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Leadership Challenges and Skills in the Downturn

Posted by: Jena McGregor on November 02, 2008

My eyes often glaze over when it comes to new studies on leadership. We all know it’s vitally important. Like diversity, women at the top, and ethical behavior, it’s one of the most important issues in business. And yet, all the studies seem to find the same thing.

But at times like this, after banks have gambled away trillions and loaned money negligently, when people are looking to leaders more than ever for answers, those studies seem at least a little more resonant. And against the vivid backdrop of a historic financial crisis, the findings can actually be a little surprising.

Last week, the Fuqua/Coach K Center on Leadership & Ethics (COLE) at Duke University (named after Duke basketball coach and sometime management guru Mike Krzyzewski)released its Executive Leadership survey findings. The sample consisted of 205 individuals from public and private companies and was drawn from the BusinessWeek C-Level Executives email list. Surprisingly, although it was administered in late September as the financial crisis deepened, respondents listed
increasing innovation, leading internal organizational growth, improving the quality of their leadership talent and developing the next generation of leaders as the top four leadership challenges.

The most startling result was the 5th biggest leadership challenge, at least for large companies: increasing employee commitment/retention. An interesting response at a time when those large companies are laying off people by the thousands. A hint of the crisis only appears on small employers’ No. 5 leadership challenge, the availability of capital.

The survey also reports the leadership skills rated as the most important: promoting an ethical environment, acting with authenticity, interpreting the competitive environment, developing trust, and demonstrating optimism and enthusiasm. While those skills would be unlikely to differ much if the survey had been performed two years ago, or even two months ago, the list is especially resonant at a time of crisis.

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Reader Comments

Bruce Temkin

November 3, 2008 09:52 AM

First off, I'm a big Coach K fan (that's not pertinent to my comment, but I didn't want to miss an opportunity to give the guy a shout out).

I've written about 2 ways to handle the recession: mange your way through it or lead your way out of it. It's good to see that many companies seem to be doing the latter. I particularly liked what Jeff Immelt recently told his leadership team at GE: "Keep your company safe but keep building the future."

My blog (Customer Experience Matters):

Wally Bock

November 3, 2008 06:07 PM

One thing that has really struck me during these last weeks is the way companies talk out of one side of their mouth about the importance of people while out of the other side they deliver layoff notices that don't seem much better thought out than the slash and burn tactics of two recessions back.

After years of getting lean, the sheer numbers of employees aren't what they were. And in today's knowledge economy it's important to know who you're asking to head for the door and what knowledge and relationships are going with him or with her.

Tory Clarke, Co-founding Partner

November 4, 2008 03:22 PM

During a time of economic crisis (contrary to the author’s belief) it seems logical rather than startling that companies who are actively laying off employees, or are fearful that they may have to do so in the future, would have the challenge of retaining the employees they actually want to keep at the front of their minds.

After all, at such times morale can be low, leadership can be perceived as questionable or nonexistent, panic about the bottom-line leaves managers (mistakenly!) unlikely to invest in developing remaining talent…

While it is noted at the beginning of this article that “diversity, women at the top, and ethical behavior” are “important issues in business,” it seems that a direct connection has been missed as to how these three key business issues directly affect retention.

A consistent recruitment theme is that high caliber executives (of any age, culture, ethnicity, gender, geographic background, race or sexual orientation) are more attracted to an organization where there is a culture of ethical integrity and where diversity-inclusion initiatives are under-pinned by a fundamental belief, throughout the organization, in diversity as an economic imperative.

Companies that are committed to ethical integrity and diversity-inclusion initiatives not only leverage themselves to attract the best talent, but also harness those initiatives to retain top talent during both good and bad times, i.e. once those high potential individuals are a part of an organization that places value on ethics and diversity-inclusion, retention rates will increase as employees take pride in those initiatives and view their firm as an employer of choice.

The flip side is that, in companies where ethics and diversity initiatives are a low priority, employees leave because they don’t believe they are valued, because they perceive a workplace to be hostile, or because they believe a competitor organization shows precedent in developing careers paths for a more diverse range of executives.

In the end, one of the best measurements of recruitment and retention initiatives is to see your internal talent receive promotions, gain responsibility and take on higher profile roles throughout the company. With a focus on retention, despite the current economic downturn, you will build a strong performance culture within your company, becoming the employer of choice…one that attracts star players, not fights to keep them!

As an executive search firm that focuses on the recruitment and retention of high-caliber diverse senior executives, Bridge Partners LLC published a discussion of retention and diversity in 2006, which is available on our website ( We work closely with clients in the corporate, academic and public sectors to support their initiatives to diversify their leadership teams, and therefore understand the challenges faced by organizations trying to thrive during perilous economic times.

rob fox

November 5, 2008 12:07 PM

There appears to be growing evidence that it is Sally at the all center and Garry in the local branch that are suffering from the emotional fall out of the banking crisis. Their leaders got them into this emotional abyss and now should have the ethical commitment to help get them out - not those that are going to lose their jobs, rather those that are staying and need to help rebuild consumers' credibility and society's confidence in their institutions.

To accomplish this bank board rooms need to find ways to help better engage and inspire their staff in building the future; hence employee engagement is vital.


December 1, 2008 04:26 PM

Anyone can lead when the chips are up. It is during these hard times that leaders need to step up to the challenge and make a difference through their leadership. This is an opportunity to reevaluate and make necessary changes. Employee retention and commitment has been declining for quite some time. It’s started to decline when companies began to replace the Baby Boomers with Generation X. Today, Generation Y is in the workforce and they have no plans on staying at one company for a life time. Change in their jobs, and careers affords them opportunities in this fast past society that we live in.

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How can you manage smarter? BusinessWeek writers Nanette Byrnes, Patricia O’Connell, Emily Thornton, Matthew Boyle, Michelle Conlin and Diane Brady synthesize insights from the brightest business thinkers, critique the latest management trends, and comment on leaders in the news.

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