THE TURNAROUND LEADER

Organisations pride themselves on their mission and values. They are proudly displayed on corporate literature, accessed on their websites and sometimes even trumpeted by their leaders. These are examples from one organisation:

- Client focus
- Respect for the individual
- Teamwork
- Responsible citizenship
- Integrity

In the following example, the organisation has separate value statements relating to their different stakeholders:

“Managing risk effectively and always maintaining our financial strength"
“Preserving our reputation"
“The hallmarks of our success will be one of the best long-term records of value creation for our stakeholders"

And this is what it has to say about its approach to people:

“Working together as members of one firm in an environment of integrity, collegiality, respect and mutual trust."

It is difficult to disagree with any of these worthy sentiments, particularly since the matter of integrity crops up in both organisations.

Value statements are not about the actual tasks people perform, but how they feel. They are about expectations, not just about outcomes. In short, they appeal to our emotions, which is why they sound so good. But do senior members of an organisation ever take any notice of them, or are they merely superficial decoration, hiding a corporate culture which is based on none of the above?

I ask because the first set of statements is taken from Merrill Lynch and the second set from Lehman Brothers - investment banks that have been brought down by the risky investments they have made in the recent past. How do the investment decisions they made stack up with these pious value statements?

The conclusion that many people are reaching is that senior management, particularly those in the financial sector, cannot be trusted. These laudable words are not matched by commendable deeds. They leave us with the impression that these aspirational phrases are window dressing and are not meant to impact on day-to-day or even strategic decision-making.

The mistakes made by leaders in corporations like these unfortunately have an impact on all of us and are at the heart of the current global financial crisis. Every organisation needs to find a response to the unprecedented events now swirling around us. The type of leader that is required to get us out of this mess is actually quite different from the type of leadership that got us into it. Let's call this person the 'Turnaround Leader'. What sort of qualities will the Turnaround Leader require to repair the damage and steer their organisation through the choppy waters ahead?

Trust will be paramount in the next few years. Leaders will have to deal with much greater scrutiny than they have been used to in recent years coupled with tighter government control and increased regulation. After yearning for more freedom, some leaders of this generation have proven to be incapable of exercising that freedom with responsibility or wisdom. A particular breed of leader is required now to help us all navigate though this and the most important task facing our Turnaround Leader is earning respect.

The legacy of leaders in organisations like Lehman Brothers and Merrill Lynch is that we will be less willing to believe what our leaders are telling us. It has been remarked upon a lot recently that too many of us have lost faith in politicians and in our political leaders. This sense of alienation will now apply to our business leaders and they will have to work hard at earning our respect and trust. People will be even more aware of the gap between rhetoric and action. Take Sir Fred Goodwin, the recently departed chairman of Royal Bank of Scotland. He made it clear that he did not like waste and that the bank should be run as efficiently as possible at all times with overheads cut to a minimum. This approach earned him the title of Fred the Shred and he was deemed a successful banking leader. But whilst everyone was looking at their costs and counting their pennies, the leadership of RBS was buying a significant chunk of ABN AMRO at a hugely inflated price. The result of the bank's strategic decision-making has left it having to raise tens of billions of pounds, firstly from its own stakeholders and then from the government.

At this time we need leaders who do indeed lead by example, and act as genuine role models for values as opposed to the “do as I say not as I do" approach exemplified by some. This quality is particularly important at this time because there are tough decisions to be made. Employees deserve to know and to feel that the people making these decisions have done so with objectivity, which will require open and transparent communication from their respective leaders.

This theme of honesty and openness also means that our Turnaround Leader will need to provide an objective reality check of the here and now to keep a sense of perspective. Our Turnaround Leader must not give false impressions about the current situation or further prospects. In uncertain times people become anxious, which will inevitably lead to counter-productive work behaviours. Keeping people motivated and engaged should be a significant priority.

Our Turnaround Leader must also articulate a clear set of objectives with a plan to match that explains how the current crisis will be managed. This provides purpose, direction and more importantly a sense of what is possible. Creating a path to the future will help to relieve some of the anxiety that people will be experiencing.

There is an increasing amount of literature on why leaders derail. The research suggests that the very characteristics that enable leaders to reach the top are the ones that could also bring them down. Central to this is the belief that they do not need to change or to learn. The leader may view this as self-confidence, but others could see it as arrogance. Our Turnaround Leader must maintain a degree of humility, which means recognising that they might not always have the answers to everything. It means looking for and acting upon feedback. It also means recognising that even the greatest leaders are human and as such are fallible, which in turn means that they make mistakes. Leaders who do not recognise their mistakes do not learn and, as a consequence, will be unable to improve themselves. In times like this, where economic conditions and markets are highly volatile, leaders will have to recognise that they will not get it right all of the time.

The Turnaround Leader then will have a degree of self-awareness and know their strengths and weaknesses. They will attempt to build teams that are not only strong, but where people feel empowered. This is not the time for either the messianic or the self-interested. The Turnaround Leader will be trying to understand others' perspectives, what makes them tick and will utilise this information to ensure, as far as can be done, that an individual's motivational needs and interests are aligned with that of the organisation's. It is a rare skill but an important one. Leaders need to ensure that people feel that the pain they are enduring now has some meaning that the organisation is indeed worth fighting for. Recessions are always difficult and stressful, but they do provide the opportunity to rethink the way things are done and to reformulate and refresh our business models. They can also help an organisation shake off any complacent attitudes, assumptions and behaviours.

This recession though, provides us not only with an opportunity to streamline our processes, but more significantly our views about what we want from our leaders and what kind of leader you can become.