Teamwork at the top

Posted in Aktuellt, Executive Coaching, Executive Team / Ledningsgruppsarbete, Fact Based Management, Leadership / Ledarskap on July 29th, 2021 by admin

Creating an effective top team starts with behavioral improvement and teamwork in leadership.

The popular business press on both sides of the Atlantic is infatuated with chief executive officers who have drunk from the Holy Grail of heroic leadership. To be sure, a single person can make a difference at times, but even such heroic CEOs as General Electric’s Jack Welch emphasize the power of team leadership in action. As Welch himself said, “We’ve developed an incredibly talented team of people running our major businesses, and, perhaps more important, there’s a healthy sense of collegiality, mutual trust, and respect for performance that pervades this organization.”

Increasingly, the top team is essential to the success of the enterprise. Indeed, Welch is celebrated not only for increasing GE’s revenues nearly sevenfold in his 20-year tenure but also for building one of the world’s strongest executive talent portfolios, which has provided new leadership for many Fortune 500 companies besides GE.

So despite the obsessions of the business press, senior executives, shareholders, and boards of directors question the myth of heroic leadership. Merely bringing in a new CEO to reshape an organization will tend to show mixed results. In reality, long-term success depends on the whole leadership team, for it has a broader and deeper reach into the organization than the CEO does, and its performance has a multiplier effect: a poorly performing team breeds competing agendas and turf politics; a high-performing one, organizational coherence and focus.

Often, however, the leadership team is at best a collection of strong individuals who sometimes work at cross-purposes. What does it take for senior managers to gel as a team? Our work with more than a score of top teams, involving upward of 500 executives in diverse private- and public-sector organizations, suggests a straightforward process for enhancing their performance.

The most effective teams, focusing initially on working together, get early results in their efforts to deal with important business issues and then reflect together on the manner in which they did so, thus discovering how to function as a team. Formal team-building retreats are rare; behavioral interventions and facilitated workshops, though sometimes helpful, are not central to the effort of team building. Top teams address business performance issues directly but behavioral issues only indirectly and after the event.

A second myth of leadership, as pervasive as the myth of the heroic CEO, is the idea that seasoned managers slotted into an organizational chart can easily function as a team. In reality, top teams face many problems: finding the right people, matching the available skills to the job, and learning to work together without taking the time to craft roles. Teams don’t magically coalesce overnight. Their members have to be close in the professional rather than personal sense; they can thrive in an atmosphere of conflict if it is managed to increase creative output and to catalyze change. Becoming a top-performing top team must be one of the team’s goals.

To meet that goal, teams have to master three dimensions of performance. First, they require a common direction: a shared understanding of goals and values. Second, skills of interaction are crucial if the team is to go beyond individual expertise to solve complex problems and, equally, if it is to withstand the scrutiny of the rest of the organization, for people usually take their cues from the top. Finally, top teams must always be able to renew themselves—to expand their capabilities in response to change.

One reason for the difficulty of improving a team’s performance is that interaction, direction, and renewal are interdependent—teams need to go forward simultaneously on all three fronts to make real progress. It isn’t surprising, for instance, that top teams interact poorly when they don’t have a common direction. By contrast, enhanced performance in one dimension not only reinforces the improvement in others but also provides for the genuine personal development that builds success.

Suppose, for example, the team believes that it must build trust among its members. It rarely helps to have self-conscious discussions or “sharing” exercises about keeping or breaching trust, an approach that may actually be quite destructive. But by working together to sharpen the sense of strategic direction—and in this way experiencing successful interactions—the team can indirectly, but often dramatically, improve its effectiveness and thus the feeling of trust among its members. In effect, the team exploits its strong reasoning abilities to build trust.

Identifying real problems

Tolstoy wrote, “Happy families are all alike; every unhappy family is unhappy in its own way.” The same can be said of underperforming teams. Nonetheless, there are typical warning signs in each of the three dimensions of team performance.

Confused direction

Many CEOs assume that they and their top teams share a common understanding of corporate goals and values. Formal descriptions of roles, expected conduct, and corporate strategies and plans all reinforce this assumption, but several realities undermine it.

Lack of alignment. Executives may nod their heads when the CEO propounds a vision, but the team often lacks a shared view of how to implement it. At one well-known energy company, the five executives of a top team were asked to list the company’s 10 highest priorities. Alarmingly, they listed a total of 23 priorities; only 2 appeared on every executive’s list and only 7 on the lists of more than three members; indeed 13 of the 23 priorities appeared on only one list. In other cases, the team doesn’t agree about how performance should be assessed, who the company’s top performers are, or how to motivate the organization to achieve its stated objectives.

Lack of deep understanding. In some cases, the top team agrees on plans, but subsequent actions are inconsistent with its decisions. This problem reflects the tendency of top teams to focus on making decisions without examining the assumptions, the criteria, and the rationales behind them.

Lack of strategic focus. Top teams without a common direction spend more time on business as usual and on “fire fighting” than on seeking out and doing the work only they can do—work that is important to the organization and gives the team as a whole an opportunity to add value. A focused team concentrates on developing talent within the organization and on driving major growth initiatives; an unfocused team second-guesses line-management decisions, reruns analyses, and immerses itself in detail. Half of the executives we interviewed believed that they failed to add value in much of their work.

Ineffective interaction

Many management teams pay lip service to the importance of interaction but foster a working style that inhibits candid communication and collaboration.

Poor dialogue. Although the members of a team may spend much time talking to one another, they can often fail to communicate, by withholding vital information, suppressing critical opinions, or accepting questionable strategies out of fear of retaliation. These games lead not only to frustration but also to hidden agendas—problems that may stem from mistrust if individual team members don’t know one another or organizational units have a history of conflict. According to 65 percent of the respondents in our top-team database, trust was a real issue for their teams.

Dysfunctional behavior. Often the most serious result of poor dialogue is an inability to capitalize on diverse viewpoints and backgrounds, thus reducing the team’s ability to work creatively and adapt to changes in the market. And like any group of people, top teams can fall into destructive practices—for instance, the public humiliation of team members. Such behavior understandably creates fear and defensiveness and can intensify problems by isolating and scapegoating individual team members. Because the top team’s conduct is mimicked lower down in the organization, this kind of behavior can come to pervade it.

An inability to renew

Although many top teams recognize the importance of organizational renewal, few of them institute processes that revitalize effort and commitment. Three problems can make it hard for members of a team to step back and honestly assess their own performance. These problems often have their origin in the team members’ experience as middle managers. Most executives have climbed functional silos and are accustomed to defending their organizational turf. It is often difficult for such people to make the leap to broad strategic issues that have a bottom-line impact. Frequently, executives also can’t adapt their leadership style to life at the top, where interactions tend to be shorter, more frequent, less prepared, and aimed at a wider and more diverse audience.

Personal dissatisfaction. Many team members, despite their apparently successful careers and enviable positions, have become frustrated or insufficiently challenged by their work. A quarter of our respondents said that their jobs didn’t stretch them. Collectively and individually, team members ignore new sources of insight, information, and experience that could push them out of their comfort zone. The teams we have observed engaging in destructive politics usually discourage their members from assuming new roles or taking risks. As a result, these executives ultimately become bored, and their performance declines; hence, the typical CEO complaint that once-solid team members no longer energize others or adapt to changing needs.

Insularity. Top teams rarely pay enough attention to information from outside their companies or industries—information that, digested quickly, could influence key strategic and organizational decisions. In addition, top teams seldom make the time to reflect on the information they do receive and to assess its future impact. Lacking structured processes to receive and reflect upon information from external sources, most teams don’t find the time to generate a real strategic focus.

Deficient individual skills. Most companies give the members of their top teams little mentoring or coaching about how to effect change. Unlike middle managers, who frequently get broad training and coaching, senior managers usually work without a safety net and, frequently, without a second chance. Among the executives we surveyed, 80 percent believed that they had the necessary skills to fulfill their role, but only 30 percent believed that all of their colleagues did.

Becoming a top team

How can a company set about improving the performance of its top team? Our research points to some useful strategies for promoting effective action, reflection, and cohesion.

How it works

Many behavioral team-improvement efforts fail because they don’t speak to the needs of top managers: programmed exercises, for instance, seem artificial. Our work with top teams suggests four ways to build their performance by replicating the way senior executives actually work together.

1. Address a number of initiatives concurrently. The top team must focus on the most pressing issues—work that only it can do. Achieving tangible outcomes in a variety of management challenges is essential. The activities most likely to foster team action and reflection include framing strategy, managing performance, managing stakeholders, and reviewing top talent. The team really needs to do these things whether or not its members are attempting to improve their own performance as a team. The action element of the cycle improves the direction of the organization and its ability to renew itself, while reflection makes it possible for teams to discover ways of improving their interaction.

2. Channel the team’s discontent. Only 20 percent of the executives we surveyed thought their team was a high-performing one. Successful teams invite external challenges, focus on competitive threats, and judge themselves by best practice, since comparisons with industry leaders or key competitors raise the quality of debate by putting facts on the table.

3. Minimize outside intrusions. It is hard for a team to execute an improvement process by itself; some form of facilitation is usually required. Consultants or coaches should observe top teams at work rather than lead meetings or presentations. They should never try to direct the team’s work. Finally, they should ensure that real work dominates the improvement process. Teams must discover what is effective for them. Merely telling a team the solution to its problems reinforces the poor quality of its alignment and interaction.

4. Encourage inquiry and reflection. More than 80 percent of the executives we surveyed said that they didn’t set aside enough time for analyzing the root causes of problems. These executives believe that instead of developing rules of thumb slowly and subconsciously, they should use their business experience to draw lessons. Most senior business executives took a decade or more to develop their business judgment, but with the tenure of CEOs becoming shorter as investors’ expectations rise, most top teams just cannot wait years to improve their performance. Facilitating team cycles of action and reflection—accelerating the pace of change and making the process of discovery explicit—can have a significant effect in as quickly as three months.

What it looks like

On the face of it, a top team going through the performance improvement process resembles any other top team at work. As usual, CEOs and senior executives address a number of strands of business, but they focus on major strategic issues and work together as colleagues rather than delegate tasks to staffers, consultants, or individual team members. At a minimum, the entire top team should spend one day each month together, without staffers, doing real work as a team. Subgroups of two or three members should work together a couple of times a week on every issue the team is addressing and should probably spend some time with a facilitator as well.

Teams rarely manage to improve their performance wholly outside their active working environment, so short-term workshops, no matter how attractive the setting or how heart-felt and candid the members’ exchanges may be, aren’t likely to change their mode of working. Structured self-discovery and reflection must be combined with decision making and action in the real world; the constant interplay among these elements over time is what creates lasting change.

Why it works

Teamwork is a pragmatic enterprise that grows from tangible achievements. The action-reflection cycle—supported by improved direction, interaction, and renewal—complements the work style of most senior teams. First, this approach pushes them to address their own performance just as directly and forcefully as they would address other business performance issues. By doing real work on important problems and applying business judgment to reflect on that work, top teams jump-start their performance and satisfy their need for visible progress.

Second, taking an oblique approach to sensitive performance issues allows top teams to address their behavior after the event, without personal confrontations. Team members discover that alternative points of view are valid, that the CEO doesn’t have all the ideas the company needs for success, and that the team can be both challenging and supportive at the same time. This paradoxical combination—the indirect assessment of team behavior through direct work on critical issues—allows top teams to manage their own performance. Before investing time and resources in programs to build the top team, leaders should ensure that such efforts deal with its real work.

Teams must assess their own performance regularly and honestly. Every senior team should also dedicate several working sessions a year to issues—such as technology, changing demographics, political and environmental pressures, and emerging themes from management literature—that have little bearing on the next quarter but could reshape the enterprise and the team itself during the next five years. Teams should also explore unexpected successes and interesting failures inside and outside their organizations. They ought to travel, both physically and intellectually, outside their own regions and industries to companies that have tackled challenges similar to their own.

In doing all this, teams should pay attention to the consistency of their leadership, the quality of their interaction, and their opportunities for renewal. They must also build into their work processes ample time to reflect on the deeper causes of problems, on the areas where they can add the most value as a team, and on the quality of their past decisions. It is the process of discovering the best way for the members of the team to work together that ensures the absorption of basic behavioral lessons.

The prize for building effective top teams is clear: they develop better strategies, perform more consistently, and increase the confidence of stakeholders. They get positive results—and make the work itself a more positive experience both for the team’s members and for the people they lead.

 

Source: McKinsey.com
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High-performing teams: A timeless leadership topic

Posted in Aktuellt, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on July 19th, 2021 by admin
CEOs and senior executives can employ proven techniques to create top-team performance.

The value of a high-performing team has long been recognized. It’s why savvy investors in start-ups often value the quality of the team and the interaction of the founding members more than the idea itself. It’s why 90 percent of investors think the quality of the management team is the single most important nonfinancial factor when evaluating an IPO. And it’s why there is a 1.9 times increased likelihood of having above-median financial performance when the top team is working together toward a common vision. “No matter how brilliant your mind or strategy, if you’re playing a solo game, you’ll always lose out to a team,” is the way Reid Hoffman, LinkedIn cofounder, sums it up. Basketball legend Michael Jordan slam dunks the same point: “Talent wins games, but teamwork and intelligence win championships.”

The topic’s importance is not about to diminish as digital technology reshapes the notion of the workplace and how work gets done. On the contrary, the leadership role becomes increasingly demanding as more work is conducted remotely, traditional company boundaries become more porous, freelancers more commonplace, and partnerships more necessary. And while technology will solve a number of the resulting operational issues, technological capabilities soon become commoditized.

Building a team remains as tough as ever. Energetic, ambitious, and capable people are always a plus, but they often represent different functions, products, lines of business, or geographies and can vie for influence, resources, and promotion. Not surprisingly then, top-team performance is a timeless business preoccupation. (See sidebar “Cutting through the clutter of management advice,” which lists top-team performance as one of the top ten business topics of the past 40 years, as discussed in our book, Leading Organizations: Ten Timeless Truths.)

Amid the myriad sources of advice on how to build a top team, here are some ideas around team composition and team dynamics that, in our experience, have long proved their worth.

Team composition

Team composition is the starting point. The team needs to be kept small—but not too small—and it’s important that the structure of the organization doesn’t dictate the team’s membership. A small top team—fewer than six, say—is likely to result in poorer decisions because of a lack of diversity, and slower decision making because of a lack of bandwidth. A small team also hampers succession planning, as there are fewer people to choose from and arguably more internal competition. Research also suggests that the team’s effectiveness starts to diminish if there are more than ten people on it. Sub-teams start to form, encouraging divisive behavior. Although a congenial, “here for the team” face is presented in team meetings, outside of them there will likely be much maneuvering. Bigger teams also undermine ownership of group decisions, as there isn’t time for everyone to be heard.

Beyond team size, CEOs should consider what complementary skills and attitudes each team member brings to the table. Do they recognize the improvement opportunities? Do they feel accountable for the entire company’s success, not just their own business area? Do they have the energy to persevere if the going gets tough? Are they good role models? When CEOs ask these questions, they often realize how they’ve allowed themselves to be held hostage by individual stars who aren’t team players, how they’ve become overly inclusive to avoid conflict, or how they’ve been saddled with team members who once were good enough but now don’t make the grade. Slighting some senior executives who aren’t selected may be unavoidable if the goal is better, faster decisions, executed with commitment.

Of course, large organizations often can’t limit the top team to just ten or fewer members. There is too much complexity to manage and too much work to be done. The CEO of a global insurance company found himself with 18 direct reports spread around the globe who, on their videoconference meetings, could rarely discuss any single subject for more than 30 minutes because of the size of the agenda. He therefore formed three top teams, one that focused on strategy and the long-term health of the company, another that handled shorter-term performance and operational issues, and a third that tended to a number of governance, policy, and people-related issues. Some executives, including the CEO, sat on each. Others were only on one. And some team members chosen weren’t even direct reports but from the next level of management down, as the CEO recognized the importance of having the right expertise in the room, introducing new people with new ideas, and coaching the next generation of leaders.

Team dynamics

It’s one thing to get the right team composition. But only when people start working together does the character of the team itself begin to be revealed, shaped by team dynamics that enable it to achieve either great things or, more commonly, mediocrity.

Consider the 1992 roster of the US men’s Olympic basketball team, which had some of the greatest players in the history of the sport, among them Charles Barkley, Larry Bird, Patrick Ewing, Magic Johnson, Michael Jordan, Karl Malone, and Scottie Pippen. Merely bringing together these players didn’t guarantee success. During their first month of practice, indeed, the “Dream Team” lost to a group of college players by eight points in a scrimmage. “We didn’t know how to play with each other,” Scottie Pippen said after the defeat. They adjusted, and the rest is history. The team not only won the 1992 Olympic gold but also dominated the competition, scoring over 100 points in every game.

What is it that makes the difference between a team of all stars and an all-star team? Over the past decade, we’ve asked more than 5,000 executives to think about their “peak experience” as a team member and to write down the word or words that describe that environment. The results are remarkably consistent and reveal three key dimensions of great teamwork. The first is alignment on direction, where there is a shared belief about what the company is striving toward and the role of the team in getting there. The second is high-quality interaction, characterized by trust, open communication, and a willingness to embrace conflict. The third is a strong sense of renewal, meaning an environment in which team members are energized because they feel they can take risks, innovate, learn from outside ideas, and achieve something that matters—often against the odds.

So the next question is, how can you re-create these same conditions in every top team?

Getting started

The starting point is to gauge where the team stands on these three dimensions, typically through a combination of surveys and interviews with the team, those who report to it, and other relevant stakeholders. Such objectivity is critical because team members often fail to recognize the role they themselves might be playing in a dysfunctional team.

While some teams have more work to do than others, most will benefit from a program that purposefully mixes offsite workshops with on-the-job practice. Offsite workshops typically take place over two or more days. They build the team first by doing real work together and making important business decisions, then taking the time to reflect on team dynamics.

The choice of which problems to tackle is important. One of the most common complaints voiced by members of low-performing teams is that too much time is spent in meetings. In our experience, however, the real issue is not the time but the content of meetings. Top-team meetings should address only those topics that need the team’s collective, cross-boundary expertise, such as corporate strategy, enterprise-resource allocation, or how to capture synergies across business units. They need to steer clear of anything that can be handled by individual businesses or functions, not only to use the top team’s time well but to foster a sense of purpose too.

The reflective sessions concentrate not on the business problem per se, but on how the team worked together to address it. For example, did team members feel aligned on what they were trying to achieve? Did they feel excited about the conclusions reached? If not, why? Did they feel as if they brought out the best in one another? Trust deepens regardless of the answers. It is the openness that matters. Team members often become aware of the unintended consequences of their behavior. And appreciation builds of each team member’s value to the team, and of how diversity of opinion need not end in conflict. Rather, it can lead to better decisions.

Many teams benefit from having an impartial observer in their initial sessions to help identify and improve team dynamics. An observer can, for example, point out when discussion in the working session strays into low-value territory. We’ve seen top teams spend more time deciding what should be served for breakfast at an upcoming conference than the real substance of the agenda (see sidebar “The ‘bike-shed effect,’ a common pitfall for team effectiveness”). One CEO, speaking for five times longer than other team members, was shocked to be told he was blocking discussion. And one team of nine that professed to being aligned with the company’s top 3 priorities listed no fewer than 15 between them when challenged to write them down.

Back in the office

Periodic offsite sessions will not permanently reset a team’s dynamics. Rather, they help build the mind-sets and habits that team members need to first observe then to regulate their behavior when back in the office. Committing to a handful of practices can help. For example, one Latin American mining company we know agreed to the following:

  • A “yellow card,” which everyone carried and which could be produced to safely call out one another on unproductive behavior and provide constructive feedback, for example, if someone was putting the needs of his or her business unit over those of the company, or if dialogue was being shut down. Some team members feared the system would become annoying, but soon recognized its power to check unhelpful behavior.
  • An electronic polling system during discussions to gauge the pulse of the room efficiently (or, as one team member put it, “to let us all speak at once”), and to avoid group thinking. It also proved useful in halting overly detailed conversations and refocusing the group on the decision at hand.
  • A rule that no more than three PowerPoint slides could be shared in the room so as to maximize discussion time. (Brief pre-reads were permitted.)

After a few months of consciously practicing the new behavior in the workplace, a team typically reconvenes offsite to hold another round of work and reflection sessions. The format and content will differ depending on progress made. For example, one North American industrial company that felt it was lacking a sense of renewal convened its second offsite in Silicon Valley, where the team immersed itself in learning about innovation from start-ups and other cutting-edge companies. How frequently these offsites are needed will differ from team to team. But over time, the new behavior will take root, and team members will become aware of team dynamics in their everyday work and address them as required.

In our experience, those who make a concerted effort to build a high-performing team can do so well within a year, even when starting from a low base. The initial assessment of team dynamics at an Australian bank revealed that team members had resorted to avoiding one another as much as possible to avoid confrontation, though unsurprisingly the consequences of the unspoken friction were highly visible. Other employees perceived team members as insecure, sometimes even encouraging a view that their division was under siege. Nine months later, team dynamics were unrecognizable. “We’ve come light years in a matter of months. I can’t imaging going back to the way things were,” was the CEO’s verdict. The biggest difference? “We now speak with one voice.”


Hard as you might try at the outset to compose the best team with the right mix of skills and attitudes, creating an environment in which the team can excel will likely mean changes in composition as the dynamics of the team develop. CEOs and other senior executives may find that some of those they felt were sure bets at the beginning are those who have to go. Other less certain candidates might blossom during the journey.

There is no avoiding the time and energy required to build a high-performing team. Yet our research suggests that executives are five times more productive when working in one than they are in an average one. CEOs and other senior executives should feel reassured, therefore, that the investment will be worth the effort. The business case for building a dream team is strong, and the techniques for building one proven.

 

Source: McKinsey.com
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Hur kommer distansarbetet att utvecklas framöver?

Posted in Aktuellt, Allmänt, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on March 22nd, 2021 by admin

Microsofts Vivachef: De anställdas upplevelse av distansarbete blir en ledningsfråga

Ungefär fyra av fem företag (78 procent) ser det som en utmaning att stödja distansarbetare under de närmaste två åren, enligt 451 Research. De svåraste utmaningarna är att skapa balans mellan arbete och privatliv, att förse de anställda med rätt teknik, att hålla arbetsmoralen i gruppen uppe och att kunna behålla kompetensen.

Läs mer här.

Eight lessons on how to get the growth you planned

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete on December 4th, 2020 by admin

Now is not the time to slow down. Growth initiatives are critical for value creation, even survival, throughout an economic cycle.

Maintaining focus on the growth agenda, especially during a downturn, is no easy feat, however. For growth initiatives to deliver lasting gains, they require a clear aspiration, organization-wide alignment, and careful monitoring. When we reviewed 60 recent growth transformations—intense, company-wide programs aimed at enhancing overall corporate performance—we found that more than half failed to meet their targets. So we looked for the biggest pitfalls that tripped up promising projects and the key elements that contributed to others’ success. Our analysis reveals eight lessons that companies looking to reignite growth should apply.

  1. Set targets high enough to compensate for declining momentum in the base business and inevitable setbacksAs we noted in our earlier research, the growth aspiration that leaders set matters a great deal to the shareholder value those efforts generate. Companies whose growth outperformed others throughout the 2007–2017 cycle achieved excess total returns to shareholders (TRS) of 8 percent, while the rest hovered around zero during the period. Yet many companies venture on what they believe to be ambitious programs only to find the results fail to change the growth trajectory of their overall business. Why? The reason often lies in overly optimistic baseline scenarios and a lack of detailed understanding of the business momentum. Over time, competitive activity, shifts in sales channels, product commoditization, and other market factors can erode revenue in the base business. Without a granular view of that underlying business, bold plans, even if executed well, can be undermined by leakage in the base. To produce incremental growth, the targets and priorities leaders set for the growth program need to accurately reflect the business’s momentum and compensate for this natural attrition.Consider the experience of a technology player looking to turn around declining revenues. About a year into its growth transformation, the program had produced an impressive 8 percent in new revenues—yet the company’s total sales continued to decline. The leaders realized that the downward sales trend in other parts of its business exceeded the gains made through the new growth initiatives. The company ended up resetting its targets to take into account the trajectory of its base business based on more accurate market forecasts.

    Companies also need to be realistic about their likelihood of success. All growth initiatives face the intrinsic risk of new competitors or changes in customer behavior shifting the market dynamics, and some efforts are bound to underdeliver or fail altogether. In the growth transformations we reviewed, the success rate ranged between 50 to 70 percent. To offset the likely setbacks, companies should create a pipeline of initiatives that adds up to 130 to 150 percent of the growth ambition. Leaders should also foster an entrepreneurial spirit and not punish failure due to factors beyond project managers’ control.

  2. Define a few growth themes and ensure the entire organization embraces themBefore launching growth transformations, many companies extensively review and update their strategic priorities. This typically entails analyses of market trends, category and product performance, and competitive activities. In studying the practices of growth outperformers, we found these companies go beyond the core and look into potential moves involving geography, market adjacency, and value chain to set their priorities and aspirations.The result should be a set of four to six clearly defined priority growth themes that cover all potential growth levers. That could mean expanding offerings by entering into new product categories or introducing new services, and expanding segments the company pursues by deepening penetration into existing markets or focusing on micromarkets. Defending the existing customer base (through the acquisition of new accounts, churn reduction, and cross-sell) also needs to be part of the mix, as does innovation in products and business models. Improving sales performance management or customer experience and even M&A or partnerships all could be part of the growth recipe. It’s essential that the organization can act on the growth themes within 12 to 18 months and that their achievement be hardwired into incentives for business leaders.

    In our experience, cascading these priority themes down through the organization is as important as the strategic review that produces them. The failure to communicate and ensure organization-wide alignment on the desired direction hobbled the growth program at one industrial company. The leaders had spent significant time developing what they believed to be clear strategic priorities, yet growth failed to materialize. There were two problems, it turned out: the priorities were too numerous for the organization to address with focus and scale, and regional business leaders found them disconnected from near-term opportunities for their units. A subsequent mapping of the hundreds of regional initiatives against the corporate priorities demonstrated that some units pursued growth projects tailored to their specific markets rather than the company’s chosen themes, and those local opportunities were in turn not supported by the corporate programs, diminishing the potential to leverage the company’s global scale.

  3. Protect the margin of your base business while focusing growth on high-margin targetsA growth aspiration sometimes ends up becoming a push for volume at the expense of margin. Sales teams may present “opportunities” that essentially mean lowering prices or focusing on lower-margin offerings to reach more customers—recipes that rarely deliver profitable growth. This risk is particularly acute in companies that lack strict pricing and margin controls. Perhaps counterintuitively, raising margin targets when setting the aspiration for the growth transformation can help deliver the desired results. This requires leaders to identify initiatives that combine volume growth and pricing levers within sales. More broadly, they should pursue ideas that are both growth- and margin-accretive, such as business-model innovations or expansion into high-margin, high-growth markets.When an international agricultural company asked its various units to develop growth plans, for example, it found the country organizations were reluctant to launch pricing-related initiatives alongside revenue-growth efforts for fear this would limit their sales opportunities. Management also realized the organization lacked the pricing systems, processes, and governance needed to avoid margin erosion as business units strove to deliver top-line growth. To address these shortcomings, the company developed a pricing tool through which it could challenge each national organization on its (net) prices at the product level and intervene when it found them offtrack. The new tool not only delivered a 1 percent improvement in earnings before interest and tax, but ensured the revenue growth achieved by the business units did not erode margins.
  4. Make line managers accountable for designing and implementing growth programsOur analysis of successful growth transformations suggests that having a critical mass of employees involved in their design and execution makes a big difference. Companies that score in the top quartile of growth performance mobilized at least 8 percent of their workforce to drive the initiatives. Some top performers deployed 20 percent of staff or more.Additionally, for growth gains to be sustainable, local leaders need to be accountable for their targets—they should “own” their parts of the program. As such, management should empower them to develop portfolios of initiatives (within the corporate growth themes) that are customized for their businesses or regional contexts and are projected to deliver 130 to 150 percent of their ultimate growth target (in line with our point in the first lesson). Line managers—the individuals who know the offerings and the customers best—should then lead the initiatives, not external project managers who lack a long-term stake in the business. Which function these internal leaders come from would depend on whether the initiatives are related to go-to-market strategy, innovation, product development, or inorganic moves.

    Some growth opportunities require establishing or improving cross-functional collaboration. As the chief growth officer of one leading consumer packaged-goods company put it, “Product, engineering, and sales [should] take decisions jointly, so you don’t have fingers pointing at each other.” For example, a food ingredient player noticed the lack of short-term alignment between operations and sales which, as at many organizations, were separate functions. A shortage of customer orders at specific moments led to sizable productivity losses due to production stops and slowdowns. Unlocking growth required making sales and operations jointly accountable for the objectives, key performance indicators (KPIs), and milestones set for different team members.

  5. Fund growth by reallocating resources and reinvesting gainsAsking business unit leaders to come up with growth ideas will inevitably lead to requests for additional resources for sales, marketing, and technology. An ambitious growth transformation does require proper funding, but it should be guided by a structured process of resource reallocation. Often, existing allocations are due more to past performance than future growth potential. Consider instead asking each unit leader to free up 20 to 30 percent of resources from their existing budgets and separate the savings and the gains from earlier initiatives when reallocating these resources to growth programs. Making resource reallocation a mandatory exercise before committing any additional funding forces everyone to invest in their own success.Wherever the resources come from, top leadership needs to communicate early how much funding will be provided to support growth initiatives and how the decisions about its allocation will be made. Setting expectations for new funds and then failing to deliver them can be a major blow to the transformation effort’s credibility and the organization’s commitment to its execution.
  6. Create implementation plans with clear milestonesMcKinsey’s research on organizational transformations suggests that shorter initiatives tend to produce better results. In that study, we found that successful transformations delivered close to a third of the transformation value within the first three months and approximately 75 percent in the first year. Our research into growth transformations found a similar trend: shorter initiatives have higher success rates. Moreover, early successes are important accelerators of the entire transformation.Yet many growth programs are designed to last multiple years. What’s more, they often rely on high-level plans short on detailed proximate goals and expectations. Designing a growth program with specific, measurable, achievable, realistic, and timebound milestones can enable leaders to address execution bottlenecks in a timely manner. This requires setting milestones based on weeks rather than months or years.

    It can be useful to test the larger program with a limited-time pilot. One electronics player that was working on a new direct-to-consumer proposition it expected to become a sizable business first spent six months running a small-scale study with select users to develop and test the proposition. The lessons at each step of the project helped the company fine-tune the expectations for subsequent milestones while the multiyear road map kept the project firmly on its path.

  7. Continuously prune and replenish the pipeline of initiativesIdeate, refine, renew, and repeat is a cycle that never stops, when done well. Our earlier research on organizational transformations shows that companies in the top quartile restocked their initiative pipeline by 70 percent after the first year, often compensating for initiatives that had been canceled. Maintaining such a healthy pipeline of growth projects, however, requires that companies adopt a rapid-learning approach.Continuously monitoring progress and pruning underperforming initiatives allows scarce sales and marketing resources to be redistributed to more promising efforts—and the faster that is done, the better. As for generating new growth ideas, networks of champions for each of the priority themes can be great sources for pipeline renewal: they can share lessons and success stories across regions and business units, often without the involvement of senior management.
  8. Measure and incentivize performance at multiple levels to focus interventions where they are needed mostManaging a growth transformation requires tracking numerous performance dimensions, from market demand to the competitive landscape to the progress of the initiatives themselves—factors that are both within and outside the management’s control. Performance management should include financial metrics as well as operational and leading KPIs. Many of these will be interrelated, and leaders should determine which are best managed at which level of the organization to create the right incentives and enable timely intervention. At a minimum, growth performance management should cover three levels:
    • Overall corporate goals. The top leadership team needs to understand how the growth transformation is driving the company’s top line. Connecting the growth project’s impact to the actual (or forecasted) revenues can reveal influences outside the initiatives’ parameters, such as foreign-exchange effects or sales declines in parts of the business not targeted by the growth transformation.
    • Growth transformation targets. Leaders of the transformation should track execution progress, operational KPIs, and financial impact for each initiative within the program. Creating a performance-management dashboard to monitor these metrics can enable them to address execution problems and redesign or even terminate initiatives quickly.
    • Functional performance. Take sales as an example. Companies whose sales organizations outperform their peers consistently excel in two capabilities: frontline execution through standardized performance management and analytics-driven opportunity identification and prioritization. These sales leaders are three times as effective and twice as efficient (based on gross margin to sales cost) as the median. Sales management should provide a single source of truth on forward- and backward-looking sales performance as compared to targets (such as order book and funnel) and incorporate this into frequent sales-performance dialogues so the insights the metrics reveal are translated into frontline action. The performance of other functions critical to reaching the growth aspiration, such as marketing, innovation, or corporate development, should have similar growth targets and analytics integrated into their performance measurement.

Delivering the growth your strategy calls for is a complex and challenging endeavor for most organizations, particularly during a downturn. To ensure the results meet the aspirations, companies can lean on the experiences of others to guide their targets and approaches to execution. While the temptation to wait for the current crisis to pass may be strong, it entails the risk of falling behind competitors who adopt a through-cycle approach to growth and emerge far ahead in the recovery.

Source: McKinsey.com, November 2020
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Talent retention and selection in M&A

Posted in Aktuellt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on October 14th, 2020 by admin
Retaining critical talent and ensuring the right people are in key roles are essential to a successful merger.

An organization is only as good as its peopleas the adage goes. At no time is that more true than during a merger integration. A deal can create an opportunity to upgrade talent across the organization; in some cases, gaining access to highly skilled employees is the primary reason for an acquisition. Conversely, mismanaging talent issues can seriously affect the success of even a relatively straightforward transaction.

Organizations undergoing a merger need to tackle two core challenges around talent: how to retain people critical to the combined company’s performance and how to manage the employee selection and appointment process in a way that causes the least disruption and anxiety. Thorough preparation and management of both processes is paramount to achieving a merger’s goals. This article presents our insights into talent issues that arise during M&A and how to handle them to foster a smooth transition.

Understand your merger archetype

Managing talent in a merger integration should not follow a one-size-fits-all approach. Rather, the type of deal you pursue needs to guide how you go about employee retention and selection.

In the case of two organizations of similar size coming together in an approximate merger of equals, both the acquirer and the target company need to pay close attention to retaining key talent. This type of deal often happens during industry consolidations or when a company is trying to reinvent itself by acquiring a competitor with complementary products and customer relationships. While leadership teams tend to protect their own core cadres and corporate cultures, the focus here needs to be on keeping the people best suited to driving the combined company’s performance. Accordingly, a fair and transparent selection process is needed to avoid (real or perceived) biases or favoritism on the part of either legacy company.

When a larger, often better-performing company acquires a smaller or lower-performing firm that operates within its core business, employee selection tends to favor the acquirer’s incumbent talent. In such cases, the acquirer’s retention focus may be quite narrow, aimed at the best performers or employees deemed critical for maintaining business continuity.

In an acquisition involving the entry into a new business or market, the buyer’s talent retention focus will likely be quite different. Typically, retaining the target firm’s employees is essential to the deal’s value, and there is usually limited overlap between the target’s workforce and that of the acquiring company, aside from support functions.

Tailor your talent retention strategy

During the anxiety-filled period of merger negotiation and integration, talent deemed critical to the combined company’s future needs to receive special attention. Since talent flight can undermine performance, value creation, and both the near- and long-term success of the deal, organizations should develop talent retention plans as soon as possible—often before the acquisition is finalized.

The key steps in a talent retention program are determining its scope and approach, defining retention levers, and implementing and monitoring the results.

Determine retention scope and approach

In most merger scenarios, the vast majority of employees do not receive retention packages—typically, less than 2 percent of staff should receive such incentives. However, those few critical employees need to be identified quickly. They could have highly specialized and hard-to-access skills or knowledge vital to running the combined business (such as expertise in the legacy IT systems). They may be important for ensuring stability during the integration phase or they may be high performers essential to building the next phase of the combined organization.

For example, when a global medical device company acquired a small but fast-growing healthcare solutions firm, the target’s product innovation capabilities were a core reason for the deal. The acquirer’s CEO knew he had to move quickly to engage and retain the R&D team, so the head of the integration group promptly flew across the country to meet with the staff, reassure them about their roles in the future organization, and express the company’s enthusiasm for their product innovation plans. The integration leader also committed to ring-fencing the R&D team to allay their concerns that the multinational’s “bureaucracy” would stifle their activities. All the core innovation staff ended up remaining with the new company, with limited financial retention investment required.

It can be challenging to identify the most valuable individuals or know which ones represent a flight risk. Often, top leaders create lists of employees they feel are important to retain—a top-down approach that, being fast and simple, is well suited to mergers with short time frames and high potential for significant loss of talent. However, unless an organization had recently undertaken a talent-to-value exercise, top corporate leaders may lack a comprehensive understanding of the critical talent and roles in the company. As a result, the company may end up offering retention bonuses to too many people, some of whom do not hold essential roles, potentially causing integration cost overruns. Conversely, complex hierarchies or unconscious biases may shield top executives’ views of who really matters in the legacy company, leading to omissions in retention efforts that end up costing the combined company valuable capabilities.

A more comprehensive but time-consuming alternative is a bottom-up approach, which gathers input from multiple management tiers and combines it with other information, such as employee interviews, surveys, or social network analysis. While this provides leaders with a more detailed understanding of the talent they should try to retain—including people at lower levels of the organization—it is not always feasible given pre-close limitations on who can be engaged for input and what information the target company will provide.

A solution that balances the above two approaches is for the legacy heads of each function and the HR business partners of both organizations to nominate the 2 percent “critical talent” in each area—individuals in mission-critical roles, high performers, or those with strong future potential. The HR team can then vet the list with the CEO, the chief human resources officer (CHRO), and the integration leader to determine the need for retention incentives based on the impact and probability of each individual’s departure. (For more on identifying critical talent, see “Matching talent to value” and “Finding hidden leaders”.)

Define incentives

 

Talent-retention programs typically target critical employees the company believes it may lose with a mix of financial and nonfinancial incentives. While financial measures tend to be the first lever organizations turn to, this approach can be both expensive and often less effective than companies anticipate. Financial incentives are best used for addressing short-term needs, such as inducing a finance manager targeted for layoff to stay for a few months after merger close to help with the transition from legacy financial processes to new ones adopted by the combined company. Generally, however, organizations should lead with “soft” incentives such as praise, attention from leaders, and opportunities to take on more responsibility, all of which have proved to be more powerful at keeping talent motivated. A McKinsey survey of more than 1,400 integration executives, for example, reported that “praise and commendation from an immediate manager” was the most effective retention lever, scoring above performance-based cash bonuses and increases in base pay.

In general, incentives should be offered in waves rather than at one time, as not all essential employees will be immediately known to management. Additionally, leaders may find that some highly valued talent does not need special incentives to stay after the deal is announced.

Implement and monitor retention

Once companies have identified their critical talent and determined suitable incentive plans, they should waste no time in implementing the retention program. With financial incentives, it is usually best to conduct the program discreetly so as not to alienate those not offered incentives to stay. There is much less sensitivity around the many nonfinancial retention levers, such as opportunities to participate in training programs or invitations to lead projects, as these are common incentives or rewards for high-performing individuals. With both retention approaches, perceived fairness is critical. In particular, functional heads and HR staff need to be prepared to answer questions about the methodology and thoroughness of the process that determines which individuals receive financial bonuses.

Tracking the impact of the talent retention program is important, both as it applies to the overall workforce and employees identified as critical. Companies can use metrics such as unwanted attrition, turnover costs and employee satisfaction, and should be proactive in adapting the retention program in response to the findings. For instance, engagement surveys can deliver early alerts of declining staff morale, providing time to reengage select employees or employee groups before they decide to move on.

Selecting the right talent

Identifying the candidates for key positions in the combined company is a priority that HR leaders should start addressing even before the deal closes. From determining the selection criteria to communicating, implementing, and tracking outcomes, the decisions made at this stage will bear heavily on the integration’s success. This is particularly important in deals involving the merger of similarly sized firms as such situations require more finesse than other M&A integrations.

At a time when companies are competing for talent in a global arena, offering a positive employee experience—by enabling staff to create personalized, authentic workplaces that ignite their passion and give them purpose—is a key driver of retention, especially among millennials. Our research shows organizations that focus on employee experience as a core element of talent management have a 65 percent chance of achieving superior total returns to shareholders.

Designing, managing, and delivering a positive experience is especially important during the post-merger talent selection process—not only for employees offered positions but also for those not selected or who choose to leave. How the HR and integration teams treat the latter groups can have far-reaching effects on workplace morale and the company’s reputation as an employer of choice.

There are four core elements to ensuring that the selection process leaves a positive impression on all involved: designing a fair and transparent methodology, ensuring the process is well coordinated, managing stakeholder expectations, and effectively onboarding employees starting new positions. Most of these tasks are best handled by a central talent selection office.

 

Establish a fair and transparent process

“Will I have a job in the new organization?” During a merger, that is the primary concern of most employees, so step one in the talent selection process should be providing information. Defining how staffing choices will be made—including selection criteria, legal parameters, and timelines—and communicating this to the organization will help allay anxiety, as will an explicit commitment to fairness and transparency.

Naturally, the approach to selecting high-level executives (such as those reporting directly to the CEO) will differ from the one used for most of the workforce. While the executive selection process is often opaque to the broader organization, the outcomes send a message to all employees about the values and culture they will experience in the combined organization. For example, if the CEO only selects individuals from the acquiring company for the new management team, this may be interpreted as a signal that the acquirer’s employees will be favored for lower-level positions as well, creating the risk of critical talent leaving the acquired company.

Typically, at least the top two levels of leadership below the CEO are chosen before the deal closes, usually by the combined company’s chief executive, and the appointments are often subject to board approval. In selecting direct reports, the CEO should first focus on roles essential to maintaining business continuity along with those needed to fulfill the growth or transformation ambitions that motivated the acquisition. For example, if the CEO is moving from a sales-led geographic structure to a more matrixed brand structure, selecting a chief marketing officer should be a top priority, and if no sufficiently strong candidate is present at either organization, the company should quickly launch an external search. Furthermore, the new leadership team ideally should be introduced to the organization as a group rather than through appointment announcements over time, as a one-time transition in management will help lower uncertainty and distraction among employees.

For the rest of the staff, the selection principles and process should be communicated as soon as possible to reassure employees that the methodology will be consistent and equitable. The principles are typically developed by the CHRO, endorsed by the CEO, and shared with the employee base as the talent selection process kicks off. They may range from strategic, outcome-oriented goals (such as supporting and protecting the core businesses and enabling the vision for the combined company) to specific guidelines (for example, if a position in the new organization consists at least in half of new responsibilities, all eligible employees from both companies can apply for it).

What matters most is that the principles resonate with the organization and increase confidence in the process. They should address questions such as: What does the talent selection aim to achieve? Will employees from both companies receive equal consideration for positions? Who decides who will be offered positions in the merged company? And, will downgrades, grandfathering, relocation, trial periods, and other individual factors be part of the decisions?

The selection process also needs to establish “guardrails”: legal parameters by which decisions must abide, such as regulatory approvals, the WARN Act (for US businesses) and works council stipulations (for European businesses mostly) that apply to HR practices and may vary by role, geography, and timeframe (for example, pre-close, day one, and post-close). Such guardrails are typically shared only among HR employees responsible for defining and executing the selection process and with managers involved in conducting interviews or choosing talent for the new company. The parameters should be defined and disseminated as soon as possible after the deal is announced and reviewed regularly by the general counsel overseeing the integration.

Finally, management needs to define and communicate the criteria, process, and timeline for selections. These are often constrained by how quickly a company needs to make staffing decisions, how involved direct managers are in the process, and the availability and quality of talent assessment data. Typically, the criteria cover the following kinds of questions:

  • How do you define the talent pool eligible for each role in the new organization (for example, can potential candidates come from both legacy companies)? If someone is not selected for a CEO-2 role (reporting to a CEO’s direct report), can the individual be eligible for a CEO-3 role? Could he or she be offered positions in other parts of the company?
  • What guides the selection when multiple incumbent employees apply for a role?
  • What data (such as performance ratings or R&D patent applications) and other inputs (resumes, for example) are considered and how do you calibrate their relative importance given different practices in the legacy organizations and potential functional or individual biases?
  • For which roles will you conduct interviews or seek additional internal or external applicants, and how will you source external talent if needed?

In terms of schedule and time frame, the following questions should be answered:

  • Are you prioritizing talent selection by seniority and level of responsibility, or handling multiple employee tiers at once?
  • When will candidates be notified, when will new roles begin, and what will be the exit dates for those leaving?
  • Will the dates vary by office location or country?
  • What do HR business partners, managers, and other decision makers need to do, and by when, in order for candidates to be notified of selection outcomes by a certain date?

Establish a central office to coordinate selection

Deciding which employees should stay, go, or move to different roles is often a complex process involving many decision makers and urgent time pressures. If managed poorly, it can cause the new company to lose critical talent and capabilities, miss synergy targets, face business disruptions, and even risk lawsuits and reputational damage. What’s more, during the hectic integration period, the HR team often lacks the capacity to adequately support talent selection, especially as the department is likely undergoing its own functional integration. Creating a talent selection office (TSO)—a temporary, centralized command group—can improve the employee experience, produce better selection outcomes, and reduce potential legal risks.

A TSO is particularly valuable during large employee reorganizations driven by ambitious synergy targets and undertaken within short time frames. It can also play a vital role in ensuring exits happen quickly when one or both of the merging companies operate in multiple geographies or industries with complex labor laws or strong union relationships. For example, when one US-based company acquired a European firm of similar size with a significant number of employee overlaps across numerous regions and functions, it established a temporary TSO and placed a member of the target company in charge. Not only did the central TSO enable the combined organization to reach its synergy targets roughly six months ahead of schedule, but the choice of lead helped reassure the target company’s employees that the selection process would be fair to them.

As the command center, the TSO is responsible for guiding leaders involved in the selection process in how they manage organizational anxiety around potential head-count reductions. This includes instructing managers and job candidates on the interview and selection steps and timelines and coordinating with the communications team of the central integration management office (IMO), where appropriate, on responses to questions about the process. The TSO also ensures that the employee choices align with the new organization’s strategy, desired culture, and synergy objectives related to employees, and that the selection and retention processes adhere to the established principles and other guidelines.


Communicate with stakeholders

 

Typically, the TSO is also responsible for the third element of the selection process: managing stakeholder expectations. This can range from defining who will be consulted in talent selection decisions to helping managers conducting interviews understand how much time is required and when they need to commit. The TSO needs to become the “one source of truth,” tracking decisions in real time and making sure systems are updated promptly and accurately.

Doing this effectively requires regular communication among several stakeholder groups, including the IMO (to coordinate the timeline with other integration activities), employees involved (both those who interview or select candidates and the candidates themselves), the communications team (to align messaging related to talent, such as the announcement of a new leadership team), and finance and IT (to coordinate updates to HR management and payroll systems). The TSO also needs to be in close touch with the company’s HR partners to coordinate the execution of the selection process, as when new external employees are brought onboard.

Onboard employees into new jobs

Once talent selection is completed and announced, the talent team often thinks its job is done. However, the selected employees still need to be properly onboarded. Given the intense pace and workload before, during, and right after a merger, this crucial step is often neglected, leaving employees who start new jobs insufficiently prepared for the realities of the merged organization.

To avoid a decline in workforce performance and employee experience, the TSO should work with HR staff and line managers to define the onboarding requirements, at least for critical roles and talent. It should also solicit feedback from employees on their experience of the integration process and report that to the IMO.

Källa: McKinsey.com, October 2020
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Improve your leadership team’s effectiveness through key behaviors

Posted in Aktuellt, Executive Coaching, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap on September 29th, 2020 by admin
Having effective leadership teams can yield significant results across the entire organization. All leadership teams should strive for such results by addressing key opportunity areas and the behaviors most important to their success.

Delivers growth, innovation, and organizational agility and is an expert on culture change, leadership development, team effectiveness, capability building, and transformation

As investors cast a wider net to gain a more accurate view of a company’s prospects, most realize they should also look closely at the management team. Leaders can make or break a company transformation. In fact, 33 percent of failed transformations occur because the leadership team’s behaviors did not support the desired changes.

Consider one large insurance company. Discord among senior leaders led to low trust among team members, misaligned priorities, ineffective meetings, and struggles to make or adhere to decisions. The result was significant churn and rework. Employee engagement and accountability dropped, and the transformation slowed.

With so much riding on the leadership team’s performance, what can be done to improve its effectiveness?

Our experience, combined with scientific literature on organizational psychology, revealed 22 behaviors that contribute to effectiveness. These behaviors can be broadly condensed into four characteristics of effective teams:

  • They configure the team around a clear mandate and precise roles, understanding which roles drive the most value and securing the right talent for those positions.
  • They align on a value agenda, set of priorities, and way of working together, which helps forge a distinct identity.
  • They execute under a governance system that allows them to make decisions quickly and effectively, collaborate, and challenge one another.
  • They take time to renew—evolving, innovating, learning from the broader context, and investing in individual and team-wide development.

Bringing leadership together around critical behaviors

We studied 37 organizations to understand how frequently each behavior occurs in their leadership teams and which ones they believe are most important to their success. The results suggest that significant opportunity exists to improve behaviors associated with team effectiveness.

For instance, while leadership teams generally agree that aligning on their purpose is critical, only 60 percent of organizations’ team members reported that they were actually aligned. Similarly, while consistent communication is ranked as a priority, less than 40 percent of teams report practicing it. This failure to enact important behaviors is a missed opportunity: when leadership teams have a shared, meaningful, and engaging vision, the company is nearly two times more likely to achieve above-median financial performance.*

To design a leadership team journey, teams should align on their value agenda and vision; be thoughtful about which profiles are represented in the leadership team; structure the right cadence of interactions, focus on the most important decisions and areas where the team needs to collaborate; and identify and develop three to five behaviors that are most critical to delivering the organization’s value agenda. The initiatives taken to address these behaviors should be simple and results oriented.

It is easy for senior leadership teams to fall into a pattern of addressing all escalated decisions. Therefore, some leadership teams have improved their effectiveness by focusing their time and attention on the work only they can do and delegate the rest. Relatedly, some teams schedule fewer meetings with the core team and instead use committees to meet on topics for which the full team is not required.

Source: McKinsey. com, 2020
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Coronavirus: 15 emerging themes for boards and executive teams

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete on June 2nd, 2020 by admin
As Winston Churchill said, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” We are seeing some faint signs of progress in the struggle to contain the pandemic. But the risk of resurgence is real, and if the virus does prove to be seasonal, the effect will probably be muted. It is likely never more important than now for boards of directors and executive management teams to tackle the right questions and jointly guide their organizations toward the next normal.Recently, we spoke with a group of leading nonexecutive chairs and directors at companies around the world who serve on the McKinsey Resilience Advisory Council, a group of external advisers that acts as a sounding board and inspiration for our latest thinking on risk and resilience. They generously shared the personal insights and experiences gained from their organizations’ efforts to manage through the crisis and resume work. The 15 themes that emerged offer a guide to boards and executive teams everywhere. Together, they can debate these issues and set an effective context for the difficult decisions now coming up as companies plan their return to full activity.

Managing through the crisis

1. Boards must strike the right balance between hope for the future and the realism that organizations need to hear. There are many prognostications on what comes after COVID-19. Many will be helpful. Some will be right. Boards and managers may have some hopes and dreams of their own. Creating value and finding pockets of growth are possible. It is important to have these aspirations, because they form the core of an inner optimism and confidence that organizations need. However, leaders should not conflate aspirations with a prescience about the future.

2. The unknown portion of the crisis may be beyond anything we’ve seen in our professional lives. Boards and managers feel like they might be grappling with only 5 percent of the issues, while the vast majority are still lurking, unknown. Executives are incredibly busy, fighting fires in cash management and other areas. But boards need to add to their burden and ask them to prepare for a “next normal” strategy discussion. Managers need to do their best to find out what these issues are, and then work with boards to ensure that the organization can navigate them. The point isn’t to have a better answer. The point is to build the organizational capability to learn quickly why your answer is wrong, and pivot faster than your peers do. Resilience comes through speed. This may be a new capability that very few organizations have now, and they will likely need to spend real time building it.

3. Beware of a gulf between executives and the rank and file. Top managers are easily adapting to working from home and to flexible, ill-defined processes and ways of working, and they see it as being very effective and also the wave of the future. Many people in the trenches think it is the worst thing to happen to them (even those that are used to working remotely). Remote working is raising the divide between elites and the common man and woman. There is a real risk of serious tension in the social fabric of organizations and in local and national communities.

4. Don’t overlook the risks faced by self-employed professionals, informal workers, and small businesses. These groups are often not receiving sufficient support. But their role in the economy is vital, and they may be noticed only later, when it is too late.

5. Certain industries and sectors are truly struggling and require support. Several disrupted industries and many organizations in higher education, the arts, and sports are severely struggling and require support to safeguard their survival.

Return to work—the path ahead

6. Mid- to long-term implications and scenarios vary considerably. It’s important to differentiate between industries and regions. Some industries may never come back to pre-COVID-19 levels.

7. What went wrong? Boards and executives, but also academics, need to debate the question. Where should we have been focusing? Take three examples. Why did companies ignore the issue of inadequate resilience in their supply chain? The risks of single sourcing were well known and transparent. Also, why did we move headlong toward greater specialization in the workforce, when we knew that no single skill was permanently valuable? Finally, why did we refuse to evolve our business models, although we knew that technology and shifts in societal preferences were forcing us down a treadmill of ever decreasing value-creation potential?

8. How can we prevent a backlash to globalization? The tendency toward nationalism was already strong and is growing during the crisis. The ramifications will be challenging. For example, in pharmaceutical development, residents of the country where a pharma company has its headquarters may expect to get the drug first. Global companies, despite their experience, may find it harder to address and engage directly with diverse, volatile, and potentially conflicting stakeholders. In such times, societies may need someone to mediate between the private sector and some of these stakeholders.

9. Companies need help with government relations. Strong government interventions are occurring on the back of a serious loss of confidence in free-market mechanisms. There is little question that different governments will land on different answers to the debate around how free markets really ought to be structured. The corporate community has been thrust into a new relationship with government, and it is struggling. The government landscape is fragmented, with highly varied approaches and competencies. Companies are looking for a playbook; no one has an infrastructure to manage this complexity.

10. Where will the equity come from, and with what strings attached? Governments are propping up various sectors with new capital. What will they receive in return? Will they distort markets? How can companies manage this process carefully to emerge from the crisis with a stronger balance sheet? Further, much more capital is likely needed; presumably some of it will come from the private sector. Will capital markets be effective and trusted in such times? Who governs this overall process, and what role should the government play? Is it the time for more state funds?

11. The balance between profits and cash flow is tricky, and essential to get right. Many companies are caught right now and are sacrificing their bottom line in order to pay for their financing. That’s not sustainable; companies will need guidance on how to balance the two.

12. It may be time for responsible acquisitions, including to help restructure certain industries. Many “resilients” have “kept their powder dry,” and are now ready to acquire. But they need to be sensitive and allow sellers a good path to exit. We need guidelines for responsible acquisitions.

13. Cyberrisk is growing. Remote working increases the “attack surface” for criminals and state actors. Both are more active. Chief information officers and chief information security officers are grappling with the overwhelming demand for work-from-home technology and the need for stringent cybersecurity.

14. Innovation may never have been so important. Innovation has always been essential to solving big problems. The world is looking not just for new things but also for new ways of doing things (especially on the people side, where we need new behaviors, long-term rather than short-term), capabilities, and work ethics.

15. The path ahead will surely have ups and downs and will require resilience. As lockdowns are relaxed, and segments of the economy reopen, viral resurgences and unforeseen events will keep growth from being a straight line going up. It will likely be a lengthy process of preserving “lives and livelihoods” over several months, if not years. The reality is that many or even most business leaders made choices over the past decades that traded resilience for a perceived increase in shareholder value. Now may be the moment to consider that the era of chipping away at organizational resilience in the name of greater efficiency may have reached its limits. This is not to say that there are no efficiencies to be sought or found, but more that the trade-off between efficiency and resiliency needs to be defined far more clearly than it has been in recent years.


It is the board’s responsibility to coach and advise its management team, especially when the terrain is trickier than usual. However, boards should not mistake the need for vigorous debate with the need for consensus. More than ever, a bias to action is essential, which will frequently mean getting comfortable with disagreement. Apart from all the operational focus needed for the return to work, it is even more important that boards and management teams take a step back to reflect upon these 15 core themes. In summary:

  1. Take the time to recognize how the people who (directly or indirectly) depend on the company feel.
  2. Have aspirations about the post-COVID world, but build the resilience to make them a reality.
  3. Strengthen your capability to engage and work with regulators and the government.
  4. Watch out for non-COVID risks, and make sure to carve out time to dedicate to familiar risks that have never gone away.
  5. Find out what went wrong, and answer the uncomfortable truths that investigation uncovers
Source: McKinsey.com, June 2, 2020
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About the author(s): Cindy Levy is a senior partner in McKinsey’s London office,
Jean-Christophe Mieszala is a senior partner and the global chief risk officer 
in the Paris office, Mihir Mysore is a partner in the Houston office, and 
Hamid Samandari is a senior partner in the New York office

From thinking about the next normal to making it work: What to stop, start, and accelerate

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Executive Team / Ledningsgruppsarbete on May 16th, 2020 by admin

What’s next? That is the question everyone is asking. The future is not what we thought it would be only a few short months ago.

In a previous article, we discussed seven broad ideas that we thought would shape the global economy as it struggled to define the next normal. In this one, we set out seven actions that have come up repeatedly in our discussions with business leaders around the world. In each case, we discuss which attitudes or practices businesses should stop, which they should start, and which they should accelerate.

1. From ‘sleeping at the office’ to effective remote working

Stop assuming that the old ways will come back

In fact, this isn’t much of a problem. Most executives we have spoken to have been pleased at how well the sudden increase in remote working has gone. At the same time, there is some nostalgia for the “good old days,” circa January 2020, when it was easy to bump into people at the coffee room. Those days are gone. There is also the risk, however, that companies will rely too much on remote working. In the United States, more than 70 percent of jobs can’t be done offsite. Remote work isn’t a panacea for today’s workplace challenges, such as training, unemployment, and productivity loss.

Start thinking through how to organize work for a distributed workforce

Remote working is about more than giving people a laptop. Some of the rhythms of office life can’t be recreated. But the norms associated with traditional work—for example, that once you left the office, the workday was basically done—are important. As one CEO told us, “It’s not so much working from home; rather, it’s really sleeping at the office.”

For working from home to be sustainable, companies need to help their staff create those boundaries: the kind of interaction that used to take place in the hallway can be taken care of with a quick phone call, not a videoconference. It may also help to set “office hours” for particular groups, share tips on how to track time, and announce that there is no expectation that emails will be answered after a certain hour.

Accelerate best practices around collaboration, flexibility, inclusion, and accountability

Collaboration, flexibility, inclusion, and accountability are things organizations have been thinking about for years, with some progress. But the massive change associated with the coronavirus could and should accelerate changes that foster these values.

Office life is well defined. The conference room is in use, or it isn’t. The boss sits here; the tech people have a burrow down the hall. And there are also useful informal actions. Networks can form spontaneously (albeit these can also comprise closed circuits, keeping people out), and there is on-the-spot accountability when supervisors can keep an eye from across the room. It’s worth trying to build similar informal interactions. TED Conferences, the conference organizer and webcaster, has established virtual spaces so that while people are separate, they aren’t alone. A software company, Zapier, sets up random video pairings so that people who can’t bump into each other in the hallway might nonetheless get to know each other.

There is some evidence that data-based, at-a-distance personnel assessments bear a closer relation to employees’ contributions than do traditional ones, which tend to favor visibility. Transitioning toward such systems could contribute to building a more diverse, more capable, and happier workforce. Remote working, for example, means no commuting, which can make work more accessible for people with disabilities; the flexibility associated with the practice can be particularly helpful for single parents and caregivers. Moreover, remote working means companies can draw on a much wider talent pool.

2. From lines and silos to networks and teamwork

Stop relying on traditional organizational structures

“We used to have all these meetings,” a CEO recently told us. “There would be people from different functions, all defending their territory. We’d spend two hours together, and nothing got decided. Now, all of those have been cancelled—and things didn’t fall apart.” It was a revelation—and a common one. Instead, the company put together teams to deal with COVID-19-related problems. Operating with a defined mission, a sense of urgency, and only the necessary personnel at the table, people set aside the turf battles and moved quickly to solve problems, relying on expertise rather than rank.

Start locking in practices that speed up decision making and execution during the crisis

The all-hands-on-deck ethos of a pandemic can’t last. But there are ways to institutionalize what works—and the benefits can be substantial. During and after the 2008 financial crisis, companies that were in the top fifth in performance were about 20 percentage points ahead of their peers. Eight years later, their lead had grown to 150 percentage points. The lesson: those who move earlier, faster, and more decisively do best.

Accelerate the transition to agility

We define “agility” as the ability to reconfigure strategy, structure, processes, people, and technology quickly toward value-creating and value-protecting opportunities. In a 2017 McKinsey survey, agile units performed significantly better than those who weren’t agile, but only a minority of organizations were actually performing agile transformations. Many more have been forced to do so because of the current crisis—and have seen positive results.

Agile companies are more decentralized and depend less on top-down, command-and-control decision making. They create agile teams, which are allowed to make most day-to-day decisions; senior leaders still make the big-bet ones that can make or break a company. Agile teams aren’t out-of-control teams: accountability, in the form of tracking and measuring precisely stated outcomes, is as much a part of their responsibilities as flexibility is. The overarching idea is for the right people to be in position to make and execute decisions.

One principle is that the flatter decision-making structures many companies have adopted in crisis mode are faster and more flexible than traditional ones. Many routine decisions that used to go up the chain of command are being decided much lower in the hierarchy, to good effect. For example, a financial information company saw that its traditional sources were losing their value as COVID-19 deepened. It formed a small team to define company priorities—on a single sheet of paper—and come up with new kinds of data, which it shared more often with its clients. The story illustrates the new organization paradigm: empowerment and speed, even—or especially—when information is patchy.

Another is to think of ecosystems (that is, how all the parts fit together) rather than separate units. Companies with healthy ecosystems of suppliers, partners, vendors, and committed customers can find ways to work together during and after times of crisis because those are relationships built on trust, not only transactions.

Finally, agility is just a word if it isn’t grounded in the discipline of data. Companies need to create or accelerate their analytics capabilities to provide the basis for answers—and, perhaps as important, allow them to ask the right questions. This also requires reskilling employees to take advantage of those capabilities: an organization that is always learning is always improving.

3. From just-in-time to just-in-time and just-in-case supply chains

Stop optimizing supply chains based on individual component cost and depending on a single supply source for critical materials

The coronavirus crisis has demonstrated the vulnerability of the old supply-chain model, with companies finding their operations abruptly halted because a single factory had to shut down. Companies learned the hard way that individual transaction costs don’t matter nearly as much as end-to-end value optimization—an idea that includes resilience and efficiency, as well as cost. The argument for more flexible and shorter supply chains has been building for years. In 2004, an article in the McKinsey Quarterly noted that it can be better to ship goods “500 feet in 24 hours [rather than] shipping them 5,000 miles across logistical and political boundaries in 25 days … offshoring often isn’t the right strategy for companies whose competitive advantage comes from speed and a track record of reliability.”  

Start redesigning supply chains to optimize resilience and speed

Instead of asking whether to onshore or offshore production, the starting point should be the question, “How can we forge a supply chain that creates the most value?” That will often lead to an answer that involves neither offshoring nor onshoring but rather “multishoring”—and with it, the reduction of risk by avoiding being dependent on any single source of supply.

Speed still matters, particularly in areas in which consumer preferences change quickly. Yet even in fashion, in which that is very much the case, the need for greater resilience is clear. In a survey conducted in cooperation with Sourcing Journal subscribers, McKinsey found that most fashion-sourcing executives reported that their suppliers wouldn’t be able to deliver all their orders for the second quarter of 2020. To get faster means adopting new digital-planning and supplier-risk-management tools to create greater visibility and capacity, capability, inventory, demand, and risk across the value chain. Doing so enables companies to react well to changes in supply or demand conditions.

One area of vulnerability the current crisis has revealed is that many companies didn’t know the suppliers their own suppliers were using and thus were unable to manage critical elements of their value chains. Companies should know where their most critical components come from. On that basis, they can evaluate the level of risk and decide what to do, using rigorous scenario planning and bottom-up estimates of inventory and demand. Contractors should be required to show that they have risk plans (including knowing the performance, financial, and compliance record of all their subcontractors, as well as their capacity and inventories) in place.

Accelerate ‘nextshoring’ and the use of advanced technologies

In some critical areas, governments or customers may be willing to pay for excess capacity and inventories, moving away from just-in-time production. In most cases, however, we expect companies to concentrate on creating more flexible supply chains that can also operate on a just-in-case approach. Think of it as “nextshoring” for the next normal.

For example, the fashion industry expects to shift some sourcing from China to other Asian countries, Central America, and Eastern Europe. Japanese carmakers and Korean electronics companies were considering similar actions before the coronavirus outbreak. The state-owned Development Bank of Japan is planning to subsidize companies’ relocation back to Japan, and some Western countries, including France, are looking to build up domestic industries for critical products, such as pharmaceuticals. Localizing supply chains and creating more collaborative relationships with critical suppliers—for example, by helping them build their digital capabilities or share freight capacity—are other ways to build long-term resilience and flexibility.

Nextshoring in manufacturing is about two things. The first is to define whether production is best placed near customers to meet local needs and accommodate variations in demand. The second is to define what needs to be done near innovative supply bases to keep up with technological change. Nextshoring is about understanding how manufacturing is changing (in the use of digitization and automation, in particular) and building the trained workforce, external partnerships, and management muscle to deliver on that potential. It is about accelerating the use of flexible robotics, additive manufacturing, and other technologies to create capabilities that can shift output levels and product mixes at reasonable cost. It isn’t about optimizing labor costs, which are usually a much smaller factor—and sometimes all but irrelevant.

4. From managing for the short term to capitalism for the long term

Stop quarterly earnings estimates

Because of the unprecedented nature of the pandemic, the percentage of companies providing earnings guidance has fallen sharply—and that’s a good thing. The arguments against quarterly earnings guidance are well known, including that they create the wrong incentives by rewarding companies for doing harmful things, such as deferring capital investment and offering massive discounts that boost sales to make the revenue numbers but hurt a company’s pricing strategy.

Taking such actions may stave off a quick hit to the stock price. But while short-term investors account for the majority of trades—and often seem to dominate earnings calls and internet chatrooms—in fact, seven of ten shares in US companies are owned by long-term investors. By definition, this group, which we call “intrinsic investors”—look well beyond any given quarter, and deeper than such quick fixes. Moreover, they have far greater influence on a company’s share price over time than the short-term investors who place such stock in earnings guidance.

Moreover, the conventional wisdom that missing an estimate means immediate retribution is not always true. A McKinsey analysis found that in 40 percent of the cases, the share prices of companies that missed their consensus earnings estimates actually rose. Finally, an analysis of 615 US public companies from 2001 to 2015 found that those characterized as “long-term oriented” outperformed their peers in earnings, revenue growth, and market capitalization. Even as a way of protecting equity value, then, earnings guidance is a flawed tool. And, of course, there can be no bad headlines about missed estimates if there are no estimates to miss.

Along the same lines, stop assuming that pursuing shareholder value is the only goal. Yes, businesses have fundamental responsibilities to make money and to reward their investors for the risks they take. But executives and workers are also citizens, parents, and neighbors, and those parts of their lives don’t stop when they clock in. In 2009, in the wake of the financial crisis, former McKinsey managing partner Dominic Barton argued that there is no “inherent tension between creating value and serving the interests of employees, suppliers, customers, creditors, communities, and the environment. Indeed, thoughtful advocates of value maximization have always insisted that it is long-term value that has to be maximized.” 2 We agree, and since then, evidence has accumulated that businesses with clear values that work to be good citizens create superior value for shareholders over the long run.

Start focusing on leadership and working with partners to create a better future

McKinsey research defines the “long term” as five to seven years: the period it takes to start and build a sustainable business. That period isn’t that long. As the current crisis proves, huge changes can take place in much shorter time frames.

One implication is that boards, in particular, should start to think about just how fast, and when, to replace their CEOs. The average tenure of a CEO at a large-cap company is now about five years, down from ten years in 1995. A recent Harvard Business Review study of the world’s top CEOs found that their average tenure was 15 years. 3 One critical factor: close and constant communication with their boards allowed them to get through a rough patch and go on to lead long-term success.

Like Adam Smith, we believe in the “invisible hand”—the idea that self-interest plus the network of information (such as the price signal) that helps economies work efficiently are essential to creating prosperity. But Adam Smith also considered the rule of law essential and saw the goal of wealth creation as creating happiness: “What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” 4 A more recent economist, Nobel laureate Amartya Sen, updated the idea for the 21st century, stating that the invisible hand of the market needs to be balanced by the visible hand of good governance.

Given the trillions of dollars and other kinds of support that governments are providing, governments are going to be deeply embedded in the private sector. That isn’t an argument for overregulation, protectionism, or general officiousness—things that both Smith and Sen disdained. It is a statement of fact that business needs to work ever more closely with governments on issues such as training, digitization, and sustainability.

Accelerate the reallocation of resources and infrastructure investment

Business leaders love words like “flexible,” “agile,” and “innovative.” But a look at their budgets shows that “inertia” should probably get more attention. Year to year, companies only reallocate 2 to 3 percent of their budgets. But those that do more—on the order of 8 to 10 percent—create more value. In the coronavirus era, the case for change makes itself. In other areas, companies can use this sense of urgency to change the way they put together their budgets. Sales teams, for example, are used to getting new targets based on the prior year’s results. A better approach is to define the possible, based on metrics such as market size, current market share, sales-force size, and how competitive the market is. On that basis, a company can estimate sales potential and budget accordingly.

In previous economic transitions, infrastructure meant things such as roads and pipelines. In democratic societies, governments generally drew up the plans and established safety and other regulations, and the private sector did the actual building. Something similar needs to happen now, in two areas. One is the irresistible rise of digital technologies. Those without access to reliable broadband are being left out of a sizable and surging segment of the economy; there is a clear case for creating a robust, universal broadband infrastructure.

The second has to do with the workforce. In 2017, the McKinsey Global Institute estimated that as much as a third of workplace activities could be automated by 2030. To avoid social upheaval—more high-wage jobs but fewer middle-class ones—displaced workers need to be retrained so that they can find and succeed in the new jobs that will emerge. The needs, then, are for more midcareer job training and more effective on-the-job training. For workers, as well as businesses, agility is going to be a core skill—one that current systems, mostly designed for a different era, aren’t very good at.

5. From making trade-offs to embedding sustainability

Stop thinking of environmental management as a compliance issue

Environmental management is a core management and financial issue. Lloyds Bank, the British insurer, estimated that sea-level rises in New York increased insured losses from Hurricane Sandy in 2012 by 30 percent; a different study found that the number of British properties at risk of significant flooding could double by 2035. Ignore these and similar warnings—about cyclones or extreme heat, for example—and watch your insurance bills rise, as they did in Canada after wildfires in 2016. Investors are noticing too. In Larry Fink’s most recent letter to CEOS, the BlackRock CEO put it bluntly: “Climate risk is investment risk.” 5 He noted that investors are asking how they should modify their portfolios to incorporate climate risk and are reassessing risk and asset values on that basis.

Start considering environmental strategy as a source of resilience and competitive advantage

The COVID-19 pandemic froze supply chains around the world, including shutting down much of the United States’ meat production. Rising climate hazards could lead to similar shocks to global supply chains and food security. In some parts of Brazil, the usual two-crop growing season may eventually only yield a single crop.

As companies reengineer their supply chains for resilience, they also need to consider environmental factors—for example, is a region already prone to flooding likely to become more so as temperatures rise? One of the insights of a McKinsey climate analysis published in January is that climate risks are unevenly distributed, with some areas already close to physical and biological tipping points. Where that is the case, companies may need to think about how to mitigate the possible harm or perhaps going elsewhere. The principle to remember is that it is less expensive to prepare than to repair or retrofit. In January 2018, the National Institute for Building Sciences estimated spending $1 to build resilient infrastructure saved $6 in future costs. 6 To cope with the COVID-19 pandemic, companies have shortened their supply chains, switched to more videoconferencing, and introduced new production processes. Consider how these and other practices might be continued; they can help make companies more environmentally sustainable, as well as more efficient.

Second, it makes sense to start thinking about the possible similarities between the coronavirus crisis and long-term climate change. The pandemic has created simultaneous shocks to supply chains, consumer demand, and the energy sector; it has hit the poor harder; and it has created serious knock-on effects. The same is likely to be true for climate change. Moreover, rising temperatures could also increase the toll of contagious diseases. It could be argued, then, that mitigating climate change is as much a global public-health issue as dealing with COVID-19 is.

The coronavirus crisis has been a sudden shock that essentially hit the world all at once—what we call “contagion risk.” Climate change is on a different time frame; the dangers are building (“accumulation risk”). In each case, however, resilience and collaboration are essential.

Accelerate investment in innovation, partnerships, and reporting

As usual, information is the foundation for action. A data-driven approach can illuminate the relative costs of maintaining an asset, adapting it—for example, by building perimeter walls or adding a backup power supply—or investing in a new one. It is as true for the environment as any part of the value chain that what gets measured gets managed. This entails creating sound, sophisticated climate-risk assessments; there is no generally accepted standard at the moment, but there are several works in progress, such as the Sustainability Accounting Standards Board.

The principle at work is to make climate management a core corporate capability, using all the management tools, such as analytics and agile teams, that are applied to other critical tasks. The benefits can be substantial. One study found that companies that reduced their climate-change-related emissions delivered better returns on equity—not because their emissions were lower, but because they became generally more efficient. The correlation between going green and high-quality operations is strong, with numerous examples of companies (including Hilton, PepsiCo, and Procter & Gamble), setting targets to reduce use of natural resources and ending up saving significant sums of money.

It’s true that, given the scale of the climate challenge, no single company is going to make the difference. That is a reason for effort, not inaction. Partnerships directed at cracking high-cost-energy alternatives, such as hydrogen and carbon capture, are one example. Voluntary efforts to raise the corporate game as a whole, such as the Task Force on Climate-related Financial Disclosures, are another.

6. From online commerce to a contact-free economy

Stop thinking of the contactless economy as something that will happen down the line

The switch to contactless operations can happen fast. Healthcare is the outstanding example here. For as long as there has been modern healthcare, the norm has been for patients to travel to an office to see a doctor or nurse. We recognize the value of having personal relationships with healthcare professionals. But it is possible to have the best of both worlds—staff with more time to deal with urgent needs and patients getting high-quality care.

In Britain, less than 1 percent of initial medical consultations took place via video link in 2019; under lockdown, 100 percent are occurring remotely. In another example, a leading US retailer in 2019 wanted to launch a curbside-delivery business; its plan envisioned taking 18 months. During the lockdown, it went live in less than a week—allowing it to serve its customers while maintaining the livelihoods of its workforce. Online banking interactions have risen to 90 percent during the crisis, from 10 percent, with no drop-off in quality and an increase in compliance while providing a customer experience that isn’t just about online banking. In our own work, we have replaced on-site ethnographic field study with digital diaries and video walk-throughs. This is also true for B2B applications—and not just in tech. In construction, people can monitor automated earth-moving equipment from miles away.

Start planning how to lock in and scale the crisis-era changes

It is hard to believe that Britain would go back to its previous doctor–patient model. The same is likely true for education. With even the world’s most elite universities turning to remote learning, the previously common disdain for such practices has diminished sharply. There will always be a place for the lecture hall and the tutorial, but there is a huge opportunity here to evaluate what works, identify what doesn’t, and bring more high-quality education to more people more affordably and more easily. Manufacturers also have had to institute new practices to keep their workers at work but apart—for example, by organizing workers into self-contained pods, with shift handovers done virtually; staggering production schedules to ensure that physically close lines run at different times; and by training specialists to do quality-assurance work virtually. These have all been emergency measures. Using digital-twin simulation—a virtual way to test operations—can help define which should be continued, for safety and productivity reasons, as the crisis lessens.

Accelerate the transition of digitization and automation

“Digital transformation” was a buzz phrase prior to the coronavirus crisis. Since then, it has become a reality in many cases—and a necessity for all. The consumer sector has, in many cases, moved fast. When the coronavirus hit China, Starbucks shut down 80 percent of its stores. But it introduced the “Contactless Starbucks Experience” in those that stayed open and is now rolling it out more widely. Car manufacturers in Asia have developed virtual show rooms where consumers can browse the latest models; these are now becoming part of what they see as a new beginning-to-end digital journey. Airlines and car-rental companies are also developing contactless consumer journeys.

The bigger opportunity, however, may be in B2B applications, particularly in regard to manufacturing, where physical distancing can be challenging. In the recent past, there was some skepticism about applying the Internet of Things (IoT) to industry. Now, many industrial companies have embraced IoT to devise safety strategies, improve collaboration with suppliers, manage inventory, optimize procurement, and maintain equipment. Such solutions, all of which can be done remotely, can help industrial companies adjust to the next normal by reducing costs, enabling physical distancing, and creating more flexible operations. The application of advanced analytics can help companies get a sense of their customers’ needs without having to walk the factory floor; it can also enable contactless delivery.

7. From simply returning to returning and reimagining

Stop seeing the return as a destination

The return after the pandemic will be a gradual process rather than one determined by government publicizing a date and declaring “open for business.” The stages will vary, depending on the sector, but only rarely will companies be able to flip a switch and reopen. There are four areas to focus on: recovering revenue, rebuilding operations, rethinking the organization, and accelerating the adoption of digital solutions. In each case, speed will be important. Getting there means creating a step-by-step, deliberate process.

Start imagining the business as it should be in the next normal

For retail and entertainment venues, physical distancing may become a fact of life, requiring the redesign of space and new business models. For offices, the planning will be about retaining the positives associated with remote working. For manufacturing, it will be about reconfiguring production lines and processes. For many services, it will be about reaching consumers unused to online interaction or unable to access it. For transport, it will be about reassuring travelers that they won’t get sick getting from point A to point B. In all cases, the once-routine person-to-person dynamics will change.

Accelerate digitization

Call it “Industry 4.0” or the “Fourth Industrial Revolution.” Whatever the term, the fact is that there is a new and fast-improving set of digital and analytic tools that can reduce the costs of operations while fostering flexibility. Digitization was, of course, already occurring before the COVID-19 crisis but not universally. A survey in October 2018 found that 85 percent of respondents wanted their operations to be mostly or entirely digital but only 18 percent actually were. Companies that accelerate these efforts fast and intelligently, will see benefits in productivity, quality, and end-customer connectivity. And the rewards could be huge—as much as $3.7 trillion in value worldwide by 2025.

McKinsey and the World Economic Forum have identified 44 digital leaders, or “lighthouses,” in advanced manufacturing. These companies created whole new operating systems around their digital capabilities. They developed new use cases for these technologies, and they applied them across business processes and management systems while reskilling their workforce through virtual reality, digital learning, and games. The lighthouse companies are more apt to create partnerships with suppliers, customers, and businesses in related industries. Their emphasis is on learning, connectivity, and problem solving—capabilities that are always in demand and that have far-reaching effects.

Not every company can be a lighthouse. But all companies can create a plan that illuminates what needs to be done (and by whom) to reach a stated goal, guarantee the resources to get there, train employees in digital tools and cybersecurity, and bring leadership to bear. To get out of “pilot purgatory”—the common fate of most digital-transformation efforts prior to the COVID-19 crisis—means not doing the same thing the same way but instead focusing on outcomes (not favored technologies), learning through experience, and building an ecosystem of tech providers.

Businesses around the world have rapidly adapted to the pandemic. There has been little hand-wringing and much more leaning in to the task at hand. For those who think and hope things will basically go back to the way they were: stop. They won’t. It is better to accept the reality that the future isn’t what it used to be and start to think about how to make it work.

Hope and optimism can take a hammering when times are hard. To accelerate the road to recovery, leaders need to instill a spirit both of purpose and of optimism and to make the case that even an uncertain future can, with effort, be a better one.

Source: McKinsey.com, May 15, 2020
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Authors: Kevin Sneader, the global managing partner of McKinsey, is based in McKinsey’s Hong Kong office; Shubham Singhal, the global leader of the Healthcare Systems & Services Practice, is a senior partner in the Detroit office.

Endast 194 av 1.000 storbolag har en jämställd ledningsgrupp!

Posted in Aktuellt, Allmänt, Executive Team / Ledningsgruppsarbete on March 2nd, 2020 by admin

Inte ens vart femte av Sveriges storbolag har en jämställd ledningsgrupp. Det visar en kartläggning av de 1.000 största företagen i Sverige, som Di har gjort.

”Det här håller inte”, säger jämställdhetsminister Åsa Lindhagen.
Med bara dagar kvar till internationella kvinnodagen är det uppenbart att det fortfarande är långt kvar till jämställdhet i det svenska näringslivet. Under vintern 2019/2020 har Di kartlagt ledningsgrupperna i Sveriges 1.000 största företag sett till omsättning. Kartläggningen visar att bara 194 bolag har en jämställd ledningsgrupp, om man definierar det som att den består av minst 40 procent kvinnor respektive män.

Det är en siffra som upprör jämställdhetsminister Åsa Lindhagen.

”Det visar ju svart på vitt hur lång väg vi har kvar till ett jämställt näringsliv och att bolagen måste skärpa sig”, säger hon.

710 ledningsgrupper domineras av män, att jämföra med 38 kvinnodominerade. 123 av 1.000 bolag har en kvinna som vd.

Åsa Lindhagen anser att alla bolag måste jobba aktivt med jämställdhetsfrågan.

”Jämställdhet gynnar företagen och samhället i stort och vi vet att det går att göra skillnad. Ställer ägarna krav och man jobbar aktivt med jämställdhet ger det resultat, det finns det gott om goda exempel på. Vi kan inte acceptera att inte alla bolag gör det”, säger hon.

Hur ser du på kvotering som ett verktyg för att snabba på utvecklingen?
”Det är inte ett verktyg man ska plocka fram dag ett. Men om man år efter år ser att utvecklingen går så här långsamt tycker jag att man ska vara öppen för att överväga kvotering. Bara att diskutera frågan kan ge positiva konsekvenser”, säger Åsa Lindhagen.

Arbetsgivarorganisationen Svenskt Näringsliv föredrar att fokusera på den långsiktiga trenden snarare än nuläget.

Carina Lindfelt, ansvarig för arbetsmarknadsfrågor på Svenskt Näringsliv.Foto:

”Det här ger ju en nulägesbild men det har under en lång tid funnits en tydlig trend med ökande andel kvinnor i ledningsgrupper. Det är naturligtvis positivt”, säger Carina Lindfelt, ansvarig för arbetsmarknadsfrågor på Svenskt Näringsliv.

Så Svenskt Näringsliv ser inga problem med att mindre än vart femte bolag har en jämställd ledning?
”Utifrån perspektivet att trenden är så tydlig och inte verkar avmattas ser jag positivt på att det går i rätt riktning. Kompetensbristen är våra medlemsföretags viktigaste fråga och eftersom kvinnor är i majoritet på högre utbildningar driver det på utvecklingen mot fler kvinnor på ledande positioner”, säger Carina Lindfelt.

Teknikkonsulten Sweco SWEC B +2,2% är ett av bolagen som kvalar in på 50/50-listan. Det är också ett av totalt 62 bolag med både jämställd styrelse och ledning. Förutom en kvinna som vd har bolaget dessutom tre affärsområdeschefer som är kvinnor.

”Anledningen att vi har lyckats är att vi alltid utgår från talang och faktabaserad prestation. Bedömer man utifrån fakta och inte sig själv och sina egna erfarenheter har alla samma möjligheter”, kommenterar vd Åsa Bergman bolagets framgång med att lyfta kvinnor till toppositioner.

Hon kallar jämställdhet affärskritiskt och starkt förknippad med bolagets lönsamhet och tillväxt. Att identifiera könsbalans som viktigt för affären gör att Sweco kan prioritera det ena eller andra könet när obalanserade grupper ska rekrytera.

”Det finns alltid talangfulla tjejer, man måste bara välja dem. Eftersom jämställdhet är affärskritiskt kan jag säga till chefen för en obalanserad grupp att du behöver kvinnor, fokusera på det”, säger Åsa Bergman.

Vad betyder det för era omkring 5 000 kvinnliga medarbetare att ni har en jämställd ledning?
”Hur ledningen ser ut sänder naturligtvis signaler till hela organisationen. På Sweco kan alla kvinnor se att det enda som står i vägen mellan dem och rollen som koncernchef är deras egen vilja och prestationer. Det gäller ju inte alla bolag i Sverige”, säger Åsa Bergman.
Källa: DI.se, 2 mars 2020
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Anställda saknar förtroende för ledningens förändringsarbete

Posted in Aktuellt, Board work / Styrelsearbete, Executive Coaching, Executive Team / Ledningsgruppsarbete, Leadership / Ledarskap, Strategy implementation / Strategiimplementering on February 27th, 2020 by admin

Få anställda i stora nordiska finansbolag känner tillit och förtroende till sin ledning i förändringsfrågorna – det visar en ny undersökning från konsultjätten Accenture.

Konsultjätten Accenture har i undersökningen “Nordic Transformation Readiness Study” undersökt hur anställda och chefer på företag inom bank, finans och försäkring arbetar med förändring. Det är första gången undersökningen genomförs i Norden med företag inom bank, finans och försäkring.

Resultatet visar att de nordiska företagen inom bank, finans och försäkring har relativt få anställda som är frustrerade eller otrygga över sin roll i förändringsarbetet, i en internationell jämförelse. De anställda upplever även att organisationerna har tillräckligt med personal för att driva förändringsarbetet framåt.

– Först och främst vill jag säga att alla de nordiska företagen vi analyserat är “on track” med sin förändringsresa. Däremot har de inte kommit lika långt i processen som önskvärt och har ännu inte riktigt fått utväxling för sitt arbete. Vi konstaterar att de har en del kvar att göra för att uppnå de bästa resultaten, säger Linda Håkansson, ansvarig för finansiella tjänster på Accenture.

De nordiska svagheterna identifieras till att få anställda känner tillit och förtroende till sin ledning i förändringsfrågorna. De anställda finner även att cheferna på avdelningarna inte gör tillräckligt för att stödja förändringsarbetet.

– Vårt resultat visar att medarbetare i Norden är redo för att skapa förändring och har alla förutsättningar som behövs. Däremot är det ledningen som här behöver ta kommando över processen vilket inte upplevs av de anställda i nuläget.

På internationell nivå är resultaten de omvända. Där känner fler medarbetare oro och frustration över sin roll i företagets förändringsresa. De upplever också i större utsträckning att företagen är underbemannade för processen.

– Internationellt är resultaten de motsatta. Där är det istället ledningen som driver på för förändring och de anställda som känner sig dåligt utrustade för processen. När vi jämför de nordiska resultaten med de globala konstaterar vi att internationella bolag har kommit längre i förändringsresan än deras nordiska konkurrenter.

Linda Håkansson tror att skillnaden dels beror på kulturella skillnader inom ledarskap. Andra faktorer som spelar in är företagens storlek och benägenhet till förändring.

– I Norden har vi en ledningskultur som önskar konsensus vilket stärker medarbetarnas roll i arbetet men i viss mån försvagar ledarskapet. Internationellt är det vanliga med toppstyrda organisationer och där behöver de istället arbeta med att förankra medarbetare i processerna.

Ser ni några skillnader mellan olika roller på samma företag?
– Det vi ser är de som arbetar på utvecklingssidan bättre förstår företagets hela förändringsprocess och känner sig delaktiga. Rådgivare, eller de som arbetar med slutkunden, är de som ser lägst resultat kring förändringsresan.

Vilken är er rekommendation till ledningar som vill driva förändring?– Det handlar om att förstå sina anställda, sitt företag och tydligt kommunicera vägen framåt. När du som ledare tror att kommunicerat tillräckligt behöver du ofta upprepa budskapen och målsättningen så att det verkligen går in. Det handlar om att skapa en delaktig “vi-känsla” som får dina anställda att nå sin fulla potential.

– Det är väldigt farligt att tro att du som ledning är färdig med förändring. Oavsett vilka andra problem eller utmaningar du som ledning har måste din närvaro vara tydlig och framåtdrivande. En öppen organisation som tillåter personalen att jobba mot tydliga mål.

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Undersökningen gjordes under våren 2019 och innefattar anonyma svar från sex nordiska storbolag inom bank, finans och försäkring. 

– Syftet är att du som företag ska ha rätt information när du fattar strategiska beslut. Genom att kartlägga företagens förmåga och beteende inom förändring så att företagen bättre kan förstå hur de ska leda sin utveckling framåt, säger Linda Håkansson, ansvarig för finansiella tjänster på Accenture. 

Undersökningen görs via det Accenture-utvecklade analysverktyget Transformation GPS och kompletteras med djupintervjuer med personer i ledande roller. Sammantaget har Accenture fått svar från över 1 miljon anställda som enligt Accenture tydligt visar var företagen befinner sig i sin förändringsresa. 

 

Källa: Realtid.se, 27 februari 2020
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