Colin Price, chairman of organisational health experts Co Company, explains why, with the millennial-dominated workforce demographic shift on the horizon, traditional styles of and attitudes towards leadership are no longer effective in a working environment. Generation Y can add serious value to an organisation, but in order to benefit from this and retain the best talent, companies must know how to keep this new breed of employee engaged.
As the world of business changes, so must the role of leadership within organisations. According to a Gigaom report last year, millennials are soon to become the largest group in the workforce. They play by different rules: millenials want to be engaged at a personal level and will not hesitate to jump ship if their needs are not met.
For any organisation to succeed and to be profitable, its leaders must recognise that the employer-employee contract is increasingly becoming a collaborative relationship rather than one of pure command and control. Within this new dynamic, it can be argued that the leader is no longer the most influential driver of organisational growth; rather, it is the talent and teams the leader builds that make the ultimate difference. Performance indicators have revealed that engaged, effective teams almost always outperform teams that are disengaged, and deliver twice as much revenue growth.
Today's employees, whether in the private or public sector, want more from their jobs than might have been the case just a few decades ago. Gigaom's report also suggested that having jobs they feel are meaningful and impactful has increasing influence on an employee's decision to work for - and remain with - a particular employer.
Interestingly, this has also changed attitudes towards leadership: employees now consider personable 'soft' attributes, such as the capacity to empathise and collaborate well with others, to be more important in leaders than in previous years. This shift in the relative perceived value of different aspects of working life is revolutionising organisational culture, and the role and nature of leadership in the organisation.
As the number of people entering higher education increases so do their career options, forcing organisations to compete more vigorously to attract and retain the brightest minds. With this new workforce effectively holding more power in the employer-employee relationship than ever before, employees expect and demand that their ideas be liberated; advancements in social and business technology have contributed to this feeling, resulting in a more sophisticated, innovative and an openly collaborative workplace.
Even at the lower levels of the organisational structure, employees expect not only to execute others' ideas and strategies, but to also play a tangible role in generating them and in influencing the way in which they will be implemented. If they are denied this opportunity, they simply move organisations or set up shop for themselves, building a business that will by definition allow them to do just that.
This expectation is one of the key drivers for a growing trend in business, causing the leadership 'ruling classes' to devolve from a small number of executives in a command centre, running the show from the top of a hierarchy, into a more distributed and collaborative format, in which leadership is spread further, laterally and horizontally, throughout the organisation.
Command and control is an archaic notion that no longer applies in today's business environment; instead, companies that are ahead of the curve are increasingly seeking ways to actively engage staff in the decision-making process.
What is leadership?
According to Kevin Kruse, CEO, serial entrepreneur and New York Times bestselling author, leadership is a "process of social influence, which maximises the efforts of others, towards the achievement of a goal." If this fairly non-contentious definition is accepted, it can readily be seen that a very significant proportion of the role of a leader is in building effective teams that have the capability to spot and execute on value-generating opportunities in the marketplace. The leader's job is to ensure that the organisation has the right team in place, and that they are focused and ready to take advantage of the opportunities and changing trends in the market place before any competitor does.
So, leaders - whether senior management, lower-level managers or project leaders - must develop and hire the best talent and task that talent to execute opportunities that bring not just financial results but other forms of tangible value to the organisation as well.
It is instructive to think of the organisation as a clearing house for the application of matching talent to opportunities. Effective business leaders consider a wide range of opportunities, markets to enter, customer segments to target, technological advancements to exploit and other considerations. What separates the effective from the best leaders is the latter's simultaneous and complementary focus on acquiring and developing the best workforce talent, and in matching this talent to the right value opportunities.
However, to safeguard the future of their organisation, leaders have to make brave decisions about whether or not to act on value opportunities that may shape their company's future. It is important that such decisions are made with some urgency but without sacrificing due diligence. Whatever the industry, pace decides the winners: organisations have to be quick to spot and capitalise on new opportunities.
Kodak, once a household name, provides a cautionary tale: the photography powerhouse famously misread the advent of digital cameras despite, ironically, having invented them - one of its employees came up with the idea and designed a working prototype in 1973, long before the digital age. Unfortunately, bosses did not see its full potential at the time, only the threat posed by filmless photography to its current cash cow, and dismissed the idea.
The dangers of getting it wrong
As touched on above, as well as getting the right people in front of the right opportunities quickly, it is also critical to keep those people working for you. There is increasing evidence that supports the case for an engaged workforce: a Gallup report in 2015 revealed that there are links between employee engagement at the business-unit level and vital performance indicators, including productivity and profitability. When an organisation takes the time to engage with its workforce, that goodwill spreads across every facet of the business, enhancing performance at every level. Getting it wrong could result in an organisation burdening itself with a workforce that is not sufficiently motivated to do their all to meet important business targets.
Furthermore, in a business environment where companies continually compete for the best talent, it is a mistake to underestimate how important a role engagement can play in reducing staff turnover. Studies have found that 75% of people who leave their posts voluntarily do so because they are 'quitting' their bosses, rather than their jobs per se. It is clear that leaders play an important role in not just retaining and engaging clients, but building effective and happy teams too.
Building unhappy and ineffective teams, conversely, can cost organisations dearly. In the US alone, disengaged workers cost the economy an estimated $450-550 billion a year and, according to research by Investors in People and economic analysis consultancy TBR, bad leadership costs UK businesses £39 billion a year.
With an engaged team in place accurately targeting the high-value opportunities appropriate to its skills, the remaining task is to accelerate the speed with which those opportunities can be executed - and eventually exited - effectively. In the past few years of cautious economic recovery, organisations have begun to shift away from cost reduction to keep the lights on. To be sure, cost-efficiency is still an important priority for many companies, but the strategic reason is now about freeing up cash reserves to invest in new markets, new products and services, and new technologies.
More businesses, too, are once again investing heavily in staff development and engagement because they know they cannot afford to miss out on the best talent. And with the biggest engagement driver for teams being reliable leadership from senior levels combined with a strong sense of purpose and impact, concentrating on developing talent from within the organisation, as opposed to hiring externally, is the smartest move by far.
However, building a team that will remain effective and productive in a rapidly changing market of shifting opportunities and small windows requires more than an abstract commitment to teamwork. Clearly, a FTSE 100 CEO and the leader of a four-person project team will need to consider vastly different things, but the primary function of a leader of any description is to provide clarity for those he or she leads. A team clear on what its goals are hits deadlines, reaches milestones, and even innovates more reliably, more quickly and more often than one that is not. If it lacks clarity, the team, and the organisation, will remain stuck and will be unable to develop or grow.
It is a leader's role to assign responsibility and express how each role impacts the overarching objective. There is nothing more frustrating for an employee than having no meaningful impact or not knowing how to achieve their goal. Leaders have to put in the time to outline a realistic strategy based around the competency of the team. Set measurable key results and KPIs that can allow team members to scrutinise their own performances against what is expected of them. Once that is in place, great leaders will go on to focus on coaching and developing their teams. The idea is not to micromanage but to trust in your team's ability to make sound decisions and take ownership of their work.
Also, great leaders realise that they are role models. Employees tend to mirror their leaders' behaviour, so it is important that leaders exhibit all of the same characteristics and enthusiasm they wish to see in their teams. It is imperative that leaders do not overlook how important leadership-role-modelling behaviour is. Creating the right culture fosters the sort of engagement that ensures an organisation remains competitive and innovative in the long run.
Finally, leaders should make a point of having regular dialogue with their teams and of getting them involved, not just in idea-generation exercises but also in the decision-making process. Having regular, frank and honest discussions can build trust and allow team leaders to demonstrate some of the soft skills that employees are increasingly looking for. Providing regular feedback and holding regular reviews can help staff understand how well they are doing and reassure them of the progress they are making professionally.
The key to unlocking the benefits of a future-fit leadership team lies in accepting and embracing the knowledge that the image of the rock star or the lone-wolf leader no longer influences or inspires employees in the same way it once did. Employees look to their leaders for guidance and inspiration but, ultimately, they want to see their leaders as mentors and coaches; failure to win your teams over will result in silos, bureaucracy, stalled projects, poor collaboration, talent leakage and, inevitably, market failure.