This article was first published in April 2011 in Accountancy Futures.
The last couple of years have been characterised by redundancies, corporate restructures, predictions about economic upturns, downturns and double-dip recessions, and a consistently growing level of public mistrust of big business and politicians.
Almost half of CMI members (44%) had to make people redundant in 2010 and, in April 2011, 81% of those working in the private sector told CMI that the UK economy was still having a negative impact on their business. Managers have been left wondering how best to adapt to the new circumstances they find themselves in.
When writing my book, Managers and Leaders Who Can: How You Survive and Succeed in the New Economy, I was looking at where we go from here.
I interviewed 30 leading UK businesspeople, including ACCA chief executive Helen Brand and Ernst & Young partner Adrian Godfrey, to elicit their views on how managers will need to behave and perform if they are to succeed in the post-recession economy.
The consensus was that leaders must be more responsive to society’s expectations and needs, with businesses taking account of a much wider range of issues than they have done in the past. The organisations (and leaders) that succeed in this new economy will be those that can demonstrate they work in an open and accountable way and can fully engage their employees in what the business wants, and needs, to achieve.
A VALUES-LED APPROACH
The recession has exacerbated mistrust of big business and politicians. The British public believes it has been betrayed by MPs fiddling their expenses and that taxes on hard-earned incomes have gone to bail out the risk-happy banks that caused the financial crisis in the first place. Recent allegations that a national newspaper hacked into private voicemails have resulted in a public outcry so vehement that household-name businesses refused to advertise in the now extinct publication.
All this has helped usher in an era where shareholders, customers and stakeholders are demanding, and expecting, more information and access than ever from the organisations they give custom to, work for and invest in.
To succeed in the new economy, therefore, companies will need to demonstrate that they are taking a different approach.
Transparency, accountability and ethical practice must all move much higher up the management agenda than they have ever been in the past. This applies to all sectors; accountability is no longer just something for civil servants handling publicly funded budgets to worry about.
A values-driven approach should be at the heart of everything managers and leaders do. But this will only happen if it’s led from the top. The senior management team must walk the talk – this cannot be a case of just paying lip service.
Take the example of BP, which proudly states on the brand values page of its website that it is ‘progressive, responsible, innovative and performance driven’. I’m not sure those who observed the Deepwater Horizon crisis would agree with the second of those. Practising what you preach has never been more important.
For many businesses, starting to work in a more values-driven way may involve some reflection and analysis of their current organisational values and how these currently play out – or not – in their operations. Values must be communicated clearly to staff members; it’s a cliché, but employees need to live and breathe the brand. Suppliers should be next – a company’s approach shouldn’t be undermined by less ethical organisations it may be working with.
One particular challenge is putting frameworks in place to help organisations monitor their ethical performance and to communicate openly about the way they work. This needs to become as important as measuring and reporting financial performance. If there are no skeletons in the closet, a business can’t fall foul of a WikiLeaks-style crisis.
The company’s values should be a key consideration in business decision-making. Take the approach to rewarding employees. Staff bonuses, where they can be given, need to be justifiable and there should be nothing that a company would not be prepared to share the details of if need be. Businesses need to think about those groups that have a stake in their operations. What are their attitudes to bonuses? How would they feel about where funds available are spent and invested?
ENGAGING EMPLOYEES AND CUSTOMERS
Evidence shows that organisational values are key to engaging both employees and customers. In fact, the most productive, loyal employees and customers are those who feel that their personal values resonate with the values of their employer or supplier. Companies need to think about how things like pay and rewards strategies fit with corporate values as well as considering them when recruiting. Are job candidates a good fit for the company in terms of values? If not, neither side is getting a good deal.
There is a direct correlation between how engaged employees are with their employer and organisational performance, yet employee engagement levels are lower than ever. So low, in fact, that the government formed a taskforce, on which I sit, to tackle the issue. Managers should look on a values-led approach as a useful weapon in the battle to re-engage the workforce.
In turbulent times, a strong and well-practised set of values and ethics can offer a guiding light for managers looking to engage and motivate staff. A manager faced with having to cut costs, for example, should look to the organisation’s values before making any decisions.
If a company is well known for the favourable way in which it treats its staff, reducing headcount may not be a good option. Likewise, an enterprise which prides itself on doing right by its customers should talk to them before pulling certain products to save money.
Employees will believe in what a company is doing and trying to achieve only if they can see how they themselves fit into the grand scheme. There is nothing as motivating as knowing you are making a contribution to the overall success of the business.
Managing in the new economy presents a host of new challenges for the modern leader, but, if managers can take what they have learnt from the tumultuous past few years and adjust their practice accordingly, I’m convinced that they can succeed.
Revisiting and reintegrating values into management behaviour and decisions in a way that meets the needs of all stakeholders and engaging employees are just a couple of the things leaders need to do if their businesses are to succeed and thrive.
Ruth Spellman OBE was until recently chief executive of the Chartered Management Institute (CMI). While at CMI she published her first book, Managers and Leaders Who Can: How You Survive and Succeed in the New Economy. Spellman has also served as the first female chief executive of the Institution of Mechanical Engineers (IMechE) and been chief executive of Investors in People. In 2007 she was awarded an OBE for services to workplace learning.