Route2 leadership paper FINAL

LEADERS IN THE

SPOTLIGHT

Making sense of leadership

in a time of austerity

April 2011

Authors:

Jane Boyt

Debbie Fuller

Rupert Widdicombe

Matthew O‟Connor

2 Route2: Leaders in the SPOTLIGHT

Route2 carried out this research to better

understand the opportunities and challenges

facing public and private sectors leaders during

the current economic crisis.

We held a series of discussion groups and face-to-

face interviews with senior leaders from a range of

sectors including financial services, IT, retail,

consulting, transport, local government and

education.

This paper summarises the views of the leaders we

spoke to. (A full list of participating organisations

can be found on page16).

We would like to thanks these organisations and

individual leaders for their time and expertise.

The organisational

perspective

How organisations

can adapt to

sustain growth and

performance

4

9 Personal response

and behaviours

How leaders can

inspire and lead

their people while

transforming their

organisations

13 Conclusion

Strengthening the

psychological

contract between

leaders and staff

is crucial in

challenging times

LEADERS IN THE

SPOTLIGHT

Making sense of leadership

in a time of austerity


“In times of austerity, the leader becomes

a lightning rod; in bad times employees

really care who the leader is.”

Marc Sands, Director of Media and Audiences, Tate

The global financial crisis of 2007 started a chain of events that is yet to fully unravel.

The collapse of some of the largest financial institutions in the world forced

governments to create massive financial rescue programmes, in the process

derailing domestic fiscal and monetary policy. The knock on effect as banks de-

leveraged halted economic growth, hitting property and employment markets.

In the UK, the private sector has already lived through two years of recession.

Companies have learned and adapted; the survivors are leaner, more agile. Now,

Government spending cuts of an unprecedented scale are beginning to hit the

public sector. At the same time, the government‟s localism policy is putting the

citizen at the heart of spending choice, requiring a radical review of how public

services are delivered.

The prevailing negative economic climate is now affecting almost every individual

and organisation in the country. While the private sector is currently holding steady,

with significant growth in financial services, many companies are gearing up for an

economy shaped by higher unemployment and reduced consumer spending

power. The smart companies are applying the lessons learned in 2009.

The change is only just beginning for the public sector and comes after 14 years of

growth. The public sector is now being required not only to radically cut costs, but to

also completely transform services. The dilemma facing senior leaders is stark: how

do you devolve decision-making and service delivery when the scale of change

seems to demand greater centralisation and control?

Public sector workers, meanwhile, must continue to do their jobs knowing

major change is inevitable – if they keep their jobs they will need to start

working in a way which is unfamiliar and unknown. This is new territory for

many and there is great concern about what this will mean and how

their performance will be judged.

The way in which

the change is

implemented has

never been more

important

INTO THE

UNKNOWN


“Make it clear for people why they are

still here, don‟t bury issues, engage

people in debate”

Professor Dame Pat Collarbone,

Director, Creating Tomorrow

Route2 carried out this research to better understand the opportunities and

challenges facing public and private sectors leaders during the current

economic crisis.

We held a series of discussion groups and face-to-face interviews with senior

leaders from a range of sectors, including financial services, IT, retail,

consulting, transport, local government and education. Our research was

framed around two key questions:

1. How must organisations adapt if they are to sustain growth

and performance?

2. How do leaders inspire and lead their people while transforming

their organisations?

In answering these questions, the leaders we interviewed said the scale of

change faced required them to be at their top of their game – giving their

people hope by providing a clear vision for the future, energising their

leadership teams, and engaging widely in designing new ways of working.

They told us that successful change would depend on people who are

engaged, committed and competent in the new way of doing business.

This paper summarises the experiences and insights of the leaders interviewed

by Route 2 on how to achieve effective and sustained change.

Insights from

SENIOR LEADERS


The organisational perspective

Adapting to sustain growth and

performance

Use vision as an anchor

Involve people in the transformation

Work through your leadership team

Cut and reshape with respect

Use evidence-based reasoning

Leaders’ responses and behaviours

Inspiring and leading in a period of

transformation

Be clear, honest and visible

Build relationships

Model the behaviour you want to see

Keep learning

In carrying out this research, we looked at two

perspectives on leadership in a time of austerity – at the

level of whole organisations, and at the level of the

individual leader.

Insights from

SENIOR LEADERS


The leaders we interviewed told us that

despite the high degree of uncertainty in

their sectors they were acutely aware of

the need to provide a clear vision of the

future for their organisations. People at

all levels responded positively to a

detailed, positive and consistent view of

the situation and the way ahead.

A clear vision is always important but its

importance is heightened at a time

when employees feel both their own

and their organisations‟ futures are at

risk. Knowing what the new world will be

like gives people a sense of what will be

required of them, helping them to feel in

control.

Not everyone will like the vision.

Nevertheless, it gives people a choice: to

sign up to the new way of working or

accept that they no longer fit with the

future and direction of the organisation.

As well as having a clear vision, leaders

need to ensure it is communicated

effectively and continues to be

promoted through difficult times.

Use VISION as

an anchor

“Communication about the future strategy is key. In the

downturn there was an increased focus on

communication with and between Partners to ensure

alignment and clarity of direction. This was cascaded

through the organisation by the partnership group. This is

still critical.”

Tim Payne, Partner, HR Chief Operating Officer for

KPMG Europe

“The [public sector] cuts are significant and this kind of

situation is not part of many people‟s experience.

Therefore, it‟s important to provide a vision and a feeling

of hope. A vision gives a sense of where we are going.

The cuts feel like they are being done to people and so

creating engagement in change, allowing people to

shape services, provides hope for the future.”

Steve Reed, Leader of Lambeth council

“We have an urgent need to change the way we deliver

services. We can‟t take on this challenge and meet the

required cost savings without a major transformation in

the way we work. This is huge. It requires belief,

momentum, vision, energy and drive – a real picture of

what the future could be like needs to be

communicated. Staff won‟t take the bold steps in

change without that clear vision. The trick has to be to

generate confidence in a new future at a time of ever

increasing uncertainty.”

Katherine Kerswell, Group Managing Director, Kent

county council

The Organisational

Perspective

How organisations can adapt to

sustain growth and performance


Significant change requires people and

organisations to think differently and to

innovate. In times of uncertainty,

organisations, leaders and employees

tend to stick to established ways of

solving problems. There‟s a tendency to

default to simply working harder rather

than working differently.

Releasing employees‟ creativity and

initiative is most likely to happen when

they are engaged, are part of a team,

and are meaningfully involved in

shaping their own future. Leaders can

encourage innovation by:

o ensuring communication is two-way

and messages are consistent

o ensuring wide involvement in

designing the future

o preventing established ways of

working from getting in the way of

new approaches

o demonstrating that senior leadership

have as much at stake as everyone

else during difficult times

o being open about the future so that

everyone feels they are in the know

and can choose to sign up or not

o being clear on the skills and attitudes

that will be needed so that staff can

respond, and feel in control of their

future

Involve

PEOPLE in the

transformation

“This is transformation. You need to work

together to question and change the

way things are done now in order to

manage this level of cuts”

Graham Martin, Executive Coach, Lecturer and Non Executive Director

"Encourage your employees' involvement in solving

business problems. It is important to make it clear that

you really want their involvement. Show them that

their ideas are listened to and acted upon. Then

they'll believe that you really are interested in their

help and they'll offer even more."

Louise Redmond, Director Governance Services, The

Law Debenture Corporation

“Employees are the key. It is essential they recognise

where you are, so they‟re engaged enough to do the

talking and identify the solutions; after all, they know

the business as well as anyone. It‟s about listening to

your champions.”

Rebekah Wallis, HR Director, Ricoh UK

“You must encourage innovation. Allow people to

take a chance, tell them, for example: „I want you to

succeed and my commitment to you is that I won‟t

nail you for the three in ten innovations that don‟t

succeed‟.”

Andrew Potter, CEO, NCP

“The added dimension of the current climate is that

there are so many things we don‟t know; how are

businesses going to reformat, is a local authority going

to fall apart, or is it going to restructure, reposition

itself, create different traded services so it survives.

These are all new mindsets.”

Geraldine Hutchison, Assistant Director, CfBT

Education Trust


The spotlight may be on senior leaders

but they are acutely aware that the

effectiveness of the wider leadership

team is what‟s crucial in times of

significant change.

Many changes fail when messages are

diluted or diverted. To communicate a

sense of confidence throughout the

organisation, the wider leadership must

be visibly aligned to the change plan,

acting as a cohesive team. They need to

be equipped to cascade the message,

and tailor it appropriately and faithfully

to the people below them.

When the leadership team is aligned

and cohesive, it gives senior leaders the

confidence that the change plan will be

carried through. Listening, and the

honest flow of information in both

directions is essential – senior leaders

need people to be able to tell them

what is really happening and not just

what people think they want to hear.

Work through

your LEADERSHIP

team

"We have a dilemma; a risk-averse culture

and an environment where things need to be

done differently. Our survival depends on

bright ideas; we need to communicate and

reinforce the good ideas."

Professor Steven Cowley, CEO, United Kingdom Atomic Energy Authority

“Top managers need to engage with staff. It‟s not as

simple as just walking the floor. It‟s about how you

communicate, how you facilitate conversations.

Encourage employee voice and talk about impact:

people must feel they are heard to be empowered.”

Janita Bagshaw, Director of Royal Pavilion and

Museums, Brighton

“Going through a big change, there‟s a huge desire

to have one simple, combined message. You have to

keep asking yourself how is this message being

tailored, are all middle management doing the

translation for you? This is a consummate challenge in

a time of austerity when people want certainty. On

the one hand you want to get your top level

messages across in a way that is very simple and

applicable to everyone, on the other if you don‟t

make them specific enough for the person working in

the warehouse in Turkey or in the store on the Strand,

it is very difficult to have an impact.”

Andy Hornby, Group CEO, Alliance Boots

“Never underestimate the ability of middle leaders

and managers to stop what you are planning to do.

In most organisations, there is a network of influencers

and leaders alongside the formal structures – talk to

that network and communicate informally as well as

formally”

Peter Maddison, Olympic Police Coordination Team


A striking aspect of our research is that

the way in which an organisation is

reshaped is a far higher priority for the

senior leaders we spoke to than in past

downturns.

The scale of job cuts that is anticipated,

coupled with the level of uncertainty

about the future, mean that leaders are

considering how they are managing

leavers and the impact this has on those

who stay – to avoid the fear among

employees that comes from seeing

good people leave or fail without

explanation.

The leaders said they needed to keep

an eye on the longer term as they cut

and reshaped their organisations.

Cut and

reshape with

RESPECT

“It‟s important to help people leave with respect.

Treat leavers well, as people are watching. It's

important not to lose employees‟ trust.”


“Reinforce people‟s strengths and up the level of

feedback-giving: staff who are staying need to

maintain a growth mindset and, equally, if you‟re

leaving the organisation then it‟s important that you

leave us as a vibrant, passionate leader.”

Maggie Farrar, Strategic Director, National College of

Leadership for Schools and Children’s Services

“I am open with staff about the financial position. But

given our (staff) turnover, and the fact that it‟s always

challenging to recruit the sort of specialists we need,

such as people who can interpret clinical trials, I think

we can reshape without compulsory redundancies. I

can be upbeat about individual career prospects. I

can say „If you want to stay I can give you an

interesting job‟.”

Sir Andrew Dillon, CEO, National Institute of Health

and Clinical Excellence

“Make sure that jobs are designed so that the work

itself is interesting and rewarding. This can increase

engagement and productivity hugely. And for some

this has greater impact than efforts managers make

to get employees motivated about the company; try

getting them motivated about the work as well."

Louise Redmond, Director Governance Services, The

Law Debenture Corporation

“Managing leavers well was important in 2009. Way

over 80% of staff agreed to vary their terms and

conditions and take on board flexible futures – this

said a lot about trust in the organisation.”

Robert Bolton, Partner, Head of People and Change

(Public Sector), KPMG


The leaders we interviewed stressed that

evidence and data are essential when

creating a clear vision of the future and

a compelling rationale for change. This

evidence should be built into all the

conversations that are happening in the

organisation.

Increasingly, bruised and sceptical

employees need convincing that the

planned changes make sense and are

well thought through – and not reactive

and ill-considered. There‟s an

opportunity for organisations to build

confidence among employees by

drawing on data collected by staff to

inform innovation and decision-making.

In addition, sensible hypothesis and

scenario-testing among employees can

be a way of identifying and developing

the „champions‟ who will be important in

the transformation to come.

Use data and

INTELLIGENCE

well

“Always start with the customer and prioritise

data and activities by asking „does this add or

take away from the customer?‟”

Andy Hornby, Group CEO,

Alliance Boots

“Hard times make real data rather than assertion

important. Getting at the right data and looking

beyond your own assumptions is key.”

Robert Bolton, Partner, Head of People and Change

(Public Sector), KPMG

“We are blitzed by information, hundreds of emails,

customer research and campaigns. The hardest thing

is to know what is important, which part of the river to

listen too, which colleague group to listen to. The

tendency is to suck in more and more data and it can

be hard to see things clearly. Leaders have a

responsibility to provide staff with good information,

genuinely gathered at the right level.”


“Information and data are important but you need to

work through information overload to understand

what‟s really going on. Make sure managers have up-

to-date, relevant and real information that helps them

do their jobs


“You need a lot of intelligence from within your

organisation and it‟s easy to get distracted by the

echo problem: where the leader shouts something,

then hears people repeating it back because that‟s

what they think you want to hear – so you don‟t find

out what the real problems are. So the question is:

how do you get your business intelligence?”



Be CLEAR,

be HONEST,

be VISIBLE

Personal response

and behaviours

How leaders can inspire and lead

while transforming their organisations

The leaders we spoke to know how

important it is to be visible, to spend time

on the “shop floor”, particularly during

periods of uncertainty, re-organisation

and cuts. They need to engage with

people, participate in the emotion of

the situation and, where needed, act as

a steady hand to deal with any kick-

backs and difficulties. Employees at all

levels respect the truth and want to hear

it, even if the truth is „we don‟t know‟.

Allowing leaders to have a low-level

presence within an organisation can

significantly undermine efforts to engage

people in the planned changes. By

being widely seen and by

communicating honestly, a leader is far

more likely to take employees with them

through a successful change.

“I‟m staggered by the significance that leaders have;

the attention people pay to their body language,

noticing whether they are in their office, or locked

away in meetings. Leaders have to visible, it‟s not

good enough to email.”


“It‟s about communication. As a leader, if you are not

visible and articulate, how will people know where

they are going, how will they have confidence in you,

how will you help them understand?”


“We‟ve managed uncertainty in a number of ways

but key was creating an internal communications

portal. This was a focus to manage rumour – it was a

breakthrough as it reduced anxiety, allowing staff to

focus on work rather than the future.”

Maggie Farrar, Strategic Director, National College of

Leadership for Schools & Children’s Services

“Be visible – have a word with everyone not just your

favourites. As a leader you are a presence – use that

to give people hope and confidence.”

Professor Dame Pat Collarbone, Director, Creating

Tomorrow

“Leaders need to make sure that they see, hear and

feel things on the ground but are also able to take a

helicopter view to see emerging patterns and

direction of travel.”

Tessa Mason, Relationships Manager, Carnegie Leaders


The leaders we interviewed reminded us

of the importance of the informal

networks and channels that exist in every

organisation alongside the formal ones -

leaders need to be plugged into these.

This means getting to know key

individuals at all levels: those who really

know what is going on, the opinion

formers, those who know what works and

what does not, the enthusiasts who have

ideas but don‟t know how to get them

implemented. Building mutual trust is at

the heart of this kind of communication.

Leaders can benefit from getting to

know the staff whose work will be

ultimately reshaped when the changes

come to fruition. One way to do this is for

leaders to get directly involved in some

of the change projects.

Effective leaders can help key staff

develop needed attributes by taking on

a coaching or mentoring role. The

leaders we spoke to stressed that these

relationships have to be two-way. The

bottom line is this: work on those

relationships, then employees will believe

and trust in your leadership.

Build trusting

RELATIONSHIPS

“I‟m very aware of the need to reinforce

trusting relationships. I take more time to

manage the micro elements of relationships

as there may not be time to let it ride”

Maggie Farrar, Strategic Director, National

College of Leadership for Schools and

Children’s Services

“If you get to know your staff you can draw on their

strengths. You need to listen to the wisdom of those

around you and give them the credit for it. It‟s important

to get out and understand the world through the people

who are doing the job. If you wait for a crisis before

behaving like this – it will be too late.”

Tim Glass, former CEO, The John Ellerman Foundation

“Being able to talk to staff in all the different parts of the

council gives me the opportunity to explain how things

could be and win their support and enthusiasm for a new

way of doing things. What is critical is that staff

understand how much they matter. What they think and

do every day really makes the difference in us being able

to work through this incredibly tough period and deliver

what‟s needed.”


County council

“Listen, connect: get to the truth of what's going on, what

employees feel, what customers want.”

David Pullan, Co-Founder, Mckechnie Pullan

“Listening is crucial – it‟s not something that humans as a

species are particularly good at – but it‟s a skill that can

be developed and which leaders need.”

Sarah Jane Mckechnie, Co-Founder, Mckechnie Pullan

“Don‟t carry the can alone – ask for help and distribute

leadership. Develop people as much as possible.”

Professor Dame Pat Collarbone, Director, Creating

Tomorrow


Model the

BEHAVIOUR

you want to see

Promoting the values and behaviour

needed for transformation and future

success can be a powerful way of

driving change. As well as encouraging

what you want to see, it is also important

to try to eradicate the established

behaviours and processes that are no

longer needed – and to be seen to be

doing so.

The desired values must be

demonstrated by the organisation and

by key individuals – starting with the

senior leaders and the leadership team.

The behaviour of leaders will be the first

place where people will look to see how

serious the organisation is about the

planned change. Any hint of “Do what I

say and not what I do” can undo

progress in a very short time.

Ensuring the transformation is managed

in a way that is compatible with the

values and vision that lies behind the

changes is a powerful reinforcer.

“In a time of job cuts, you need to think longer term.

Ask yourself „is there anything more we can do?‟ to

make this situation better. How you handle

redundancies has a significant effect on those staying

as it demonstrates your values.”


“One of the things that has changed a lot in the last

five years is that the level of trust for big institutions is at

an all-time low. Leaders have to be a lot more

humble, they can‟t be arrogant anymore – it‟s not

enough to say we‟re a great company. At the same

time, we as leaders need to give our organisation and

our people confidence – doing both at the same time

is the challenge.”


“Spend time with staff get to know them as individuals

and collectively, then you can draw on strengths and

celebrate these. Listen to the wisdom of those around

you and give them credit for it.”

Tim Glass, former CEO, The John Ellerman Foundation

"At times like this leaders need to up their

representational role, increase their visibility and

demonstrate the values of the organisation."

Steve Reed, Leader of Lambeth Council

“Know your organisation‟s values and what they

add to the business. Be prepared to retain

what‟s relevant but also be prepared to throw

some things away”.



Keep

LEARNING

The leaders we interviewed know well

that employees look to leaders for

inspiration during difficult times. But how

do senior leaders find inspiration for

themselves? How do they stay

motivated?

Some suggested spending time with the

organisation‟s inspirational people,

whatever level they are found at. Others

stressed the importance of the wider

leadership team and of creating ways

for that team to regularly spend time

with and learn from each other, be in

inspired by successes and even by

temporary failures.

Being open to or seeking out

opportunities to learn was a behaviour

leaders wanted to see in themselves and

in others.

“Be intensely curious to maintain your own positive

outlook – ask „what have I learned from this?‟

Deliberately see this as a growth opportunity to

prepare yourself and others for change.”

Maggie Farrar, Strategic Director, National College

of Leadership for Schools and Children’s Services

“I‟ll measure myself by having a sense of team –

not being on my own anymore, achieving the set

up of a successful organisation, successful launch

of a new organisation, building capacity and

energy for the future, feeling the level of

uncertainty drop.”


County Council

“The question is: how do leadership teams keep

themselves inspired? In every organisation, there

are two types of people – „radiators‟ and „drains‟.

With the drains, you put in the energy; with

radiators, it‟s all about the art of the possible,

they‟re always doing something exciting. When I

am feeling down, my strategy is to go and spend

time with the radiators. Then you celebrate what

they‟re doing and people see this and take

inspiration from it.”


“My last boss said to me inspiration comes from

the top. It‟s true – you can‟t expect the team to

say „don‟t worry boss we‟ll sort it out for you‟. If

you accept that this is true, then how do you

generate inspiration in the top team?”



Times of change and austerity challenge

the „psychological contract‟ between

employer and employee. When this

relationship is strong and flexible, it is a

powerful enabler for productivity and

successful transformation. When it is

weak or in question, employees‟ morale,

productivity and capacity to change

are much reduced.

The leaders interviewed here told us that

there were many practical things that

they do to ensure trust, morale and

commitment remain intact through

upheaval and change. As a result, staff

are prepared to continue giving their

discretionary effort, and carry on

performing and developing.

Strong, insightful leadership coupled with

genuine staff involvement have never

been so important.

“Leadership exists where people are no longer

victims of circumstances but participate in

creating new circumstances. It‟s not about

position or power; it‟s not about accomplishments;

it‟s ultimately not even about what we do.”

“Leadership is about creating a domain in which

human beings continually deepen their

understanding of reality and become more

capable of participating in the unfolding of the

world. Leadership is about creating new realities.”

Dr Peter Senge, director of the Society for

Organisational Learning at the MIT Sloan School of

Management; author of The Fifth Discipline

CONCLUSION

Route 2 is an advisory partnership that

specialises in the leadership and delivery of

strategic change programmes in the public

and private sectors. Our core expertise is in:

Preparing the workforce: faster adoption of

strategy and creation of business benefits

through workforce engagement

Everyone's business: using corporate social

responsibility activities to deliver real social

impact and business benefits

Change impact assessment: optimising

programme design to deliver the benefits and

behaviours needed to sustain change

Communicating change: clear and

compelling communication which creates

ownership of the change within the workforce

For more information contact

[email protected]

[email protected]

[email protected]

[email protected]

mailto:[email protected]





Participating Organisations

Alliance Boots

Carnegie Leaders

CfBT Education Trust

Creating Tomorrow

Kent County Council

KPMG

The Law Debenture Corporation

The London Borough of Lambeth

McKechnie Pullan

National Car Parks

The National College

National Institute for Health &

Clinical Excellence

Olympic Police Coordination Team

PDA Associates

Ricoh

Royal Pavilion and Museums,

Brighton

Tate

UK Atomic Energy Authority

Route2 leadership paper FINAL

Documents

Transcript of Route2 leadership paper FINAL