CMI MBOTY 2019: How to manage in uncertain times

10 January 2019 -

The most effective leaders have a high tolerance for ambiguity

Ian MacRae and Adrian Furnham

For 23 years Lloyd Craig led Coast Capital Savings, transforming it from a small local credit union into one of the largest in Canada. Judging from the Coast balance sheet under his leadership, you wouldn’t think there was a financial crash in 2008.

If you ask Lloyd about how Coast avoided some of the riskier investments that brought other financial institutions to their knees, his thoughts quickly turn to managing ambiguity.

Leaders must get opinions from different experts – people with different and dissenting points of view, says Craig. They must talk with people across their organisation, and they must be open to criticism, even when it’s uncomfortable.

During the good times, when companies are making money from risky investments, Craig insists that leaders must ask difficult questions, and dig into the complexity and the ambiguity of the business. Failure to address the long-term implications of ambiguity or complexity can lead to serious damage later on.

An effective leader who is guided by strong values and who has worked to get all the information will say, “we will not be responsible for selling [bad debt] to other banks, through our investment bank, to our clients – be they little old ladies or companies or pension funds. When they do business with us, they’re getting quality. That comes from the top.”

Unfortunately too many leaders in the build-up to the financial crisis buried their head in the sand and didn’t make themselves accountable.

In contrast, Lloyd and the leadership team at Coast would regularly do informal visits to different locations and departments. Lloyd would work hard to put people at ease, develop trust and be open to listening to people across the organisation, whether the feedback was positive or negative.

What employees are experiencing at branches or in different departments may not be consistent with the leadership team’s grand strategy or plans. But if people trust you, says Craig, they will tell you exactly what is going on, what the problems are on-site and what could be done about it. You must be open to hearing this and, crucially, commit to acting on it. If the leader listens, but never acts on the information, people will be far less willing to open up.

Eight lessons for leaders in ambiguous times

Predictions are always risky (especially ones about the future), but 2019 will surely be another year of uncertainty in management. A neat and tidy Brexit resolution seems unlikely; satisfactory political consensus probably won’t emerge in the US either. It must be fair to assume that we haven’t seen the ‘end of history’ and that there’s plenty more economic and political uncertainty yet to come.

But some leaders will relish such ambiguity. Our research among 4,000 professionals in the UK shows that people with high levels of the ‘ambiguity acceptance’ trait tend to feature prominently in management and, particularly, at the senior leadership level.

In other words, people who take up leadership positions have an appetite for ambiguity.

Here are eight observations about how managers should behave in times of ambiguity and uncertainty:

1. Ambiguous circumstances demand managers who can manage complexity and communicate the realities, challenges and opportunities to their employees. Effective managers treat their teams and employees like adults. Honesty is essential. So, too, is clarity about the business goals, strategy and planning.
2. Leaders and employees won’t always agree on what the problems are, or what needs to be done about them. But it’s a core responsibility of leadership to manage all the available information, consider the dissenting points of view and decide on the best course of action.
3. Enthusiasm is a powerful motivational tool. Great successes can be built on challenging circumstances with the right attitude and team, and when the best managers are united behind a common purpose.
4. Managers explain, in realistic and practical steps, how teams and the businesses will approach complex circumstances. It’s rarely helpful to bury your head in the sand and hope everything will turn out alright. Offer up plans and contingencies.
5. Distil the market/economic complexity into clear messages that are relevant and useful to the business and its employees. If you’re not personally comfortable doing this, then identify other people on your team who can do so with authority and accountability.
6. Don’t be glib or superficial. Most employees will spot what is going on. Opacity, prevarication or wilful ignorance from senior leadership will quickly filter down to other employees.
7. Avoid a bunker mentality. An us-vs-them view of the world may bring a team closer together in the short term, but quickly stultifies and leaves no room for growth in the long term.
8. And avoid a Pollyanna “business as usual” approach that imagines that everything will be fine. This approach neglects contingency planning for potential difficulties.

Many people like to have stability, consistency and order in their everyday life or work. So the responsibility for dealing with challenges ultimately falls heaviest on those in leadership positions. Effective senior leaders must be able to make use of conflicting information, different perspectives and contrasting opinions.

But then, who said management was going to be easy…?

Ian MacRae is the co-author, with Adrian Furnham, of High Potential: How to Spot, Manage and Develop Talented People at Work (Bloomsbury, 2018), which is shortlisted for the 2019 CMI Management Book of the Year award. This is the first of a series of exclusive ‘CMI Insights’ articles they’re writing about defining and clarifying the talent management pipeline.