Last month at Davos, Accenture and the World Economic Forum released a new report, Seeking New Leadership. The report compiles findings from surveys of 20,000 corporate executives, young global leaders, consumers, and employees around the world to draw an important conclusion: the future demands responsible leadership.
Noting that today’s global organizations must balance three overarching priorities, organization performance, continuous innovation, and stakeholder trust, the new report proposes a responsible leadership model that speaks to the qualities needed by leaders capable of managing that complexity. (The report can be read in its entirety at this link.) The model identifies five “elements” of responsible leadership:
- Stakeholder Inclusion
- Emotion & Intuition
- Mission & Purpose
- Technology & Innovation
- Intellect & Insight
But when it comes to those five elements, do stakeholders (a category that includes employees, consumers, and community members) want the same thing as company executives? No, says the report. Stakeholders place a greater emphasis on emotion and intuition, followed by mission and purpose, while company executives prioritize technology and innovation well above the other elements of the responsible leadership model.
This is an important gap that has financial, as well as social, implications. When organizations manage to do both well, it may lead to stronger financial performance. The report found that when companies innovate with technology and have stakeholder trust, they see a 3.1% increase in profit. In other words, it’s innovation + trust that accelerates growth.
Accenture’s Ellyn Shook, Chief Leadership and Human Resources Officer, wants to be clear about these findings: it’s possible to create shareholder value without honoring values. But, she says, “the accelerator, the rocket fuel is the honoring of the values that create stakeholder trust.”
“Creating value is essential – it’s table stakes. But honoring values is the real accelerator.”
If managing all five elements sounds like a lot for one leader, Shook, believes that the capacity for each of the five factors can be spread among a leadership team. One individual does not need to fully possess all five qualities. Instead, “it is this collection of leadership skills that propels an organization forward,” she says.
Why trust matters at work
The report’s findings underline the importance of trust in stakeholder relationships, including those with a company’s employees, customers, or community members. Stakeholders are differentiated from shareholders, who are the individuals who profit financially from the company. A growing body of research that extends beyond this report emphasizes the direct impact employee trust, in particular, has in aiding the business metrics that determine a company’s success.
Writing in Harvard Business Review in 2017, Paul Zak summarizes the benefits of employee trust:
- Less stress
- More energy
- More engagement
- Fewer sick days
- More life satisfaction
- Significantly higher productivity
- Less burnout
It’s easy to see how these benefits might pay financial dividends for the firm.
If you want to enact more responsible leadership in your organization, built on authentic stakeholder trust, where you can you start? Shook offered several suggestions.
Consider the implications of your decisions more carefully, in human, social, and environmental terms. Shook notes that, “by and large, people do not wake up every day to try to do bad things.” Yet, as business leaders, decisions regarding the technologies we create and use and the products we manufacture have implications and unintended consequences. As the report suggests, we must manage for both promise and peril.
“We must view it as our obligation that people don’t just understand how to solve problems. We must understand the implications of what solving that problem are. The fundamental question one should ask themselves is, “just because I can, should I?”
“That’s at the very essence of responsible leadership, whether it’s technology or products.”
Shook cautions that younger leaders see this approach to corporate responsibility as a necessary part of leadership. “Next gen leaders hold purpose and mission as a primary element and are clear on the fact that companies shouldn’t create a product or pursue a business model if they can’t create societal good in tandem,” she says.
Focus on human connection. “The more digital the world becomes, the more human connection is important,” says Shook. As the world becomes more digital, interpersonal relationships and the skills of emotional intelligence take on new importance. She notes that developing this capacity is not just something we should expect of our senior leaders. “All humans need to dial that up.”
Earn trust by investing in people and innovation. As the Five Elements model of responsible leadership makes clear, neither people nor innovation can be ignored. Instead, leaders must work to balance the two, especially when an innovation might threaten stakeholders of the company.
To illustrate, Shook offers an example from Accenture. Six years ago, the company was looking at the impact of emerging technology on its own business, realizing that many roles currently done by humans, particularly within their Operations business, could be automated or augmented. This offered an opportunity for costs savings, but as a talent-led company, leaders were concerned about job loss. To retain trust, Accenture presented automation as an innovation challenge to their workforce, and offered employees a promise: automate your job, and we’ll train you to do something else.
“We’re now at over 45,000 people who have done that, and we’ve not had any job loss,” says Shook. In part, this is because the company has taken the savings from automation and intelligent technology and reinvested 60% back into their people, making good on their promise and building stakeholder trust.
Accenture and the World Economic Forum have called this “year zero” of a three-year collaboration to explore responsible leadership. Future years will focus on how organizations close the gap between the trust-earning behavior companies intend, and what actually happens.
“We’d like to give a playbook for turning their aspiration into action,” says Shook, noting that this is an especially important priority for the youngest employees entering the workforce.
The report’s authors will continue working with young leaders to explore action-oriented next steps.
Recognizing the importance of financial value as well, future reports will include economic modeling to make sure responsible leadership’s financial implications are satisfactory to shareholders, as well as stakeholders. Shook hopes this report leads to greater commitment to responsible leadership among CEOs and executives.
The ideas of responsible leadership shared in this article are just one theory of what it means to be an effective leader. Find more on leadership theories at this link.