Within the next decade, organizations will face many unique challenges. Many of these difficulties can only be addressed through effective leadership practices. Before discussing what skills will be required of leaders in the 21st century, we will review three organizational challenges that constitute what could be called the “Perfect Storm.”
First, as Baby Boomers exit the workforce, some organizations will be brought to their knees with the realization that their people are their “greatest asset,” and that it was not enough to hang a slogan on the wall proclaiming this as a company value. As they exit the workforce, Baby Boomers will take with them critical expertise; and there will not be enough younger workers to replace the much larger Baby Boomer cohort. Organizations that have not prepared for this massive demographic shift will find themselves panicking to fill positions. The wake-up call may come too late for some organizations.
The outflow of experienced workers is but one aspect of the “Perfect Storm” that will hit organizations in the coming decade. The second aspect of this storm will be the scarcity of educated, talented people. Skilled employees are quickly becoming a scarce resource—the only lasting resource of competitive advantage. In the coming years, successful companies will be forced—whether proactively or reactively—to become the “employer of choice” to attract talent. But how will they outperform their competition in attracting talent while also remaining profitable? How will smaller companies keep up with larger competitors? How will companies avoid disengaging their mature workers as they cater to the demands of younger talent? In the coming years, these questions will become major dilemmas for virtually every organization. Those organizations that cannot reasonably adapt to the expectations of younger talent will quickly disappear. Companies that want to hang on to the status quo, that can’t let go of the existing order, will be swept up by the storm.
The third reality that organizations must confront is what Thomas Friedman calls the “Flat World.” Changes in technology and the global economy have created an entirely different playing field. Businesses are changing the way they work with customers and how they collaborate. The web has forever changed how we do business. These changes are also producing a different kind of “knowledge worker,” to use Peter Drucker’s term. This new “Flat World” is leading people to change how they think and how they work. Not only do people have instant access to information, but they are participants in the creation of information (e.g., Wikipedia). People no longer rely on experts, managers, or authorities for their knowledge. Everyone can be an expert now, without even leaving a computer. Friedman calls this the “democratization of information.” These changes are breaking down traditional hierarchies and creating a more collaborative, peer-based organizational climate. And once again, organizations that fail to adapt will not last.
A New Kind of Leadership
These unique challenges and new realities of the workplace require a new kind of leadership. No longer can a leader rely on authority, rank, or position to “command and control” employees to achieve results. That approach to leadership is completely foreign—and unacceptable—to the younger generation. And, with an impending talent shortage in the labor market, this younger generation can afford to be picky about where they work. Managers can no longer play the role of the all-knowing “expert.” They can no longer hoard information, and they can no longer fail to lay out a clear and attractive career path for talented employees. Out of the multiple leadership models available—from One-Minute Managers to Level-5 Leaders—which leadership approach should we take to effectively confront this “Perfect Storm”?
When a manager realizes there is a leadership gap, it is commonplace to pick up the latest book on leadership, often based on anecdotal evidence, hand out copies to the executive team, and hope it is put into practice. This approach gives leaders a sense that they are improving, and sometimes they do make improvements. However, leaders should be wary of opinion-based leadership models. It is important that leaders choose a leadership development model based on rigorous scientific research. Unfortunately, much of the leadership literature is opinion and has little, if any, research or theoretical foundation.
In recent years, there has been a welcome and growing body of popular leadership books that are based on scientific research. Examples include the work of the Gallup Organization (including authors Tom Rath and Marcus Buckingham), Zenger|Folkman (books by John Zenger), and Jim Collins (“Good to Great,” “Built to Last”). These and other publications have elevated leadership development to a science. They have also established metrics, which can be used by organizations to measure leadership competence and how it is impacting the organization.
There are some common themes in current research on leadership. One important development has been the application of positive psychology to leadership development and performance management. Positive psychology is a branch of psychology that studies what is right with people, rather than what is wrong with people. It studies human strengths such as optimism and resilience, with an emphasis on positive emotions. The Gallup Organization has many publications on the application of positive psychology to organizational performance and leadership development. They focus on helping people discover their strengths and then developing their unique strengths to the point where perceived weaknesses become neutralized or irrelevant. Jim Collin’s, author of Built to Last and Good to Great, has also published on the idea that people should focus on doing what they can be “the best in the world at.” In other words, be the best at what you are already are capable of being.
In light of this research, leaders have a responsibility to discover and develop their strengths, while supporting and coaching those directly beneath them to do the same. Gallup found that when managers help their people “do what they do best” every day, they are significantly more engaged, and are much more productive at work.
When talented employees are engaged—i.e., doing what they love doing—and have an opportunity to develop themselves, and they see themselves on a career path in the company, they will perform at optimal levels. Furthermore, they will stay with the company longer, will be the most active company recruiters, and will treat customers with the same respect that they receive. These are the characteristics of successful businesses in the 21st century. For organizations to remain competitive, great leaders must rise to the challenge to create these conditions.