As the recession bites, strong management is more important than ever, says Gordon Brown
With the UK economy in recession, it is time for business leaders to stand up and be counted. Prime minister Gordon Brown recently made a point of highlighting the importance of leadership in the current climate – he commented that it was important for Great Britain, the EU and the US to “provide leadership” in order to head off the threat of a prolonged global slump.
However, are UK business leaders – including chief executives at major insurance companies – up to the task of steering their companies through the downturn? Unfortunately, new research suggests that some are not. A survey of 100 managers just below board level at FTSE 350 companies showed that 88 per cent “do not believe their company will achieve its strategic objectives this year”. Meanwhile, nearly half of those surveyed “fear their company will not deliver” on their chief executive’s commitments to shareholders, and believe their chief executive’s “promises are unrealistic”.
In addition, a total of 28 per cent of managers questioned in the survey – which was carried out by management consultants Hay Group – “disagree with some or all” of their chief executives’ commitments to shareholders. Meanwhile, one in five believe their chief executive has “set expectations too high” and, as a result, the value of the company could be damaged.
The study also gives the impression that many chief executives are poor communicators. A third (32 per cent) of the managers surveyed said they lacked a “clear enough understanding of the chief executive’s strategy to implement it”.
If that is not alarming enough for chief executives, the survey also reveals that some are at risk of causing a mutiny among their senior staff. Incredibly, seven per cent of the managers surveyed said they would “actively resist” plans to implement their chief executive’s strategy.
It seems some leading chief executives are anxious to give their shareholders reassurances, but that the promises they are making will be difficult to keep because their senior staff believe they are unrealistic. Russell Hobby, associate director at Hay Group says chief executives are “under intense pressure” to keep their promises to shareholders. But he adds: “FTSE chief executivs are struggling to effectively communicate the thinking behind their strategic vision, provide the right structures to enable it and shape the right incentives to reinforce it.”
If leadership is the quality that is needed to help businesses survive the recession, the future for some FTSE 350 companies is looking bleak.
