Leadership in Crisis
Outsourcing of operations, foreign affiliate sales, the rise of CSR as a profession. These events are all catalyzed by momentous global shifts in population demographics, labor provision, industrial structure, and financial integration. Together with a mounting imperative for sustainable business operations, the restructuring of economies and industries worldwide will have far-reaching implications for business and the corporate social engagement (CSE) space. As a window into this year’s Corporate Investment Fellowship, Changing Our World’s summer Fellow Nicolas Picard will share his perspective on timely topics that intersect with these large macroeconomic trends. Look out for the full report to be released later this year.
Analysis of several McKinsey surveys of global senior executives reveals an evolution of the core tenants of leadership. As societal forces push and pull at a faster and more volatile pace, businesses in developed and emerging markets are finding it difficult to keep up with a mounting number of stakeholders and issues.
Meanwhile, the talent supply pipeline is changing as well. Young professionals who seek meaningful and inspiring careers are demanding more social and environmental responsibility courses in their MBA’s, a trend that most B-schools are struggling to process. There are also changes in non-profit sector education, with a move towards a more formalized academic path into the sector. For example, Indiana University recently awarded the world’s first undergraduate degrees in philanthropic studies.
Business: A Talent Gap
At the center of the debate are two general trends with ensuing implications:
First, business sales and operations are increasingly international. Foreign affiliate sales have increased by 96% from 2002 to 2010. IBM expects to earn 30% of its revenues from emerging markets by 2015. Meanwhile, in the US, less than 10% of directors of the largest 200 companies are non-US nationals.
It has never been more important to adequately recruit and manage top business talent.
For emerging economies, the problem is that executives are scarce, expensive, and hard to retain. A 2008 survey by Ashridge/EABIS and the UN Principles of Responsible Management reports that 76% of senior executives believe their organizations need to develop global-leadership capabilities, but only 7% of executives think they are doing this very effectively. There are also challenges in the West, where the proportion of staff ready to relocate and expatriate for a job has decreased over time.
Second, business leaders are beginning to rethink and redefine business as usual. Megatrends like ‘sustainability’ and ‘shared value’ call for a more engaged relationship with civil society, and output that goes beyond pure profit. The economic effects of aging, income and population growth are stressing the public sector beyond capacity, with the remaining responsibility falling to business.
A need is emerging for leaders to become “tri-sector athletes”, effectively adapting to crises by understanding and navigating the private, public, and civil society sectors.
This translates into an expanded scope of work, and different recruitment criteria. A McKinsey Global Survey reported that 63% of business respondents already feel that their organizations build effective relationships with governments and communities. Increasingly, businesses need to go further and build direct rapport with customers. Greater scrutiny of all business aspects has magnified the complexity of managing risk, and justified the importance of “adaptive” leadership.
Education: Creating the Pipeline for Future Leaders
There are clear evolutions in the aspirations of current Generation Y job seekers. Research by Net Impact organization shows that 65% of graduating students expect to make some impact for good 6 years after starting their first job. 74% of job-seeking students want to work for organizations that share their values, and 65% want the possibility to contribute to society as part of their job.
There are also indications that business school administrators are responding to demand. In 2007, the Financial Times reported that 84% of the top 50 Global MBA programs required some ethics or CSR component in their curricula. The UN Principles for Responsible Management Education (UN PRME) were created to inspire and champion responsible management education, research and thought leadership. 463 universities and business schools are current adherents to the six core principles. The Aspen Institute’s “Beyond Grey Pinstripes” project creates an online repository of B-school classes worldwide that in integrate social, environmental or ethical perspectives. Finally, continued growth of Net Impact, a student-run organization, signifies growing interest in more socially responsible careers (for example in the nascent field of Corporate Social Responsibility).
However, research by the Business Civic Leadership Centre, the Corporate Responsibility Officers Association, and IBM shows there is much to be done to formalize the corporate responsibility (CR) profession. Professional recognition of the role of a CR officer is limited by the lack of a formal certification, professional association, or clear toolkit of knowledge and skills tracing a clear career path for aspiring practitioners. Furthermore, the number of CR-related dissertations has consistently stagnated at around 25% of the number of dissertations in finance fields.
The corporate move up the food chain from reactive traditional business to proactive global-but-local management must be catalyzed by forward-thinking educational institutions. Though a formal CSR career track may be premature, business schools that are attuned to student demand for social and environmental content are better aligned to meet the future corporate demand for tri-sector leaders.
Nicolas Picard is the 2012 Corporate Social Investment Fellow at Changing Our World’s New York office. Currently a Master’s candidate at Carnegie Mellon University’s School of Public Policy and Management, Nicolas is also co-directing an international consulting non-profit (SCIO) doing development work in Ghana. Before graduate school, Nicolas was working in development at the United Nations University and in curriculum-design at a Singaporean micro-business school. Nicolas is French and holds a B.A. in International Development from McGill University in Canada.
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 A term coined by Joseph Nye, an American political scientist and former dean of the Harvard JFK School of Government