In Case of Trouble, Change the Leaders!

In Case of Trouble, Change the Leaders!

This recession just refuses to go away.  From 2008 onwards, the survival strategy of some firms has been to batten down the hatches and to survive the recessional storms in whatever way they can.   The problem is that this is a short term tactic rather than a long term strategy – you have to come up for air at some stage!

So what can the hatch-batteners do next?  Rather than address the longer term competitive fundamentals, the knee-jerk reaction of many firms in a management mess is to appoint a new leadership group or a new managing partner, often without much thought to the firm’s underlying governance and structural issues, or the malaise and general partner cynicism into which the firm may have lapsed as a result of previously poor management and leadership.  An alternative scenario is that the current managing partner – having endured a torrid period in office – decides that enough is enough and decides to step down.

In such circumstances, the hope is that a fresh set of faces will work well for a short period and that a refreshed mandate will allow a new leadership group to address any current crisis and deal with all the short term problems facing the firm.  In the short term, this can work well, as newly appointed managing partners usually get down to their initial responsibilities with enthusiasm, and the freshness of their appointment combined with a compelling mandate, often fosters a honeymoon period that enables early successes to be achieved.

Following this period, however, three problems typically arise.  First, crisis management is entirely different from continuity management.  In critical or difficult times, leaders need (and are generally chosen for) the skills and mental toughness to impose change, to restructure (usually by reducing the number of equity partners round the table), to deal with economic imperatives and to drive performance rigorously.  When times improve, the managing partner then needs softer skills in order to motivate and inspire the firm, and many leaders find it hard to change from ‘push’ to ‘pull’.  To manage the transition, he or she needs to change from martinet to role model for the firm and its partners to remain happy, committed and motivated.

The second of the three problems at the end of the honeymoon period is that the underlying infrastructure often does not exist either for the firm to be run lastingly as a well co-coordinated business (offering a consistent “one-firm” approach to its clients) or for it to develop from a loose-knit organisation into a tight-knit institution.  What happens is that some or all of the underlying leadership and infrastructure issues, which may have become latent during the new leadership’s honeymoon period, then become blatant as the firm struggles to maintain its initial turn-around or upturn.  This is not an easy problem to solve but requires a deep understanding of what the firm requires at its particular stage of growth and development to develop into an enduring institution.  Work on the infrastructure (systems, processes and structures) needs to be combined with the nurturing of trust and attitudes within the firm to create a sense of belonging and unity which will drive long term success.

The third problem to arise at the end of the honeymoon period is that, faced with more difficult and intractable issues, the dormant management behaviours – ‘the way management is usually done round here’ – can again become the ‘default’ standards and the vicious management cycle starts all over again.  Yet again, the managing partner needs to examine the management styles prevalent in the firm and to take a view as to whether those management styles will continue to enable success or will need to be adapted in order to encourage a more flexible environment.

Crises need to be faced, but the imperative also is to shift attention as soon as possible from the original and usually short term objectives towards the longer term objectives of developing an enduring institution.  There is no point in a managing partner accepting this leadership challenge unless he or she is both highly driven and prepared to change leadership styles and to expand his or her own horizons and skill set.  The ability to be focused and purposeful in the pursuit of long term priorities with a deeper sense of purpose and direction is paramount