Influence of the Macro-economic Situation on the Leader’s Success

Svetlana Simonenko,
PhD in Psychology

When speaking about management as one of the most common types of leadership, it should be pointed out that it is influenced not only by the organizational culture of a company and its business goals, but also by the social situation at a macro-level, in other words developments in society as a whole.

From September 2005 until December 2006 inclusive we performed research in order to determine the key competencies that define a leader’s success in Russia. A total of 45 leading Russian and Western companies operating on the Russian market participated in the research. Within the framework of the research we conducted 157 interviews with TOP management and successful middle management in Russia.

Based on the results we created a generalized competency model “20 dimensions”, where the 20 identified competences can be divided into five large clusters:

• Management Skills,
• Interpersonal Skills,
• Decision-Making Skills,
• Individual Traits and Motivational Behaviors.

Each cluster contains four competencies.

Then we compared the competency model “20 dimensions” with standard competency models that had been developed at different times in Great Britain (national British standards of leadership and management from 1998 and 2004). The results of this comparison demonstrated that, despite significant similarities between these models, there are differences between the criteria used to define the success of a manager in Russia and the West. The main differences in the criteria for the success of managers in West and in Russia can be found in the area of interpersonal skills (communications skills, building relationships) and individual traits (positive thinking, self development), which depend to a large extent on cultural specifics and the country’s socio-economic development at the specific moment in time.

In spring 2009 we repeated the interviews of managers of companies working in Russia and Ukraine in order to verify our assumptions on changes to the mission critical qualities of a leader. For this purpose we asked working managers at Russian and Western companies present in Russia to select from the 20 dimensions model what they considered to be the ten most essential competencies and then rank them.

In total 260 TOP managers and middle managers in Russia and Ukraine participated in the survey, of which 160 were managers in Russia and 100 were managers in Ukraine.

Based on the data from the interviews we ended up with the following rating of competences, presented in Table No. 1, compared to the rating of competencies in 2006. In this table the competencies found in both lists are highlighted in bold.

Table No. 1 Comparison of the ratings of a leader’s competencies in 2006 and 2009 (first 11 ratings).

Now if we consider these lists in detail, we will see that most of the qualities in these lists coincide, 7 out of 11, or 8 out of 11, but there are also different competencies. In 2006 Interpersonal Understanding, Persuasive Communication and Responsibility were also recognized among the most IMPORTANT competencies. In 2009 these qualities were not included among the competencies most in demand. Quality Standards, Self Development and Commercial Awareness were highlighted instead of these qualities.

It is particularly striking that the quality ranking first in 2006 – Interpersonal Understanding – is no longer on the list of the competencies most in demand. Moreover, if we look at the rating of all the competencies, we will discover that it is now ranked last. We can also see that another communications competency has disappeared from the list of vital competencies of a leader. It should be stated that both these competencies come from the communications group. This group is completely absent from the new list of competencies.

If we only highlight the qualities ranking in the TOP five, virtually all the qualities of the top five have retained their places, with the exception of Interpersonal Understanding, which has been replaced by the competency People Management.

Summarizing these results, it can be stated that the above example of comparing priority competencies of the 20 dimensions model, based on the results of research in 2006 and 2009, provides a graphic illustration as to how the models of an effective leader change when the social situation changes. Analysis of the received data leads us to conclude that the effective leadership model does not remain static. Or to put it another way, this should be a complex model, where some parameters are universal and relevant irrespective of the specific point in time, other parameters may change depending on variables (type of organization, culture, etc.), while still others will be dynamic, reflecting general trends in socio-economic and technological development globally and in specific countries.

Furthermore, if we seek to define effective leadership as the specific behavior of the leader, which results in the high objective performance of a group and is positively assessed by the individual’s entourage, it is essential that we emphasize anotherIMPORTANT component, without which our presentation on this phenomenon would be incomplete. This component is the goal being pursued by the group and for the attainment of which the leader consolidates the efforts of his or her followers. In order to assess the performance of a group managed by the leader, it is necessary to benchmark the results that were obtained against the perception of the anticipated result, which is the actual goal of these efforts.

Consequently, the model of an effective leader should be built in a three-dimensional space, where the social situation is assessed in one dimension, with the goal pursued by the leader and his/her team or the objective they are resolving assessed in the second dimension, while the behavior of the leader is assessed in the third dimension (diagram 1). We have called this approach the Dynamic Leadership Concept.

Diagram 1. Dynamic Leadership Concept

Incidentally, when we refer to the social situation, we are referring to situations at all levels. The macro-social situation represents developments in society in general, the specifics of the political order, historical events, socio-economic specifics, economic specifics, environmental factors, etc. The situation at meso-level is the culture within which the leader acts. The micro-social situation represents situations where people interact. These situations may occur in different circumstances, for example, in connection with the resolution of a problem in a group, the discussion of an objective with management or with a subordinate, the attainment of an objective in line with predefined standards, etc. It is obvious that identical micro-social situations may be typical of different companies and different organizational cultures. The more unique situations for interaction arise within the framework of this culture, the more significant the differences from other organizational cultures.

When we refer to an objective, we are referring to the wide variety of objectives that a group of people guided by the leader may have to tackle. These could be the business goals of a for-profit organization, or political goals, or smaller and more specific goals of a small group responsible for the organization of a certain event, etc. Depending on the specific goals of the leader and the circumstances in which the leader has to realize them, it is possible to determine the most effective behavioral methods, and then designate the personality traits that an individual should possess to demonstrate this behavior.

On the one hand, the goal is situated in another dimension than the social situation. On the other hand, it cannot be perceived in isolation of this situation. Consequently, the goal is at it were projected onto the specific social situation and is perceived from the perspective of this situation. This mutual projection determines the methods for attaining this goal, which determine in turn the behavior of the people seeking to attain this goal. Within the framework of leadership – this is the behavior of the leader, as he or she attains the goal together with the group that he or she heads and it is this particular individual who should lead the group to attain this goal.

If the goal changes, so does the perspective of this projection, and accordingly the requirements for the leader’s behavior also change. At the same time, however, some of these requirements do not change. In this case the extent of the changes is determined by the extent of the deviation from the previous goal. In other cases where leaders try to attain the same goal in different organizational cultures, their actions will also be similar in some areas and different in others.

References:

1. Simonenko, S., Khrenov, D. Tales and Truths about Assessment Methods of Personnel. М: 2010.