When you think about Leadership Confidence, your thoughts probably go to how employees feel about the senior leadershiop team. But have you thought about what leaders feel about themselves or about their own teams lately?
Your senior executives set the tone for the entire organization; employees, customers, partners, shareholders, and suppliers all listen and learn from your senior executive team. Your stakeholders worry when the executives worry; they celebrate when the management team looks happy. Leadership "aura" is catchy.
Therefore, you may want to take the results of this month´s Leadership Pulse research to your senior teams and ask them what they think. How are their confidence levels today? And how does the level of confidence exhibited by your leadership team affect the attitudes and behaviors of your employees and other stakeholders?
Confidence in Economy Up
The October results of the 2003 Leadership Pulse indicate that senior leaders are growing more confident in the economy. The Leadership Confidence metric has been collected every other month starting in June, 2003. In October, responses were received from 1,035 senior leaders. The sample contains 47% C-core exeuctives (CEO, CFO, CIO, etc.), and 83% are a Director level or above. The sample also contains a broad range of industries from mining and agriculture to technology, transportation, communication, to retail trade, and more.
In June, 14.3% of the senior executives polled expressed confidence in the economy, and in October, that number rose to 22.8% (this percentage is the total number of people who responded either 4 or 5 on the response scale; this reflects answers that are confident or very confident).
Confidence in Themselves Down
The Leadership Confidence research tracks four other metrics, and it is interesting to note that although confidence in the economy improved in October, leaders in our sample expressed less confidence in other aspects studied. Scores on confidence in their leadership team, ability to execute on their vision, that they have the right people and skills, and their ability to change either remained the same or decreased from June.
Perhaps with the economy picking up even slightly, executives are feeling more pressure to drive financial results quickly. This pressure can lead to unrealistic expectations that may reduce internal confidence. It´s important for all leaders to stay focused and realistic because our research shows that confidence levels have significant impacts on future performance. Even though the economy is improving, there may still be a long road to full recovery, and it will take hard work and patience to continue to climb out of our economic slump. Shareholders do not want their organization´s employees losing hope or confidence so early in the recovery journey.
Learning from Consumer Confidence
Why do senior business executives and government leaders all care so much about consumer confidence? They track consumer confidence because consumer spending fuels approximately two-thirds of the U.S. economy; thus, consumer confidence predicts economic growth. When consumers are confident in the economy, they are more likely to spend money today on goods and services. Spending today spurs business activity in the future.
Your employees are responding to their own confidence in your firm´s vision and strategy in the same way that consumers respond to confidence in the economy. When employees are confident in their organization´s strategy and ability to execute on a new vision, they behave in ways that drive the company toward the future. Similar to how consumers spend money on goods and services, employees spend time and energy to move their companies forward toward new visions. But when employees are not confident in the future at work, they engage in behaviors that parallel those of consumers.
Consumers with low confidence levels choose to save money rather than spend it. Even worse, consumers may choose to sell volatile assets such as stock or real estate in order to be safer (cash in the bank). Employees engage in similar types of behaviors. Rather than exert energy to move a company forward toward a new vision, employees that lack confidence in their vision will withhold effort in moving forward, and instead, work to keep the company right where it is (saving what they have today). In the most unfortunate case where the creation of a vision reduces employee confidence in the future, they may choose to exert energy to return a company to its former state.
Behaviors that result from high and low confidence states
The Role of HRM
As a strategic HRM executive, assessing and monitoring confidence levels are key to helping your business thrive as the economy starts to trend upward again. The lesson learned from this month´s Leadership Pulse data is not simply that confidence in leadership matters; it´s that confidence starts at the top.
Take Action Today
Take the Pulse of your own leadership team; learn about their confidence levels, their concerns, and their worries. If there are things getting in the way of their confidence, help them articulate the issues and develop an action strategy to solve their problems. Taking action builds confidence and then communicating action being taken spreads confidence to others in your firm.
No one company is perfect in everything it does; as the economy picks up, demands on your leadership team will change but will be just as intense as they were when the economy headed downward. The pressure of trying to make quarterly numbers and to be part of the economic "upturn," all while continuing to be economically frugal (not spending money too quickly on new employees, marketing, etc.), will strain your leadership team. HRM executives can help be the confidence makers and spread energy and confidence throughout the organization.
