Leadership Challenges and Trends Report 2019

Natasha Volkk
Executive search consultant | Moon Consulting Ltd
12th February 2019
Member roleInitiative member

2018 was a year of both optimism and uncertainty.

The economy has undoubtedly been affected by Brexit and organisations have been focused on trying to anticipate the opportunities and threats posed by Brexit. For many this has led to a more cautious outlook.

Diversity and inclusion have remained high on the agenda, and Boards across the UK are realising the benefits that a diverse board can bring, especially to organisations which are looking to adapt to the economic conditions.

Investor confidence has remained high. The boom in technology-start-ups and scale-ups of the last few years has positively impacted the medical, energy, aerospace and automotive sectors, to name just a few. When it comes to looking at the year ahead, the underlying message is focused on the need to innovate to thrive, particularly for organisations which operate in an evolving sector where considerable change can happen in a short period of time.

“Organisations need to have the capacity to be able to respond to those challenges at the same time as dealing with business as usual.” Sue Porto, CE at Brandon Trust.

However, for many leaders, especially those who are planning to add significant scale and reach to their business, attracting prospective employees, staff retention and working culture are equally important and will remain key issues throughout 2019. In addition, as the demographic of those in work changes, the aspirations and values of people of differing ages is becoming an issue which leaders need to address. “There is a growing demographic who have completely different experiences in terms of education, life and use of technology, and therefore different expectations in terms of what work looks like,” comments Robert Bourns, Non-Executive Director & Consultant .

In this report, Moon Consulting, in conjunction with Non-Executive Directors Hans Falkenburg, Theresa Wallis and Robert Bourns, and Executives from Brandon Trust, Action for ME, Osborne Clarke, Bristol Water, The Society of Merchant Ventures and Hargreaves Lansdown, considers some of the current challenges & trends facing leadership teams.

LEADERSHIP CHALLENGES

At a time of virtually full employment there is a real need to identify and nurture talent internally.

The need to create more sustainable and reliable income streams, sees leaders citing one of their biggest challenges as fully understanding the competitive pressures of the markets that they currently operate in and the markets that they want to operate in, in the future. The two don’t necessarily mean the same thing.

This is a challenge which has been made even more difficult by the inevitable market uncertainties caused by Brexit.
Theresa Wallis, Non-Executive Director comments, “one challenge is planning with Brexit as an unknown. Depending on the form of Brexit, there may be additional regulatory hurdles to access EU markets, such as getting products registered with another regulatory agency within the EU, and some organisations may want to consider setting up a subsidiary within the EU.”

Therefore, the process of strategy and business planning to make sure that there is a robust plan in the event that there is not an appropriate withdrawal agreement from the EU, has been at the top of many leaders agenda.
The deployment of technology to provide a competitive edge is something which is particularly affecting professional services firms, according to Simon Beswick, International CEO at Osborne Clarke.

However, whilst technology can provide a competitive advantage, the flip side of this is the need for increased cyber security.

The potential for loss of data through a cyber-attack is a constant threat that needs to continually be reviewed, as both the hackers themselves, and the methods for defending against attack, improve.

In addition to market conditions and technology, there are a number of additional leadership challenges focused around staff retention, attraction and organisational culture.

Brandon Trust, Hargreaves Lansdown, The Society of Merchant Ventures, and Bristol Water cite the acquisition of talent in key skills areas, embedding values and culture, and achieving diversity, as being among the top challenges which their leadership teams are facing.

And at a time of virtually full employment there is a real need to identify and nurture talent internally, to provide training which will help fill skills gaps, and to have a comprehensive succession plan – not just at director level but throughout the organisation.

Sonya Chowdhury, CEO at Action for ME, highlights the need to create a working environment which fosters passionate and committed teams who want to do as much as they can, while ensuring they know when to stop and avoid burnout.
Leaders are also having to deal with the challenges brought about by generational differences, not only in terms of education and life, but also how younger generations use technology and engage with the world around them.

Robert Bourns, Non-Executive Director & Consultant suggests, “businesses need to be very aware of the extent to which their customers and employees engage on-line without any one on one contact. Building brand or organisational loyalty and establishing and maintaining business relationships is a challenge which today’s leaders need to be aware of and manage.”

This is certainly a reflection of what Moon Consulting is seeing in the market. The issues of staff attraction, retention and recruitment, sit alongside the challenges of operating in uncertain market conditions, making best use of technology and being agile enough to adapt to future market.

The acquisition of talent in key skills areas, embedding values and culture, and achieving diversity, are among the top challenges which their leadership teams are facing.

DRIVING ORGANISATIONAL CHANGE

The drive for organisational change needs to come from the leadership team, who should have a clear vision and direction, can lead from the front, and focus on enduring values, according to Mel Karam at Bristol Water. And this is a common view point amongst leaders, who also highlight the need to ensure that change is aligned with both the organisations’ strategic objectives and internal capacity to take the opportunities forward. In addition, Hargreaves Lansdown suggests that organisational change should be driven by facts rather than by feelings. Communication is also vital, as is setting an organisational tone which will encourage colleagues to be creative in seeking the best possible solutions and not just working to achieve consensus.

“Sometimes the more challenging discussions can lead to the emergence of something new, which might otherwise have been missed if I was just driving forward what I thought was best,” comments Sonya Chowdhury, CEO at Action for ME.

Driving change as a whole organisation, and not just as the leader, is more powerful and ultimately creates more momentum.

In order to achieve this, you need have genuine engagement across the organisation and collaborative working processes which enable employees to share their views.

This not only leads to the development of shared understanding, but also facilitates learning and produces insights which wouldn’t have otherwise be gained. Robert Bourns, Non-Executive Director & Consultant comments “if you are in a leadership position, there is little benefit in building a rigid hierarchical structure and culture. You want people to feel that they are all working towards the same goal and the same purpose. However, increasingly leaders also need to recognise that people have personal needs and their own careers to build and be conscious of this in the context of the changing social and business environment.”

Without doubt, ensuring that employees across the spectrum understand the need for change, and the consequences of not making that change, is important. However, Simon Beswick, International CEO at Osborne Clarke, suggests that employee engagement should be deeper than a surface level understanding and advocates involving people in identifying the reasons for implementing change, deciding on the right option and then assigning an appropriate and relevant project sponsor, manager and team to drive through the change.

The role of the leadership team in organisational change is an important one, with Hargreaves Lansdown pointing out that leaders need to be able to demonstrate strong influencing skills and be analytical and competitive.

Caroline Duckworth, Treasurer at The Society of Merchant Ventures adds “leaders need to be well informed about the sector they operate in, so that they can decide which are the big and important issues and when to compromise or give way.” Unsurprisingly, when change is managed appropriately it tends to be more successful than when time pressures or lack of resources force an organisation to cut corners.

Leaders play a critical role in determining how the business will pilot change so that the eventual roll out is effective, and any unforeseen impacts or errors are quickly corrected.

The role of a Non-Executive Director in driving change is through a less direct approach. Hans Falkenburg comments that “you drive change through a questioning and coaching approach. You might provide examples from other industries of how things are done and how they could be adapted to suit your organisation.”

Theresa Wallis adds that “your NED is there because of their business experience and they should use this to ask questions - Have you thought of this? Why aren’t you doing that?” Non-Executive Directors can also be a useful resource in implementing specific changes, such as implementing new governance processes, or helping to ensure compliance with significant new legislation, where they can utilise their specific sector skills or industry knowledge.

Once a new approach has been suggested by the board, Non-Executive Directors can also play a critical role in critiquing the business case, scenario plans, costs and risk. One recommendation which Moon Consulting would add, is that when looking at organisational change it is important to consider the overall composition of the leadership team.

Diversifying the board or bringing in new experience and talent can lead to different viewpoints, different questions being raised and different ideas being suggested – all of which could be the impetus for change.

MAKING YOUR ORGANISATION ATTRACTIVE TO EMPLOYEES

With levels of employment at an all time high, the onus is on employers to make themselves an attractive proposition for employees, and this goes beyond offering competitive salaries and benefit packages.

Employees want to work for an organisation that they believe in, that has a story to tell, is embedded in the local community and has a positive effect on the environment.

Being an organisation, which has sound purpose, good environmental and social governance and operates in a sustainable manner is something which leadership teams recognise as being important to employees.

Sue Porto, CE at Brandon Trust, comments, “organisations have to be really clear and explicit about their purpose, what they are there to do and how they go about doing that. They need to be able to tell a compelling story to potential employees about the difference that they can make in helping to deliver against the wider organisational purpose.”

However, alongside a strong brand, diversity and equality are also a key issue for future employees according to Mel Karam at Bristol Water. This is a view shared by Hargreaves Lansdown who suggest that the best businesses have diverse teams and policies, and a structure which supports diversity such as returner programmes and flexible working.

Mental health and the way in which employers approach this is also high on employees agendas according to Caroline Duckworth, Treasurer at The Society of Merchant Venturers. Employees want to feel that the organisation that they work for takes its duty of care seriously.

This should run right through from the onboarding process, to the working conditions and the on-going management and training. “In order for employees to feel supported and that they can cope with the job that they have been recruited to do, organisations need to invest in training, have appropriate appraisals and make sure the employees have the right tools,” suggests Hans Falkenburg, Non-Executive Director.

In addition, organisations need to be aware of creating a working environment, development opportunities, career paths and rewards packages that work for the different generations they employ. Simon Beswick, International CEO at Osborne Clarke, comments “we want to be as attractive an employer for the Millennials as we are for Gen X, and we are constantly thinking about what we need to change to remain attractive to the next generation.”

Development and training opportunities are critical to attracting the next generation of employees who want a job which will enable them to learn and improve themselves.

“Companies need to not only offer training wherever it is relevant, but also where possible offer support for professional or work-related qualifications including paying for the course and study materials,” comments Theresa Wallis, Non-Executive Director.

This is particularly important in SME’s where the opportunities to go upwards within the organisation are limited. Instead leaders can implement programmes which offer employees the training and development required to allowed them to take on different roles within the business.

Organisations should also recognise that people are human and need to be treated as such. Regardless of how professional or motivated we are, we can all make mistakes. The organisations response to mistakes is very important. It can impact on both staff motivation and the organisations reputation, and affect the perceptions held by potential recruits and clients in the market place.

Robert Bourns, Non-Executive Director & Consultant comments, “it is important to deal with any individuals within the organisation, even “high performers”, whose actions create cynicism among other colleagues. Such cynicism is corrosive and can extend beyond the organisation which is likely to prejudice your ability to recruit.”

The role that the leadership team plays in making organisations attractive to employees is essential, according to Moon Consulting .

An important part of any leadership role is to make sure that you foster a supportive environment and create an open and honest culture where people can admit mistakes – this will help to attract and retain employees.

As a leader you don’t want to drive your employees into corners and make them defensive - this will only have a detrimental effect on the organisations market reputation.

FOSTERING A POSITIVE WORKING CULTURE

Don’t allow poor performance to go unchallenged or it will erode both shared purpose and positive culture.

While culture is influenced from both the top and the bottom of an organisation, employees will look to the leadership team to set the tone.

Therefore, leaders need to not only behave in a way which is aligned with the values and behaviours that they expect of others, but they also need to remember that their employees will have high expectations in terms of how the leadership team portrays the organisations values.

“Be clear about the values that you believe in and be visible living those values. Build the values into all aspects of life at work including communications, evaluations, promotions and recruitment,” comments Mel Karam at Bristol Water.

And in a challenging economic climate, remembering that leaders are in the spotlight and that others will take their lead from them is never more important than when reacting to bad news. Leaders are in a position where they can mitigate the impact that societal and economic issues have on their employees by demonstrating a positive attitude and being able to explain why something has happened.

However, edicts from above, badly worded mass communications and a culture driven by process and jargon gets in the way of real engagement and communication explains Robert Bourns, Non-Executive Director & Consultant.
“As a leader you will sometimes have to do things in the context of organising business that you would prefer not to do. In my experience, employees will recognise and accept a need if it is genuine. Therefore, it is important decisions are explained and that you take the time to do that in a genuine and open way. Generally, people will accept the explanation. Some will be grateful that they have been recognised and levelled with,” he adds.

Alongside the need for open and honest communication, Simon Beswick, International CEO at Osborne Clarke, suggests that there are three key elements that leaders need to embed into their organisation to foster a positive culture. First, leading by example.

Secondly, recognising, rewarding, promoting and amplifying people and behaviours that foster a positive culture.

And thirdly, correcting, being intolerant of, and challenging behaviours that are inconsistent with the organisations culture.

Developing a shared purpose where everyone is working towards reinforcement of a positive culture acts as a stronger compass for the team as well as the individual.

But shared purpose needs to be built around the fundamental concept of trust, explains Sue Porto, CE at Brandon Trust.

If you can foster trust within an organisation then you can have challenging conversations which don’t undermine relationships because there is an understanding that there is a shared intent across the organisation to do what’s best for the company and its employees. If you can create that kind of culture within an organisation, then that becomes an enabler to the delivery of organisational purpose and strategy, rather than an obstruction.

There is also the need to create a learning environment which is based on insight, oversight and foresight.

This encourages growth and development at all levels so that organisations can learn from the things they get wrong and drive collaboration and integration across their teams.

Sonya Chowdhury, CEO at Action for ME, comments “don’t allow poor performance, in any way and for any reason, to go unchallenged, or it will erode both shared purpose and positive culture.”

It is important not to forget your employees themselves. “Positive culture is, in part, about enabling your employees, making sure that they have clear objectives with good technology, so that they can do their jobs,” comments Hans Falkenburg, Non-Executive Director. “In addition, there needs to be clarity around role expectation and job descriptions and these need to be reviewed from time-to-time.”

Alongside this there needs to be a robust and fair Human Resources policy. At Moon Consulting many of the organisations that we support have found that giving the Head of Human Resources a direct line of communications to the board provides visibility and means that if insufficient steps are being taken to ensure a good culture, push back happens in both directions.

People are also viewed as the key to creating a positive culture at Hargreaves Lansdown. If you actively employ great people who are better than you are, then you can build teams which know how to run the business better than you. Positive culture comes from giving them support and challenging them but also giving them the freedom to operate on their own impetus.

One of the roles of a Non-Executive Director is to reinforce positive culture by encouraging the board to foster good culture from the top down, and to make sure that there are annual reviews for all staff, with objectives set, and that those objectives are linked to performance and also behaviour.

Theresa Wallis, Non-Executive Director, explains “be seen to be following company policy, make sure that you are performing your role on the remuneration committee fairly, and remember that remuneration is a sensitive subject - people need to know they are being treated fairly.”

CLOSING THE SKILLS GAP

Learning and development are instrumental to closing the skills gap. An organisational culture that is based around learning and development which starts from the moment an employee arrives should be an expectation rather than the exception.

Mel Karam at Bristol Water comments “organisations should see training and development as a business benefit rather than cost.” In addition, every employee should have a career development path which encourages them to better themselves, suggests Hargreaves Lansdown.

This dovetails into the need for effective development programmes, which not only encourage employees to identify their route to career progression, but also provides them with an understanding of what skills they need to do their job now, and what they skills they’ll need to support them in future roles, suggests Sue Porto, CE at Brandon Trust.

Organisations also need to have leadership programmes which recognise and train the leaders of the future.

However, creating opportunities for development doesn’t always need to be costly. “Facilitating groupwork sessions, presenting to the board, shadowing, crossteam working, and coaching or mentoring opportunities can provide cost effective alternatives,” comments Sonya Chowdhury, CEO at Action for ME.

However, in order for organisations to build effective training programmes which will add value, develop new skills and broaden employee opportunities, they need consider what skills they need, not just for today but also for the next 5-10 years.

Hans Falkenburg, Non-Executive Director, comments “leadership teams need to make sure that they have comprehensive plans in place which encompass recruitment, training and succession planning so that they can identify and move towards the skills that are required for future.”

Organisations should be realistic about how the development of the company may impact on the skills required.
Simon Beswick, International CEO at Osborne Clarke, comments “review your organisation’s requirements from both the top down, looking at the strategic needs of the business, and the bottom up within each team. Then prioritise those gaps which are based on a balance of both needs.”

When considering the skills-gap, organisations also need to be mindful of the impact of technology and artificial intelligence (AI) on the shape of their workforce. Increased use of AI driven technology will change the skills required by future employees as some roles become automated and disappear all-together, and new roles such as Head of Automation are created.

Recent reports suggest that leadership teams need to be planning for a future where 65% of children in primary schools will be doing jobs that we haven’t even begun to think about.

The changing nature of work and the resultant skills gaps could have a big impact unless it is addressed, particularly for sectors where there is a culture of continual professional development or competence training, which is focused on the skills required for the current role rather than future roles.

Schools working together with industry can play a key role in helping to educate young people for a changing work environment, suggests Caroline Duckworth, Treasurer at The Society of Merchant Venturers. But organisations also need to adopt different recruitment and training strategies.

“Identifying transferable skills and understanding how people from different backgrounds can bring their skills or knowledge into your organisation can be valuable. If specific skills are required, it may not be enough to bring in someone who does not have those specific skills if there was no time, opportunity or financial resources to up skills internally ” comments Theresa Wallis, Non-Executive Director.

Organisations should make sure that they are addressing not just the hard-skills gaps but the soft-skills gaps as well.

More emphasis is being placed on soft-skills, comments Moon Consulting. That the candidate can do the job is almost a given, it is more about what else they can bring to the role both in terms of team fit, management style, and of course, diversification.

More employers are encouraging their employees to get involved with mentoring and volunteering schemes in the wider community. These schemes are a useful tool, which can sit alongside more formal training and enable employees to develop their presentation, supervision and negotiation skills, as well as broaden their horizons.

“There is a huge business benefit to having employees who have real life skills that they are encouraged to use in the course of their work to support their technical skills. By encouraging your employees to do volunteering work, not only is the business supporting the local community, it is also developing employees who will acquire different perspectives and strengthen skills that bring real value to the business,” comments Robert Bourns, Non-Executive Director & Consultant.

ENCOURAGING SOCIAL MOBILITY & DIVERSITY

The starting point for encouraging social mobility and diversity is a recruitment policy which embodies these values, according to Hans Falkenburg, NonExecutive Director.

However, any recruitment policy needs to be flexible enough to recognise that people from different backgrounds may not have gone to University or completed formal schooling.

In fact, organisations need to make sure that they are considering a wide range of factors including the wording of job advertisements, job profiles/descriptions, where advertisements are placed and how interviews are conducted, or they will miss some of the most brilliant candidates, advises Moon Consulting.

“Rather than employing people who come with the full package, spotting potential means that you recognise that candidates will have some skills and knowledge which need to be fostered,” adds Sonya Chowdhury, CEO at Action for ME.

Social mobility and diversity goes beyond recruitment practices and needs to be embedded in the organisations values, culture and key metrics.

“These issues need to be given air time at meetings internally, reflected in internal and external communication protocols, and leaders should lead by example through involvement in initiatives,” comments Simon Beswick, International CEO at Osborne Clarke.

As well as encouraging behaviours that reinforce diversity and social mobility, organisations need to ensure that behaviours that could be considered discriminatory are not tolerated.

Theresa Wallis, Non-Executive Director, comments “by fostering good working practices, organisations can create an environment where people from minority backgrounds or, indeed, any type of person feels happy and comfortable.”

In addition, collaboration between different organisations is also essential according to Osborne Clarke and Hargreaves Lansdown.

Listing and swapping ideas with clients, suppliers, peer organisations and advisors can be hugely beneficial both in terms of providing inspiration and achievable goals.

To really address these issues, organisations need to play an active role in encouraging social mobility and diversity.

We need to understand our own unconscious bias and consider how new employees from different backgrounds and cultures might feel coming into our environment,” comments Caroline Duckworth, Treasurer at The Society of Merchant Venturers.

Employers also need to find ways to open doors so that they can reach out to future employees living in environments where they wouldn’t necessarily be exposed to different opportunities.

Mel Karam at Bristol Water suggests that, “organisations need to work hard to understand what motivates different employees from different backgrounds, create flexible working environments and promote diversity opportunities.”

Leaders can also play an important role in encouraging social mobility and diversity by sharing their own stories around ethnicity, gender or social background.

“We all have to openly and authentically share our stories, because I genuinely believe that helps to inspire the next generation,” comments Sue Porto, CE, Brandon Trust. “There is nothing more powerful than when you see a lightbulb come on in someone’s head. They might think that particular doors or paths are closed to them because of their background or mistakes they have made in the past, but then they talk to people like them and they think, well maybe I can do that,” she adds.

Engagement with the next generation of employees needs to start early, according to Robert Bourns, Non-Executive Director & Consultant. “There are good schemes in almost every big commercial centre, working in schools helping students preGCSEs, asking them questions such as ‘What do you want to achieve?’ or ‘Where do want to be in five and ten years time?’ The idea being that students ambitions are developed ahead of public exams, motivating higher attainment, rather than demanding that ‘you must do better at GCSE’s.'”

There is a lot of onus on organisations not only to lead on initiatives that see leaders going into to schools to talk about their backgrounds and their careers, but also for those organisations to work collaboratively with schools to open up different careers.

And this reflects what Moon Consulting are seeing in the market - collaboration and leadership driven recruitment policies and a workplace culture which encourages social mobility and diversity are key.

Leaders play an important role in encouraging social mobility and diversity by sharing their own stories around ethnicity, gender or social background.

ADVICE FOR THE NEXT GENERATION OF LEADERS

“Engage with the management team and enjoy the role,” Hans Falkenburg, Non-Executive Director.
“Use the opportunity to learn how the Board works and operates,” Bristol Water.

“Keep focussed on the people working in your business. This might seem simple, but success is generally dependent on people who are enthusiastic and keen to develop and promote the organisation in which they work,” Robert Bourns, Non-Executive Director & Consultant.

“Make sure there is a good fit between you and the company, that you understand what the organisation wants from you, that you are interested in the organisation and its purpose, and trust and respect the other members of the board,” Theresa Wallis, Non-Executive Director.

“Invest as much time as you can with the key stakeholders in the business, its customers and suppliers so that you know much as you can before you are expected to contribute,” Osborne Clarke.

“Be yourself, be authentic, and build a network of people around you whether it’s a professional coach, colleagues, or a mentor that you can call upon for advice,” Brandon Trust.

“It can be tough at the top, and a leaders resilience needs to come from believing wholeheartedly in what they are doing,” Hargreaves Lansdown.

“Don’t be frightened to ask questions, and that goes for both new and experienced leaders, and never assume!” Society of Merchant Venturers.

IN CONCLUSION BY VANESSA MOON

Thank you for reading Moon Consulting’s 2019 Leadership Challenges and Trends Report.

When I started Moon Consulting it was because I realised that business leaders were not getting the support and personal service they needed when recruiting c-suite executives.

Business leaders were looking for a firm that provided bespoke and confidential search and selection services, with the onus for role and organisation positioning, candidate identification, pre-screening and short-listing resting with the recruitment firm they were partnering with. This is the service that Moon Consulting continues to offer its clients.

I also wanted to create a business that was ethical, genuinely personal and approachable. At Moon Consulting we understand the importance of providing a truly responsive service which enables business leaders to effectively address current market challenges. This is at the heart of our search and selection services.

We recognise that in a market where candidates are making increasingly selective career decisions, a tight and focused search criterion will target candidates who are actively seeking career advancement, meaning that you overcome the reticence to jeopardise financial and job security.

We know that managing the candidate experience when making a head-hunt approach is equally important. It is vital that the initial approach is professional and considered with the right research and messaging, and that relevant feedback is provided throughout the process to ensure the candidate feels valued and respected.

We understand that in a candidate driven market the messaging around experience, values, culture, location, travel and salary expectations needs to be positioned appropriately. In addition, companies need to actively ‘sell’ themselves at interview, and during the recruitment process, to secure the best candidates.

It will be important to stay on top of emerging trends throughout 2019 and undertaking a search and selection campaign often provides a lot of useful information about the market. Indeed, we are regularly asked by clients to consult on market mapping and identifying future talent.

2019 looks set to be another exciting year for our firm, and we look forward to working with you and supporting your business.

Kind regards,
Vanessa Moon

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