Leadership Strategy Services

What are the core competencies required by senior leaders seeking to steer their companies through a crisis? Do C-level executives in charge of corporate strategy have detailed knowledge of their top performers’ strengths and weaknesses? Asking such questions is an important first step to successfully weathering the storm. But to build future competitive advantage, C-level executives need to closely align the competencies of their top performers and teams with their business strategy, argue Sven Michaelis and Richard Stark from Egon Zehnder International.

As the word “recession” continues to reverberate around the global business community, firms seeking to survive face a growing number of challenges. Realizing that this is not simply a financial, but an economic crisis of uncertain proportions, companies are reassessing their business models, focusing on cutting costs by downsizing production and laying-off workers. These initiatives have been matched by the public sector in the form of large-scale intervention by governments around the world to support ailing sectors like financial services with the launch of major global economic stimuli programs; nevertheless, the true battle for success will always be played out on a corporate and company level.

As the far-reaching implications of the crisis crystallise, the crucial role played by talent management in times of turmoil grows increasingly clear. The current downturn is forcing senior leaders to step back and ask a number of questions, most of which are talent-related such as do I have the right people on board to successfully execute my strategy?

To enlightened senior managers, the talent-related risks of such a harsh economic climate are obvious. It is not only difficult to retain top talent in times of turmoil, since the best performers often walk away while mediocre managers stay and crawl into their shells without tackling the real issues, let alone solving them; leaders can also fail to address mismatches between talent and new business realities, causing serious value destruction in the medium-term. A further pitfall lies in the hiring freezes that tend to proliferate in downturns, which effectively mean that companies fail to recruit fresh talent or improve the diversity and quality of their staff at this crucial time.

On a brighter note, leaders who possess an accurate and objective assessment of their key talent are in a position to deploy it as effectively as possible. They can also ensure that critical top performers are retained by supporting in-house stars with important special projects, insightful developmental feedback and coaching that reflects their needs and concerns during tough times. Moreover, forward-thinking leaders can use downturns as an opportunity to acquire top talent from weaker competitors at a time when such players may be feeling unsettled or under-valued.

Companies facing a crisis need leaders who generate and develop ideas that can steer the organization safely and successfully through these challenging times. So what are the most important competencies found in these types of managers?

Key leadership competencies in turbulent times

Based on decades of experience, Egon Zehnder International has identified nine core competencies that typically drive 95 percent of senior management performance. But which of these are most critical in times of turmoil? By studying the profiles of leaders who have succeeded under difficult and uncertain circumstances, we have found the following five competencies to be the most critical:

• Strategic orientation: demonstrating complex thinking to refocus and develop insightful new strategies, reshape core business units and align work cultures
• Change leadership: driving for improvement through people, transforming and aligning an organization in a new and challenging direction, possibly reinventing the company, keeping people onboard through tough times and difficult decisions
• Team leadership: building effective groups and leading successfully under difficult circumstances, providing guidance and support in times of insecurity
• Results-focus: boosting business results and focusing on the right (re)sourcing instead of downsizing, ensuring execution and follow-through
• Building capability: strengthening the organization by acquiring top talent and developing teams and potential successors with special projects and behavioural feedback

Knowing the bench strength of your team is critical

C-level executives need to ask themselves if they have a realistic overview of the competencies, strengths, weaknesses and potential of their top performers and their overall team. This knowledge, not based on gut feelings, but on objective analysis and tools , is critical to successfully leading and interacting with top performers, as well as effectively positioning and developing them within the organization.

Strategy is key to successfully implementing talent management

Leadership is always a key requirement, but especially in times of uncertainty. While effective talent management can be a key survival tool, its success depends entirely on a clear linkage with business strategy. By defining an organization’s goals and priorities, corporate strategy lays the foundation for outstanding talent management. This mid- and long-term strategy needs to be followed resolutely and must then be communicated and convincingly explained to staff at all levels of the organization to ensure its guiding function.

Once a strategy is in place, talent management needs to be driven by a company’s most senior leaders to ensure close interaction of strategic planning and stringent implementation (and follow-through) of talent initiatives. Moreover, only a systematic and holistic approach with dedicated and sufficient resources allows effective and efficient talent management on a global and group scale. Such an approach is not a one-time exercise but a continuous ongoing program.

Focusing on the top team

Certainly a sign of our times is that the future in top management will belong to outstanding leaders who are supported and driven by their teams. Although the CEO will always remain a key figure, in an interconnected and highly globalized world with diverse challenges, it is evident that teams will play a more crucial role in the future. But do C-level executives know what the strengths and weaknesses of their teams are and how they can guide the team to top performance? An objective, professional Team Effectiveness Review can help answer many of these questions by identifying critical strengths and weaknesses of a team and providing valuable insights into how its members interact and how they could be more effective.

Such a review assesses all the fundamental aspects that contribute to a team’s effectiveness including, for example, the team’s openness to engaging with the broader organization and the outside world. It also highlights the balance of skills present within a team, the degree to which its members understand the importance of diverse competencies and their willingness to incorporate them. By openly addressing such topics with the team, a leader helps to enhance the team and its members from within, thus “releasing its full potential.”

How to deal with talent in a downturn

Best-selling business author Jim Collins once wrote that “[Good to Great Companies] are rigorous, not ruthless … To be rigorous, not ruthless, means that the best people need not worry about their positions and can concentrate fully on their work.”

Our experience suggests that the following recommendations are essential for C-level executives:

• Get ready ahead of time - you need to be ready to start the engine and open up the throttle at any time
• Make good use of bad times to prepare for recovery by investing ahead of the cycle in leadership that creates a good business and productive working atmosphere.
• Make sure you have the right leaders on board to drive the organization and multiply their impact through their leadership team
• Focus on the right leadership competencies for your business and develop the skills of your individuals and leadership teams to keep your talent from walking
• Ensure alignment of business and people strategy, and make people issues a priority – leaders should be communicating consistently and frequently

The current economic environment and its unparalleled recession are certainly placing unusual stresses on today’s senior managers. However, focusing on a clear business strategy to beat the competition and ensuring that you have the right talent in place to deliver that strategy in these difficult times will certainly create a more positive can-do environment and a more powerful team performance with which to tackle the situation and steer through the storm.