The Psychology Behind Effective Crisis Leadership

by Gianpiero Petriglieri

When I ask groups of managers what makes a good leader, I seldom have to wait long before someone says, “Vision!” and everyone nods. I have asked that question countless times for the past 20 years, to cohorts of senior executives, middle managers, and young students from many different sectors, industries, backgrounds, and countries. The answer is always the same: A vision inspires and moves people. Expansion, domination, freedom, equality, salvation — whatever it is, if a leader’s vision gives us direction and hope, we will follow. If you don’t have one, you can’t call yourself a leader.

This enchantment with vision, I believe, is the manifestation of a bigger problem: a disembodied conception of leadership. Visions hold our imagination captive, but they rarely have a positive effect on our bodies. In fact, we often end up sacrificing our bodies in the pursuit of different kinds of visions, and celebrating that fact — whether it is by dying for our countries or working ourselves to exhaustion for our companies. Visions work the same way whether mystics or leaders have them: They promise a future and demand our life. In some cases, that sacrifice is worth it. In others, it is not. Just as it can ignite us, a vision can burn us out.

When a leader’s appeal rests on a vision alone, leadership is not whole. And the limitations of such visionary leadership become painfully obvious in times of crisis, uncertainty, or radical change. Take the coronavirus pandemic. No one had anything like it in their “Vision 2020.” Crises always test visions, and most don’t survive. Because when there’s a fire in a factory, a sudden drop in revenues, a natural disaster, we don’t need a call to action. We are already motivated to move, but we often flail. What we need is a type of holding, so that we can move purposefully.

What do I mean by holding? In psychology, the term has a specific meaning. It describes the way another person, often an authority figure, contains and interprets what’s happening in times of uncertainty. Containing refers to the ability to soothe distress and interpreting to the ability to help others make sense of a confusing predicament. Think of a CEO who, in a severe downturn, reassures employees that the company has the resources to weather the storm and most jobs will be protected, helps them interpret revenue data, and gives clear directions about what must be done to service existing clients and develop new business. That executive is holding: They think clearly, offer reassurance, orient people and help them stick together. That work is as important as inspiring others. In fact, it is a precondition for doing so.

Holding is a more obscure and seldom celebrated facet of leadership than vision, but no less important. And when crises hit, it becomes essential. In groups whose leaders can hold, mutual support abounds, work continues, and a new vision eventually emerges. When leaders cannot hold, and we can’t hold each other, anxiety, anger, and fragmentation ensue. In a study of BP during the Gulf of Mexico oil spill, for example, my INSEAD colleague (and wife!) Jennifer Petriglieri observed both outcomes. She found that BP’s top talent, which the company needed to resolve and recover from the crisis, had different reactions to the crisis. Some lost faith in the company and in its leaders. Others doubled their effort and commitment. The difference between the two groups? The former was exposed to the top brass’ upbeat messages. The latter had bosses who drafted them to help clean up the mess. Despite the stress, working closely with one’s boss and colleagues on the response was more containing and informative. It reassured those who did it about the company’s integrity and long-term viability. Being held as we work through a crisis, the study concluded, is more useful than being told how bright the future is.

It was Donald Winnicott, a pioneering British psychoanalyst, who first conceptualized holding in this way. He observed that being held well was necessary for healthy growth in children. Parents who were available but not demanding, reassuring but not intrusive, responsive but not reactive, present even if not perfect, Winnicott observed, provided a “holding environment” that made children comfortable and curious. Holding made space for them to learn how to make sense of, and manage, their inner and social worlds—and to develop a robust sense of self. That is, a self with a healthy regard for its abilities and limitations, a self that can learn, play, work, face hardships, and sustain hope through it all.

Caretakers who held well, Winnicott noted, did not shelter children from distress and turns of fate. But they buffered children enough that they could process distress, and helped them find words to name their experiences, and ways to manage it. “Are you angry, love? Is that why you kicked? Come here. How about we tell your brother to leave your bear alone, instead.”

Children who are held well, Winnicott discovered, became more sociable and independent as grown-ups. They neither became paralyzed when faced with challenges, nor sought rescue from parental figures. They did seek help when needed and made good use of it. Winnicott called such selves true, meaning that they were free to make their way in the world, and he saw such strength and freedom as the result, one might say, of a competent kind of love. He also observed that they could offer it in turn. They had learned to hold themselves and others too.

Good holding, in short, not only makes us more comfortable and courageous. It makes us. That was Winnicott’s major insight, one as revolutionary now as it was then. His work refined Freud’s idea that socialization tames us and can make us neurotic. That only happens, Winnicott observed, when authorities impose a vision of who we must be that leaves us little room to discover who we can become. Neurosis, he contended, is not the product of what socialization does to our instincts, but of what it fails to do with our potential. Mental health and freedom, then, take learning new ways of relating to each other.

Children are not the only ones who need holding to survive and grow. Adults do too, throughout their lives. To face difficult circumstances, master new conditions, and develop in the process, we need holding from leaders and organizations. And we need to hold each other.

When we expand the definition of holding beyond child development, however, it becomes clear that there are different kinds of holding. In his later works, Winnicott hinted that the immediate, intimate holding that he spent most of his work describing works best when it occurs in a broader context of a society that is itself secure and free enough to render interpersonal holding less necessary. That was one of the functions of a democratic society, Winnicott argued: making it less indispensable for members to rely on their next of kin.

In my own research I have drawn a distinction between interpersonal holding and this broader institutional holding. Ideally, good leaders provide both, in a crisis and beyond. This is how.

Leaders provide institutional holding by strengthening the structure and culture of an organization or group. They do it, for example, when they put in place policies and procedures that reassure people about their job security or how fairly the organization is treating them. They do it when they promote dialogue that lets diverse people participate in decisions and in adapting to new challenges together, rather than encouraging polarized factions. For leaders in executive positions, this is the most impactful way of holding people in a crisis. Failing to provide it makes expressions of sympathy and understanding ring hollow. Providing institutional holding, conversely, will often make people forgive even personally dislikable leaders their remoteness.

To provide institutional holding, tell your people what will happen to their salaries, health insurance, and working conditions. What will change about how they do their work? What are the key priorities now? Who needs to do what? You might not be able to make predictions, but you can still offer informed interpretations, that is, why certain measures are sensible and needed instead of others. Dispel rumors. Encourage and protect everyone’s participation even more than you usually do. Do these things before you recommend the usual regular breaks, meditation, or exercise — otherwise you will just be neglecting your duty of care.

Once you have provided institutional holds, turn your attention to interpersonal holding, offering it to others and modeling it for them. To do this well you must let yourself be in the present. Your impulse may be to focus on the future but that will be little more than escapism if you cannot witness and understand people’s immediate experience and concerns. (Even if you can’t resolve them!). You need to muster a lingering, attentive availability that lets others “go on being,” as Winnicott put it. This is more than just being around and supportive when needed; it is a mixture of permission (to feel whatever it is that we are feeling without being shamed or overwhelmed) and curiosity (to consider different ways to understand our circumstances and, eventually, to imagine our future). Remember, as Winnicott described it, the core of holding is acknowledging distress and difficulty without giving in to powerlessness.

Leaders are not the only sources of holding. There is much we can offer each other, at work and elsewhere. In a study of successful independent workers, Sue Ashford, Amy Wrzesniewski, and I found that they invested heavily in cultivating a holding environment with peers and with behaviors that tempered the financial and emotional volatility of gig work. In her study of working couples, for example, Jennifer Petriglieri found that the most successful held each other reciprocally. Each partner helped the other face their career struggles and grow professionally, not just at home. When I reviewed the literature on grief, for a piece I wrote with Sally Maitlis on mourning in the workplace, again I found that a holding presence—capable, first, to just bear witness to another person’s pain, and later to help them find new meaning—was the most valuable gift a peer (or a manager) could offer. That gift is even more important when the loss is shared. Holding brings us back to life together, then.

People never forget how managers treated them when they were facing loss. And we will remember how our institutions, managers, and peers, held us through this crisis — or failed to. We also see the consequences of past failures of holding, in those institutions struggling to mobilize an already depleted pool of resources. It is tempting to resort to command and control in a crisis, but it is leaders who hold instead that help us work through it.  And it is to those leaders, I believe, that we’ll turn to when time comes to articulate a vision for the future.

When I ask managers to reflect a bit more on the leaders whose visions they find most compelling and enduring, they usually realize that none of those leaders started from a vision or stopped there. Instead the leader started with a sincere concern for a group of people, and as they held those people and their concerns, a vision emerged. They then held people through the change it took to realize that vision, together. Their vision may be how we remember leaders because it can hold us captive. But it is their hold that truly sets us free.

Source: Harvard Business Review

 

Now Is an Unprecedented Opportunity to Hire Great Talent

by Claudio Fernández-Aráoz

While the Covid-19 pandemic hits and reshapes companies, industries, national economies, and our society in previously unthinkable ways, business leaders need to think beyond survival to the opportunities this crisis might create, not only for their own organizations but the greater good. Chief among these is a chance to hire talented people at a time when they might have trouble finding or keeping jobs elsewhere.

According to The Economist, four-fifths of CEOs worry about skill shortages — up from half in 2012 — while outside hiring at the top reached record highs, causing business for large global search firms to increase by 9% to 15% last year.

Now, many companies are laying off workers and downsizing. Some sectors are collapsing. It seems an unprecedented number of people, around the world, from new graduates to seasoned veterans, will be looking for employment. At the same time, a major force that had been fueling the intensity of the war for talent — globalization — might recede. As companies revisit their international expansion strategies and cross-border business practices, workers are recalculating their personal purpose and individual and family priorities, with serious implications for their geographic and work preferences and travel habits.

The pool of available talent is suddenly both changing and expanding, and visionary leaders can make the most of it, preparing the ground for post-crisis recovery and growth. As management guru Jim Collins has shown us, making the leap from good to great starts with getting the right people on the bus.

History Lessons

Throughout history, economic hardships have created windows in which exceptional employees and leaders are widely available for a limited time. In the late 1940s, for example, many organizations were struggling. At Hewlett-Packard, the fledgling electronic equipment maker that would eventually become one of America’s best-known technology companies, business was slow and finances strained. But as legions of great engineers streamed out of closing or soon-to-close U.S. military labs, HP’s legendary founders Bill Hewlett and Dave Packard realized they couldn’t let such an amazing hiring opportunity pass them by. When asked how they could afford to keep taking on new people in those difficult years, their answer was simple: “How could we afford not to!”  Years later, when asked about the biggest contributor to HP’s success over the years, they routinely cited their willingness to invest in talent no matter the external economic climate.

While most of us become short-sighted and irrational during crises, the best leaders and organizations stay calm and use them to their advantage, sprinting away from their competitors and never looking back. To use another analogy, they bring in architects to plan the new building even as the firefighters work to save the old one.

Harvard Business School’s Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen considered the benefits of this kind of long-term thinking in an analysis of 4,700 companies across the last three recessions. They discovered that 9% were able to come out in much better positions than they entered because of their “progressive” focus. They did cut back, but were extremely selective about when and where they did so and, more importantly, they continued to make strategic investments. Rather than thinking in “either/or” terms — you’re either hiring or you’re downsizing — they, like HP following the war, embraced the “and,” understanding they could do both things if they were smart about it.

Unfortunately, most companies make the mistake of uniformly freezing hiring in downturns. During the 2008 global financial crisis, BCG and the European Association for People Management surveyed 3,400 executives, including 90 senior human resources leaders in more than 30 countries, to see how they were responding. The most frequent action (or reaction) was to scale back recruiting. At the same time, survey participants rated the selective hiring of high-performing employees from competitors as one of the three most effective responses to the previous crisis (from a list of 22) and the one with the best impact on employee commitment. This irrationality is widespread. Those who stay rational can capitalize on it.

Seizing the Opportunity

So, how should visionary leaders go about capturing this once-in-a-century hiring opportunity? Through urgent and disciplined engagement in several initiatives:

These will probably be individuals they frequently deal with (as suppliers, advisors, clients), or even assessed as past potential candidates. In your next executive team meeting, discuss everyone’s selections, rank them in terms of attractiveness for and to your company, and agree on who to contact. It’s possible that many will now be open to considering an offer because their circumstances have changed. One of the best staff hires I ever made for Egon Zehnder was a brilliant young executive I’d previously met in Latin America whose career I had tracked closely for more than 10 years. He’d told me he would never consider joining the executive search profession. Yet, two decades ago, at a crucial time in his career as a CEO of a sizable company, the time was right. I asked, and he came on board. He has since become a global partner and office leader in his home country, as well as playing all sorts of key global roles.

Set up a task force to source potential candidates from target sectors and companies who may now be either jobless or open to change.

Jeff Bezos, founder and CEO of Amazon, has repeatedly stated that the company’s high hiring bar is a critical factor in its success. When many years ago I spoke at one of its global recruiting summits, I met an army of hundreds of Amazonians dedicated to exactly that: bringing in the most promising new hires from target sectors and companies. One of them specialized full time in the military sector, in his view one of the best sources of talent in the United States. All companies should bring this level of focus and discipline to sourcing potential candidates, especially during this period. Insist that your senior HR leaders step up their efforts and purposefully assign some of your top-line managers to scout for outstanding people in key functions, particularly ones coming from hard-hit sectors such as airlines, hotels, and recreation, or start-ups that might already be faltering in the face of recession.

Interview and check references remotely with the same rigor you would in person.

Thanks to modern technology, we have the ability to replicate all of our traditional hiring processes and procedures in remote, physically distanced settings. Telephone calls and video conferences are a must. And then follow the same guidelines for great recruitment experts have described for years. Outline the qualities and competencies you’re looking for in a new hire before you start; at this time of flux, I would give heavy weight to soft skills, including inspirational leadership, change management, collaboration, and influencing, as well as the potential to keep growing, learning, and adapting to new circumstances. Such potential will stem from their curiosity, insight, engagement, and determination, on top of the right motivation. Ask behavior-based questions, such as “Could you tell me about a time you led your team through a big transition?” Record your thoughts and observations about how the person measures up to your initial metrics as soon as you’re done. Bring in more than one but not too many interviewers and compare notes with them. And carefully check references. Decades of social research have concluded that third-party opinions are much more accurate than individuals’ own views of themselves, particularly for soft skills.

Go out of your way to motivate the best candidates. 

Once you are convinced that you have the opportunity to bring in someone you really want, arrange to have the person speak to senior leaders who can share their love and passion for your company and describe the value they hope to build with the new colleague. Pay can be important but research shows that what truly motivates knowledge workers is a high level of autonomy, mastery, and purpose. In these trying times, flexible work arrangements will no doubt continue to be key, as will the chance to keep on learning and growing while working to build something larger than ourselves.

Don’t ignore the sourcing, retaining, and development of in-house talent.

This is also the time to carefully review your existing key players, stay closer to them than ever, assess their skills and knowledge in light of the revised outlook for you sector and company, and help them move from potential to success with targeted development plans including the right type of stretch assignments, which often arise from crises. During the 2001 economic collapse in Argentina, in which annualized GDP fell by 30% coupled with a 300% currency devaluation, I was contacted by an American bank operating in the country. It had lost more money there in a few weeks than it had made in cumulative profits over the previous century. And yet, at that point its leaders asked me to set up a retention plan for its top executives in Argentina. Their reasoning? Because of the bank’s situation, competitors would be targeting their talent; however, those were the very people they still needed to recover some those monumental losses.

This pandemic has created unprecedented trauma around the world. The economic fallout will be equally painful for many. It can be tempting to focus on the short term of crisis management. But when we emerge from this unfolding tragedy, it will be the long-term thinkers who not only survive but thrive. If your organization is well-capitalized and visionary enough to hire for lasting greatness, now is the time.

Source: Harvard Business Review

How businesses could emerge better after COVID-19, according to B Lab

By Adele Peters

As the coronavirus crisis and the ensuing economic fallout grows, many companies shifted their policies—in some cases, giving low-wage hourly and gig workers temporary access to paid sick leave for the first time. But when the crisis is over, will the companies that survive make more lasting changes?

Andrew Kassoy, cofounder of B Lab, an organization that certifies companies that focus on social good as B Corporations (B Corps for short), argues that the pandemic might accelerate shifts that were already underway. “I think there is already a new consensus that has formed over the last couple of years that we were moving from shareholder capitalism to stakeholder capitalism,” he says, pointing to examples such as a 2019 letter signed by CEOs in the Business Roundtable that signaled a new commitment, at least in words, to more social responsibility.

“I think that message has already been heard loud and clear in the culture,” he says. “And I think this crisis creates an opportunity because it makes it clear that we haven’t built a resilient economic system. This is an opportunity for us to focus on both how business and government play a role in building a more resilient economic system for the next crisis, and there’ll be more of these.”

The current crisis makes it obvious, if it wasn’t already, how many people have been living financially fragile lives. “There’s this oft-quoted statistic that 40% of Americans aren’t prepared for a $500 emergency, and now, we’re all having that emergency together,” Kassoy says. “While shareholder primacy didn’t cause the COVID-19 crisis, it certainly laid bare the fact that we have a system where workers and communities aren’t prepared for a downturn like this. You can see it in how fast the unemployment numbers went up. You can see the desperation of lots of workers to find alternative sources of income and the need for a massive bailout. And so in a different system, where companies were actually paying our workers well enough that people had reserves, we might be in a different situation than we are today and needing a multi-trillion-dollar bailout. And this will only be the first of several, I’m sure.”

Kassoy argues that B Corps, which have to meet strict standards for social and environmental performance, are actually better prepared to weather crises; during the last financial crisis, B Corps were 63% more likely than other businesses of a similar size to make it through the downturn. “We think that’s because those companies were more resilient,” he says. “They had stronger relationships with their workers, or their customers, or through their supply chains, that allowed them to make it through. I hope that we’ll see something similar this time around.”

It’s possible that more companies will choose to make changes to benefit workers. While many businesses are obviously struggling now, when the economy improves, some may decide to pay living wages and offer better benefits rather than adding to oversized CEO pay or making other investments.

Investors should also push for broader improvements, Kassoy says. “It’s pretty tough to expect individual heroic CEOs to change the whole business system. So we need the investment community to play a role as well. They, more than individual companies, have an interest in the stability of the whole system.” Government also has an obvious role—both in terms of setting conditions on companies if they’re given bailouts during the crisis, and by passing laws to permanently improve policies such as sick leave and access to healthcare. “It’s really about changing the rules of the game so that all companies have to be like B Corps.”

“If we get to the other side of this and we end up with the same system that we started with,” Kassoy says, “then we won’t have learned much.”

 

Source: Fast Company

To Be a Great Leader, You Need the Right Mindset

by Ryan Gottfredson and Chris Reina

Organizations worldwide spend roughly $356 billion on leadership development efforts. Yet, the BrandonHall Group, a human capital research and analyst firm that surveyed 329 organizations in 2013, found that 75% of the organizations rated their leadership development programs as not very effective. Why aren’t companies getting more bang for their leadership development buck? Our latest research suggests it’s likely because most leadership development efforts overlook a specific attribute that is foundational to how leaders think, learn, and behave: their mindsets.

Mindsets are leaders’ mental lenses that dictate what information they take in and use to make sense of and navigate the situations they encounter. Simply, mindsets drive what leaders do and why. For example, they explain why two different leaders might encounter the same situation (e.g., a subordinate disagreement) and process and respond to it very differently. One leader might see the situation as a threat that hinders their authority; another as an opportunity to learn and further develop. When leadership development efforts ignore mindsets, they ignore how leaders see and interpret problems and opportunities like this one.

You may wonder: if mindsets are so important, which ones should you help your leaders develop? In our recent work, we broadly scoured research across the social sciences to understand the various mindsets that individuals may possess. In doing so, we identified four distinct sets of mindsets that have been found to affect leaders’ ability to engage with others, navigate change more successfully, and perform in their leadership roles more effectively.

Growth and Fixed Mindsets. A growth mindset is a belief that people, including oneself, can change their talents, abilities, and intelligence. Conversely, those with a fixed mindset do not believe that people can change their talents abilities and intelligence. Decades of research have found that those with a growth mindset are more mentally primed to approach and take on challenges, take advantage of feedback, adopt the most effective problem-solving strategies, provide developmental feedback to subordinates, and be effortful and persistent in seeking to accomplish goals.

Learning and Performance Mindsets. A learning mindset involves being motivated toward increasing one’s competence and mastering something new. A performance mindset involves being motivated toward gaining favorable judgements (or avoiding negative judgements) about one’s competence. Leaders with a learning mindset, compared to those with a performance mindset, are more mentally primed to increase their competence, engage in deep-level learning strategies, seek out feedback, and exert more of an effort. They are also persistent, adaptable, willing to cooperate, and tend to perform at a higher level.

Deliberative and Implemental Mindsets. Leaders with a deliberative mindset have a heightened receptiveness to all kinds of information as a way to ensure that they think and act as optimally as possible. Leaders with an implemental mindset, as the name suggests, are more focused on implementing decisions, which closes them off to new and different ideas and information. Comparing the two, leaders with deliberative mindsets tend to make better decisions because they are more impartial, more accurate, and less biased in their processing and decision making.

Promotion and Prevention Mindsets. Leaders with a promotion mindset are focused on winning and gains. They identify a specific purpose, goal, or destination and prioritize making progress toward it. Leaders with a prevention mindset, however, are focused on avoiding losses and preventing problems at all costs. Research has found that those with a promotion mindset are more prone to positive thinking, more open to change, more likely to persist despite challenges and setbacks, and demonstrate higher levels of task performance and innovative behaviors compared to leaders with a prevention mindset.

Once you have a better understanding of these mindsets, you can tailor your leadership training programs to unlock most effective ones in your managers. A great example of an organization that leveraged the power of mindsets in this way is Microsoft. From 2001-2014, Microsoft’s market capitalization and stock price largely stayed the same. But, in 2014, when Satya Nadella took over, he made it his mission to revamp the leadership and the culture at Microsoft. In his book, Hit Refresh, Nadella explains that mindsets– particularly growth mindsets– were his primary focus when revamping Microsoft. With this leadership, the company’s market capitalization and stock price has more than tripled.

This is just one example that shows that if organizations want their investment in leadership development to more fully pay off, it is essential that they prioritize mindset development — specifically by targeting growth, learning, deliberative, and promotion mindsets. As leaders cultivate each, their thinking, learning, and behaviors will naturally improve because they are seeing and interpreting their situations more effectively.

Source: HBR

How Do You Know If You Have The Right Talent To Be Positioned For Success?

by Larry Janis

Having the right talent in the right roles is essential for a successful business strategy. Strategy execution demands a thorough evaluation of not only people, but also of their roles and responsibilities, their impact and their alignment with the company’s business goals.

Corporate leadership and business leaders focused on strategy execution need a talent assessment program that functions as an extension of their strategy planning that addresses the following thoughts and processes:

  • An understanding of the talent implications associated with the strategy. Without this context, talent reviews may provide a false sense of security and lead to misaligned, well intended talent plans that actually work against the strategy.
  • Differentiation between important and critical roles. The successful execution of strategy requires talented people, more importantly talented people in the right roles. Without clear differentiation the people most likely to positively impact strategy may be in the wrong roles or not in the organization at all!
  • A facilitated talent discussion that evaluates talent in an integrated manner; standardizes the organizations’ talent “language” and calibrates talent between divisions, departments and teams.
  • A talent map that summarizes the organization’s talent “picture” in a simple, powerful format. The talent map can be easily referenced for future planned, or unplanned talent decisions.
  • A talent plan that captures the key talent actions required to support the strategy; assigns accountability for completion; encourages all leaders to accept responsibility for the organization talent pool; and provides a mechanism for tracking progress.
  • A partnership with an external recruitment firm that has a solid knowledge of your industry, your competitors and has the ability to react in a timely fashion to acquire the talent you have defined as essential to your business goals.

When planning changes to your staff, consider the following timing considerations:

  • Bringing in someone from the outside to fill a role lacking the talent required for a business initiative would typically takes four to six months.
  • Add in the time for onboarding, learning how your firm does things and understanding the capabilities of your firm: your talent acquisition time frame may extend upwards of one year for your new hire to be fully engaged and productive.
  • If your company operates in a competitive industry, factor in additional time to work through thinned out talent pool: your key competitors are likely seeking the talent they need to drive their businesses to the next level.

Talent processes linked to business strategies offer a considerable competitive advantage. Streamlining the implementation of the timeline, understanding the talent implications of your strategy and recognizing the talents you have and don’t have are critical to successful strategy implementation and differentiating your organization from the competition.