Any article on the UK economy at present is pretty grim reading, so the challenges for our business leaders are ever increasing. We asked Graeme Bissett, highly regarded and experienced Chairman and Non-Executive Director, with experience of many types of businesses and sectors, for his thoughts and advice on leadership during these volatile times:
“It’s legitimate to ask ‘are the times we’re living in really that much more volatile than in previous periods of crisis ?’ I’d say the answer is a resounding yes, with the exception of the two periods of World War in the 20th century for obvious reasons.
If you frame the question, as say the 20th and 21st centuries, rather than earlier times, the crisis periods in the UK have been:
- Depression in the 30s
- The post-war rebuilding periods
- Technology introduction in the 60s, 70s and acceleration into the 80s right up to today
- Industrial unrest in the 70s and the economic impact of Thatcher’s policies that followed
- The currency crisis in 1992 following ejection from the ERM
- The dotcom bust in 2000
- The financial crash in 2008
- The pandemic and continuing ramifications of Covid-19
But an average business leader today in the UK is dealing with some or all of these challenges :
- International trade disruption due to Brexit, non-tariff barriers and despite the political posturing, no serious evidence of any upside
- Legislative and regulatory change as “EU law” is changed or jettisoned
- Pent-up societal disharmony after 14 years of stagnant real wages, industrial unrest, societal division
- Inflation in supply and labour costs at levels not seen for 50 years, energy costs exponentially higher even with government support
- Cost of living stresses on people – energy, interest costs on the rise from a low base (more below), food costs
- Radical change in employment arrangements – pressure to achieve proper diversity & inclusion, working from home patterns, quiet quitting / early retiral
- Accelerating technological disruption
- Cyber security threat
- Compromised political leadership in the UK, both in calibre and in policy orientation
- Scottish independence and impact on investment into Scotland and by Scottish-based companies
- Supply chain upheaval caused by Brexit, Covid and the war in the Ukraine, with escalation worry
- Uncertainty of supply to and from China as geopolitics plays out.
- And as a result of Kwarteng’s disastrous mini-budget, accelerating interest costs for mortgagees and rising interest costs for businesses, in both cases if you can get credit in markets that have paused
Many of these can be individually important for companies, but the aggregate effect is pretty chilling.
And I would add an over-arching dimension – the cumulative impact of these factors and a prevailing sense of unease on the mental health and general well-being of everyone, including responsible senior business leaders regardless of their individual level of financial comfort. There is no playbook for dealing with this combination of challenges, so what are we to do.?Here are some thoughts:
- If you agree with me that these are seriously difficult times, and that the impact on mental health and general well-being is a valid point, a leader who takes time to listen to his or her people will be a major asset. Listening is a skill and the benefits are often under-rated, but especially so when there is real concern about the weight of the challenges people are facing.
- Add decisiveness. There is no conflict between being a good attentive listener and being a clear-minded decision-maker. The former will improve the latter. But people also respond to rational and determined leadership, a feeling that views have been listened to but when decisions have to be made they’re made and communicated with the minimum of fuss.
There are a number of specific skill sets that are now either much more valuable and much more challenging or indeed novel –
- Procurement – finding reliable alternative channels, managing multiple channels to build resilience, cost and currency management
- Margin management – dealing with customer end of the severe inflationary equation
- Cash flow management – of course
- Recruitment in a stretched labour market, especially for some specific skills such as ICT, digital marketing, cyber
- Creative, sensitive but commercially savvy HR strategies – marrying changed employee objectives with commercial imperatives
- Pragmatic deployment of tech – out of the box, rapid deployment / development, witness response to lockdown, cyber security expertise
And then what should non-execs on our boards do ?
The first thing is to invest time in prioritising your contribution in line with the real challenges in the business. Minor point-scoring is bad enough in good times, but in tough times it is utterly corrosive. What are the big issues the business is facing, what experience can I bring to bear, how can I support the execs and cut them slack when needed. Do I really need to know about the variance versus budget in the stationery line ?
Secondly mobilise your skills, not by doing the execs’ job for them but by prompting useful action and contextualising those big issues based on your own skills and experience. Should be doing this anyway but it’s more important in tough times (for example be alert and sensitive to the challenges with forecasting amid an epidemic of uncertainty ; encouragement to discipline credit control, not a harrumph about bad debts).
Thirdly work as a team of non-execs, with regular contact and discussion, don’t always wait for the chair to lead but if you are the chair then take the lead. Compare notes, agree what approach would be useful, encourage mobilisation of personal skills and experience, avoid execs feeling they are being shot at from all angles.
Fourth, keep the big picture and the long-term clearly in mind. It’s the old adage about remembering that the objective is to clean the moat when you’re up to your ass in alligators. Have a mental checklist that tests short-term proposed action and decisions against a rational long-term strategy.“
Graeme Bissett is an experienced corporate financier and qualified chartered accountant, having previously been a partner with Arthur Andersen LLP and finance director of international groups. He is currently a non-executive director of Calnex Solutions plc, Smart Metering Systems plc, Aberforth Split Level Income Trust plc and Cruden Holdings Ltd. Graeme was formerly Chair of Macfarlane Group plc and acted as a non-executive director of businesses including Interbulk Group plc and Belhaven Group plc. He currently undertakes a number of pro bono appointments including as Trustee at Citizens Advice Scotland and the Entrepreneurial Scotland Foundation.