Effective leadership in a world of geopolitical upheaval—a contextual challenge for organizations
The ongoing global events—economically, politically, and otherwise, make the world feel more volatile, and fractured than just 10 years ago. What does this mean for organizations and their understanding of what leadership traits are important?
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Research Shows Understanding Context Is Key
The ability to be agile in different situations and having the right talent in place that can adapt and thrive during change is critical. As Nitin Nohoria wrote in a recent Harvard Business Review article, “Great leaders are defined less by enduring traits and more by their ability to recognize and adapt to opportunities created by a particular moment...effective leadership is largely context specific.”
From a 3-year study amongst 9,000 global leaders that SHL conducted to find out what makes them successful, context was found to be a key differentiator. Context covers the external environment such as the industry and location the leader must work in, the organization, including business priorities, the team, and the role, including job characteristics and psychological demands.
When selecting leaders, factoring in the wider work context can lead to predictions that are 4x more accurate on average than a ‘one-size-fits-all’ approach. Furthermore, a better prediction of high-performing leaders translates into a 22% increase in leader performance on average—which in turn is associated with a 4% increase in revenue and a 4% increase in net profit.
Another outcome our research highlighted was the positive impact on diversity, with results showing that women were stronger than men on 21 of the 27 challenges identified by organizations across the globe as being most critical in making or breaking a leader’s performance. Together with providing a very flexible and robust way of evaluating who are the best fit individuals to a particular set of challenges, using context widens the field of potential prospects and ensures organizations do not miss any hidden gems that may exist in the talent pool.
If we can measure and identify the best fit individuals to particular combinations of challenges—understanding which of these challenges align most closely to the uncertainty, disruption, risk, and opportunity associated with the geopolitical landscape enables an organization to evaluate how well equipped its leaders/employees are to navigate this. That sort of talent insight could be critical to an organization thriving in an otherwise chaotic world.
What Challenges Matter For Effective Leadership In An Uncertain Landscape?
From around 300 challenges that leaders face, SHL distilled 27 critical contexts—categorized into 4 groups—which impact leader success. Those groups were Lead Change, Manage Risk and Reputation, Drive Performance and Deliver Results.
Each of these areas have contexts that may become more important or less important as time passes and new challenges appear, and be particular to an organization’s priorities or goals at a point in time—but when thinking about global uncertainty, there are a few challenges that could well come to the fore:
Deliver Under High Uncertainty and Ambiguity
This looks like an obvious choice. The capacity to operate in an environment that is not clear cut and where there may be sudden twists and turns is likely to be crucial.
Ensure Safety & Security of Persons or Operations
If part of the business or operations are in a location which might be judged as being volatile or unstable, then the capacity to navigate regional conflicts, politics, environmental issues, or infrastructure challenges will be paramount. Building mechanisms to counter the threat of cyber-attacks is likely to be a major focus for organizations.
Deliver Rapidly Changing Products, Services and Processes
Part of this challenge potentially relates to issues to do with the management of supply chains. If established supply chain lines are disrupted, the organization will need to quickly re-consider alternative processes.
Deliver in High Risk-Taking Contexts
Disruption and the unexpected may mean that the organization needs to make big calls, for example quickly shifting operations to another geography or gambling on introducing a new line in a country that is suddenly in conflict with another, but longer term could be a significant market opportunity.
Deliver in Risk Averse Contexts
Disruption may lead organizations to explore new global opportunities. These new environments could have more regulation, or a requirement to navigate other ‘bureaucratic’ stakeholders, where the way business is done might be quite different to what the organization is used to.
Grow the Business through Geographic Expansion
Geopolitical challenges in a particular country/region may require the organization to consider new geographies as a base for manufacturing and/or markets for products and services.
Take The Guesswork Out Of Leadership Selection and Succession Planning
Without understanding the people within existing talent pools that have the right leadership traits to guide the business through often unknown geopolitical challenges, it can leave organizations vulnerable to inevitable change. Evaluating the potential and experience of individuals who are best placed to navigate various contextual challenges can enable organizations to be proactive in building effective leadership teams and succession plans, regardless of what the future holds.
Learn more about SHL’s research on context and how SHL can help your organization help find diverse successors that perform 22% better than their peers.
