Leaders in European organizations have to adapt to the "new normal" instead of acting as if the crisis, which started a few years ago, is temporary, Georg Vielmetter, head of leadership and talent in Europe at Hay Group told Emerging Markets.
Hay Group released the results of a study that shows that as economic problems persist in Europe, more leaders adopt the "coercive," de-motivating leadership style prevalent in emerging markets.
"What is necessary for Europe is to adapt their mindset, change their mindset," Vielmetter said in an interview.
"This is the environment now and will be over the next few years: it is volatile, it is over-complex, ambiguous, difficult. They should not expect to get back the former stability and smoothness that we got used to in the last century or the first decade of this century."
"They should accept that what they may still perceive as a crisis, the volatility of the situation, is the new normality."
The research by global management consultancy Hay Group shows that the coercive style of leadership – in which the leader instructs and manages employees mainly by criticizing them – is now a dominant approach for 31% of European leaders, up from just 18% in 2005.
"They need to accept that volatility and complexity and uncertainty are the new normality," said Vielmetter. "If you are able to do that mindset shift, then you are open and able to use those leadership styles that support your company in performing best."
Research started at Harvard University identified six leadership styles, of which two – the coercive style and the pace-setting style – can de-motivate people if they are used for a long period of time.
The other four styles – authoritative, affiliative, democratic and coaching – involve employees more and help them achieve their best performance.
The coercive and pace-setting style mean that the leaders put themselves to the front and "want people to follow at the same pace," Vielmetter explains.
"These two styles are more de-motivating. They restrict people's freedom to act, they don't focus on their developmental needs, they don't necessarily give you the big picture, the strategic direction of the company, they don't include you in the strategic direction of the company, don't include you in the decision-making processes," he added.
CHANGE IN EMERGING MARKETS
But these are the two styles that do well in crisis situations, in an environment when people need to act urgently.
"Take firefighters," says Vielmetter. "When there's a fire you need to get people out of the building. In this specific situation you probably have no use for a participative style or a coaching style. You would be happy if someone takes the lead and solves the problem, rescues the people."
In 2008 and 2009, in many business environments this was probably the appropriate style because action needed to be taken very fast so it was not surprising to see it then, he said.
"What is surprising though is that we still see this style so dominant today and I think it's a surprise because we can say that we are in year five, year six of the crisis but the crisis is not at the stage it was five or six year ago," Vielmetter said.
"Many leaders still see the economic environment as so volatile and so difficult and so unexpected that they conclude the coercive style is the more appropriate style," he added.
"I still think that this is not sustainable, that the coercive style will not be so dominant in the future. I cannot imagine that that will be accepted by people working in organizations in Europe over the long term."
The Hay Group's study showed that in emerging markets the coercive style remained the approach of choice for leaders. Around 48% of Asian leaders and 60% of Latin American leaders cited it as their dominant style.
But Vielmetter believes that, over the longer term, things will change.
"I think there will be a quite a change in leadership style in Asia and other emerging markets over the next few decades," he said.
In emerging markets, the middle class is growing and "these people will not accept a purely coercive or a predominantly coercive style in the long run," Vielmetter said.
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