Why Principle-Centered Leadership Matters Now

Although the second half of 2022 has not been as volatile as many feared, it is clear that the economic climate will not be as clement in the months to come. With the IMF warning that a third of the world’s economies will find themselves in a recession this year, it is no surprise that leaders look ahead with trepidation.

Many will react by cancelling projects, postponing campaigns, and deferring hiring in an effort to conserve budgets. While these might be sensible steps, the risk is that the baby gets thrown out with the bathwater as important initiatives are adversely impacted. When the economic tide turns, organisations might suffer “recession regret” as they reflect on the loss of momentum in strategic areas of their business. In order to mitigate this risk, principle-centered leadership is now more important than ever. Here are three examples.

SUSTAINABILITY With consumer demands and awareness regarding the subject of climate change more prevalent than at any previous time, sustainability has featured prominently in corporate strategy over the last two years. Yet there is no doubt that postponing or dropping sustainability related targets can be a cost-saving measure. With the long term positive impact difficult to capture on an annual, let alone quarterly P&L, leaders will need to consider their principles as they commit to following through on their sustainability and climate ambitions.

HUMAN CAPITAL While it would be a bold move for any organisation to declare that their employees’ skills development and wellbeing shall be deprioritised as a cost saving measure, this is too often an unfortunate consequence of economic pressure. From training budgets suddenly drying up, to expectations of weekend working becoming commonplace, looking after employees requires leaders to actively prioritise them. While there are near-term cost implications, the alternative can lead to costly talent attrition and reputational harm.

ETHICS When completing ethics training, people always know which boxes to check. Yet when the pressure builds and revenue shortfalls loom, that official's “facilitation fee” can suddenly look a lot more tempting. Senior leaders need to emphasize the importance of upholding ethics principles, and stick with the governance mechanisms available to them. While governance can feel like a burden at the best of times, it is far from a superfluous activity during times of adversity, when people and partners might be tempted to cut corners.

At the end of the day, it can be easy to dismiss strategic priorities in a crisis, particularly if it improves the organisations’ short-term cash position. Yet the long-term implications can be painful at best and devastating at worst. After all, if you are sailing towards a harbour and a storm strikes up, do you suddenly forget about your destination? Or do you marshall resources to ensure your vessel arrives safely? Principle-centered leadership helps safeguard the organisation’s long-term success and ensures it does not end up lost at sea.

– Ryan

Cover photo by Anastasia Petrova.