Leadership qualities in volatile business environments

Abstract

Turbulent economic environments such as the current Global Financial Crisis (GFC) present organizations with both challenges and opportunities, and the challenge for organizations is to understand which leadership characteristics are critical to guiding an organizations successfully through situations such as the current GFC. Various researchers have found that the qualities which business leaders themselves consider being critical were the "soft" Human Resources (HR) skills rather than traditional leadership virtues such as results (profitability) and motivation to lead. This essay will examine in further detail the qualities of Values (ethics) and the Emotional Intelligence (EI or EQ) in guiding organizations through turbulent times.

Introduction

Turbulent economic environments such as the current Global Financial Crisis (GFC) present organizations with both challenges and opportunities. Researchers such as Sull (1999) and McGrath & MacMillan (2009) have investigated reasons why some companies succeed, while others fail when faced with changing market environments. Sull (1999) observed that there was a common misconception that companies failed because they did not recognize the approaching challenges and did not plan a appropriate response (inertia). Contrary to this perception, Sull (1999) found that many failed because of active inertia. In active inertia, the leaders of the organization recognize that action is required, but responded using the successful formulas of the past which were not applicable in the new environment.

Bernthal and Wellins (2006) present the results of a global benchmarking study of 4,500 leaders from 900 organizations of the leadership qualities that business leaders considered were critical, and their rankings of how they performed. The findings were interesting in that many of the qualities that the leaders considered as critical were Human Resources (HR) issues rather than the traditional leadership virtues, such as results (profitability) and motivation to lead. Researchers such as Wood and Vilkinas (2007), Sparks and Gentry (2008), and Caligiuri & Tarique (2009) reported similar findings where HR characteristics were considered to be more critical indicators of leadership potential than technical or cognitive (knowledge) skills. A disturbing finding from Bernthal & Wellins (2006) study was that three (3) out of ten (10) leaders did not demonstrate the key qualities necessary for effective leadership.

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