Leadership, Management, and Performance
By Paul C. Godfrey, Academic Advisor
Welcome to the Society of Bank Executives blog post. I’ll post something on this site regularly.
There’s so much ground to cover on the topic of leadership and management that there is no lack of important things to consider. Sometimes the posts will be timely and address current issues, other times they’ll feature timeless wisdom that provides help with current and future challenges.
In the early days of the Coronavirus pandemic, I had a conversation with a former student. We discussed the challenges facing her company, from keeping customers to sorting out supply chain challenges. All these issues mattered but she summed up her biggest business challenge as, “I know how to manage through our current situation, but how do I lead?”
Technology offers tools to manage projects and workflows but the lack of face-to-face contact with her teams brought into sharp relief the essence of leadership: how do we comfort, develop, inspire, and nurture our teams and organizations?
Management is about getting things done; efficiency in production and quality in output. Management focuses on products. Leadership is about helping people find purpose and perform at their highest ability; effectiveness in action, and quality guidance. Leadership centers on purpose. Products are objective and concrete; a purpose is subjective and abstract. We can get things done without asking whether they’re worth doing at all. Whether it’s the coronavirus, political challenges, or the ever-present threat of fintech companies, leaders have two recurring challenges to deal with.
1. Organizing Chaos
We see chaos everywhere around us. COVID-19 has remained remarkably persistent and we have yet to realize its long-term impact on global and local economies. Labor markets send conflicting and opposing signals: almost every window has a Help Wanted sign and wages are up, but the effects of the Great Resignation mean that some jobs won’t come back. Management and its focus on tasks can help create order out of chaos like this. Longer-term, however, we can’t just play whack-a-mole to each new challenge. We need more than order, we need organization.
Organizing chaos doesn’t mean controlling it. Organizing means understanding it and the forces that drive it and working to leverage those drivers to refine your bank’s purpose. If creating order means giving clear instructions, organizing chaos requires clear and unimpeded listening. Order means sequencing actions, organization requires understanding how changes interact with each other, and where they may cause rebounds and ripple effects. Order is about getting the hand-off right between people, organization is about getting all hands involved.
Bottom line: If you want to manage well, talk to your teams; if you want to lead, listen to them. Be firm around core values but remain flexible in strategy and tactics. Set up checks and balances to ensure your decisions create long-term health and viability for your bank. As uncertainty rises, your willingness to be flexible and adapt should rise in tandem.
2. Creating Faith
Back in the 1930s, in the midst of an economic depression that wouldn’t end, Chester Barnard, then President of New Jersey Bell, gave a series of lectures at Harvard on the topic of management, organization, and leadership. His last lecture explained the need for moral leadership by those at the top. He said that moral leadership entailed the creation of faith, “Faith in the common understanding, faith in the probability of success, faith in the ultimate satisfaction of personal motives, faith in the integrity of . . . authority, faith in the superiority of the common purpose as a personal aim of those who partake in it.”
Management is, at its essence, a technical art. Managers inspire faith because they help people understand how to solve problems, breakthrough barriers, and create successful outcomes. It’s the world of "What to Do and How to Do It." Leadership, as Barnard notes, is at its essence a spiritual and emotional art. Leaders inspire faith when they help people connect their work to larger ends; success for the organization means success for employees, but also for other key stakeholders such as customers, investors, and communities. Leadership is all about the "Why" something is worth doing in the first place.
Bottom line: Sit down and write out the common purpose that binds stakeholders to your bank. It may not be your mission. When you have that in hand, carve out time in every customer interaction, employee meeting, and investor presentation to help people connect their actions today with the set of long-term objectives you share with them. Be open about real challenges that uncertainty brings, but also communicate hope and faith that things will work out well.