10/09/10

By Claire West

The Agile Leader, a report released by independent management consultants, Berkshire Consultancy Limited (www.berkshire.co.uk), reveals that the current ‘stop-start’ economic climate is testing the leaders of Britain’s UK PLCs “like never before”.

The research probes the views of those tasked with leading the UK’s top 500 companies out of recession and into growth; and examines the impact of today’s economic climate on business performance, workforce engagement and talent retention, as well as offering guidance for moving forward.

Unprecedented Pressure

Berkshire Consultancy’s report found that 81% of senior decision makers feel the current business environment is more difficult to negotiate than the recession.
Complex strategic demands are at the root of the problem with four out of five respondents trying to meet two conflicting objectives: cutting costs and growth. Consequently, 73% now fear cost control is actually hampering their organisation’s ability to capitalise on opportunities.

These conflicting priorities are placing unprecedented pressure on senior executives. 8 out of ten (81%) are struggling to form clear business plans, 84% are finding it difficult to prepare budgets and forecasts, and 65% say it’s impossible to make accurate performance predictions in the current economic climate. Almost half (49%) admit to having to regularly shift strategic focus.

“Despite official figures revealing faster paced growth during the second quarter, impending public sector cuts and a scheduled VAT rise cast a long shadow over a fragile market,” said Sarah Hunter, Account Director, Berkshire Consultancy. “Ongoing uncertainty is clouding strategic thinking and leading to a crisis in confidence among UK business leaders.”

Crisis of Confidence

With senior managers battling to cope with the fundamentals of their job, confidence is at a low with only 14% believing they have the skills needed to match the conditions. In addition to this, less than half (46%) expect to hit targets and nearly half (49%) believe growth is unachievable this year.

Following two years of stringent cost-cutting, a risk-averse culture has taken hold. 75% of senior management admit they are more risk averse now than ever before. Green shoots of growth are threatened at the roots as 53% admit their firm is now too cost conscious to take advantage of growth opportunities.

“Frustrated by the ebb and flow of the nascent global market, many senior decision makers are sticking to what they know best: cost-cutting. This fear of risk threatens to stifle growth. Success depends on an agile leadership that remains open to opportunities, ideas and innovations,” added Hunter.

Courage and clarity

81% of senior executives are struggling to create a clear and consistent vision to guide their organisation through the recovery, whilst two-thirds (67%) are struggling to maintain consistency in their management style. 63% also say that the requirement to be a tough decision maker and motivator at the same time is a stretch on their management capabilities.

There is concern that this situation its not only undermining senior management confidence, but also weakening the relationship between top level executives and the rest of the company: 72% of respondents admitted that it’s increasingly difficult to obtain ‘buy in’ on management decisions from employees.

Furthermore, according to almost half of those surveyed (47%) the sincerity of the leadership team has been damaged in the eyes of the workforce and company morale is down in two out of three firms.

“Leaders are in danger of losing the support of their teams. Tough decisions had to be taken during recession, but today’s uncertain climate demands ever- changing strategies, resulting in a perceived lack of clarity from the top. Good leaders do not need all the answers, nor should they pretend to have them. What they need is the agility to help their businesses grow, improve and evolve, and to challenge the way that things are done.

“By adopting an authentic, honest approach, leaders will maintain the trust of staff, even when tough decisions dampen morale. This is a difficult balancing act to manage, but leaders must pay close attention to their workforce if they are to maintain engagement and morale, enabling staff to sustain performance through difficult times,” concluded Hunter.