Strategy & Leadership3 biases to tackle for successful HR leadership during COVID

3 biases to tackle for successful HR leadership during COVID

The COVID pandemic has forced CEOs to apply their skills, experience, and personal insight as never before. Recent research looks at biases that have been displayed and what needs to be done to form a successful approach for the future.

The Covid-19 pandemic has required professionals in HR leadership to make decisions under considerable pressure. Many CEOs have been acting as the “chief crisis officer” as they work to ensure their firm’s survival and to manage the physical, mental, and social well-being of their employees.

Since there is no road map for a crisis like Covid-19, CEOs have had to manage largely by relying on their existing skills under the influence of their personality traits. Here we will discuss three biases that have shaped CEOs’ pandemic response.

“The glass is half full” versus “the glass is half empty” 

Regardless of your personality, there will be managerial implications. As observed in HR leadership, optimistic CEOs tend to develop positive psychological states, such as confidence, hope, and resilience, in themselves and their teams. However, positivity can be counterproductive if leaders neglect the severity of a crisis and lose touch with the concerns of employees, clients, or business partners.

For their part, overly pessimistic CEOs run the risk of creating a climate of fear and anxiety, which can lead to employee disengagement. You, as a leader, need to be realistic about the challenges facing your firm while also motivating your employees to meet them.

As a check against your natural bias — whether you are an optimist or a pessimist — we recommend adopting an open, approachable HR leadership style. This type of style will help you obtain feedback from your employees on whether the right message is being conveyed for your team.

According to our research, we observed that optimists (52%) and pessimists (48%) were almost equally represented among the CEOs in our study.

The optimists were, for the most part, founders and business owners. Founders’ strong ties to their personal networks kept them confident that they could maintain and leverage business opportunities during the downturn. For example, the founding CEO of a leading architectural-lighting design firm said that thanks to “our brand, long-term customer relationships, and mutual trust, we gain our clients’ commitment to keep business projects going. … We stand for quality, and it’s not the first time that our growth depends on how we behave in a tough business environment.” We found that most of the pessimists worked in B2C markets with their main concern regarding a drop in market demand and precautionary savings due to consumer sentiment about economic uncertainty in China.

Costs versus people

Crises prompt firms to cut costs, hoard resources, and tighten controls. The logic is simple: when markets and future revenues are difficult to predict, margin-expansion strategies are a safe bet. However, those measures have a direct impact on employee well-being, motivation, job satisfaction, and job security.

Ultimately, professionals in HR leadership cannot afford to focus on either costs or people at the expense of the other. Both negative operating returns and demotivated employees could cause your firm to fail. Instead of asking, “How can we decrease costs?” try asking, “How can we continue to compete?” By doing so, you can avoid a vicious cycle with negative consequences for productivity, creativity, and innovation.

Based on our research, female and generalist CEOs with transferable skills and competences across industries and functional domains were found to be more aware of the pandemic’s deteriorating effects on employment conditions and attitudes. They actively attempted to address employee dissatisfaction and low commitment. The female CEO of China’s leading online mutual insurance company emphasized that “people and innovation are key for our business. These success factors don’t change during Covid-19 and won’t change in the future. I did not hesitate to invest in our employees’ training and development … and recruited skilled managers from other companies. These people will help us grow once the pandemic is over.”

Short-term versus long-term thinking in HR leadership

Knee-jerk reactions are a major risk during a crisis. CEOs who are overly focused on the short-term may take actions that could harm future business. While those who are overly focused on the long term may fail to address short-term business needs essential for survival.

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It is important to understand that CEOs with a short-term bias need to be mindful of their activities’ potential long-term impact on the firm’s competences, brand, and stakeholders. While, on the other hand, CEOs with a tendency toward long-term thinking may risk underestimating the pandemic’s impact on profitability. Having a counterpart who can function as a voice of reason can help you and your company to avoid unrealistic goals and maintain short-term accountability.

During a crisis, HR leadership needs to be objective and rational, which is often easier said than done. This concept is crucial when you are making important decisions with limited time and resources. You will be able to better manage future crises once you understand which decision-making biases you bring to the table and how to combat them.

Most of the CEOs surveyed displayed a bias toward long-term thinking, particularly in B2B markets. As the CEO of the biggest Chinese office real estate management company explained, this orientation stems from B2B markets’ “high entry barriers,” which force leaders “to handle our business partners’ properties in their best interest.” There were exceptions: CEOs in B2C markets, who understandably were occupied with short-term retrenchment measures as consumer behavior rapidly changed. However, even some in that group were looking ahead to new business models. For example, the founding CEO of a Chinese consumer products firm described how her organization was seeking to strengthen its market position by connecting online-offline offerings to its customers after the pandemic.

Editor’s note: This article has been written based on “Research: 3 Biases That Shaped CEOs’ Pandemic Response” written by Achim Schmitt, Katherine Xin, and Robert Langan.

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