The role of a leader has changed. The importance of sustainability to both employees and consumers means that leaders need to be well-versed on this topic too. Professor Matt Gitsham from Hult International Business School explains why he thinks that leaders need a nuanced understanding of major societal forces and know where and how to respond for the good of their organisation and the wider world.
Public expectations of businesses and business leaders have shifted dramatically over the last decade. While it is a tough time to be a business leader, it is also a time of opportunity for leaders to make an authentic, long-lasting impact – not only on their organisation but the future of the planet.
In the context of increasing awareness of multiple global challenges, a new order of leadership for action on climate and other social and global turbulence is required, and a new order of HR professionals is required to recruit and develop them.
Climate change is increasingly recognised by business leaders as a global emergency and many of the world’s biggest companies now have programmes in place to act on climate and other environmental, social and governance (ESG) issues. Discrimination with movements such as #BlackLivesMatter and #MeToo, modern slavery and human rights issues, against the backdrop of the UN’s sustainable development goals, mean public expectations on businesses to play a leadership role are increasing rapidly, as are the expectations of investors, employees, customers and regulators.
In little over the space of a decade, business leaders’ roles have shifted. Whereas a few years ago leaders may have ‘kept their heads down’ to focus on business, leaving political leaders to tackle societal challenges, these days business, civic and political leaders must work in partnership. Business leaders must engage with these challenges through their core business and see addressing societal challenges as essential to creating value. They need a nuanced understanding of major societal forces and know where and how to respond for the good of their organisation and the wider world.
Business leaders need to retain a focus on these challenges – encapsulated in the 17 UN Sustainable Development Goals – because it is important for society as a whole and also for their organisations. Nobody want to be on the wrong side of history!
New leadership mindset and skillset
A recent study conducted by Russell Reynolds Associates in partnership with the UN Global Compact found that 92% of business leaders believe integration of sustainability issues is critical to business success, but only 4% of C-suite role specifications demand sustainability experience or mindsets. We’re in uncharted territory.
My research, based on in-depth conversations with CEOs and senior leaders at more than 30 organisations recognised at leading on sustainability and ESG, aims to provide clarity on how the leadership role has changed, what new skills business leaders need and the best way to acquire those skills.
We found three key areas that business leaders need to address if they are to embed sustainability into their organisations.
- A new leadership mindset – today’s business leaders need to see addressing social challenges as at the heart of their job description. They are leaders in society as much as leaders of their businesses. Rather than seeing a trade-off between doing good and making money, business leaders need to aim to achieve each through the other
- A new skillset for leading change inside the organisation – CEOs see their new role as influencing change in their organisations to open up the space for others to behave differently
- A new skillset for leading change outside the organisation – CEOs now see it as their role to lead their organisation’s wider ecosystem, proactively leading change in consumer and supplier behaviour, industry norms and government policy
This new emphasis on leading change across the wider ecosystem around the organisation has required leaders to develop skills in areas that historically have not been a conventional part of the business leaders’ repertoire: contributing to public debate with an informed point of view, relating well with multiple constituencies, engaging in dialogue to understand and empathise with groups and communities with perspectives contrary to one’s own and engaging in multi-stakeholder collaboration with unconventional partners. This means leaders can’t afford to be uninformed – they need to learn about these global challenges, what they mean for the work they and the company engage in and how and where they should be intervening
Effective ways to acquire new skillsets
However, it appears that more is required than just lectures on global trends. While each individual’s story was unique, a few key themes emerged when analysing senior executives’ accounts of what experiences had helped shape their mindsets and develop their own skills. For some it was formative experiences around upbringing, university and business school study. For others it was influential mentors and participation in professional networks focused on ESG issues, or first-hand experiences like engaging with people living in poverty, personal experience of ESG challenges like the impacts of climate change, or personal first-hand experiences of the changing interests of key partners and stakeholders. This has implications for the design of leadership development learning programmes, as well as the wider management of talent management programs and succession planning.
The challenge is two-fold – to create structured learning opportunities for current and future senior leaders to gain knowledge around the issues but our research suggests first-hand experiences are at the heart of what it takes for business leaders to build the emotional connection and commitment to put this agenda front and centre in their work.