How do Companies lead in an Era of Division?

Articles

Published 1 April 2020

Populism has become a serious phenomenon in our fragmented world with fractured models of globalisation and capitalism. It has created divisive ‘Us and Them’ scenarios, forcing companies and leaders in Asia to reframe their views towards business, organisational life, and leadership.

The issue of division has advanced and is exacerbated due to three inter-related phenomena – technology, inequality and elite unresponsiveness, as revealed in HCLI’s 2018 study ‘.

Technology – although expected to create opportunities for innovation, productivity and economic growth, can also be economically disruptive and threaten the current nature of work.
Inequality – with only the top global 1% benefitting from the economic wealth and GDP gains of the last 25 years, ‘blue-collar workers’ have been left facing job displacement, falling wages, and the loss of socio-economic structures. Now, the growing middle class in Asia is displacing this wealth, benefitting from globalisation and free trade, creating income inequality in the region and prompting discontent. This shift creates a fundamental challenge in the region.
Elite unresponsiveness – this is fast becoming a flashpoint for populism because although technological disruption and inequality are enormous challenges, solutions are needed. Otherwise, it creates a sense of injustice that leadership inaction has resulted in society’s elite to prosper at the expense of regular people.

Posing a considerable risk to businesses, a proactive approach to populism is vital for an alternative future and to steer away from further division.

Eight practices that help business thwart the rise of populism in Asia

The Human Capital Leadership Institute offers eight internal and external practices that assist companies in managing this issue, allowing people to flourish and businesses to thrive:

1. Help countries achieve their public interest. Business must operate in a socially responsible manner while being mindful of the national contexts they operate. By proactively understanding the direction of government, along with popular sentiment and critical issues in decision-making, they can assist with significant matters concerning employment, education and healthcare.

“You have to figure out what is the public interest of Singapore and how you can help Singapore achieve its public interest as a global company with a regional HQ here. Or as a global company with a country office here.”

Former Director of Public Affairs for various corporates. Based in Singapore

1. Continue to strategise with your customers as top of mind. In some countries, populist sentiments have triggered incumbent governments to rein back on open borders and trade. Affected businesses lobby for less restrictive trade regulations as this poses a risk to global production hubs and supply chains. Organisations need to frame their argument, so it advocates for customers and their customers, and persuade governments and regulators, beyond just economic facts and figures, to relax any constrictive border and trade controls.
2. Align investors for the longer term with a plan. A short-termism approach causes difficulties in building more successful and sustainable strategies. To overcome these interim pressures leaders must be encouraged to champion, believe in, plan and execute longer-term sustainable strategies that bear fruit, even when facing demands from the board and shareholders to produce quick results. Serving the interests of all stakeholders, as opposed to only shareholders, is essential to the long-term success and health of any business.

“It takes a very special type of leader to turn around and say, ‘I’m not going to lead for the short term. I am going to lead for the long term, and this is my plan.’”

Regional CEO (Asia-Pacific) of a European fintech company

1. Measure success by lifting all four legs of the table. Introduce performance indicators – Revenues, Customer satisfaction, Profit, Employee satisfaction – to track the journey to sustainable success. If each indicator represents one of the four legs of a table, long-term achievement requires the support of each of these essential indicators (or legs) at the same time, evenly. The core team should be able to balance each ‘indicator’ equally, so the table can be lifted while remaining level at all times. For example, driving down costs to increase profits may compromise the quality of goods or service. Alternatively, if focusing on employee happiness means increasing employees’ salaries and benefits, and reducing work hours – how does this affect profits? Examine teams in your organisation – can they lift all four ‘legs’ of the table together. How do you support employees to raise an even table and fulfil your organisational priorities?
2. Give opportunities to local employees. Organisations need to support countries in achieving their public interest, with a critical concern being employment and career prospects for citizens. With this in mind, companies need to employ a fully engaged, committed, and productive local workforce.

“If the government is expecting certain demands to be met, align with it because that is the most sustainable way. Believe in it and invest in it. So, for example, in countries like Singapore and the US, we have aligned with what the government is expecting us to do.”

Human Resources Director (Asia Pacific) of an Indian IT company

1. Accelerate the reinvention of people and business now. Technological disruption is one of the fundamental culprits behind populism, so we must remain agile. This involves upskilling for the future at every level, including leadership which tends to be a laggard in learning. Also, with the constant reinvention of the business model, customer and employee needs, and government concerns must remain a priority.

“You are never under threat when you have stayed ahead of the curve by trying to build the right skills.”

Human Resources Director (Asia Pacific) of an Indian MNC

Share the Cause, Values, and Value. Having acquired investor buy-in of the plan, aligned it with the long-term strategy, and begun the process of reinventing the business and reskilling talent, people need to be encouraged to believe in and act on the plan. This can be achieved by:
- Sharing the cause and seeing those needs in action which galvanises people into action
- Values that guide decisions, particularly in the face of criticism and disagreement, and anchor actions during threatening times
- Your approach towards values reveals your own values. By investing time, money, and energy into a person’s future, it motivates them and exposes your principles.
Create an environment where your people can power on together on the real issues. On a positive, populism highlights and prioritises the grievances of the masses. However, often populist language polarises a population, playing on their emotions and creating ‘the pure us’ versus ‘the corrupt them’ scenario. Such organisational dynamics (or rather, dysfunctionalities) make the lifting of all four legs of the table extremely challenging.

Don’t forget the importance of elite unresponsiveness

These eight proactive practices manage and ideally forestall the business risks of populism. However, although they also tackle the two culprits of technological disruption and inequality, if the third culprit, elite unresponsiveness, is ignored, the positive impact created will not be sustained. Leaders need to listen, have genuine compassion for people, keep the bigger picture in mind and make space for reflection for ongoing success.

Populism breeds, and perpetuates, in an environment of distrust. It is a paradigm which sees the world split between ‘us’ and ‘them’, with the ‘common people’ not trusting the ‘elite’ with power, and vice versa. The parallels between this paradigm and some corporate cultures are apparent – however, every individual can initiate positive change by simply starting with their own sphere of influence.