COVID's Leadership Wake-Up Call

August 9, 2021

Employees, customers and competitors need your focus – on them – now

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By Steve Gresham

ceo, The Execution Project, LLC and managing partner, Next Chapter

There is trouble brewing in the corporate workplace. The Fall of 2021 promises to challenge company leaders to engage better with their employees or risk further declines in morale – or worse. The rate of retirement in 2020 doubled over 2019, resignations and job changes are also up, and many companies have struggled to find the appropriate balance between work that can be conducted at home and the need to have more staff onsite. The decisions being made right now will have lasting consequences. This is one of those moments when all leaders are in the spotlight with every move judged in real time by every employee and compared with competitors. The winners will be able to accept current conditions, including the uncertainty, and navigate a course of execution focused on objectives that transcend the conditions of a global pandemic. There is a profound difference between leaders who view COVID-19 as an obstacle and those that view it as a catalyst for changes already underway. I advocate for the catalyst view and suggest we commit heavily to tackling the immense challenges already stalking the financial advice industry long before the coronavirus broke loose, and take advantage of the destabilization to create certainty and focus out of relative chaos. This is a time – an opportunity -- for leadership.

The first step is to admit the uncertainty ahead. No one knows if the virus or its variants will be controlled enough to ensure a safe workplace – or travel. Focusing on specific dates to be back in the office or a target percentage occupancy is at best a strategy of hope. And hope has an unreliable history in business planning. Likewise, arbitrary delivery dates are just that – arbitrary – and unless tethered to actions we can control they add false urgency and foment frustration across the organization. Focus on objectives you can control and prepare for the inevitable distractions from changing circumstances. Don’t wait for certainty.

Next, select objectives that are foundational to the forward progress of the organization and its clients. There is a rich selection of candidates here. The financial advice industry was already earning poor grades from clients for not executing against some pretty basic needs – especially on behalf of the retiring wave of aging baby boomers. COVID-19 threw gas on each of these fires that have smoldering for some time. Can we really say we’ve made much progress in the past year on any of them? Here’s a partial list from our perspective at Next Chapter:

-??????Retirees Seeking Advisors - The fastest growing age cohort in America is the retiree. 12,000 per day rolling off with levels of anxiety and fear that challenge the entire industry to respond with care. This is the ultimate test of the value of the financial advice industry. We helped a historic number of clients get to this point – to abandon them now is absurd and will provide the mother of all disruptions as more alert and nimble competition enters and wins.

-??????Clients Seeking Help and Protection - One in four Americans older than 65 suffers from cognitive impairment bad enough to prevent safe financial decision-making. What will we do to help? Far from a pure altruistic exercise, your work with this cohort will pay off - it represents more than half of all the financial assets in the US.

-??????Provide Liquidity - The largest asset class is now residential real estate. Can we find an intelligent and economical process to unlock that value for the benefit of retirees like my 87 year old mother who’s #1 objective is to safely live in her home? Converting personal home equity to income is the biggest asset shift on the horizon – bigger still than retirement plan rollovers. Crack this nut.

-??????Improve Financial Literacy – COVID has shown the world how little most people know about medicine – with devastating results. The financial advice industry doesn’t have the political baggage stupidly weighing down vaccinations but we are not generally supporting people of all ages with the insights and tools they need as financial consumers. Kids don’t learn the ropes in high school or college and retirees freeze selecting Medicare choices. Help consumers, family and friends help themselves by making better decisions. What can you do?

-??????Engage Younger - and Older - People – If our financial literacy was more prominent in our schools, we might have a better chance of attracting younger people to financial advice jobs. There’s a thought. And if we are really ambitious, we might re-think the role of sales-based compensation for people we expect to deliver personal service. The advice industry is precariously balancing the 80/20 rule with the support of a historic bull market. If prices slip, the fallout will be bad. Let’s get the right people in place with the right incentives to do the work most needed. At the same time, stop managing results and focus instead on drivers – also the fastest way to rid our ranks of Neanderthal “keyboard” managers who pound their teams to do more without giving them the tools or the support. We are better.

-??????Adoption is the New Innovation – The 80/20 phenomenon is the ball and chain for FinTech. A generation of fabulous inventions is roundly ignored by advisors content with 12 years of rising markets -- “proud and plateaued” says my friend Leo Pusateri. Technology is a game changer only if we play the game. Start by reversing the priority – consider machines for everything we do and save the humans and their judgment for only the jobs that only humans can perform. Open the window of creativity for both engineers and right brained, consultative advisors to do their things in concert, not in competition. How can anyone believe that we can program a car to drive itself and not equip a bot to take a client through an investment policy questionnaire? Blind spot found.

-??????The Search for Meaning - Investing is not just about the returns, there is permanent interest in impact. You don’t have to be a mindfulness pioneer to see that ESG is the only truly interesting development in active management in decades. Don’t fight it.

-??????Acting in Best Interest - Consumer protection, aka regulation, is here to stay. Does anyone really think clients want advice that doesn’t match the responsibility of a fiduciary or an otherwise common sense standard of suitability? Can we commit to ridding the industry of bad actors, confusing policies and overpricing?? And if we have the energy, can we retrieve from our memory banks the concept of a “simple” prospectus once used to demystify mutual funds and unlock a simpler generation of retirement products? We are confusing clients just at the time they need more ease of doing business with us. The result is loss of trust, of credibility. And that bleeds over to employees who might not want to work here.

-??????Peace of Mind – 9 out of 10 retiring consumers say they would like to discuss guaranteed income (Alliance for Lifetime Income), 71% are concerned about healthcare costs, 67% are worried about the rising cost of living, and 66% fear a declining market (Allianz). Uncertainty at this level creates incredible opportunity for organizations and advisors willing to lean in to have the conversations – and spells doom for the unengaged. The inability to answer very basic questions and alleviate understandable concerns is the first stage of classic industry disruption. For all of its brainpower, the financial advice industry is a sitting duck for a script flip that gives consumers what they want with a new level of simplicity. Do you truly believe that massive organizations reading real time consumer data will continue to ignore this historic opportunity?? Thank goodness for the current entrepreneurial distractions of space travel and driverless cars – and buckle up.

The third stage of our pandemic recovery mission is personal. A wealth management industry ceo said it well, “I feel like post COVID we are much more acutely aware of people who lack self awareness. This next chapter in our world’s history will reward those who amplify talent and invest in creating a workplace that nurtures the human psyche.” She’s spot on. Also note that she’s a she. Another trend. The pandemic has exposed the weakness of our leadership at all levels public and private sector. What we really need is a different approach to managing change – the only certainty we face together.

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By contrast, consider the executive who challenges a young associate for wearing a mask upon her return to HQ. “We are back to work now!” he declares in the building lobby in front of other employees and the chastened worker, who suffers from a medical condition and has doctor’s orders not to be vaccinated for now. She’s been told by the company to return to the office. Whether she is right or he is right or neither are right or both are right is irrelevant. The interaction has already gone viral and different populations within the company (and potential new hires) have already made up their minds what they think. COVID has made everything we do more personal.

The corporate workplace has been ripe for change almost from the beginning, and a brilliant example of that need for change can be found in the debate about physical location and “flextime”. Long before COVID, employees were quitting jobs because of lousy commutes and the need to prioritize life and lifestyle. The difference now is the quantity taking action – the trend went nuclear with the pandemic. And it’s here to stay…because at some level it should be. Life for many people has been running too fast for too long. I for one have wondered what I gained by flying 3-4 days a week for 30+ years.

“Flextime” is not a new concept. Christel Kammerer – a management consultant no less – and notably another “she” – wrote a paper in 1965 promoting a flexible work schedule as incentive to stay-at-home mothers to offset the significant labor shortage in West Germany. Mold was turned into medicine faster than the uptake of flextime. Maternity leave – a foundational form of flextime - was not mandated by law in the US until the 1993 passage of The Family and Medical Leave Act. And that applies only to companies with more than 50 employees (though many states have extended the benefit to smaller firms). Importantly, the federal mandate is only for unpaid leave. Most younger workers at companies today are not aware that their grandmothers did not get time off to bear children and that condition made it difficult to seek and hold a job.

So back to the present. When the pandemic sent most corporate workers home, a variety of simmering pots began to boil. Long-distance commutes on crowded trains and highways were ended for some people already exhausted by the effort. But since those workers had made lifestyle choices that created that distance, the discovery was not the commute but how much of their jobs could be executed remotely. I worked for a number of years at a big company with 50,000 employees. Every year we had a terrific “employee engagement” survey. And each year a question was asked, “If you could change any aspect of your job, what would it be?”. And each year the top choice was, “I’d like to work one day a week at home”. The frenetic pace of life has made it harder for people – especially with small children, pets and aging parents – to conduct their lives. A big company client told me they are now losing more employees and unexpected time off because of the variable demands of elder care than they lose to parental leave. That’s a new development courtesy of the nation’s largest demographic, the baby boomers – a game in just its first inning with a long way to go. An aging population is just one cultural shift that has complicated life for ordinary people, complexity that can be dismissed by corporate leaders who fought their way to the top in simpler times and expect employees to suck it up and pay their dues. Worse still, the daily grind may be invisible to leaders now used to a world of executive perks like car services and first class travel.

Empathy is both underrepresented and undervalued by today’s company leadership, but it is emerging as the most important quality needed to engage both employees and customers. To be fair, not too many ceos would pick “empathy” as one of the traits that got them to the top. But several now see the value of mindfulness. I’ve learned to define “empathy” when I’m working with executive leadership due to the polarizing reactions I receive. My view of empathy is to first have genuine INTEREST in another person, then make an effort to truly UNDERSTAND, then to confirm both your interest and understanding by asking QUESTIONS. This is pure effectiveness, not a superpower. Authentic leaders are just that, and they attract the trust and confidence needed to lead. Especially now, in a world with many choices for work and employers, authenticity is easy to test. It rolls downhill through the company culture to where it faces the most important test – the understanding and appreciation by employees and customers. Despite the mammoth size of Fidelity, our team was committed to reducing the friction for clients and our client-facing associates. “How will we know we are winning?” asked a young telephone representative. “You will tell us – because your job will be easier and more enjoyable. And your clients will be happier”. Is it really more complicated?

But empathy is both a noun and a verb. It is an aspect of human character, but it is also a process. Having empathy is a gift – and considerable scientific research indicates it has genetic roots, so not everyone is so gifted – but to have it and not act on it is a missed opportunity. Active empathy is what’s really missing in today’s leadership ranks. Knowing what to do and then rallying others to make sure it’s being done right should not be an exercise in moral courage. A recent Wall Street Journal article featured the work of Newell Brands ceo, Ravi Saligram with the headline, “A No-Jerks Policy Ignited Morale at the Company Behind Yankee Candle”. Saligram kicked off his leadership presentation with a slide that said “no a**holes”. He got attention. It seems impossible that any modern company would tolerate a**holes, especially in a world dominated by social media. Ever checked out your company on Glassdoor? Get ready for the cold water. If a “toxic work environment” can run wild at a company that makes happy products that smell good – as well as Sharpies and Graco strollers – what chance do we have in the rough and tumble money culture of Wall Street??

If you’re a leader and not blessed to have empathy, there is still hope – and you’re in very good company. Today’s leaders are conspicuous – there’s no place to hide. Many I know admit their history and own up to their skills – “I’m a finance guy” – and actively seek leadership partners with complementary traits. Empathy creates understanding that builds trust and confidence – you don’t have to be perfect for sure, but you do need to be worth following. That’s the epicenter of the flexible work issue. Valuable employees know who they are – “If I don’t like you, the company, the people, I’m not going to work for you”. They aren’t trying to change you – that’s so 1960s Baby Boomer Flower Power. They just won’t show up. Sure, the commute is bad or good, but employers who think the current debate is only about convenience are just as tone deaf as the managers who allow “toxic” conditions to exist. That’s the true weakness of the org – the existence of something everyone seems to agree is wrong but leadership does not take the steps needed to eliminate it and keep it from coming back. Where is it written that only Millennials like work/life balance and us older folk are trained to tough it out? The best workers of our time know their value and vote with their feet. Light a compelling path toward your organization during this unprecedented opportunity to attract talented, willing associates. And while you’re at it, take a look at some of the experienced people rolling off for the benefits of a buyout but with plenty of energy left – and learned perspective to offer.

I’m too much of a realist to believe companies will be able to harness the power of empathy and achieve the long term results they seek. Our time horizon of management has shortened, and we have marvelous analytical tools that capture our every movement but strangely fall short of understanding what we are measuring. And until now, we’ve gotten away with it.

Start small. By definition, a mindful organization drives change from the bottom up, not top down. Customer preferences, advisor ease of doing business. Pronounce all you want from the C-suite – this generation is waiting for authentic action and “follow worthy” leadership but also to perform meaningful work that makes sense. Little actions can have impact – both good and bad. Catching people doing something right is a step. Modeling desired behaviors is critical – the world is always watching and recording you on a smartphone. Let’s maybe start by not being our own worst enemies. Don’t make predictions about public health – we’re not qualified and no one expects us to be. And don’t wait for the storm clouds to pass. Focus on areas of critical importance to your employees that will harness their energy and ensure they are engaged in valuable efforts, aka “meaningful work”. Prove to clients you care about them by engaging more and on tricky topics like a bear market or healthcare costs – these are your values and they should be displayed prominently and with pride. Referrals will follow.?And above all, model those behaviors you admire in others who lead people out of uncertainty. Don’t pound them for wearing a mask – we have important work to do together in a time of unprecedented uncertainty. We need each other.

Steve Gresham is ceo of The Execution Project, a consulting firm dedicated to rethinking and rebuilding “retirement”. He is also leads Next Chapter, an initiative focused on retirement with partners Financial Advisor magazine and the Money Management Institute. Formerly the head of the private client group at Fidelity Investments, Steve is the author of “The New Advisor for Life” (Wiley) and Conspicuous Leadership: The Nine Habits of Successful Transition Leaders – coming soon.

See more at:

https://www.theexecutionproject.com/