What is credibility? Credibility is simply the quality of being believed or accepted as true, real, or honest. Personal credibility is about trust, respect, and being believable. A leader’s credibility is typically defined in terms of the degree of employee confidence, belief, and acceptance towards the leader.
While personal credibility applies to everyone in the workplace, it is especially important for leaders. Why is that? Because, if your employees do not believe in you as their leader, you just cannot be effective as a leader. Under these circumstances, employees will simply comply with rules but will not work towards the common goal and will not put in their best efforts. Their morale will be low and customer service will be poor.
Lack of leadership credibility creates employee distrust and disengagement thus impacting the reputation of the organisation and also its profitability. Studies have shown that the credibility of the leader influences employee engagement which in turn impacts the organization's productivity and performance.
While credibility has many facets, in most cases it is judged simply by comparing what you say with what you do in your day-to-day behaviour. Leaders that say one thing but do another won’t have the authenticity and credibility that’s essential to be an effective leader in today’s VUCA environment.
But being trustworthy is not the only contributor to your credibility as a leader. The other very important component of credibility is the perceived competence of the leader – i.e., people’s faith in your knowledge, skills, and ability to do your job and get the job done as a leader.
Employees form such opinions or perceptions not just through direct interaction with you but also through indirect observation of your actions and performance. And these perceptions are extremely important in this hyperconnected age, when vast amounts of information about you is easily accessible in the public domain.
So basically, your credibility as a leader is important because employees want to have the assurance that when you are managing them and assessing their performance, you are yourself competent and trustworthy.
To assess the level of your leadership credibility in your organization, you need to ask yourself these questions and honestly reflect on your answers:
If the answer to any of these questions is “no,” then you have a leadership credibility gap that you need to work on.
While there are many factors, let’s talk about the six key behaviours that undermine your credibility as a leader.
Research shows that employees seriously question the competency of leaders who fail to take action or ignore problems. This is especially true when it comes to problems that impact the sustainability of the organization.
One of the key roles of a leader is to make sense of the operating environment and take strategic decisions about the future of the organization. When you are seen as not fully clued in to the operating environment and lack vision and clarity about the future direction of the organization, you quickly lose the respect of your employees.
Leaders who make promises without making any effort to fulfil them, really erode their credibility. For example, if you keep saying “I’ll get back to you,” but never do so, it impacts your credibility. Many leaders tend to over-promise even if it is with good intentions, but when it comes to the crunch they can’t deliver what they promise. Your employees will believe your promise and expect you to fulfil them. If you can’t offer what you promise then you will quickly lose credibility as a leader. Another behaviour that undermines your competence is giving contradictory information. The contradictions might come from different people on the leadership team or even from the same person- but it confuses employees and makes them suspicious.
When leaders create confusion among employees and other stakeholders by distributing incorrect or misleading information or they misrepresent the facts, it can really undermine their credibility. Sometimes leaders do this without even realizing and sometimes they may do it intentionally to paint a rosier picture, in the hope that it will motivate employees – either way, it results in people getting totally confused at best — and suspicious at worst.
Research shows that self-serving behaviours can undermine employees’ trust in their leaders. These include bending the rules to privilege yourself or your close associates, making decisions based on your self-interest rather than what’s best for the organization, urging employees to make sacrifices while wasting the organization’s resources on perks for yourself, and taking credit for the achievements of others. Even if you don’t act unethically yourself, you can suffer a serious loss of trust if you permit colleagues to act unethically. You must uphold high ethical values to protect your organization and your people, or your followers and key stakeholders will lose faith in you.
Leaders who treat their employees as expendable or tend to openly ignore the opinions of employees and key stakeholders are perceived as untrustworthy and hence not credible. Leaders can damage their credibility when they ask for information and reports that don’t seem worthwhile or that they don’t review and act on. Such requests can cause confusion as to what the organization’s priorities are, and the employees may feel resentful about what they see as a waste of their time.
So, these are some specific behaviours that erode your credibility as a leader. What is interesting is that even though leaders lose credibility when they display incompetence or untrustworthiness, employees are much more tolerant and forgiving of an incompetent leader than they are of an untrustworthy leader. They believe that incompetent leaders can at least try to become more competent, whereas untrustworthy leaders can’t easily become more trustworthy.
What positive actions can you take to strengthen your credibility over time?
Credibility isn’t something that you just gain as you step into a leadership role. There is a process to gaining trust and dedication from your employees, which then leads to credibility.
Here are five specific things that you can do to build your credibility over time:
This is very different from simply stating a strategic vision or setting performance targets and then just going about business as usual. It involves mapping out, in detail, how the organization will achieve its goals in the medium to long term.
Having a sophisticated knowledge of industry trends and clear ideas about how the organization should respond to them can really build your credibility as a leader. You can also actively predict and prepare for upcoming changes. For example, by making strategic investments in new technologies or markets. These will really enhance your perceived competence.
When you work consistently to improve organizational structures and processes and maintain financially sound operations, your credibility as a leader soars. Eliminating unnecessary reporting structures and careless spending, establishing new strategic roles, or investing in technology that improves operational efficiency or business effectiveness are some actions you can take to build your credibility as an action-oriented and competent leader. Don’t shy away from taking tough decisions.
Leaders are perceived as trustworthy and credible when they communicate and behave in a consistent manner. To begin with, this means making decisions that aren’t contradictory. But it also means behaving in a way that aligns with the promises (both explicit and unspoken) that the company makes to employees and other stakeholders. By pre-emptively looking out for stakeholders’ needs, you can prevent stakeholder conflicts and organizational crises, as well as gain the trust of your employees and other key stakeholders.
Be clear about your values and the organization’s values so that employees and other stakeholders can see why you do what you do. The culture of the organization flows from the top. If you want your employees to trust you, you need to start by showing that you trust them. If you want your employees to be open to change, be change-ready yourself. Basically, know that your employees are observing you minutely all the time and if you want them to behave in a certain way, they need to see you doing the same. Demonstrate your values in how you talk and act to establish credibility and authenticity as a leader.
So, there you have it. Why credibility is important for leaders – because your success as a leader and the success of your organisation depends on it. Credibility stems from your perceived competence and your trustworthiness.
Credibility takes time to build, but it can be torn down in seconds. You don’t need a big scandal or mess up to destroy your credibility – it’s often the little things that you do over time that can add up to destroy your credibility. So, keep your promises, do what you say you will, give credit where it is due, acknowledge mistakes, don’t talk about others behind their back, don’t withhold information, don’t belittle others, be consistent and be accountable.
As a business leader in the 21st century, you face persistent changes in the business environments in which you operate. The diversity, intensity, and rapidity of these changes create volatility, uncertainty, complexity, and ambiguity, which challenge you on ways to lead effectively as what methods worked in the past seem inadequate to deal with this environment. VUCA refers to this operating environment that is constantly changing in conflicting, dramatic, and relentless ways to produce leadership and organizational challenges.
Each letter of the acronym VUCA represents a type of change that we need to identify to cope fully with the environmental unpredictability.
Our world is volatile — things change, change quickly, and for reasons beyond our control and cause instability.
It is uncertain — we lack full and confirmed information and hence gaining conviction about future outcomes becomes ever more challenging.
It is complex — we can never know the interaction of the multiple variables we must consider, let alone how to integrate them effectively.
It is ambiguous — the same data can yield multiple and often competing interpretations and lacks precedence making it difficult to move ahead.
Globalization and technology have and continue to fuel the VUCA dynamics through increased innovation, interconnectivity, and digital revolutions, which, in turn, give rise to new and nimble competitors, who operate globally to transform customer expectations radically and thus produce organizational turmoil. The current turbulence has baffled leaders due to its novelty and because the proven approaches of the past have been inadequate in the VUCA-world.
The VUCA world obstructs a leader’s ability to understand, to decide, to communicate, and ultimately to act decisively — which is actually a precondition for effective action in business.
It’s natural for leaders to react differently to this environment. Some have become so distracted by the volatility and constant change that they have stopped planning and are just trying to react to events.
Others have become so intimidated by the uncertainty and ambiguity that they don’t act for the fear of making a mistake. Still, others try to do everything they possibly can in this complex environment and don’t end up focusing their efforts in any one direction.
Only a few leaders have been able to fight through all the complexity and uncertainty and chart a way forward for their organizations. They have managed to impose their will on such complex environments and succeeded where others haven’t been able to do so.
In fact, a study by DDI in 2015 had shown that only 18% of leaders were capable of leading in a VUCA world! I haven’t come across any update on this study in recent times but I believe that the percentage may have moved only marginally. If you ask me why I don’t think leadership development in the last few years has really focused on developing the specific competencies to deal with this VUCA world.
So, what are the leadership traits or competencies that would prepare them to be successful in a VUCA world? What would help them to thrive where others flounder?
Based on my inter-disciplinary work in leadership development, social and cognitive psychology, coaching, and my own experience as a leader and a coach, I have come up with a model for leadership development that can prepare leaders to handle this VUCA world in a more deliberate, self-assured, and successful manner. I call it the CARES Model of Leadership.
CARES is an acronym for
C – Credible
A – Adaptive
R – Resolute
E – Emotionally Intelligent
S – Sense-making
Let’s look at each of these aspects as to why it is important for a leader in the VUCA world.
Why does a leader need to be credible to be effective in the VUCA world, or actually under any circumstance? As a leader, credibility lets your employees see you as a dependable source of reliable information and for fair, effective decision-making. This information could be on a day-to-day basis or on those occasions when it's most critical. If you have credibility with your team, you will earn their mutual trust and respect. This would enable you to align them with the goals of the organization. Without credibility, there cannot be a culture of trust and shared goals. So the creditability of the leader is of prime importance, especially in a VUCA world where you need the team to trust you to lead them in the direction that you want them to go.
To welcome change is to be adaptive. Adaptive describes people who are flexible — they don't lose their cool when plans change quickly and they are always willing to learn new ways to do things. Being adaptive helps you cope with the volatility and uncertainty and sail along in today's ever-changing world. Clearly being adaptive, flexible, agile, and adaptable is paramount in a VUCA world.
Developing and articulating a clear view of the future in today’s increasingly complex environments demands that leaders make judgments about the future — something that entails risk and could be wrong, and there could be significant consequences. Successful leaders are those who can overcome those doubts and act to prepare the organization for success in the future.
I am calling this trait Resolute because it refers to someone who is purposeful, determined, and unwavering. A resolute person has the courage to act with conviction in the face of uncertainty and risk. Be able to manage their emotions and be decisive even with limited information.
As we discussed earlier, dealing with uncertainty, volatility and ambiguity can be emotionally challenging for any leader. Unless you are able to manage your emotions on this roller-coaster, you might end up burning out really fast. Emotional intelligence is defined as the ability to understand and manage your own emotions, as well as recognize and influence the emotions of those around you.
Emotionally intelligent leaders are aware of their own emotions and intuitively aware of the emotions of others. This self-awareness also helps them to manage their emotions when dealing with stressful situations. Their social intelligence enables them to lead with empathy and factor in emotions when presenting information, or otherwise engaging with their people. Leaders set the tone of their organization. If you lack emotional intelligence, it could have more far-reaching consequences, resulting in lower employee engagement and a higher turnover rate.
The primary function of any leader is to point the way ahead. This requires vision — the ability to see something significant about the future that isn’t readily apparent to others. Today’s VUCA environments are tough on leaders. The more volatile and the more ambiguous the environment, the harder it is for leaders themselves to come to grips with the situation, let alone articulate a clear way ahead.
Sense-making is the action or process of making sense of or giving meaning to something, especially new developments and experiences. Sense-making is how we make sense of the world so we can act in it. A person with highly developed sense-making can tolerate ambiguity and uncertainty. They have the ability to be able to know enough, even from limited information, to be able to make a measured and appropriate decision. The ability to spot existing or emerging patterns is one of the most if not the most critical skill in decision-making. Hence, it is self-evident that sense-making is a key competency for leaders to succeed in a VUCA world.
As a business leader in the 21st century, you face persistent changes in the business environments in which you operate. VUCA refers to this operating environment that is constantly changing in conflicting, dramatic, and relentless ways to produce leadership and organizational challenges. The VUCA world obstructs a leader’s ability to understand, to decide, to communicate, and ultimately to act decisively — which is actually a precondition for effective action in business. The CARES model for leadership development can prepare leaders to handle this VUCA world in a more deliberate, self-assured, and successful manner.
- Sonali Sinha
Why do you need to stay relevant? What makes it important for business leaders to stay relevant, especially in times of crisis?
Well, the current COVID-19 situation is very telling about the times that we live in. While many businesses have been moving towards becoming more active online and using technology-backed tools to be more agile, this COVID-19 situation has really pushed companies to literally switch how they work within weeks, even days. Businesses that were not able and ready to make this switch have suffered tremendously during this period.
But at the same time, some businesses have made the transition quite smoothly and have been able to keep the business running remotely with employees working from home. This has been possible not only because of their use of technology-backed tools but also because of their ability to rejig their operating model quickly. More importantly, this has been possible because of the leaders at the helm.
In this post, I will share four specific steps for you to take to innovate your way out of this crisis. So, read on!
COVID-19 is a test case for leadership. While the leader’s primary responsibility is to keep the team safe, cohesive, and productive, what should the leader be focused on in the midst of a global disruption like this? I believe that every crisis is an opportunity for innovation. Crises present us with unique conditions that allow innovators to think and move more freely to create rapid, impactful change.
We are seeing this already playing out. Around the world, beermakers and distilleries have shifted production to hand sanitizers. In Italy, a start-up engineering company began quickly using 3D printers to create the valves used in ventilators. Fashion businesses are producing protective gear, gowns, and other supplies for hospitals.
When we look back to this health crisis, I am sure we’ll see the impact it had on innovation in many sectors – be it medical devices, healthcare processes, manufacturing and supply chain innovations, collaboration techniques, education, and so on. Service businesses in particular are likely to see a lot of innovation in how services are created, packaged, and sold.
If you believe the world will go back to being what it was before the pandemic, I’m afraid you are sadly mistaken. Once customers, businesses, and employees are exposed to a certain way of operating, it will be difficult for them to go back and work as if nothing changed. Actions taken during the crisis will shape how companies perform in the long run. Some companies may even continue to pursue opportunities first identified during the crisis.
A very important point to remember is that reputations are built — and lost — during times of crisis. Companies that are demonstrating good citizenship by helping with shortages, or by making major donations, are probably hoping that consumers will remember their actions when the economy returns to normal.
Companies that treat their employees or customers badly during a crisis will face major challenges rebuilding when the storm has passed. Similarly, if leaders in business segments fail to lead the way in terms of innovation and customer service, it is inevitable that other competitors will emerge with better products or platforms.
Eventually, how a business responds to such vast and dislocating change depends on how the leader views the situation – as an opportunity or as a disaster.
So how have you and your company tried to innovate and adapt during this time of crisis? How are you trying to stay relevant in the market? In the next segment, I’m going to talk about some specific approaches that you can adopt to manage this crisis and opportunity for innovation.
So, we were talking about how important it is for leaders and businesses to reinvent and innovate during a crisis. But remember, rapid change is an ongoing process – not just linked to a crisis. Change emanates from changing customer expectation, entry of new players in the market, the introduction of new-age technology, socio-economic factors, new laws, and also changes in executive management or structural transformation of organizations. A crisis only accelerates the pace of change. So these approaches that I am going to share now are relevant, whether you are facing a crisis or not.
One of the key leadership challenges in day-to-day organizational life is inspiring engagement and generating momentum towards the goals of the organization. This becomes even more important in times of crisis as there is a big jump in the nervous energy present in the workforce. Leaders who can harness this energy and focus it on a clear purpose in resolving the crisis will be able to lead the team to success. They will be able to tap into a wave of new ideas, as individuals feel compelled to share insights, they normally would keep to themselves. They will be able to lead their team from fear to a clear shared goal. After all, courage is defined as the ability to overcome fear for a good purpose. In this way, a crisis has the potential to create the organizational courage to take action in support of a purpose that would be unthinkable in times of calm. Also, know that this constant effort to get the team aligned around a purpose will pay dividends even in normal times.
When organizations want to find opportunities to innovate, they usually bring in an external consultant to get an outside perspective and fresh ideas. A crisis can actually play that role very well because it brings to the fore the vulnerabilities and problem areas in the organization which may have been ignored earlier in the drive to keep growing the way things are. When a crisis hits, we are compelled to confront the truth about whether our systems work or not. They make us question our disaster recovery plans and business continuity plans. Being able to zoom out and see things for what they are can suddenly throw up opportunities for operating more efficiently or serve our customers better. A crisis is a good opportunity for you as the leader to give a hard look at why you do what you do and whether you do it in the best possible way.
Organizations, over time, tend to fall into a familiar and predictable way of operating. The very rules that help the organization become more efficient can keep it from evolving and responding rapidly to opportunities thrown up by change. A crisis changes all that. Companies are forced to do away with bureaucratic overheads of review and approval and allow for fresh thinking to be applied quickly to address the challenge. So, how are you responding to this crisis? Are you still trying to stick to the old and familiar ways of taking decisions? If yes, then, believe me, the organization is in for some rough times. What you need right now is for communication to move upwards and downwards and sideways without any barriers of hierarchy because through these communication channels, you get valuable inputs for your strategic decision-making.
A crisis brings with it a lot of uncertainty and anxiety. This can lead to a paralysis of action as leaders and team members grapple with their worries about losing out on things that have been important to them thus far. But dealing with a crisis demands movement and change – the pace of ideation, decision making, and implementation all increase dramatically. If a leader gets trapped in focusing on how to protect what they have rather than identifying what opportunities the crisis is throwing up, they will remain stuck in the present – or an analysis paralysis situation. On the other hand, if leaders choose to focus on quickly creating experiments, seeing what happens, and experimenting some more, they will encourage the freedom to test different thinking, to fail fast, to learn, and to move forward – in short, to innovate.
So there you have it – four approaches to help you innovate and stay relevant despite a crisis. These are
#1 Align around a Purpose
#2 See Systems from Outside In
#3 Shake Up the Organization
#4 Create a Bias for Action
Times of crisis present incredible opportunities for learning and growth. It is a time for experimenting with new technologies and approaches to operating your business. We don’t know how long this coronavirus crisis will continue for or how it will impact our economies and businesses but if we use it wisely as an opportunity for innovating, for learning and growing, we will come out on the other side stronger and more agile.