Leadership styles that drive sustainability

Leadership styles that drive sustainability

By Ana Dutra, Peter Everaert, Shelly Fust, and Jay Millen

April 2011 In advance of the Sustainability Conference in Montreux, April 4-8, 2011, the World Business Council for Sustainable Development asked Korn/Ferry International to examine if corporations embracing sustainability require a special breed of business leaders.

The following paper reflects Korn/Ferry’s recent findings.

Why are business leaders interested in sustainability?

Political, moral, and regulatory pressures coming primarily from the Western world ignited the sustainability debate decades back. But today, global commercial and financial drivers have become prominent in the discussion. Sustainability increasingly is embedded in the corporate vision— not just for risk, compliance, or corporate social responsibility reasons, but also to raise business competitiveness.

Sustainability often gets linked to innovation management as an approach to creating competitive advantage or delivering long-term shareholder value. From a talent management perspective, recent research also indicates that companies embracing sustainability are perceived as attractive career destinations.

How leaders conceptualize sustainability Whether one considers sustainability a mindset, a strategic change program, or a business requirement, it calls for a systemic understanding of the interplay between business and society.

Factors intrinsic to business include the type of industry, the lifecycle of products/services, the competitive landscape, and the continuous quest for productivity and efficiencies. For each company or business unit there also may be other considerations, such as stakeholder groups (e.g., shareholders, employees, suppliers, customers) or other variables (e.g., financial performance, market position, geographical footprint, go-to-market strategies, organization and management principles).

External factors, over which the company has very limited control, include, but are not limited to, socio-economic, geopolitical, and regulatory parameters.

All business-intrinsic and social-external factors are connected, which means that no sustainability initiative can be dealt with in an isolated manner. Top business leaders Top business leaders are charged with managing this are charged with managing this whole “sustainability whole “sustainability system.” Some seem to master system.” Some seem to this challenge better than others. master this challenge better than others, which raises the question of whether there are specific leadership requirements or competencies that can be identified and further developed for CEOs who want to be in the forefront of sustainability efforts.

Leadership requirements to drive sustainability Over the last ten years Korn/Ferry International has analyzed the leadership characteristics of more than 1.3 million executives across all sectors and geographies, making it possible to generate best-in-class profiles for specific industries, positions, and contexts. Working from our basic profile of top CEOs, Korn/Ferry further delved into the leadership style, thinking style, and emotional competencies required of those who are also sustainability leaders.

Korn/Ferry also utilizes a library of sixty-seven leadership competencies for strategy execution, and we have highlighted those that are missioncritical for CEOs and businesses that desire to drive the sustainability agenda globally.

Leadership Style: Leadership Style refers to how an individual gathers input, presents ideas, and mobilizes people, whether they are employees, suppliers, customers, or the community.

Driving sustainability in a business requires a predominantly social and participative style. CEOs who present this style do not impose ideas, but rather socialize them, building a strong case for action and fueling a sense of urgency throughout the organization. Such leaders are recognized by their ability to influence and mobilize people; their passion around sustainability likely will become central to what the business stands for. These CEOs also recognize socio-economic and geopolitical diversities and regulatory compliance challenges.

2

Thinking Style: Thinking Style refers to how CEOs use information and generate hypotheses to make decisions. To what extent do they look at multiple variables in a systemic manner? Do they maximize or minimize the use of data? How fast and effectively can move into at action?

Sustainability has become an issue that lives in the hearts and minds of most people, but means different things to different populations or stakeholders. Therefore, the CEO has to gather all the relevant information around implications, connect it all to his or her business environment, and develop a cogent point of view (Why does this matter?

Why should we care?). Additionally, even as the CEO navigates this complex puzzle of interdependencies and (intended and unintended) consequences around sustainability, he or she should think holistically to make sound business decisions.

Emotional competencies: CEOs who want to leave a legacy as sponsors of the sustainability cause must particularly excel in two emotional competencies: Tolerance for Ambiguity and Humility. A high tolerance for ambiguity will be required given the speed with which geopolitical and environmental conditions are changing worldwide.

A high tolerance for ambiguity will be required given The CEO must have a clear the speed with which geopolitical and environmental sustainability agenda but conditions are changing worldwide. always be ready to revisit and reprioritize his or her agenda in light of new developments. Humility defines an executive’s willingness and ability to learn from others, also essential in the sustainability arena, where scientists, policy analysts, or others might hold key expertise. Successful CEOs are known for their confidence and composure but less often for their high level of humility.

Mission-critical competencies: The nature of the issue requires a keen interest for a variety of viewpoints. Successful leaders driving sustainability are likely to have Broad Interests and Knowledge and the Ability to See Multiple Futures. They are often good at projecting how new ideas may play out in the market and described as Visionary.

Creating the New and Different is critical to sustainability efforts as well, but it is also one of the leadership competencies most difficult to develop. Navigating through organizational mazes with ease and comfort will be important, as will knowing where to go and whom to access, and maintaining good relationships with key stakeholders.

Therefore, Being Organizationally Agile and Politically Savvy also belong on any list of critical leadership competencies. Communication skills can be trained, but developing politically savvy is very hard to achieve.

3

Influencing behavioral change throughout the organization is one of the most difficult challenges in any business. It requires a rare combination of well-developed personal and interpersonal skills to drive desired behaviors without imposing or mandating them. In this case, leading by example and modeling expected behaviors are critical. In addition Korn/Ferry considers the following mission-critical for sustainabilityoriented CEOs: Integrity and Trust, Ethics and Values, Managing Vision and Purpose, Building Effective Teams, Understanding Others, and Managing Diversity. Most of these competencies can be further developed but the last two are the hardest to learn.

While confident in their values and vision, CEOs also will have to display an unprecedented level of Willingness to Learn from new sources of information and experts while admitting that they don’t know everything about the sustainability.

Finally, Priority Setting and Managing Through Systems are vital as well.

Many companies launched a surplus of overlapping and disorganized sustainability-driven initiatives. It is up to the CEO to drive action toward the initiatives that are strategic and will truly deliver results, and identify those that should be stopped or de-prioritized.

Values and career motivators Global top executives who have succeeded in driving long-term change frequently have the competencies required to initiate sustainability strategies. However, this is not just a matter of skills and competencies, but also a matter of individual passion for the subject and This is not just a matter of skills and competencies, personal conviction. but also a matter of individual passion for the subject

and personal conviction.

Every day Korn/Ferry discusses career aspirations with more than 2,000 senior executives around the world. Our internal surveys indicate that executives appear to be more attracted to companies that have a clearly articulated sustainability strategy. These companies seem to be better positioned to attract superior talent, especially when it is reflected in the employer’s brand, or linked to talent acquisition strategies.

Korn/Ferry’s Futurestep division, which deals with the recruitment of upcoming leaders or high potentials, finds that the growing interest in sustainability is even more pronounced among the generation just entering the workforce or beginning to take leadership roles.

4

Conclusion The world’s best companies understand the art of composing boards and executive committees. They assemble teams that have the right mix of mission-critical competencies for their specific business. In recent years sustainability has become a critical topic in boardrooms. It also has moved up on the agenda of CEOs and increasingly preoccupies future leaders. As sustainability becomes more prominent in the corporate DNA, leaders will have to sharpen the mission-critical competencies Korn/Ferry identified in this paper.

5

Ana Dutra is the Chief Executive Officer of Korn/Ferry Leadership and Talent Consulting and an Executive Vice President of the firm, based in Chicago.

Peter Everaert is a Senior Client Partner with Korn/Ferry International, based in Zurich, and Leader of Industrial Markets EMEA.

Shelly Fust is a Senior Client Partner with Korn/Ferry International, based in Los Angeles, and a member of the Global Industrial Market with a focus on the Renewable Energy and Clean Tech Sector.

Jay Millen is a Senior Client Partner with Korn/Ferry International, based in Miami, and Global Leader of the Basic Materials Sector within the Global Industrial Market.

About The Korn/Ferry Institute The Korn/Ferry Institute generates forward-thinking research and viewpoints that illuminate how talent advances business strategy.

Since its founding in 2008, the institute has published scores of articles, studies and books that explore global best practices in organisational leadership and human capital development.

About Korn/Ferry International Korn/Ferry International, with a presence throughout the Americas, Asia Pacific, Europe, the Middle East and Africa, is a premier global provider of talent management solutions. Based in Los Angeles, the firm delivers an array of solutions that help clients to attract, deploy, develop and reward their talent. Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.

6

Š 2011 The Korn/Ferry Institute