The Global Leadership Crisis
Within today’s global, complex and uncertain environment, leadership has emerged as a critical issue in contemporary organizations and societies. Scholarly and practitioner journals are replete with tips on “what makes a good leader”; and “what is good leadership.” Despite increased recognition and interest in the idea of “effective leadership”, it is very hard to find. Examples of modern-day exemplary leaders are rare around the world. Instead, there is much evidence to suggest leaders are lacking in how they lead their followers, and organizations or countries. In recent years, we have witnessed a litany of scandals globally (including Enron, Worldcom, Lehman Brothers, AIG and Saytam), which have highlighted persistent self-serving interests of corporate and political leaders (Mumford, 2010). We have also been witnessing rising levels of inequality, which have framed the “1 percent versus 99 percent” discourse in public (Bapuji, 2016). For example, assertions like: the 85 richest people in the world hold as much wealth as the poorest half of the world, have dominated discussions at many international forums, including the World Economic Forum (Oxfam, 2015)”. Stiglitz (2012), a noble laureate in Economics, argues that the world is growing apart. Milanovich, another renowned Economist, states that the gains of globalization are not evenly distributed globally. These statements are all symptomatic of a crucial social problem that continues to negatively impact societies and individual well-being.
Let me give you some recent examples of inequality from around the world: In China, the government is struggling to spread wealth more evenly (The Economist, 2016). A recent Economist report states that as China’s economy slows, convergence between richer and poorer provinces is stalling. China’s Shenghai is five times wealthier than Gansu, which has a similar sized population. Brazil’s Sao Paolo is four times richer than its poorest, Piaui (The Economist, 2016). The income inequality in United States has been growing rapidly for the past 30 years. In fact, income inequality is the highest in NY and CT, states that happen to lie right in the shadows of a wealthy Wall Street (Tritch, 2016). Stanford Center on Poverty and Inequality (2016) reports, that recent decades have seen a clear increase in the difference between CEO compensation and that of the average worker. CEOs in 1965 made 24 times more than the average production worker, whereas in 2009 they made 185 times more. Globally, inequality is much worse than we can imagine. 1% of the world’s population has more wealth than the world’s 99% combined. The world’s 4 billion people, at the bottom of the pyramid, predominantly constitute an invisible and forgotten community.
Now let us look at gender inequality in terms of pay gaps. In United States, women get paid 78% to 82% to every dollar a man earns. In Sweden, the gap between men and women’s salaries, which had progressively narrowed over recent years, has grown between 2010 and 2012. The gender gap is worse for women of color, women who are mothers and it only grows with age (Miller, 2016). According to many reports, this pay gap will not close until 2152. Swedish women earn on average 18.9% less than men with the same profile. In Iceland, which is considered the world leader in gender equity, women make 14 to 18 cents less than men. Women in Asian, African and Latin American countries, including Pakistan and India, still face the worst gender inequality in terms of access to healthcare, education and work.
John Maxwell (2002) argued, “Everything rises and falls on leadership”. Hence, if we look at all of these forms of inequalities from a macro level, one can argue that leadership at the corporate and political level has failed. As I said before, growing levels of socio-economic income equalities have negative implications for individual well-being, organizations, and political systems (Bapuji, 2015; Jayadev & Bowles, 2006; Khilji, 2017; Stiglitz, 2012; Wilkinson & Pickett, 2009). Excessive inequalities devalue human dignity, and have led to educational under-achievement, and lack of access to capital and education. The recent rise of nationalism and populism in the West, such as the US, UK, Spain, Italy, France, have been explained on the basis of the increasing gaps between the ‘haves’ and ‘have nots”. Overall, there is a pressing global need to address social imbalances that our political and business leaders have failed at (or may have also created and/or tolerated).
Morgenson (2014), a Pulitzer Prize winning business editor stated that, “True leadership is sorely lacking” globally. This is not a hidden fact, but experienced and talked-about around the world. Over a period of time, public distrust with corporate and political leaders has grown. The 2017 Edelman Trust Barometer, based upon thousands of respondents in 26 countries, attests to a serious crisis of confidence in leaders among its respondents (Edelman, 2017). The Edelman survey reveals the CEO credibility dropped 12 points globally to an all-time low of 37 percent, and government leaders (at 29 percent) remain least credible. The Edelman report argues, “Current populist movements are fueled by a lack of trust in the system and economic and societal fears, including corruption (40 percent), immigration (28 percent), globalization (27 percent), eroding social values (25 percent) and the pace of innovation (22 percent). Countries coupling a lack of faith in the system with deep fears, such as the U.S., U.K. and Italy have seen the election of Donald Trump, the Brexit vote and the failed Italian referendum.” This may be referred to as the ‘global leadership crisis”.
At the same time, there is a ray of light for the business leaders here. The Edelman survey also indicates business is viewed as the only one that can make a difference. Three out of four respondents agree business leaders can take actions to both increase profits and improve economic and social conditions in the community where it operates. Yet it is also the case that businesses also find themselves on the brink of distrust, and perhaps most concerning for business is its perceived role by the public. A majority of the global population surveyed worries about losing their jobs due to the impacts of globalization (60 percent), lack of training or skills (60 percent), immigrants who work for less (58 percent), jobs moving to cheaper markets (55 percent) and automation (54 percent). Despite this distrust, some argue that “business is the last retaining wall for trust,” (Kathryn Beiser, global chair of Edelman’s corporate practice). There is a consensus that corporate leaders must step up on the issues that matter for society.
Indeed, at this point in human history, leadership matters more than ever in that it is crucial for stimulating economic, social and political changes that promote human development (Rodinelli, 2009). Human development is ‘a process of enlarging people’s choices’ (Human Development Report [HDR], 1990: 9). It is true that the choices themselves may be infinite, change overtime, and may vary across nations. However, it is leaders (with their immense power and influence) who can begin to establish a culture that promotes collective well-being and protects human dignity.
The world is at a turning point. We need leaders with a sense of purpose- those who take a keen interest in addressing social concerns and possess a strong ability to make change happen. We need leaders who understand the complexity of the environment within which we operate, and are aware of the ‘crisis of mistrust’. I would argue that this should be the essence of contemporary leadership.
A longer version of this paper was presented in 2016 at a conference in Asia. For full paper, contact Prof Khilji at sekhilji@gwu.edu
