ntegrative approach across sector
Based on these results, what management capabilities are important for New Zealand? Taking an integrative approach across sectors, we see implications in the survey for three fundamental sets of managerial skills: 1) managing uncertainty and renewal, 2) managing stakeholders and partners, and 3) managing people and internal resources. The first of these, the need to manage uncertainty and renewal, comes through the strong emphasis private-sector chief executives place on adapting to constant change in markets and tech- nologies. This implies a need to interpret ambiguous changes and renew, or reinvent, busi- ness models. It is also seen in the way public-sector and not-for-profit chief executives now have to think more creatively about their models of service provision. In this context, managers need to be more versatile, with an ability to think laterally and solve unstruc- tured, novel problems that change the ‘rules of the game’. Management, as a whole, needs to foster a more agile kind of organisation.
This need to manage uncertainty was identified by Hitt, Keats and DeMarie (1998) as a key management skill and our data support their argument that non-linear thinking is now critical for senior managers. In the New Zealand context, similar observations were made by Walsh, Bryson and Lonti (2002), who studied a selective sample of competitively successful organisations, and found that each had deliberately adopted managerial policies and practices that facilitate organisational agility.
It is worth exploring what managerial behaviours constitute ‘managing uncertainty and renewal’. According to Hitt, Haynes and Serpa (2010) and Hitt, Keats and DeMarie (1998), relevant behaviours include experimentation, taking unorthodox approaches and allowing a degree of risk, demonstrating vision, and ‘recognizing and coping with multiple states of coexisting stability and instability, [while also] recognizing the fact that most of these states are only temporary’ (Hitt, Keats and DeMarie 1998, 25). Chapman (2001) adds that managing uncertainty requires managers to create and identify new opportuni- ties, and develop the kinds of organisational structures that enhance flexibility. Such approaches imply an ability to question ideas and strategies established in more stable business climates (Chapman 2001; Hitt, Haynes and Serpa 2010; Hitt, Keats and DeMarie 1998).
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The theme of managing uncertainty and renewal aligns with Yukl’s (2012) analysis. Combining an understanding of the current environmental context with leadership research, Yukl (2012) developed a taxonomy of leadership behaviours that captures what leaders need to do to help their organisations perform. In particular, he argues that the encouragement and facilitation of change is critical in the current environment. The spe- cific behaviours that he identifies as being relevant are: advocating change, envisioning change, encouraging innovation, and facilitating collective learning. Quantitative studies (reviewed by Yukl 2012) have shown that each of these behaviours is correlated with overall managerial effectiveness.
The second theme identified from our findings concerns the issue of managing rela- tionships with stakeholders and business partners. The private-sector chief executives in our sample placed emphasis on the need to win the support of financiers, while the public and not-for-profit CEOs were engaged in a difficult tussle over the continuity of tradi- tional funding sources. All the CEOs were involved in complex networks of alliances and outsourcing arrangements, locally and internationally, seeking to provide cost-effective products or services. This skill domain involves managers developing the kind of acumen that will help them to win the support of the various stakeholders and alliance partners involved.
Once again, this second theme reflects shifts in the business environment. Authors of the late 1990s rightly anticipated the hyper-competitiveness caused by technological shifts and globalisation, but were not in a position to foresee the effects of a full-blown financial crisis. While Hitt, Keats and DeMarie (1998) discussed the value of building strategic alliances, they did not anticipate the current financial crisis and the difficulties it would present (a situation rectified by the revised analysis in Hitt, Haynes and Serpa 2010). Yukl (2012) tackled the capability question more recently, and did identify this area, labelling it ‘external leadership behaviour’, arguing that it comprises networking, external monitoring, and representing the organisation; the ultimate goal being to gain information about external events, obtain necessary resources and support, and promote the interests of one’s organisation. In terms of skills, these behaviours suggest that pol- itical acumen will be particularly important, supporting Ferris et al.’s (2005) and Fortune’s (2012) calls for management education to better address political skill as a key area of managerial capability.
Political skills are linked to the complex set of development needs associated with our third theme: that of managing people and internal resources. As our chief-executive respondents reminded us, people continue to leave New Zealand for better pay and career opportunities overseas. This ‘brain drain’ has long been a feature of the New Zealand busi- ness environment (Thorn 2009). Unless New Zealand’s productivity improves drama- tically, the pay gap will remain an ongoing difficulty, and, apart from selective responses to key individuals, it is difficult for New Zealand management to make a concerted response. The ability to respond to the international labour market is greater in the private sector but this is a relative comparison: the problem affects the whole landscape of New Zealand organisations.
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On the other hand, the scope an organisation offers for individual development can be a stronger factor than pay with regard to staff retention (Boxall, Macky and Rasmussen 2003), and this issue is more tractable for management. It implies two areas of skill devel- opment, and related support from HR specialists. One concerns the interpersonal skills that enable managers to build rapport with their team members, learning how they respond to their jobs and feel about the career opportunities in the organisation. Building on these interpersonal skills, managers need an understanding of how to design work and foster greater learning opportunities. As Eraut (2004) argues, there are often ways to open up opportunities for informal learning through work redesign and project-based assign- ments, including enhancing employee discretion and involvement in teamwork, but organisations are often poor in helping managers develop this kind of know-how. The issue is particularly important in terms of how higher level managers and HR specialists support the development of first-line managers (Purcell and Hutchinson 2007). HR spe- cialists, then, need to ensure that management-development programs are equipping managers to meaningfully develop their own staff, coaching them in how to have useful dialogue with individuals, educating them in relevant theories of individual development, and training them in the range of methods available.
The skills of managing people must, however, be linked to the related challenge of managing limited resources. Chief executives emphasised an ongoing need to improve efficiency, either to deliver a new business model, or to reposition the existing one with constrained resources. For managers, this is not necessarily straightforward. It can play out in two main ways. In one scenario, it is possible to ‘trim the fat’ and enhance quality without creating staff redundancies. This calls on management skills in processes of quality management and lean production, working collaboratively with employees to identify waste and enhance performance. Although it is critical to understand the tech- nical dimensions of these management strategies, their success is heavily based on the people management aspects (de Menezes, Wood and Gelade 2010; Sterling and Boxall 2013). However, these strategies are largely positive, involving improved selection, train- ing, team-building, and job design. In a second scenario, corporate financial pressures are such that some jobs will be made redundant and parts of the organisation, or entire plants, will be outsourced and/or offshored. In some cases, organisations will be merged or disestablished. This scenario puts a premium on the vision and skills of senior man- agers in organisational renewal, as noted in the first set of skills identified, but also on the ability of the entire management hierarchy to foster substantive, procedural and inter- actional fairness in the people-related decisions that restructuring brings (Boxall and Purcell 2011).
Preparedness for these scenarios implies a high degree of management familiarity with how the organisation works as an entire system of people and resources, and how the parts interact and contribute to the good of the whole. This kind of understanding is assisted by management rotation, including the rotation of support specialists, such as HR and finance professionals, into line-management roles where they must personally deal with the trade-offs involved. It also implies high levels of cross-functional team-working so that
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managers are regularly exposed to interdisciplinary challenges. If management develop- ment has been silo-based or ‘ghettoised’, knowledge of how to restructure in a way that strengthens the organisation is likely to be problematic. Development processes that foster systemic thinking are needed to build skills in the simultaneous, and often conflicted, management of people and resources.
This theme, to an extent, reflects what decades of management competency research have shown: that managing people and organising resources are key features of a man- ager’s work (e.g. Boyatzis 1982; Bücker and Poutsma 2010; Winterton 1999). However, our historical frameworks for building management competencies need to be relevant to a post-GFC environment where managers are faced with ongoing trade-offs which, as Yukl (2012) argues, render leadership behaviours more complex. Managing trade-offs implies the need to think carefully about the timing and complementarity of leadership behaviours, including being aware that positive behaviours can be overused.
Together, the three themes provide a useful starting point for enhancing manage- ment capabilities in the New Zealand context. It is beyond the scope of this paper to discuss how these capabilities are best developed, but HR practitioners could begin by using a diagnostic tool such as Yukl, Gordon and Taber’s (2002) ‘managerial practices survey’, which is currently being updated. Such a diagnostic tool allows managers to assess their existing capabilities, and gain an understanding of their own develop- mental priorities, paying particular attention to the three themes identified in this paper. Having conducted a diagnostic analysis, HR practitioners can then go on to use developmental strategies to target selected areas of capability within their managerial workforce.
There are, naturally, some limitations to our analysis. First, a fuller picture might have been obtained had we sought the opinion of more than one respondent per organisation. Second, the data are descriptive and do not directly measure chief executives’ assessments of skill deficits or requirements. However, asking for their evaluation of their environmen- tal challenges was the critical first step in considering the skills that managers need. An obvious direction for further research would be to obtain chief executives’ reactions to this analysis of skill needs, to find out whether there are any skill-groups that the study has missed, and to explore the extent to which managers in New Zealand currently exhibit the capabilities identified, before then identifying the management-development strategies that may be effective in New Zealand.
Conclusion
New Zealand’s chief executives face a challenging economic environment, with changing markets and technologies, in which the support of stakeholders, including key funders, is more guarded and conditional than it has been historically. They face a ‘war for talent’, both internationally and in terms of the demographic wave of baby-boomer retirements, many of whom hold important knowledge or leadership positions. In the private sector, chief executives are reconsidering and reframing their business models to cope with
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fast-paced and ambiguous change. Chief executives in public and not-for-profit organisations are adjusting to a constrained funding base over which they have little control. They need to find ways of surviving in a climate of high demands and escalat- ing costs, driving a need to do ‘more with less’ or ‘less with less’.
This environment poses some major challenges for management development, which we have grouped into three broad categories: managing uncertainty and renewal, managing stakeholders and partners, and managing people and resources. The issues chief executives face, such as how to renew and restructure an organisation effectively, do not fall neatly into one disciplinary silo and are handled better by managers who have been equipped to deal with systemic problems. Now more than ever, HR specialists need to be focused on the development of line managers and need to take part them- selves in developmental processes that bridge internal and external boundaries. Manage- ment capability is one part of a cluster of issues surrounding New Zealand’s low productivity, but if these developmental needs can be tackled more effectively, New Zealand organisations will be better placed to tackle the fast-changing, complex business environment in which they now operate. As our discussion indicates, HR specialists have a key role to play in this development process. Their expertise is needed in the design and support of systems and processes that identify and nurture management talent and enable managers to develop their own teams in a more precarious business environment.
Acknowledgements
This research was funded by Kensington Swan Lawyers. The authors acknowledge the contribution that Kensington Swan’s Business Development Director, Andrew DeBoyett, made to the survey design, and also acknowledge the helpful comments of two anonym- ous reviewers on an earlier version of the manuscript.
Ann Hutchison (PhD, Auckland) is a lecturer in human resource management in the Department of Management and International Business at The University of Auckland.
Peter Boxall (PhD, Monash) is professor of human resource management in the Department of Management and International Business at The University of Auckland.
References
