Now more than ever, investment leaders have the opportunity to make life-changing differences for roughly four billion people’s savings and investments. They will do so by drawing from the widest range of leadership skills to manoeuvre through the epic challenges this crisis presents and by emerging with stronger, fairer and more sustainable businesses.
Research from management science identifies dominance and serving as the two critical pathways for leadership. There is a dominant, confident and support-demanded approach, and there is a serving, empathetic, and support-volunteered approach.
In times of uncertainty and stress, the confidence you can get from dominant leadership styles is favoured because it can mobilise the organisation to high-velocity action and compensate employees for their feeling of loss of control (think of how China dealt with the coronavirus).
But the management thinking is clear that this leadership choice is not a case of either / or but and. Essentially, both should be used and the exact mix should be reflective of circumstances.
One unique aspect of the coronavirus crisis is how personally challenging this is for the workforce. In Maslow’s hierarchy of needs it is basic safety that everyone craves right now. This suggests that the empathy shown to workers through this period of vulnerability will be preciously valued. For example, in the choice of what’s right to do now when family issues arise while working from home; this is the time to choose to do the family thing. For the best organisations, it’s not even close.
This crisis will probably turn out to be the biggest challenge faced by current leaders in their lifetimes. Previous experience suggests this leadership defining moment will be brilliantly handled by a few organisations, adequately handled by the vast majority, and probably botched by the remaining few. Which organisations will get into each group? This triage will take some time to be memorialized; but we know it will be through memorable stories of leaders with a human touch.
I would wager that many of the best stories will come from organisations where leadership and culture are strongest. They will have a few things in common: a balance in the craft of exercising dominant and serving leadership styles; a purposeful culture as a north star; clarity that profit play a supporting role in that purpose; and a culture that accommodates this ‘it’s all about the people’ moment.
With all this present disruption it’s hard to start work on an exit strategy, but good leaders should. The present crisis quickens the pace of three disruptive workplace realities which should be front-run.
First, there is growing complexity in organisational settings. This makes command and control-style leadership actually lose control because it cannot get enough accurate real-time information from the frontline. By contrast, good leaders always manage to stay in touch.
Second, there is a growing need for emotional intelligence among investment leadership. Employees increasingly expect work and life to be integrated and this is central to good employee experiences where well-being, purpose and personal growth rank highly and intrinsic motivations are more lasting than extrinsic forms like pay.
Third, there needs to be a culture of openness in the workplace. Leaders previously hoarded information. Now the open-cultured organisations can create the positive state of psychological safety at all levels with everyone feeling included. This plays to better decision making all round and helps people with their resilience during tough times.
These disruptions most importantly require leaders to be T-shaped. Most industry leaders will be deep experts in their field – this constitutes the vertical bar of the ‘T’. But many will not have the horizontal bar of the ‘T’ which only comes with having situational fluency around wider societal and business issues and is achieved through being in-touch with a wider network and other disciplines.
This being more in-touch means for example: a greater understanding of stress and fight or flight responses in brain science; the balancing of dominant and serving leadership in management science; the critical quality of safe space in psychology; and how to apply the delicate art of being human.
An additional, and highly relevant, T-shaped skill is the understanding of systems-theory. This is about how pandemic systems affect our lives and health; how systems may brutalise our planet; and also, if we get it right how the financial system can lay the foundations for wealth and well-being to be more fairly distributed.
The investment challenge of tomorrow is to build sustainable organisations that harness people and technology to create value in a wholly integrated sustainable investment system. We should resume our sustainable investing quest after the crisis abates with considerably more zeal than before.
Investment leadership needs to step up. It needs to project confidence that it can crack through this crisis. It then needs to re-group with the benefits of extraordinary lessons learned through extraordinary times and morph into something better. While this crisis is rightly producing stories of heroes in scrubs and gowns, the investment industry will be discovering its own heroes. They are likely to be T-shaped leaders: both sure-footed in strategy and steeped in humanity.
Roger Urwin is the co-founder of the Thinking Ahead Institute and head of global content at Willis Towers Watson.