Every CFO I know sees a business world that is growing only more volatile, not less. It’s a world in which surprises abound: competitors coming out of nowhere (as Nokia and Blackberry discovered with Apple), customers showing far less loyalty (as retailers in the crosshairs of Amazon have found), and breakthrough technologies (which made once-powerful companies like Kodak and Blockbuster irrelevant).
Few organizations have been in a better position to see the winds of change that have been swirling around midsized companies over the last decade than Robert Half International Inc. As the world’s largest specialized staffing company—with revenue of $4 billion in 2012— Robert Half directly feels the pain of midsized companies buffeted by volatility. That pain shows up in the skill needs midsized companies bring to Robert Half e.g. business analysts and financial managers with expertise in new and arcane areas who are hard to find.
A morning spent with Robert Half executives at a recently held San Francisco conference gave me a window into the world of accelerating volatility at midsized companies. Hundreds of San Francisco-area CFOs attended the event, whose theme was the unpredictable business environment. All the panelists agreed that although the level of corporate change required to survive took a big step up in 2008 with the Great Recession, change remains the watchword year after year, with no signs of abating. Even firms with strong growth cannot count on static conditions and must re-invent products, services, even their entire firms, with increasing regularity.
Futurist Bob Johansen of the Institute for the Future in nearby Palo Alto (the epicenter of technology-driven changes in many industries these days) reminded the CFOs of the opportunities and threats to their companies and themselves. His 2009 book Leaders Make the Future introduced the acronym VUCA to the business world: volatility, uncertainty, complexity and ambiguity. He maintains that we all live in an increasingly VUCA world, and that specific leadership skills are required to earn a competitive advantage.
CFOs and management teams are feeling the pain and are struggling to bring in subject matter experts to help analyze data and manage projects. Sharon Black, Senior District President of Robert Half reported a drastic labor shortage of Business Analysts and Financial Managers, pointing to the need for faster and better analysis. Several of my mid-market company clients are hiring and/or building teams of project managers, hoping to get more change accomplished in a shorter period. Other clients are driving new programs and initiatives on multiple fronts, reluctant to prioritize because they need several big wins to offset the revenue and profit declines stemming from marketplace shifts.
The creation of specialty departments (like business intelligence, project management and financial analysis) and their subsequent coordination require more meetings, more money, and more time. These staff departments may get over-utilized, becoming less responsive to business managers. As hiring this specialized talent grows more difficult and costly, perhaps the return of the “renaissance manager” is the solution.
With the VUCA world as the norm, midsized companies must instead attract, retain, and train a cadre of versatile leaders with broad skills to be able to make the nearly constant course corrections. Simply put, leaders should be able to do most of their own analytics, project management and leadership mentoring.
With everyone trying to attract these skilled leaders and with big firms paying top dollar, midsized firms will have to grow them internally and then retain them by having thriving environments and opportunities for personal development.
I’m not just referring to C suite executives. These versatile leaders who can analyze data, run a project and coach the leaders on their team are needed in middle management too. While the C suite can handle change at the strategic level, a strong middle management team can cover tactical problems stemming from marketplace volatility.
Since hiring these leaders can be challenging, developing them internally becomes paramount. Paul McDonald, Senior Executive Director of Robert Half said, “In the past 5 years we've seen the Great Recession and the slow progressive improvement economically. As the economy continues to show signs of steady improvement, the employment market for subject matter experts is strong, prompting a war for skilled talent, not unlike what we saw back in 2004-2006 for Sarbanes Oxley professionals. Heading into the New Year, retention strategies will be high on the priority list for CFOs.” Panelist Mark Hawkins, CFO of Autodesk (NASDAQ: ADSK) agreed. “Employees at companies who grow and develop them will stay and thrive. Don’t believe that there is some binary choice between leadership skills, interpersonal skills, technical skills in people. Everyone has some of all those traits, and most can be developed if their firm is willing to make the investment.”
Implement these four key steps to develop a leadership team better equipped to deal with the VUCA world:
- Actively design career paths for all your current employees, quickly identifying who is likely to grow as a leader and who will not. Constantly evaluate and dismiss those who won’t make it and hire new leadership talent. Don’t clog up your middle management with un-promotable managers. You need those mid-level positions to farm next year’s standout leaders.
- Create opportunities to challenge leaders and allow them to learn, in an effort to accelerate the creation of standout leaders.
- Make leader development a prime responsibility of every leader, from supervisors on up. Reward it with promotions. It’s not HR’s job to grow leaders. Leaders grow other leaders.
- Make strong/broad leadership skills your top priority in hiring, more important than domain experience. It is often much faster to teach your new hires about your company and industry than to develop broadly skilled leaders.
Growing leaders is no quick fix. Companies that need help now might have to pay a premium to get talent short term. But if you begin the development process now, you’ll see results in a year or two—just in time for the challenges that rear their heads at that time. Also be aware that the leaders in your firm who love control and power aren’t good coaches and won’t want to mentor. Ultimately, by stifling the growth of leaders, they will kill the growth of your company. Only retain higher level leaders who LOVE to teach and coach.
In this turbulent world, we need breadth of skills in every leader, so they can respond to market changes with agility. Companies with the best leaders always win, and this maxim is truer than ever in this permanently uncertain environment. Invest in developing your leadership team and start now.
Follow me @RobertSher and check out my upcoming book, Mighty Midsized Companies; How Leaders Overcome 7 Silent Growth Killers.
