How does the style of leadership need to change in light of the Financial Servies Royal Commission revelations?
In light of the revelations from the Financial Services Royal Commission, now more than ever, our large corporate institutions need to recalibrate towards the ‘Empowerment and Trust’ mode of leadership which requires the organisation to have a defined ‘Purpose’ and agreed ‘Values’ which are embedded into the organisation’s processes and systems and around which their people will self-regulate and hold others accountable for doing the right thing.
There is a continuum in respect to how organisations are run. On one end of the continuum is the traditional ‘command and control’ (CC) model. On the other end of the continuum is the ‘empowerment and trust’ (ET) model.
The CC model features:
- hierarchy
- authoritative leadership
- prescriptive, rules regulations and policies, which may be aimed at doing the right thing, but which people do not necessarily follow.
On the other hand, the ET model features:
- a strong set of embedded values around which people will self-regulate and hold each other accountable
- collaborative leadership at all levels.
For the ET model to work and to empower people to do the right thing, leaders of organisations must develop a climate of trust in the organization. This allows and empowers your people to think through and develop their own view on how a problem should be dealt with. This approach does mean that your people will most likely make some mistakes. What you must do is ensure that where mistakes are made, the environment is one where 'fessing up' does not lead to ridicule or denigration, but rather a focus on what has been learned and how can the mistake be constructively fixed.
If an organization does not have an ET model, then as the Royal Commission into the Financial Services industry has shown, leads to hiding the mistake and sometimes on a massive scale.