Ten Competencies for Effective Leadership in an Uncertain World
The banker and financier Nathan Rothschild famously noted great fortunes are made when cannonballs fall in the harbour, not when violins play in the ballroom.
Translated: the more unpredictable the environment, the greater the opportunity — provided you have the leadership skills to capitalise on it.
Against a backdrop of constant change and uncertainty, the IMI has uncovered 10 core competencies that separate highly effective leaders from the rest.
These competencies not only provide guidance but also serve as opportunities for growth and development — when mastered and used in concert, these 10 competencies allow leaders to think strategically and navigate the unknown.
According to the IMI research, effective leadership starts with the ability to communicate persuasively. Recognising that communication is far more than just exchanging words, leaders who articulate their vision, motivate their teams and engage stakeholders through persuasive and clear communication are better placed to set their organisations up for success.
Enhanced team cohesion and increased stakeholder trust are just two benefits of effective communication, while poor communication can lead to low morale, missed performance goals and even lost sales, which is backed up by a report from the Economist Intelligence Unit. Another study found inadequate communication can cost large companies an average of $64m (€59m per year).
However, a further challenge lies in ensuring the message is not only clear, but also strategic. IMI defines strategic thinking as about discerning the bigger picture, aligning actions with organisational objectives and overcoming complexity to make decisions in order to capitalise on opportunities.
This competency demands foresight and adaptability, along with the ability to chart a course that aligns with organisational goals, values and mission despite tremendous uncertainty. Harnessing strategic thinking is one of the core competencies that new leaders and managers often struggle with, according to the IMI.
The IMI research notes effective leadership requires a toolkit of techniques and strategies. Leaders must be able to motivate, mentor and guide their teams, adapting their leadership style to suit different situations and individuals.
Knowing what levers to dial up and dial down is key to building organisational capability and responsiveness, driving change and dealing with uncertainty, while successfully managing conflict in order to deliver on intended results.
Similarly, a clear leadership strategy acts like a roadmap — with guiding principles that inform decision-making and goal-setting. Leaders who can develop and execute well thought out strategies are more likely to achieve long-term success for their organisation, better capitalising on opportunities and mitigating challenges.
Building and leading successful teams is perhaps the most fundamental leadership competency, according to the IMI research. Great leaders recognise talent, nurture it and create environments where individuals can thrive collectively as part of a cohesive, high-performing team.
This is not a standalone task but an ongoing process woven into the fabric of leadership. Self-awareness around one’s own leadership style is paramount to building loyalty among fully engaged teams — a task made more challenging due to remote and hybrid models, with dispersed employees around the globe.
A Gallup study found only 15% of employees worldwide are fully engaged, while a separate study from the Conference Board shows disengaged employees cost organisations around $450-550bn (€419.7–466.3bn) each year in the US alone.
However, for leaders who get it right, there are major business returns: nine out of 10 CFOs found improved company culture leads to increased business value and performance, while according to a Gallup report, engaged teams show 21% higher levels of profitability compared to disengaged teams.
Similarly, effective leaders who can engage, motivate and reward their teams are more likely to retain top talent, ensuring employees remain motivated and committed to the organisation’s mission, while building a solid foundation for future success.
Not only does higher employee retention lead to increased productivity, improved customer experience and better business continuity, but thefound organisations with employee retention rates outperformed their competitors in revenue growth by an average of 2.5 times.
The IMI research notes that the preceding five competencies are most critical for growing or aspiring leaders, who may be new to management roles and need to develop the skills and capabilities to manage a growing team, while enhancing their communication skills to influence those above them and inspire those below them.
However, for the high-performing leader who is aspiring to more senior leadership roles, there are five additional competencies identified by the IMI, reflecting a need for a wider knowledge base.
Leaders aspiring to more senior leadership roles must also navigate the intricate landscape of negotiation and decision-making. In a rapidly-changing world where collaboration is key, negotiation skills are invaluable. Leaders adept at negotiating can — and do — build partnerships, resolve conflicts and arrive at decisions which benefit all stakeholders.
While extracting maximum value from a pricing strategy may be an obvious example of excellent negotiation skills impacting revenue, skilful negotiation and decision-making also opens doors to collaborative success and innovation (twice as many collaborative organisations reported revenue growth over the past three years as compared to organisations with weak collaborative cultures).
Financial acumen is non-negotiable for leaders aspiring to senior leadership roles. Indeed, to move from manager to leader, you need to build a solid foundation in financial knowledge to interpret figures and understand what lies behind them. This does not necessarily mean being a trained accountant or coming from a financial services background, but senior leaders must make informed financial decisions that contribute to the financial health of their organisation, ie managing budgets and allocating resources effectively.
Leaders who conquer this challenge, and successfully grapple with the intricacies of often complex financial systems, are best placed to secure the fiscal stability required for sustainable growth.
IMI’s Finance for Non-Financial Managers has been designed to help leaders achieve a greater understanding of how finances influence your organisation’s strategy, structure, people and systems.
In the era of big data, leaders who can harness the power of analytics and predictive models gain a major competitive edge. By leveraging data effectively, aspiring senior leaders can make more informed decisions, optimise processes and uncover hidden opportunities in their operations.
Indeed, BARC research found businesses using big data saw an 8% increase in profit and 10% reduction in cost, while research from McKinsey Global Institute shows data-driven organisations are 23 times more likely to acquire customers, 19 times more likely to be profitable, and six times more likely to retain customers.
Closely related to the previous competency, innovative thinking is not just an opportunity — it’s a necessity for those aspiring to senior leadership roles.
Innovation is the lifeblood of progress, and leaders who encourage innovative thinking within their teams can spark creativity, adapt to change and drive their organisations to stay ahead of the curve.
One BCG study shows organisations with a strong innovation culture — embracing risk, fostering collaboration and granting autonomy to team members — are 60% more likely to be innovation leaders within their industry, while another study shows innovative companies are 26% more profitable than their competitors and three times more likely to survive a recession, according to.
The IMI’s research highlights that successful leaders are not born; they are developed through a combination of learning, experience, and continuous improvement.
In keeping with the idea that leadership is not a destination but a journey, the IMI has created its Short Programme Leadership Series, designed for participants at every stage of their leadership journey.
Critically, the series will offer a holistic understanding of these 10 competencies, which act as stepping stones for becoming a leader who can navigate the complexities of the modern business world and drive their organisation towards greatness.
First published in the Irish Examiner.