Less Time To Do More

Less Time To Do More

The ability to manage complexity and turbulence has always been critical to the success of any senior executive. It became even more important as the rapid-fire pace of social and technological change accelerated.

 

Then came 2020.

 

COVID-19 turned the world upside down. It was the rarest of black swan events, a once-in-a-generation global shock.

 

Except it wasn’t.

As the pandemic raged on, shocks kept coming. Business leaders were faced with massive social unrest that spread around the world after George Floyd’s murder in Minnesota, and this coincided with a major shift in the power of the employee and a widespread talent shortage. Accelerating climate change added to the chaos, affecting production, shipping, and supply chains. The Russian invasion of Ukraine forced companies to rethink operations and undertake humanitarian efforts. Political polarization put businesses in the unfamiliar position of taking sides on everything from masks and vaccines to immigration.

 

The responsibility for dealing with all these issues has fallen upon leaders, in addition to all the traditional requirements of running a business. Said Hubert Joly, former CEO of Best Buy and now a director at Ralph Lauren and Johnson & Johnson: “The world in which leaders lead has changed fundamentally in the last two to five years. It seems we are going from one crisis to the next, all unprecedented in nature. We used to be measured on the four walls of our business; now we are being asked to weigh in on a whole range of issues. Nonbusiness issues have become business issues. It’s part of the job now.”

 

Yet from this chaos have come positives. Many leaders have reported breakthroughs in innovation and creativity, and there has been a long-needed shift in the skill set required to succeed. Said Raj Thakkar, vice president for global sourcing and logistics at GE Gas Power: “From a leadership perspective, there’s no better time. I tell my team that this is what differentiates between the rookies and the pros.”

 

To understand these trends and uncover best practices, we surveyed our members in April and May 2022, receiving responses from 209 senior-level executives representing a total revenue of US$4 trillion and 7.7 million employees. We then supplemented our results with in-depth interviews with 28 other top leaders. We heard from CEOs, CHROs, supply-chain heads, chief communications officers, board directors, and many others. They were candid, openly sharing their vulnerabilities along with the realization that they did not—could not—have all the answers. They discussed what has worked for them, and what hasn’t. And they told us they believe this chaotic environment will continue, which means they are developing a new tool kit for leading.

This report synthesizes our members’ perspectives about the Untethered World in which we live, and the strategies they are putting in place to cope and compete. We hope you find it useful.

If you think your responsibilities have increased over the past three years, you are not alone. Virtually all of our respondents—93%—agreed that “non-traditional business issues” have become a significant factor in their decision-making. Nearly the same number—91%—said they are managing a wider range of stakeholders than before the pandemic. And 95% of them agreed that the pressure to lead on social and political hot-button topics—once considered out of bounds by most businesses—has increased over the past three years. Said Simon Zinger, group general counsel at gaming company Entain: “Four to five years ago, [these] issues took up 5% to 10% of my time. Today it is closer to 40%. Nothing else has slipped; more has been added to the role.”

This increased emphasis on issues that may not directly affect sales or profits has dramatic implications for any leader, regardless of function.

 

First is the stress of dealing with surprise after surprise. For many leaders who advanced in their careers by being organized and strategic, the need to react in the moment feels uncomfortable. Second is the unrelenting pressure, which has led some executives to opt out entirely via “The Great Resignation,” while others have thrown themselves in even deeper.

 

The global nature of many of these crises means that all functions and levels are involved. Take the war in Ukraine, for instance, which affects HR professionals trying to evacuate and relocate employees, supply-chain leaders finding new ways to get goods from the area, and CFOs, who must restructure balance sheets. Political polarization in society—and the increased pressure on businesses to speak out—makes chief executives political targets and puts chief communications officers into positions of constant crisis planning. And we don’t need to be reminded of the pandemic’s impact.

“Now, over 30% of my time is focused on the subject of sustainability around carbon circularity,” said Dan Futter, chief commercial officer at Dow. “We’re trying to think how we can better design supply chains so we can improve. The biggest change is the focus on carbon. We’re trying to balance cost, performance, the robustness of [the] supply chain, and how can you minimize the carbon footprint. It’s a dramatic change in day-to-day preoccupations.” At Pioneer Natural Resources, executives created a Shark Tank–style “technical review board” to invite ideas for sustainability and allow other topics to bubble up from employees.

 

Hover over each option to highlight.

The focus on the employee and on diversity and inclusion will be further analyzed below. But what is particularly worth noting is not just the order of the topics listed above, but also one critical fact: More than half of respondents are spending more or significantly more time on each of the topics listed, with 58% as the smallest percentage on community development and well-being.

 

Take risk, for example: Nigel Murtagh, managing director and chief risk officer, Charles Schwab, says once a risk is identified, it never actually goes away. “”I can’t think of risks that I say ‘Oh, that’s behind me now,’” he says. “We use every risk as part of the planning process moving forward. We really never leave anything in the past.” Ben Rosenthal, senior vice president and chief risk officer, New York Life Insurance, has specific advice for anticipating risks: “I advise other leaders to think through various scenarios, shoring up the capital base and making sure you’re well prepared for any kind of liquidity shock. Right now we’re at a point where there’s a very tight labor market. There is potential to be a quick reversal of that, where there’s a lot of unemployment in a stagflation environment. What would that mean? Would we regret some of the activities we’re taking today or would we be comfortable with them?”


GE Gas Power:
Tackling Inflation Head-On

 

Working through an inflationary environment is an obstacle that GE Gas Power has overcome in the past. But after decades of price stability, few GE employees have lived through a version of this latest black swan event. Dealing with inflation requires different muscles, so the company decided to invest in its people. Raj Thakkar, vice president of sourcing, and his colleague Randy Rowe, executive sourcing operations and transformation leader, quickly developed a program to bring their teams up to speed during this latest shock to the business. “In these turbulent times, you have to look at the whole picture when you analyze the impact on operations and customers,” said Rowe. Beginning in early 2021, employees underwent a three-part training module designed to prepare them for a difficult inflationary environment. 

 

The program begins with what Thakkar calls “The Golden Rules.” A few senior sourcing team members created a list of 12 constructive and practical ideas to respond to various inflation challenges—a handy cheat sheet that can be applied to any inflationary situation. Click here to review four of the ideas. Training sessions are then conducted regarding these 12 ideas. A few examples include collaborating with the engineering team and suppliers to alternate material, “should cost,” and near-shore diversification.  

 

To supplement this internal training, GE partners with a third-party firm, which creates a standardized approach for the procurement sourcing process while taking the current situation into account. Covering 12 vertical skills through 16 modules, the course—now led by employees—teaches fundamentals and templates focused on spin analysis, supply market analysis, supplier profiling, clean sheeting, the negotiating process, ongoing supplier management, and more. Enrollment spans multiple levels of the organization, with an emphasis on entry-level and midlevel employees, along with some more experienced team members looking for a refresher. So far, 80 employees have gone through the academy, with 40 more slated for the second half of 2022. GE plans to enroll 300 people total in this training, and all of them incorporate their current projects into the training.

 

The procurement function has an enormous impact on safety, quality, and cost. Thakkar and Rowe understand that the ongoing volatility means their employees need to be mentally prepared. So rounding out GE’s training is strong mentorship, with an emphasis on soft skills and mental health. Senior leaders coach fellow team members on interpersonal skills, resilience, trust building, and more. GE’s leadership and human resources teams realized they also needed to focus on helping employees develop resilience, so team members received coaching on social interaction and how to build trust in today’s virtual environment. It was more important than ever to activate the community, explained Rowe. “In a marketplace with high inflation, it is critical to upskill and educate our people to prepare them for the uncertainty to come,” he said.

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