principles and values – and staying true to them – will make significant strides in increasing the confidence that leadership has in its people to behave in the appropriate way behind closed doors. However, it is imperative that those same people are given freedom of choice – the opportunity to align or to leave. Otherwise, tension and mistrust will perpetuate, making the ultimate challenge of leading through disruption that much harder.