Leadership and Risk

ThinkstockPhotos-463116677The way a leader fulfills their role, be it at a small company or an elected position, varies depending on the condition of that entity. A leader of a strong, secure and prosperous entity would be conservative and not take unnecessary risks. A leader of a weak or stressed entity would need to take sensible chances as there maybe few safe options. The leadership called for under these two situations would be very different.

There is a problem here however with these two scenarios. This is how the situation is perceived by its members. If they see things very differently depending on how it impacts them personally which can lead to real problems.

Suppose the entity saw a great opportunity if they bet on a new way forward though risky, but if they lost that bet then the whole organization may fail. If the entity was doing well, making a risky bet would be unwise. If the entity was doing poorly however, a good leader would explain the reality of their situation, try to reduce the risk, and then make the wager. But if the group believes that the entity was at risk when they weren’t this could lead to disaster.

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Here is an example. Company A has two lines of business. Line I has most of the employees but it has become obsolete. Line II is its future, but will require all available funds and lead to the demise of Line I. If your livelihood in tied to Line I and although you could be retrained for Line II, you would have to start at the bottom and is not what you want. A good leader determines what’s in the best interests of the entity, whether it’s in trouble or not, and make the proper choice in that context.

This can be applied to elected positions as well. Let’s say people are doing poorly as their “Line I” plant left town and is now made offshore at a much lower cost. A good leader does not give false hope of bringing Line I jobs back, but retrains its people for “Line II” jobs, provides subsidies to those left behind, or finds some other creative solution.

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Michael Neidle

Michael Neidle
Michael Neidle is president and CEO of Optimal Management, an advisor to staffing firm owners and managers.

Michael Neidle

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