GLOBAL SHIFT: UNLOCKING LEADERSHIP LESSONS
As events continue to unfold in the United States with prominent US CEOs publicly defending the rights of their migrant workers, what lessons can New Zealand business leaders take from how US CEOs are dealing with these seismic shifts? By Annie Gray.
As events continue to unfold in the United States with prominent US CEOs publicly defending the rights of their migrant workers, what lessons can New Zealand business leaders take from how US CEOs are dealing with these seismic shifts?
Business leaders globally are grappling with the massive changes afoot in the world's biggest economy and we are certainly not immune here in New Zealand.
Dr Chris Galloway, head of public relations in the Business School at Massey University, says that globally what we are looking at is a movement against the kind of economics that that has dominated the way business has conducted itself in the past. “It’s a seismic shift,” he says, noting that last year a number of public relations companies produced reputation reports some of which showed that people are more interested in an organisation’s leaders taking a stance on societal issues than they care about the financial details.
He says the appreciation is growing that leaders of significant organisations will have something to say about issues worrying society.
While Milton Friedman in the 1970’s said that the business of business is business, that is no longer seen as applicable today.
Galloway says people expect CEOs to have regard for the wellbeing of society both personal, social and environmental. It’s not just about making more profit but doing it in a way that society sees as legitimate.
This is not new, but what is recognised now is that leaders start more explicitly taking stances and are expected to take responsibility.
“You now need to articulate that and to show one is aware of the broader society issues, such as housing, taxation and the rich-poor divide.”
Galloway says the US situation is very different to that in New Zealand but he thinks we may have some of the elements here, such as anger over the income gap.
“We have that, but in embryonic form, while in the US it seems to have to come to full flower. But some of the same themes are evident with priorities for growth and development over preservation of the natural environment. So for Government and companies it’s about how to find a balance."
They need to negotiate better with key stakeholders about what they want to do. That’s not to say rolling over to stop development but, while it might be tempting to make the business decision and then consult about it, Galloway says that is not the way to go about it if companies want to get sustained community support.
Trump is showing the expectations people have about where jobs will be based, how companies operate in terms of their supply chain and HR policies and that there is a price to pay for pursuing profit alone.
Galloway says New Zealand CEOs will also be thinking about the new protectionism and how they deal with that when it is encountered in this new era.
How do you justify tree trade or free-ish trade when the mood of the moment (in the US) seems to be to lock out everyone else?
This phenomena is not just in America and Galloway points to the rise of the far right in Europe and the United Kingdom and says one of the issues for business, more than ever, is reputational risk, which he specialises in as the programme leader for Massey's Master of Professional Public Relations degree.
In the current environment reputational risk is related to concerns about the supply chain and the way you deal with international partners.
Key advisors can help leaders keep abreast and identify issues as they arise. He says environmental scanning preparation has never been more important with leaders needing to keep their eyes and ears on social trends and be adept at interpreting the signals.
SenateSHJ chief executive Neil Green sees CEOs entering into societal debates as an emerging space and says it seems many of the CEOs in the US taking a public stance against President Trump’s immigration moves were from the tech sector and were concerned about their ability to recruit the best.
In New Zealand Green thinks we are seeing more CEOs get involved in discussions but not always taking an active stance in the public arena.
He points to recent Health and Safety legislation with many CEOs publicly behind working party recommendations and indicating Government should go further in enacting these recommendations.
“That is probably one of the first times we have seen a number of CEOs across a number of business sectors stand up and react on a social issue.”
He also points to concerns around food, soft drinks and sugar and salt levels.
Companies are taking a much more active public stance, bringing in new products, working with Government and bringing in voluntary codes for advertising and promotion.
Opposing groups may say it’s somewhat self-serving but Green says we are seeing CEOs understand that if they are not part of the discussion and driving the discussion then regulations will be imposed. They recognise success is often when commercial and social interests align – creating win-win situations.
Green notes too that more and more people are getting information from sources or social media channels that think like they do and on one level are filtering out potentially opposing information. They are linking with those that align closely with their own beliefs
Globally he sees a continual decrease in trust and confidence in governments, corporations and the media and New Zealand is no different.
He says the Trump phenomena and Brexit are changing CEO perceptions.
“If a company does not take a lead and is not responsible for its own narrative, then someone else will take the lead.”
Research out of the US has found people who voted for Trump said they never believed he would do what he said he would, but they wanted to disrupt the status quo. It’s not about 'do I believe this', it’s about being disenchanted and wanting something to shake things up. “Believability is about people trusting someone like them.” Raphael Hilbron, the general manager at SenateSHJ Wellington, said there have been some CEOs active on societal issues for many years, such as The Warehouse’s Sir Stephen Tindall, and more recently Pure Advantage, the brainchild of Phillip Mills, which was formed by a group of successful leaders “who want a greener, wealthier future for all of New Zealand”
and recent top level discussions around gender diversity on boards.
Hilbron says while there is such as a thing as “enlightened self-interest” these causes are good for society and for the companies as they all want healthy workers, healthy customers and a wellfunctioning society.
Green and Hilbron say the biggest difference between NZ and the US is the cultural context – here we only have two to three degrees of separation and leaders group together quite early and quickly if an issue arises.
Earlier this year SenateSHJ published its annual predictions for the issues and trends that will shape the year ahead, forecasting further transformational change for organisations in 2017.
One of the five main forms they highlighted which, they say, offsets this ‘post-truth’ reality, was values and ethics. “There is a strong desire for our leaders and our institutions to engage transparently and authentically. This year businesses and governments need to work increasingly hard to plug the trust deficit with the majority of the communities they serve.”
Green and Hilbron say consumers have lost interest in waiting for large multinational corporations to do what is right around inter country tax payments and politicians around the world have listened.
“There is no question of just doing something that is legal, you must do something that is morally right.”
If you want people to believe what you say, they want to know what you are going to do. You have to be open and be transparent.
New Zealanders have always given companies the benefit of the doubt, but when something goes wrong now, that period of doubt is a lot shorter. People do not have the levels of trust they used to have.
Green says we are in an era now where the emphasis is on people and the environment we live in, the food we eat and communities are asking business leaders to be more responsive.
Fundamental to this is crisp communication and Green and Hilbron say that businesses are now judged on what they do, not on what they say. Online connectivity means the level of transparency rises as businesses are held to account. In turn this means the level of control firms have over something is not as great as it once was and they have to collaborate a lot more with different stakeholders to reach the desired outcome.
Andrew Dickson, Massey University Senior lecturer in Organisation Studies, is proud to say he is a leftleaning academic and believes the reasons US CEOs stood up against the immigration ban, and have not, so far, on environmental issues, is because immigration is of benefit to companies as a ban would impose limits on the potential pool of labour while the environment limits a business’s ability to create a surplus.
He does not believe New Zealand would face the same political situation as in the US but that said he doesn’t believe CEOs in NZ speak up enough.
“Am I interested in hearing from them? Somewhat, but I am more interested in seeing them change procedures and change the business around the environment. I want to see the change, the redistribution of resources.”
“If a company does not take a lead and is not responsible for its own narrative, then someone else will take the lead.”