Route2 leadership paper FINAL

LEADERS IN THE
SPOTLIGHT
Making sense of leadership
in a time of austerity
April 2011
Authors:
Jane Boyt
Debbie Fuller
Rupert Widdicombe
Matthew O‟Connor

2 Route2: Leaders in the SPOTLIGHT
Route2 carried out this research to better
understand the opportunities and challenges
facing public and private sectors leaders during
the current economic crisis.
We held a series of discussion groups and face-to-
face interviews with senior leaders from a range of
sectors including financial services, IT, retail,
consulting, transport, local government and
education.
This paper summarises the views of the leaders we
spoke to. (A full list of participating organisations
can be found on page16).
We would like to thanks these organisations and
individual leaders for their time and expertise.
The organisational
perspective
How organisations
can adapt to
sustain growth and
performance
4
9
Personal response
and behaviours
How leaders can
inspire and lead
their people while
transforming their
organisations
13
Conclusion
Strengthening the
psychological
contract between
leaders and staff
is crucial in
challenging times
LEADERS IN THE
SPOTLIGHT
Making sense of leadership
in a time of austerity

“In times of austerity, the leader becomes
a lightning rod; in bad times employees
really care who the leader is.”
Marc Sands, Director of Media and
Audiences, Tate
The global financial crisis of 2007 started a chain of events that is yet to fully unravel.
The collapse of some of the largest financial institutions in the world forced
governments to create massive financial rescue programmes, in the process
derailing domestic fiscal and monetary policy. The knock on effect as banks de-
leveraged halted economic growth, hitting property and employment markets.
In the UK, the private sector has already lived through two years of recession.
Companies have learned and adapted; the survivors are leaner, more agile. Now,
Government spending cuts of an unprecedented scale are beginning to hit the
public sector. At the same time, the government‟s localism policy is putting the
citizen at the heart of spending choice, requiring a radical review of how public
services are delivered.
The prevailing negative economic climate is now affecting almost every individual
and organisation in the country. While the private sector is currently holding steady,
with significant growth in financial services, many companies are gearing up for an
economy shaped by higher unemployment and reduced consumer spending
power. The smart companies are applying the lessons learned in 2009.
The change is only just beginning for the public sector and comes after 14 years of
growth. The public sector is now being required not only to radically cut costs, but to
also completely transform services. The dilemma facing senior leaders is stark: how
do you devolve decision-making and service delivery when the scale of change
seems to demand greater centralisation and control?
Public sector workers, meanwhile, must continue to do their jobs knowing
major change is inevitable – if they keep their jobs they will need to start
working in a way which is unfamiliar and unknown. This is new territory for
many and there is great concern about what this will mean and how
their performance will be judged.
The way in which
the change is
implemented has
never been more
important
INTO THE
UNKNOWN

“Make it clear for people why they are
still here, don‟t bury issues, engage
people in debate”
Professor Dame Pat Collarbone,
Director, Creating Tomorrow
Route2 carried out this research to better understand the opportunities and
challenges facing public and private sectors leaders during the current
economic crisis.
We held a series of discussion groups and face-to-face interviews with senior
leaders from a range of sectors, including financial services, IT, retail,
consulting, transport, local government and education. Our research was
framed around two key questions:
1. How must organisations adapt if they are to sustain growth
and performance?
2. How do leaders inspire and lead their people while transforming
their organisations?
In answering these questions, the leaders we interviewed said the scale of
change faced required them to be at their top of their game – giving their
people hope by providing a clear vision for the future, energising their
leadership teams, and engaging widely in designing new ways of working.
They told us that successful change would depend on people who are
engaged, committed and competent in the new way of doing business.
This paper summarises the experiences and insights of the leaders interviewed
by Route 2 on how to achieve effective and sustained change.
Insights from
SENIOR LEADERS

The organisational perspective
Adapting to sustain growth and
performance
Use vision as an anchor
Involve people in the transformation
Work through your leadership team
Cut and reshape with respect
Use evidence-based reasoning
Leaders’ responses and behaviours
Inspiring and leading in a period of
transformation
Be clear, honest and visible
Build relationships
Model the behaviour you want to see
Keep learning
In carrying out this research, we looked at two
perspectives on leadership in a time of austerity – at the
level of whole organisations, and at the level of the
individual leader.
Insights from
SENIOR LEADERS

The leaders we interviewed told us that
despite the high degree of uncertainty in
their sectors they were acutely aware of
the need to provide a clear vision of the
future for their organisations. People at
all levels responded positively to a
detailed, positive and consistent view of
the situation and the way ahead.
A clear vision is always important but its
importance is heightened at a time
when employees feel both their own
and their organisations‟ futures are at
risk. Knowing what the new world will be
like gives people a sense of what will be
required of them, helping them to feel in
control.
Not everyone will like the vision.
Nevertheless, it gives people a choice: to
sign up to the new way of working or
accept that they no longer fit with the
future and direction of the organisation.
As well as having a clear vision, leaders
need to ensure it is communicated
effectively and continues to be
promoted through difficult times.
Use VISION as
an anchor
“Communication about the future strategy is key. In the
downturn there was an increased focus on
communication with and between Partners to ensure
alignment and clarity of direction. This was cascaded
through the organisation by the partnership group. This is
still critical.”
Tim Payne, Partner, HR Chief Operating Officer for
KPMG Europe
“The [public sector] cuts are significant and this kind of
situation is not part of many people‟s experience.
Therefore, it‟s important to provide a vision and a feeling
of hope. A vision gives a sense of where we are going.
The cuts feel like they are being done to people and so
creating engagement in change, allowing people to
shape services, provides hope for the future.”
Steve Reed, Leader of Lambeth council
“We have an urgent need to change the way we deliver
services. We can‟t take on this challenge and meet the
required cost savings without a major transformation in
the way we work. This is huge. It requires belief,
momentum, vision, energy and drive – a real picture of
what the future could be like needs to be
communicated. Staff won‟t take the bold steps in
change without that clear vision. The trick has to be to
generate confidence in a new future at a time of ever
increasing uncertainty.”
Katherine Kerswell, Group Managing Director, Kent
county council
The Organisational
Perspective
How organisations can adapt to
sustain growth and performance

Significant change requires people and
organisations to think differently and to
innovate. In times of uncertainty,
organisations, leaders and employees
tend to stick to established ways of
solving problems. There‟s a tendency to
default to simply working harder rather
than working differently.
Releasing employees‟ creativity and
initiative is most likely to happen when
they are engaged, are part of a team,
and are meaningfully involved in
shaping their own future. Leaders can
encourage innovation by:
o ensuring communication is two-way
and messages are consistent
o ensuring wide involvement in
designing the future
o preventing established ways of
working from getting in the way of
new approaches
o demonstrating that senior leadership
have as much at stake as everyone
else during difficult times
o being open about the future so that
everyone feels they are in the know
and can choose to sign up or not
o being clear on the skills and attitudes
that will be needed so that staff can
respond, and feel in control of their
future
Involve
PEOPLE in the
transformation
“This is transformation. You need to work
together to question and change the
way things are done now in order to
manage this level of cuts”
Graham Martin, Executive Coach,
Lecturer and Non Executive Director
"Encourage your employees' involvement in solving
business problems. It is important to make it clear that
you really want their involvement. Show them that
their ideas are listened to and acted upon. Then
they'll believe that you really are interested in their
help and they'll offer even more."
Louise Redmond, Director Governance Services, The
Law Debenture Corporation
“Employees are the key. It is essential they recognise
where you are, so they‟re engaged enough to do the
talking and identify the solutions; after all, they know
the business as well as anyone. It‟s about listening to
your champions.”
Rebekah Wallis, HR Director, Ricoh UK
“You must encourage innovation. Allow people to
take a chance, tell them, for example: „I want you to
succeed and my commitment to you is that I won‟t
nail you for the three in ten innovations that don‟t
succeed‟.”
Andrew Potter, CEO, NCP
“The added dimension of the current climate is that
there are so many things we don‟t know; how are
businesses going to reformat, is a local authority going
to fall apart, or is it going to restructure, reposition
itself, create different traded services so it survives.
These are all new mindsets.”
Geraldine Hutchison, Assistant Director, CfBT
Education Trust

The spotlight may be on senior leaders
but they are acutely aware that the
effectiveness of the wider leadership
team is what‟s crucial in times of
significant change.
Many changes fail when messages are
diluted or diverted. To communicate a
sense of confidence throughout the
organisation, the wider leadership must
be visibly aligned to the change plan,
acting as a cohesive team. They need to
be equipped to cascade the message,
and tailor it appropriately and faithfully
to the people below them.
When the leadership team is aligned
and cohesive, it gives senior leaders the
confidence that the change plan will be
carried through. Listening, and the
honest flow of information in both
directions is essential – senior leaders
need people to be able to tell them
what is really happening and not just
what people think they want to hear.
Work through
your LEADERSHIP
team
"We have a dilemma; a risk-averse culture
and an environment where things need to be
done differently. Our survival depends on
bright ideas; we need to communicate and
reinforce the good ideas."
Professor Steven Cowley, CEO, United
Kingdom Atomic Energy Authority
“Top managers need to engage with staff. It‟s not as
simple as just walking the floor. It‟s about how you
communicate, how you facilitate conversations.
Encourage employee voice and talk about impact:
people must feel they are heard to be empowered.”
Janita Bagshaw, Director of Royal Pavilion and
Museums, Brighton
“Going through a big change, there‟s a huge desire
to have one simple, combined message. You have to
keep asking yourself how is this message being
tailored, are all middle management doing the
translation for you? This is a consummate challenge in
a time of austerity when people want certainty. On
the one hand you want to get your top level
messages across in a way that is very simple and
applicable to everyone, on the other if you don‟t
make them specific enough for the person working in
the warehouse in Turkey or in the store on the Strand,
it is very difficult to have an impact.”
Andy Hornby, Group CEO, Alliance Boots
“Never underestimate the ability of middle leaders
and managers to stop what you are planning to do.
In most organisations, there is a network of influencers
and leaders alongside the formal structures – talk to
that network and communicate informally as well as
formally”
Peter Maddison, Olympic Police Coordination Team

A striking aspect of our research is that
the way in which an organisation is
reshaped is a far higher priority for the
senior leaders we spoke to than in past
downturns.
The scale of job cuts that is anticipated,
coupled with the level of uncertainty
about the future, mean that leaders are
considering how they are managing
leavers and the impact this has on those
who stay – to avoid the fear among
employees that comes from seeing
good people leave or fail without
explanation.
The leaders said they needed to keep
an eye on the longer term as they cut
and reshaped their organisations.
Cut and
reshape with
RESPECT
“It‟s important to help people leave with respect.
Treat leavers well, as people are watching. It's
important not to lose employees‟ trust.”
Rebekah Wallis, HR Director,
Ricoh UK
“Reinforce people‟s strengths and up the level of
feedback-giving: staff who are staying need to
maintain a growth mindset and, equally, if you‟re
leaving the organisation then it‟s important that you
leave us as a vibrant, passionate leader.”
Maggie Farrar, Strategic Director, National College of
Leadership for Schools and Children’s Services
“I am open with staff about the financial position. But
given our (staff) turnover, and the fact that it‟s always
challenging to recruit the sort of specialists we need,
such as people who can interpret clinical trials, I think
we can reshape without compulsory redundancies. I
can be upbeat about individual career prospects. I
can say „If you want to stay I can give you an
interesting job‟.”
Sir Andrew Dillon, CEO, National Institute of Health
and Clinical Excellence
“Make sure that jobs are designed so that the work
itself is interesting and rewarding. This can increase
engagement and productivity hugely. And for some
this has greater impact than efforts managers make
to get employees motivated about the company; try
getting them motivated about the work as well."
Louise Redmond, Director Governance Services, The
Law Debenture Corporation
“Managing leavers well was important in 2009. Way
over 80% of staff agreed to vary their terms and
conditions and take on board flexible futures – this
said a lot about trust in the organisation.”
Robert Bolton, Partner, Head of People and Change
(Public Sector), KPMG

The leaders we interviewed stressed that
evidence and data are essential when
creating a clear vision of the future and
a compelling rationale for change. This
evidence should be built into all the
conversations that are happening in the
organisation.
Increasingly, bruised and sceptical
employees need convincing that the
planned changes make sense and are
well thought through – and not reactive
and ill-considered. There‟s an
opportunity for organisations to build
confidence among employees by
drawing on data collected by staff to
inform innovation and decision-making.
In addition, sensible hypothesis and
scenario-testing among employees can
be a way of identifying and developing
the „champions‟ who will be important in
the transformation to come.
Use data and
INTELLIGENCE
well
“Always start with the customer and prioritise
data and activities by asking „does this add or
take away from the customer?‟”
Andy Hornby, Group CEO,
Alliance Boots
“Hard times make real data rather than assertion
important. Getting at the right data and looking
beyond your own assumptions is key.”
Robert Bolton, Partner, Head of People and Change
(Public Sector), KPMG
“We are blitzed by information, hundreds of emails,
customer research and campaigns. The hardest thing
is to know what is important, which part of the river to
listen too, which colleague group to listen to. The
tendency is to suck in more and more data and it can
be hard to see things clearly. Leaders have a
responsibility to provide staff with good information,
genuinely gathered at the right level.”
“Information and data are important but you need to
work through information overload to understand
what‟s really going on. Make sure managers have up-
to-date, relevant and real information that helps them
do their jobs
Rebekah Wallis, HR Director, Ricoh UK
“You need a lot of intelligence from within your
organisation and it‟s easy to get distracted by the
echo problem: where the leader shouts something,
then hears people repeating it back because that‟s
what they think you want to hear – so you don‟t find
out what the real problems are. So the question is:
how do you get your business intelligence?”

Be CLEAR,
be HONEST,
be VISIBLE
Personal response
and behaviours
How leaders can inspire and lead
while transforming their organisations
The leaders we spoke to know how
important it is to be visible, to spend time
on the “shop floor”, particularly during
periods of uncertainty, re-organisation
and cuts. They need to engage with
people, participate in the emotion of
the situation and, where needed, act as
a steady hand to deal with any kick-
backs and difficulties. Employees at all
levels respect the truth and want to hear
it, even if the truth is „we don‟t know‟.
Allowing leaders to have a low-level
presence within an organisation can
significantly undermine efforts to engage
people in the planned changes. By
being widely seen and by
communicating honestly, a leader is far
more likely to take employees with them
through a successful change.
“I‟m staggered by the significance that leaders have;
the attention people pay to their body language,
noticing whether they are in their office, or locked
away in meetings. Leaders have to visible, it‟s not
good enough to email.”
“It‟s about communication. As a leader, if you are not
visible and articulate, how will people know where
they are going, how will they have confidence in you,
how will you help them understand?”
“We‟ve managed uncertainty in a number of ways
but key was creating an internal communications
portal. This was a focus to manage rumour – it was a
breakthrough as it reduced anxiety, allowing staff to
focus on work rather than the future.”
Maggie Farrar, Strategic Director, National College of
Leadership for Schools & Children’s Services
“Be visible – have a word with everyone not just your
favourites. As a leader you are a presence – use that
to give people hope and confidence.”
Professor Dame Pat Collarbone, Director, Creating
Tomorrow
“Leaders need to make sure that they see, hear and
feel things on the ground but are also able to take a
helicopter view to see emerging patterns and
direction of travel.”
Tessa Mason, Relationships Manager, Carnegie
Leaders

The leaders we interviewed reminded us
of the importance of the informal
networks and channels that exist in every
organisation alongside the formal ones -
leaders need to be plugged into these.
This means getting to know key
individuals at all levels: those who really
know what is going on, the opinion
formers, those who know what works and
what does not, the enthusiasts who have
ideas but don‟t know how to get them
implemented. Building mutual trust is at
the heart of this kind of communication.
Leaders can benefit from getting to
know the staff whose work will be
ultimately reshaped when the changes
come to fruition. One way to do this is for
leaders to get directly involved in some
of the change projects.
Effective leaders can help key staff
develop needed attributes by taking on
a coaching or mentoring role. The
leaders we spoke to stressed that these
relationships have to be two-way. The
bottom line is this: work on those
relationships, then employees will believe
and trust in your leadership.
Build trusting
RELATIONSHIPS
“I‟m very aware of the need to reinforce
trusting relationships. I take more time to
manage the micro elements of relationships
as there may not be time to let it ride”
Maggie Farrar, Strategic Director, National
College of Leadership for Schools and
Children’s Services
“If you get to know your staff you can draw on their
strengths. You need to listen to the wisdom of those
around you and give them the credit for it. It‟s important
to get out and understand the world through the people
who are doing the job. If you wait for a crisis before
behaving like this – it will be too late.”
Tim Glass, former CEO, The John Ellerman Foundation
“Being able to talk to staff in all the different parts of the
council gives me the opportunity to explain how things
could be and win their support and enthusiasm for a new
way of doing things. What is critical is that staff
understand how much they matter. What they think and
do every day really makes the difference in us being able
to work through this incredibly tough period and deliver
what‟s needed.”
County council
“Listen, connect: get to the truth of what's going on, what
employees feel, what customers want.”
David Pullan, Co-Founder, Mckechnie Pullan
“Listening is crucial – it‟s not something that humans as a
species are particularly good at – but it‟s a skill that can
be developed and which leaders need.”
Sarah Jane Mckechnie, Co-Founder, Mckechnie Pullan
“Don‟t carry the can alone – ask for help and distribute
leadership. Develop people as much as possible.”
Professor Dame Pat Collarbone, Director, Creating
Tomorrow

Model the
BEHAVIOUR
you want to see
Promoting the values and behaviour
needed for transformation and future
success can be a powerful way of
driving change. As well as encouraging
what you want to see, it is also important
to try to eradicate the established
behaviours and processes that are no
longer needed – and to be seen to be
doing so.
The desired values must be
demonstrated by the organisation and
by key individuals – starting with the
senior leaders and the leadership team.
The behaviour of leaders will be the first
place where people will look to see how
serious the organisation is about the
planned change. Any hint of “Do what I
say and not what I do” can undo
progress in a very short time.
Ensuring the transformation is managed
in a way that is compatible with the
values and vision that lies behind the
changes is a powerful reinforcer.
“In a time of job cuts, you need to think longer term.
Ask yourself „is there anything more we can do?‟ to
make this situation better. How you handle
redundancies has a significant effect on those staying
as it demonstrates your values.”
“One of the things that has changed a lot in the last
five years is that the level of trust for big institutions is at
an all-time low. Leaders have to be a lot more
humble, they can‟t be arrogant anymore – it‟s not
enough to say we‟re a great company. At the same
time, we as leaders need to give our organisation and
our people confidence – doing both at the same time
is the challenge.”
“Spend time with staff get to know them as individuals
and collectively, then you can draw on strengths and
celebrate these. Listen to the wisdom of those around
you and give them credit for it.”
Tim Glass, former CEO, The John Ellerman Foundation
"At times like this leaders need to up their
representational role, increase their visibility and
demonstrate the values of the organisation."
Steve Reed, Leader of Lambeth Council
“Know your organisation‟s values and what they
add to the business. Be prepared to retain
what‟s relevant but also be prepared to throw
some things away”.

Keep
LEARNING
The leaders we interviewed know well
that employees look to leaders for
inspiration during difficult times. But how
do senior leaders find inspiration for
themselves? How do they stay
motivated?
Some suggested spending time with the
organisation‟s inspirational people,
whatever level they are found at. Others
stressed the importance of the wider
leadership team and of creating ways
for that team to regularly spend time
with and learn from each other, be in
inspired by successes and even by
temporary failures.
Being open to or seeking out
opportunities to learn was a behaviour
leaders wanted to see in themselves and
in others.
“Be intensely curious to maintain your own positive
outlook – ask „what have I learned from this?‟
Deliberately see this as a growth opportunity to
prepare yourself and others for change.”
Maggie Farrar, Strategic Director, National College
of Leadership for Schools and Children’s Services
“I‟ll measure myself by having a sense of team –
not being on my own anymore, achieving the set
up of a successful organisation, successful launch
of a new organisation, building capacity and
energy for the future, feeling the level of
uncertainty drop.”
County Council
“The question is: how do leadership teams keep
themselves inspired? In every organisation, there
are two types of people – „radiators‟ and „drains‟.
With the drains, you put in the energy; with
radiators, it‟s all about the art of the possible,
they‟re always doing something exciting. When I
am feeling down, my strategy is to go and spend
time with the radiators. Then you celebrate what
they‟re doing and people see this and take
inspiration from it.”
“My last boss said to me inspiration comes from
the top. It‟s true – you can‟t expect the team to
say „don‟t worry boss we‟ll sort it out for you‟. If
you accept that this is true, then how do you
generate inspiration in the top team?”

Times of change and austerity challenge
the „psychological contract‟ between
employer and employee. When this
relationship is strong and flexible, it is a
powerful enabler for productivity and
successful transformation. When it is
weak or in question, employees‟ morale,
productivity and capacity to change
are much reduced.
The leaders interviewed here told us that
there were many practical things that
they do to ensure trust, morale and
commitment remain intact through
upheaval and change. As a result, staff
are prepared to continue giving their
discretionary effort, and carry on
performing and developing.
Strong, insightful leadership coupled with
genuine staff involvement have never
been so important.
“Leadership exists where people are no longer
victims of circumstances but participate in
creating new circumstances. It‟s not about
position or power; it‟s not about accomplishments;
it‟s ultimately not even about what we do.”
“Leadership is about creating a domain in which
human beings continually deepen their
understanding of reality and become more
capable of participating in the unfolding of the
world. Leadership is about creating new realities.”
Dr Peter Senge, director of the Society for
Organisational Learning at the MIT Sloan School of
Management; author of The Fifth Discipline
CONCLUSION
Route 2 is an advisory partnership that
specialises in the leadership and delivery of
strategic change programmes in the public
and private sectors. Our core expertise is in:
Preparing the workforce: faster adoption of
strategy and creation of business benefits
through workforce engagement
Everyone's business: using corporate social
responsibility activities to deliver real social
impact and business benefits
Change impact assessment: optimising
programme design to deliver the benefits and
behaviours needed to sustain change
Communicating change: clear and
compelling communication which creates
ownership of the change within the workforce
For more information contact
Jane.Boyt@route2.org
Matthew.Oconnor@route2.org
Debbie.fuller@route2.org
Rupert.widdicombe@route2.org

Participating Organisations
 Alliance Boots
 Carnegie Leaders
 CfBT Education Trust
 Creating Tomorrow
 Kent County Council
 KPMG
 The Law Debenture Corporation
 The London Borough of Lambeth
 McKechnie Pullan
 National Car Parks
 The National College
 National Institute for Health &
Clinical Excellence
 Olympic Police Coordination Team
 PDA Associates
 Ricoh
 Royal Pavilion and Museums,
Brighton
 Tate
 UK Atomic Energy Authority

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