If a business leader makes a mistake, insisting that they resign means we miss the opportunity to learn valuable lessons and build better leaders and businesses, finds Jo Gallacher.
January is a challenging month. After the gluttony of Christmas is over and the tinsel dulls, it’s back to work and normality, but with added dark nights and cold weather. Many call it the most depressing month of the year, and that’s before we put ourselves on a post-Christmas diet and vow to 5:30am gym get-ups.
So imagine you’re prime minister Boris Johnson. You’re having to face January just like the rest of us and then bam, an error you’d made at work came to light and everyone in the country found out about it. And then another. And another. Worse still, this error allegedly ignored guidance you had set the rest of the country to follow.
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As the internet debated how bad a party had to be for you not to realise it was happening, demands for Boris Johnson to resign began to circle. It’s the natural course of action in politics; ministers frequently resign when their department is found to have made a mistake, regardless of whether they are directly involved or not.
Yes, Parliament is far from a regular organisation, but the same sort of thing happens in business. Barclays’ CEO stepped down following a regulator report which linked him to former sex offender Jeffrey Epstein and a KPMG boss was allegedly forced to resign for telling his well-paid staff to stop ‘moaning’ about cuts to their bonuses.
Earlier in January, chairman of global banking giant Credit Suisse, Antonio Horta-Osorio, resigned with immediate effect after breaking Covid quarantine rules.
Once a scandal is uncovered, it’s assumed the individual involved has become too toxic and has no other choice but to resign. Yet knee-jerk reactions are rarely a solution when businesses come up against challenging situations. HR often preaches about a workplace culture which allows employees to make mistakes and learn from them, so why do we not give the same allowances to our leaders?
What does a leadership failure look like?
No matter the size of an organisation, the last two years have been hard on business. The most challenging period it has faced for many years. HR professionals and other business leaders have had to navigate extreme anxiety, shifting guidance and divided opinion, meanwhile ensuring the business continues to serve its strategic objectives. It was a time when employees looked to their leaders to solve unanswerable questions.
The lack of information around Covid-19 and related protocol meant they were bound to be errors along the way. Are we therefore judging leaders too harshly given we were treading new paths?
Scott Leiper, founder of HR consultancy the Learning Lab, thinks so, arguing we are setting ourselves up to fail if we expect perfection from leaders. He says: “We think of leaders as being experts and how dare they make a mistake.
“We always think they should have the answers, and when an expert makes an error, we immediately criticise them for it.”
Leaders are often pitted as the ‘baddie’ and not to be trusted, but they’re human just like the rest of us, he insists. “We [HR and the wider organisation] need to see the individual as a leader and a human being and they have frailties like us.”
Katie Winstanley, group head of HR at Morson Group, says failing should be a rite of passage as it leads to greater success.
She says: “Creating an environment in which people feel comfortable to fail, regardless of position, is imperative to organisational development. It is widely accepted that where people feel psychologically safe, they perform to their best.
“There are situations where it is extremely challenging to come back from a failure, in particular where the ethics of a leaders’ actions have been called into question. However, I live by the mantra that nothing is impossible.”
When things aren’t going right, resignation is often raised as the only option to create distance between the organisation and its leader. But Jules Eustance, leadership coach at Giant Worldwide, says this is an easy way out that denies any learning opportunity.
“If someone resigns you have an instant excuse, someone to blame, somewhere to hide, but you have to start all over again.
“Instead, I’d like to see greater accountability and transparency. For the leader to come out and acknowledge what’s going on, what the plan is and then run the plan.
“If that has been done, or if the leader is causing the issue, or is toxic, then of course a fresh leadership is exactly what everyone needs. I think current leaders can change but they have to be bold in demonstrating their intentions.”
Winstanley says the only time a resignation should be made is when the leader no longer moves the organisation forward.
She adds: “When their actions are not representative of the wider organisational strategy and they fail to achieve outcomes that benefit the common goal – whether that be in business, for a sports team, when leading the government, it’s time to resign. Perhaps they have brought into question the credibility of the organisation, or their ethical decision-making has been questionable.”
“When their actions are not representative of the wider organisational strategy and they fail to achieve outcomes that benefit the common goal…it’s time to resign.”
It may well be our notions around success and failure which need readdressing rather than our expectations of what a good leader is supposed to look like. Yet there’s a huge difference between leaders who make a mistake and the continual toxicity of some bosses causing huge retention and recruitment issues.
In fact, more than 40% of employees were thinking about leaving their jobs at the beginning of 2021, and as the year went on, workers quit in unprecedented numbers, according to Microsoft data. As the UK continues to wade through the Great Resignation, having a workplace where the leader is trusted and reliable works as a huge positive when attracting and retaining good talent.
Analysis of more than 1.4 million Glassdoor reviews for companies found that company culture is 12.4 times more likely than pay in predicting whether an employee leaves. Its definition of a toxic workplace begins with ‘abusive leadership’, representing the potential for bad leadership to poison the rest of an organisation.
The question for HR then is whether it can work with failed or faulty leadership or if it’s always best to start a clean slate. Leadership mentor Sally Henderson says the decision of sticking with a leader following some form of failure comes down to trust.
She says: “Trust is something that once broken is incredibly hard to rebuild. Leaders are trusted with people’s money, career, family safety, so you never want to be in a position where they are following you out of fear or they’re terrified with the alternative.
“If leaders like Boris had been more honest and held their hands up, or just had enough integrity to own the mistake and share what they have learnt, people wouldn’t call for a resignation as quickly.”
Of course, it depends on the type of mistake being made and the repercussions, argues Vlatka Hlupic, author and CEO of consultancy Management Shift Solutions.
“If it is a genuine mistake that may have costed the company some money but not people’s lives, then leaders need to take full responsibility for their mistakes and explain their thinking at the time, risk management strategies, reason for making certain decisions and learning taken on board from those mistakes.
“If they can plan on how to avoid similar failure in the future, and genuinely apologise from the heart, then the leader could be given another chance and start building up trust again.”
Henderson also warns HR not to be swayed by mob rule if a leader is found to have made a potentially damaging mistake. She says: “It’s now a lot easier and safer for people to call out change. Before the rise in social media and communications were so easy, you’d find fewer people would speak out as you could see who they were, so the threat to self was much greater.
“HR should be careful not to have mob rule when it comes to resignations – just because you can say it doesn’t mean you should, and a Twitter frenzy will not result in you getting the outcome you want. A corporate resignation should come from how a leader handles a crisis, not what people say online, because people do tend to be on the forgiving side if there is authentic leadership.”
Yet HR leaders are divided on how much responsibility the profession should take for diagnosing and dealing with poor leaders. Finding out who’s to blame for a failure in leadership may not necessarily be up to HR. Depending on the size of the organisation and power structures in place, HR is often there to manage challenging situations rather than diagnose and identify failure.
Tim Pointer, chief people officer at CAA Global Brand Management Group, says HR’s role instead is to manage challenging situations rather than label failure.
“The responsibility does not lie with HR to challenge a failure in leadership, instead this rests with the organisation’s leadership. If we sustain a strong system of accountability and the opportunity to make mistakes, learn and improve, then we are fostering a robust culture of openness and good governance.
“As one of my managers explained to me years ago, ‘If someone stuffs up, it is their mistake, but we must collectively deal with it. But if someone is repeatedly stuffing up then it’s our collective mistake because we’re not dealing with it.”
Read on to part two of this story here.
This piece first appeared in the January/February 2022 print issue. Subscribe today to have all our latest articles delivered right to your desk.