A Conversation On Leadership
A conversation between Caroline Keetch, Director at Halsey Keetch and Corjanne Van Drimmelen, Director at Structure Talent on the topic of Leadership
Caroline (CK): The concept of leadership within business is far reaching, high on the agenda, and often hard to define. Around the table with our clients in the financial services industry, we are increasingly focussed on the need for leadership, especially as it relates to ensuring that the risk, compliance and audit functions play a real role in influencing and communicating with the broader business. The need to blend experience, technical knowledge and expertise with the - often intangible—ability to lead people, and influence senior management is at an all-time high. Regulatory pressure has increased dramatically over the past decade. Given the continued and increasing demand being placed on these functions, I think it’s fair to say that there is a real shortage of people across the industry that naturally possess this softer but essential skill set. The question becomes, is it possible to develop leaders in these sorts of technically focussed functions? Can leadership skills be taught, learnt and developed?
Corjanne (CVD): For all that the business community talks about leadership, there is little exploration of the basic assumptions we make about it. What constitutes leadership? Who should we call leaders? And what qualities should a leader demonstrate? And what about everyone else—are they now relegated to acting as followers?
A key part of the challenge here is around language—most people use the word “leadership” without really understanding or defining what they actually mean. Or indeed, even considering that different people may have different interpretations of the term, let alone how that’s different from “management”. Ask 20 people for a definition of leadership and you’ll get 20 different answers.
The point here is that one first needs to invest time and effort to understand what clients mean by “leadership”—both at an individual level, and at the organisational level. The reality is that most people’s perception of leadership is that it’s somehow the exclusive realm of senior executives. As you move down the corporate hierarchy, it becomes increasingly unclear precisely which competencies are needed.
CK: I agree. Often it is very difficult to describe what a leader should do, but generally there is a consensus that it’s easy to spot a leader when you see one. In my view, it is a fundamentally important not to confuse people who can manage with people who can lead. That’s not to say that they should be mutually exclusive skill-sets, but they are different.
CVD: So let’s distinguish between the responsibilities of management, and the competencies needed for leadership. Most financial services companies have large numbers of managers with strong operational skills. Unconsciously, these individuals usually see a part of their remit as maintaining the status quo. They want to put a tick in the box—to deploy the resources at their disposal to ensure that others follow their plan—so that they can prove to their managers that they’re effective. In the end, they’re interested in meeting the KPIs and metrics put on their department because that’s how they personally are measured. In turn, these metrics are linked to bonuses, compensation and promotion. While they will nod appropriately at the right time in a meeting, they may not really care for things that don’t fit neatly into that structure.
I suppose the point is that you get what you measure. The behaviours that firms are trying to change are created by the measures and metrics that they have used to run their operations. This is not a question of coming up with yet another set of new measures. It’s a challenge so ingrained—a central part of the world view of many managers in financial services—that they cannot even see the problem. Leadership is about engaging people, drawing them out and involving them in identifying the solution.
CK: Yes, and that’s where the whole debate can become intangible and hard to define. Leaders have a way of influencing behaviour. They are able to strategize effectively, and guide the people around them. They are able to permeate an organisation in such a way that it’s hard to see where their skill sets begin and end, but they are a powerful and vital force. They can affect or even change culture. Often these people are described as having a ‘presence,’ they instil confidence in other people, and in my experience are confident in themselves.
CVD: And that’s where financial services firms face a critical deficit. Organisations lack people in positions of power with the know-how, the experience, and the confidence needed to tackle entirely different sorts of challenges; what management scientists call “wicked problems.” Such problems are not solvable through direct command. They have causes that, at times, seem incomprehensible. What’s more, the solutions to these problems seem uncertain at best. They’re all soft and squishy.
If you think about the leaders that financial services firms are seeking for their supporting functions such as Risk and Compliance, these people will need to engage their colleagues into defining both the problem and the required solutions. They need to embed Risk Management and Compliance within the culture of their operational functions.
And in turn that means the people firms are seeking need to influence and guide the business to think differently. And that means transforming the way the business operates. It means changing how they think about team construction. How they think about roles and responsibilities. How they think about processes and metrics. How they think about products and services, and how they deliver value to customers. In short, that means transforming the cultural makeup of the organisation.
CK: And that’s the point. You could argue that due to regulatory pressures and the constantly changing regulatory climate, financial services organisations now need Risk Management and Compliance functions to be full of “leaders”—people that spread their message throughout the organisation. This is not necessarily about seniority or hierarchy, it’s about behaviour and culture. For these functions, it’s a relatively new type of need. In the past, they attracted and developed technically able people. But this traditional hiring model simply doesn’t work anymore, as most of these functions are now a million miles away from being tick-box functions. What steps can companies take to invest meaningfully to develop leadership in these essential functions?
CVD: Everybody has some degree of responsibility for leadership; even if it is just for themselves, their behaviour and their own actions. But too many business leaders today—especially in financial services—are out of touch with the employees they lead. When it comes to leadership development there is an enormous mismatch between the approach that exists today, and what leaders actually need. It’s enormous and it’s widening.
On the other hand, when you engage people to help them understand their own work preferences and thinking styles, then great things happen. They then can understand how the thinking styles and preferences of those around them are different; and then you connect that insight into effective leadership conversations from above—then the business goes a long way to solving its retention problems.
CK: The skills we describe when it comes to leadership are real and powerful, but they fall into the ‘soft skill set’ box, and as such it is often the belief that individuals are either natural leaders, or not. In your experience, can leadership behaviours be taught and learnt?
CVD: For one organisation we run a regular “Become CEO of Your Own Career” workshop series that helps even the junior level employees think about how they contribute to the organisation and its purpose. Alongside that we help their line managers prepare for successful career conversations (they’re struggling too). Point is that, by engaging employees to think differently about their own careers, they start down the path of becoming leaders. They start aligning their behaviour and actions to the overall purpose of the organisation. As one delegate put it—“I went from having to go to work, to wanting to go to work.”
So yes—leadership can be taught, but that’s not through traditional classroom learning with learned academic faculty. It becomes an exercise in growing the soft skills of the people themselves, helping them operate more effectively in a complex and evolving world.
CK: In my view, leadership as a skill set is not something reserved for the most senior people in an organisation. In fact, one of our clients, a very well-known and well-respected asset management company is – and always had been – passionate and committed to a leadership culture. They expect their employees to invest in the people around them, to advise, guide and influence their peers, no matter what their role in the company. It’s a highly successful organisation and the culture is strong and healthy.
CVD: Yes, it’s so important that the organisational operating model/system and the executive leadership team open-up and realise that they need leaders at all levels. Leadership is not something that is reserved for a few select managers; it’s got to permeate the entire organisation. People need an array of mechanisms to support how they develop as individual leaders—career conversations are a part of that. Most leaders also need a confidential thinking partner to help them explore options to move themselves, their teams and their organisations forward.
CK: Okay, so what does this mean for the executive leadership team of a financial services organisation?
CVD: You could also say that the executives themselves have to set a real leadership example. They must ‘walk the walk’. It’s their behaviours and how they spend their time that really makes a difference. They need to ask themselves what is the ritual shift in behaviour that they themselves need to make? They need to somehow communicate the required leadership behaviours to the rest of the organisation, and a change in their own behaviour shows that they are serious.
The executive leader needs to take on a coaching role. Instead of the telling their employees what to do, they have to make it more experimental—asking questions to guide their reports as they explore the way ahead and work out the solution for themselves—the employees become a part of the process. They also need to accept that diversity of thought and thinking styles are a good thing. It’s about creating a positive way forward for teams to work together; a way of working that encourages balanced enquiry and exploration. The culture of the organisation has to move toward valuing different opinions when making decisions. While that may sound like slowing things down, it ensures that the firm starts to embed the right behaviours in its operations.
CK: So, when it comes to hiring for Compliance and Risk functions, what you are saying is that it means embracing unconventional ways of thinking about assessment, hiring, and training. I agree. We see many organisations within financial services still developing talent the same way they did 20 years ago in these functions, yet the problems and challenges they face are quite different.