Time to start making friends with uncertainty so we can stop fear-based decisions

Welcome to the latest edition of my newsletter, where I explore a vital theme that has emerged in the wake of the COVID-19 pandemic: the expectations of leaders and the implications of this on the strategic, critical decisions they make.

There is an aversion to uncertainty which we are seeing in our world more than ever with the continued post-pandemic volatility and constant shifting of expectations and priorities in consumers and the workforce.?? This is particularly evident in Asia where corporate cultures tend to be more hierarchical and paternalistic, more conservative, and therefore more risk averse than those in ‘western’ business cultures.?

A result of this aversion is that leaders have a genuine fear of being wrong, which I believe is driving most of the poorly communicated decisions (such return to office mandates), backtracked decisions and ‘follow the leader’ decisions we see in response to changing market dynamics.

But what is wrong with wrong anyway???

‘Wrong’ is just a perspective on a situation - if you rearrange the letters, you are not ‘wrong’ instead you are ‘grown’

This simple acronym shows how easy it is to change the interpretation of an outcome completely, just by shifting our perspective on the labels we use.

Over the past decade management consultants have advised organisations to encourage ‘failing fast’, to experiment and course-correct and keep moving in response to a VUCA world.

But what we say is good for organisations unfortunately isn't what tends to be expected of leaders - getting it wrong is a recipe for being shown the door, and that puts leaders in a very uncomfortable position.

In a world reshaped by unprecedented challenges, it's time to reevaluate our traditional notions of leadership - are we asking too much, or perhaps not enough, from our leaders? ?In this edition I unpack the shift in leadership dynamics over the past few years, suggest what it might mean to lead effectively in these transformative times, and highlight the risks to organisations of failing to adapt and respond to change.

The changing phases of leadership

I have witnessed a noticeable shift in leadership styles since the onset of the COVID-19 pandemic.? The worldwide lockdowns forced organisations to adapt swiftly to remote work arrangements, challenging deeply ingrained beliefs about the nature of work and leadership. ?During this time employee and leader expectations have shifted through four phases:

1. Trust and Unity amid Survival

The initial stages of the pandemic compelled leaders to foster trust and unity among their teams, driven by the collective need for survival. The crisis blurred the lines between hierarchical structures and emphasized the importance of problem-solving, communicating constantly and self-motivating.

2. Calling out the "Can't WFH" Myth

COVID-19 shattered the corporate line that many roles couldn't be performed remotely more flexibly. Employees quickly realised that the reasons they had been given were mostly rubbish.

3. Employee Empowerment

As businesses gradually recovered over the past two years, the balance of power shifted towards employees. The desire for remote work and better attention to wellbeing became more pronounced, driven by evolving employee expectations and the need for leaders to retain talent in a tight market as most sectors entered a rapid recovery period.

4. Mandates and Changing Power Dynamics

However, recent global layoffs, particularly in industries such as technology and banking, coupled with rising inflation and financial uncertainty, have once again shifted the power pendulum. Leaders are leveraging this mood shift to assert their authority, for example the swing towards mandated days in the office.

The impact on employees

This shift in leadership styles has certainly not gone unnoticed by employees, and it has had several notable effects:

1. Presenteeism vs. Performance

While employees may comply with mandates, the emphasis on physical presence can lead to presenteeism rather than improved performance. The focus on attendance can overshadow the importance of prioritising value-adding activities when in the office.

2. Eroding Trust and Respect

Authoritative leadership erodes trust and respect within teams. It can create an environment reminiscent of school attendance, where individuals feel compelled to "show up" but may not be genuinely engaged or productive.?

We know that disengaged employees are more likely to quit and that the main reasons for this are not feeling valued by the company or immediate manager.? McKinsey recently estimated that employee disengagement and attrition could cost a median-size S&P 500 company $228-$355 million a year in lost productivity, so there is significant risk when leadership actions create (whether intended or not) the perception that they don’t trust their people.? ?

3. Questioning Employee Autonomy

Command and control leadership styles implicitly assume that employees cannot make sound decisions for themselves and their teams. It undermines the belief that individuals, no matter how intelligent, can determine what's best for their own performance and the company.?

4. Impact on Workplace Culture & Morale

Rather than driving desired behaviors and outcomes in the office, mandates tend to promote a checkbox mentality, which is already evidenced by the rise of ‘quiet quitters’.? Of course, there are underperformers and ‘slackers’ in every organisation, they existed before and during the pandemic and are still around.?

However, taking a more authoritative approach to wielding power is akin to punishing the whole class because one child played truant at school – it didn’t work then, and it certainly doesn’t work in organisations now.?

People managers need to be equipped with the skills and support from leaders to address mediocre performance directly, not through increased enforcement of rules and regulations for all.?

What’s driving this type of leadership behaviour?

While I find mandates and authoritarian styles disappointing, I don’t underestimate how tough leadership is in the present era.? Before considering what leaders could do differently, I want to unpack a bit more of the motivation for current behaviour, because it’s kind of rational even if undesirable.?

1. Extreme Discomfort with Uncertainty

The world is far from settling into a ‘new normal’ - uncertainty, complexity and ambiguity are enormous challenges for leaders as actions have a considerable risk of unintended consequences. ?Aversion to uncertainty is particularly evident in cultures that traditionally value hierarchy, paternalism, and risk aversion, such as those in Asia.

2. The Fear of Being Wrong

Leaders understandably fear being wrong, which can lead to poor decisions or avoidance of decisions (a ‘do nothing’ approach which is in effect a decision not to act) and a reluctance to take the lead or be different from the mainstream.

According to the results of a recent global survey of more than 14,000 business leaders and employees by Oracle in partnership with bestselling author Seth Stephens-Davidowitz , a whopping 74% of business leaders said they’d held off on making a decision because they didn’t know what data to trust.? Leaders have more data than ever but in most organisations this data is increasing complexity not removing it - 86% of leaders said that they feel less confident making decisions and 72% admit it has stopped them from making any decisions at all.

This is a grave issue and while better data insights can help, its likely a false data prophet that claims to provide the solution to every decision dilemma, so it's essential to challenge this fear of not being 100% right.?

As leaders we must recognise that being wrong is not a failure but an opportunity for growth – not only for the leader personally but for sharing the journey and broadening ownership of the journey across the organisation.

Many organisations extoll the virtues of ‘failing fast’ but all too often leaders are held to different standards.

Steps towards improving leadership in an uncertain world

What practical steps can company directors and leaders take to transition towards a more encouraging leadership style that explicitly recognises the value of their employees and is consistent with the future of work capabilities leaders expect their people to demonstrate?

1. Acknowledge the Need for Change

Recognise that old leadership models may not be sustainable in the current complex environment. Acknowledge the necessity of unlearning unhelpful mindsets and habits, even if it's a challenging process.

This goes as much for independent board directors as well as executives.? While board directors may not be visible to employees, the board is ultimately responsible for setting the strategic direction of the organisation, adjusting as needed and supporting the top leadership team in the implementation of strategy.? At times this will require from leaders what might be viewed as courageous choices, changes of tack and acceptance of a degree of ambiguity, so leaders must know their Chair and Board understands this and has their back or they will not be effective in responding to change.

2. Lead by Example

If you aspire to be, or are a leader today, you have a responsibility to lead by example and demonstrate the behaviours you expect from your people:

• Take responsibility for your decisions and actions;
• Balance your personal desires, anxieties, and expectations with those of your team and the wider organisation;
• Communicate openly, proactively, and explicitly about your expectations - avoid ambiguity and obfuscation because your people are not stupid and will know when you are avoiding being honest about motivations and drivers.? According to Gallup only three in ten managers strongly agree their supervisor keeps them informed about what is going on within their organisation ; and
• Be open to other perspectives and to negotiation within parameters or guardrails - if you acknowledge there isn't a single ‘right way’ forward then it is much harder to be ‘wrong’!

3. Support and Train People Managers

Managers form the bridge between leadership and the rest of the organization, which means they are often caught between employees’ and leaders’ expectations.? During 2023 there has been an acceleration in manager disengagement and burnout and a 10% uptick in those actively looking for a new job . ?

According to recent Gallup surveys only 48% of managers strongly agree that they currently have the skills needed to be exceptional at their job and only three in ten hybrid managers have received any formal training on leading hybrid teams.?

The manager makes all the difference for hybrid employees: having a great manager is four times more important than an individual’s work location when it comes to their engagement and wellbeing.

Provide customised coaching and training to help people managers navigate the complexities of leading hybrid and distributed teams. ?Acknowledge that people managers should still be the first port of call when challenges arise, but instead of directing from above, encourage them to empower and support employees to find their own way forward.? The benefits of doing so were revealed in a recent Fortune article in which a company had replaced all its people managers with coaches , improving productivity by 20% (granted this is an extreme example I do not advocate!).

This has the added benefit of signaling to managers and their teams that they are trusted and gives leaders the confidence that within parameters teams will navigate the most effective way forward, increasing their ability to constantly respond to micro shifts in the operating environment.

4. Harness Data Intelligence Intelligently

Most organisations don’t have a data problem, they have a “so what” problem.?

According to the Oracle- Stephens-Davidowitz survey an overwhelming 91% of business leaders say the growing volume of data has limited the success of their organisation, and 77 % say that the dashboards and charts they get do not always relate directly to the decisions they need to make.

There are plenty of calls for the next generation of leaders to be equipped to understand and analyse data, at least at a higher level, and to use dashboard metrics and trend information to intelligently inform decisions.

This is a good start, but it doesn’t get to the crux of the problem – even the most advanced computing is not likely to predict with 100% certainty that a specific course of action or interpretation of why something is happening (not just what) will be right. ?The accuracy of weather forecasts are a prime example of this. ?

In a VUCA environment we need human intelligence to review an optimised range of scenarios or predictions with a leaders’ understanding of the other levers that can be pulled to minimise risks or increase flexibility for a possible course of action.?

We must become less uncomfortable with uncertainty and lead differently

The COVID-19 pandemic has highlighted the need for a fundamental shift in leadership styles. ?Our world is increasingly confounded by ‘wicked’ problems that resist resolution.? Wicked problems usually have no single solution, so a human’s ability to acknowledge complexity and see our organisations and context as complex systems in constant motion rather than isolated data points can go a long way to developing change strategies that are less likely to fail.?

This reality demands higher level capabilities from people in institutions and organisations operating all spheres of life – capabilities like critical thinking, problem solving, teamwork and greater degrees of self-management and responsibility.?

These capabilities need a culture of trust and mutual respect to thrive - a culture that is completely undermined and revealed as hypocritical when leaders demand presenteeism rather than setting expectations for performance and letting smart, capable people decide how best to achieve that within their teams.

A culture that promotes trust and empowerment is essential for the success of modern organisations because this supports the development of critical skills and fosters a sense of responsibility among employees.

Leaders must become less uncomfortable with uncertainty because it’s a reality of business that is unlikely to change anytime soon.?

Lead by example by demonstrating it's ok not to have all the answers, it’s important to seek others’ advice and to be able to course correct as you go - this is essential for resilience and growth.?

Boards, markets, and employees need to reevaluate our expectations of leaders to ensure we aren’t contributing to their dilemma by holding them accountable to an unintended double standard.

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This edition of The Regenerative Edge was inspired by a livecast interview I did last week with Marcel Daane, MSc, CSCS, PCC and Kilani Daane, NCC, ACC of Level V Partners on Leadership and the Future of Work. You can find the video of the interview here:

https://www.youtube.com/watch?v=M_xDpBBSWvw