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Leadership cultures that engage constructively with the opportunities of digital and sustainability are better prepared for economic ups and downs.
The combination of a strong economic rebound in 2021 and ongoing challenges with employee retention and labor shortages pushed uncertain economic growth into the number two spot of our 20 external threats to organizational health.
However, as the effects of Russia’s invasion of Ukraine on supply chains and energy markets continue to unfold, and we see levels of inflation not seen in many markets this century, it is clear that all leadership teams need to be laser focused on economic uncertainty.
50% of leadership teams who cited uncertain economic growth as a top threat are not prepared to face threat
Top External Factors Impacting Business Health in next 12-18 Months
% of leaders ranking in top 5 (from list of 20 threats)
Half of executive leaders (50%) and of board directors (54%) say that they do not believe their organizations’ leadership team is prepared to address the threat of economic uncertainty. Our analysis shows some notable differences between those organizations that feel prepared to face the threat of economic uncertainty and those that do not.
What differentiates the organizations that are prepared to address this threat? We found a significant link between two key factors that drive leadership preparedness to face economic uncertainty: a leadership team’s level of digital maturity and how they are advancing their organization’s sustainability agenda.
Economically prepared leadership teams are more likely to engage positively with digital adoption, sustainability, industry collaboration and risk taking
Digital, Cultural, and Sustainability Factors by Economic Preparedness
% of leaders that agree or strongly agree*
Leaders who feel unprepared to face economic uncertainty are 54% more likely to also feel that their company is lagging in the adoption of digital technologies when compared to their peer companies. Digital maturity is not simply a question of having the necessary technology and data, but rather a function of organizational culture. Our analysis shows that leaders who feel prepared to face economic uncertainty are 3.75 times more likely to work in a culture that engages constructively with digital failure and can pivot quickly to test new solutions, as well as being 56% more likely to take risks to stay ahead of competitors.
Our findings also show that leaders who say their organization has a plan to address sustainability are more likely to feel prepared for the economic ups and downs ahead. Leaders at economically prepared organizations are 19% more likely to have a sustainability plan. The complexity of climate change and other environmental and social issues means they cannot be solved alone and require cross industry collaboration. Nearly all CEOs who believe their leadership teams are not prepared to address economic uncertainty say they spend too little time collaborating with other leaders in their industry to solve industry-wide problems; CEOs at well prepared organizations are almost 5 times more likely to say they spend the appropriate amount of time collaborating with industry peers.
What this means for leadership
The connection between preparedness to face economic uncertainty and progress on sustainability and digital transformation highlight two important implications for leaders related to cohesion and culture. Effectively driving sustainability outcomes and enabling digital transformation are contingent on the leadership team’s ability to drive cohesion around a set of long-term goals and to build a culture that embraces innovation as an engine of change.
What Our Experts Are Saying
CEOs must stay on top of understanding how much confidence and clarity there is. Does everyone in the business have the whole story as it relates to key issues and future changes? The farther removed you get from the CEO, the greater the risk of a lack of clarity about the organization’s position in the marketplace and its strategy becomes. Especially in a hybrid environment, identifying where sources of disconnect and echo chambers exist, and actively overcoming them, is critically important to driving organizational cohesion. Jamie Hechinger
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The opportunity and necessity of driving both a digital transformation and a sustainability transformation is huge. And for many companies the two are intertwined. Not only can technology be an enabler of sustainability, but the necessary culture of agility and learning orientation is the same for both. The capability to curate and harness culture is a critical leadership competency for CEOs today. Laura Sanderson |
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MethodologyEvery year, Russell Reynolds Associates administers The Global Leadership Monitor, an annual survey of executives and non-executive directors, which tracks key threats to organizational health and leadership preparedness to face them, as well as indicators of confidence in leadership, and leaders' engagement and career aspirations.
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Authors
Jemi Crookes and Tom Handcock of RRA’s Center for Leadership Insight conducted the research and authored this report.
Learn more about the authors and The Center for Leadership Insight
The authors wish to thank the 1,500+ leaders from RRA’s global network who completed the 2022 Global Leadership Monitor. Their responses to the survey have contributed greatly to our understanding of leadership in 2022 and beyond.
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2022 Global Leadership Monitor
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