Leadership challenges are no different today than they have ever been. They simply manifest themselves in different ways. That means that you have to be able to recognize them for what they are and deal with them with 21^st century thinking. If you try to apply a 20^th century or even a 19^th century mentality to them – yes, there are still companies who act as if Queen Victoria is on the throne – then you’re in for a shock. Not only will your competitors leave you eating their dust, but your employees will abandon you for pastures greener.

Here are three of the top leadership challenges you face today. There are more, but if you can master these, then you’ll be well on your way to overcoming the others.

1. Government Regulations

You will always have government regulations and they will always be in a state of flux. You can depend on it. So stop groaning about how they are interfering with your business. Everyone faces them, and everyone copes to a greater or lesser extent.

One study in organizational change found that managers are fond of blaming government regulations as an obstacle, but that instead it was their intransience and ineptitude that got in the way. Make sure that you’re not the obstacle.

At present, discussions have begun regarding what constitutes an employee. As of this writing there is no legal definition. What the government eventually decides will have ramifications for taxes, national insurance, and benefits, both for the worker and the company. Until you know for certain what this means, you’ll need to carry on as before; but it is essential that you make every effort to engage those who work for you, whether they are bona fide employees or independent contractors. In other words, you must do all you can to demonstrate that you care about their professional development and personal well-being. When you fail to do this, disengagement soon follows, and after that, exodus.

Our relationship with the EU will bring about changes, too. Despite all the steam and bluster coming from Brussels, no one knows what Brexit will look like when it happens.

Whatever your views on the outcome of the referendum, had we stayed in the EU, there would have been more regulations than there are now, and we would have been largely powerless to do anything about them. With Brexit, however, will come new regulations as powers are “transferred” back to London.

To wait and see is to imagine, like King Canute, that you can somehow stem the tide of change. You can’t. So instead of standing still, use the wisdom that you have as a leader to move ahead with the information available. That’s what true leaders do. It’s what you get paid to do.

2. Profits

Leaders are always on the lookout for ways to earn more profits for their organizations. If you’re at the head of a public service organization, then the same principles apply: You want to reduce your costs, and make the money you receive go as far as possible. You want to reduce waste and get more results from what is available to you. To use an American expression, you want to get “more bang for your buck”.

To a certain extent, this is easier in the private sector because you have the power to find more customers, and more customers means more revenue. Even charities can increase their donations through appeals or by finding my donors. Public sector organizations, however, are limited by the size of the budget they’re given by the government. Nevertheless, most would admit that public institutions waste a lot of money.

There is an economic law, however, that when properly applied can enable both private and public sector organizations to achieve more with less. No doubt you’ve read about it before on this blog. It’s called Pareto’s Law or the 80/20 Principle.

Let’s see how we can use it to increase profits.

Pareto’s Law

The Law refers to the relationship between input and output. Twenty percent of your input, as a rule, gives you 80% of your output. The opposite is also true. Eighty-percent of your input yields only 20% of your output.

In practice, this means that 20% of your customers give you 80% of your income, while 80% of your customers provide only 20% of your income. Expressed like that, it’s obvious that the way to increase your profits is to do the opposite of what most companies do and what you probably do.

Many organizations spend much of their time chasing that 80% of customers because, on paper at least, it looks like that’s where the greatest potential is. The truth, however, is that the source of your greatest profits is in the much smaller part of your client base that is already doing it. It’s a case of being blinded by the obvious.

Fire low value customers

There are two things you can do to increase your profits. The first is to trim the bottom customers from your client list. That’s not to say that you fire the entire 80%; rather it’s to suggest that you look for those customers who provide the least value to you.

There are a couple of ways to do that. One is to recognize that 20% of your customers will eat up 80% of your time. Are any of them also among those who pay you the least? A two circle Venn diagram will help you to determine this.

The second way is to extend the calculation of the principle as far as it can reasonably go. By running the equation twice more, you’ll discover that just under half of your revenue comes from 99% of your customers. The fraction that each makes, therefore, is staggeringly low. If, for the sake of argument, each customer contributed an equal amount of value to your organization, then the income to you would amount to about two percent each; yet you know that there are some who provide even less than that.

Fire them! They aren’t worth the time or the effort. Use the resources they consume to obtain customers that will give you more value.

Better service

The second thing you can do to increase your profits is to raise your prices. This, too, is not rocket science; and while the market may be very competitive and all that, people are willing to pay more for a higher quality of service. So, you can justify your higher prices by providing a level of service that far exceeds that of your competitors.

Consider this for a moment. How many leaders have you heard who say that their companies are competitive?

Folks, that’s a dumb statement if ever there was one. For a company to claim to be competitive is like a person claiming to be breathing. If you weren’t competitive, then you wouldn’t be in business; but that’s nothing to brag about. All it means is that you’re like everyone else, and if you’re like everyone else, then you have nothing special to offer your customers, do you?

In order to raise your prices, you have to be willing to do what others won’t.

Let’s take a really obvious example. How many builders – carpenters, plasterers, painters, electricians, etc. – have you encountered who will show up at your house at say nine o’clock, take a half hour for lunch, and work steadily until five? And how many of them do you know will go back to the same job day after day until it’s finished?

“Hardly any” is likely to be your answer. It doesn’t matter what the reasons are. The builders who are the best are the ones who do that. The ones who are merely “competitive” are like that for a couple of days. Then they don’t show up. Then they come back for half a day, but tell you they have to leave to do something else. And after a while, you begin to wonder if you hired the right person to do the job in the first place.

Do you get the picture?

It may not be obvious what you have to do to be the best, but that’s what you have to do if you want to increase your profits.

3. The third challenge is to find qualified people.

This is a perennial problem. You are probably guilty of perpetuating it just as much as anyone else.

Experience

Everyone wants experienced applicants; the problem is that no one is willing to give people the opportunity to gain the experience they need to apply.

Back in the 1990s, there was an expression that summed up the best approach to hiring new people. It was this: “Hire for attitude; train for skill”.

When you focus on what people can do or have done in the past, you show that you’re more interested in their skill than their attitude.

Do you see how easy it is to get things turned around?

Untapped resource

Studies have shown repeatedly that those with less talent, but who are willing to work hard and who believe that they can do what you ask are more likely to succeed than those who just have more talent.

Other studies have shown that older people take fewer sick days and move less often than those in their twenties. But what’s the pattern for hiring in the UK? If you’re over 50 and you don’t have a strong track record in a particular job, then employers are not interested in them.

There’s something else that you should know about older people. They tend to be more patient with customers and they know how to handle themselves on the phone. In the United States, older people are often the ones who greet you when you come into a store. It’s not because they can’t do anything else. Instead, it’s because they make shoppers feel welcome, and happy shoppers spend more money.

To be sure, there are jobs that require some knowledge and even experience, but you shouldn’t rule out applicants because of that. What you need most are people who want to learn, who will work hard every day, and who have the maturity to handle the challenges that they’re likely to face.

You can teach them the rest.

Government regulations, profits, and people. Three of the biggest challenges you’ll face as a leader. These issues will never go away, but you can mitigate their impact considerably if you’re willing to act differently from everyone else.

This is what leaders do. It’s what you should do, too. 

If you consider your organisation would benefit from improved leadership – send an email to arrange an initial chat