Post 3 by: Sherri K Baldwin
The plane you are piloting with 150 passengers on board has just stalled after plowing through a flock of birds on takeoff. You have three choices, none of which are good; turn back, fly on to the next airport or ditch in the river below. Which choice should the pilot risk? You immediately select “ditch” and are confronted with yet more risky decisions of where, how steep and fast to descend and how and with whom to communicate. The energy industry is seldom confronted with such immediate risk decisions, but the number and magnitude of significant risks upon which energy leaders must decide has become staggering. Energy companies in the Carolinas are doing something about this.
LeadAdvantage, a Charlotte-based leadership development company, has for the past five years collaborated with E4 Carolinas and its forerunner organization, the Carolinas Nuclear Cluster, to produce leadership development programs for the Carolinas’ energy companies. The annual programs include a leadership behavior assessment of each participant. Companies including AREVA, CB&I, Duke Energy, EPRI, Fluor, SCANA, Siemens, Savannah River Nuclear Lab, Toshiba, URS, Westinghouse and many others are participating. More than 200 energy professionals have graduated and a 360-degree leadership assessment has been made of each. Assessment results reveal ten different areas that were measured in both management and leadership (tasks and people). One essential measurement in risk-taking behaviors help managers and their companies successfully achieve a higher return from their investment and participation in E4 Carolinas.
The LeadAdvantage assessments indicate almost ninety percent of participants in their twenties and thirties are willing to take business risks, as indicated by the “Actualizer” behavioral attribute for those ages in the chart below. Those in their twenties are idealistic at the beginning of their career and take risks in part to explore their business world. But, they also tend to back down quicker and defer to others, as revealed by the “Synergist” attribute, indicating an aversion to risk-taking consequences. The thirty to forty group has a similar risk appetite, but more realistic business views and take more calculated risks. This is indicated by the increase of the “Sentinel” behavioral attribute. This behavior is less idealistic and tends to deliberate longer before taking action, factoring in the consequences.
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The assessment results show a 40% decrease in risk-taking behavior with energy professionals in their forties, but a greater appetite for strategic risks, as indicated by the balance at 50% between the “Actualizer” and “Strategist” attribute. After twenty years in the energy industry, fewer managers are willing to take risks, but those who do are better at persuading others to support their ideas and their higher risk-taking more often produces their company a greater positive return. LeadAdvantage’s studies show that those taking appropriate, moderate to high risks increase the probability of moving more quickly into higher management positions.
Risk-taking is also influenced by a company’s operating environment. Those companies and managers encouraging creativity and flexibility foster more appropriate risk-taking and produce more innovative problem solutions. These companies with LeadAdvantage’s support are identifying managers with high return risk-taking acumen and are putting them in important risk management positions.
There is also a direct correlation between risk-taking and decision-making. Making quicker decisions involves risk. Gathering sufficient information to mitigate risk requires time. Managers with a strategic risk aptitude have a sense of how to balance information, time and risks to more quickly reach a decision. LeadAdvantage believes such managers make productive decisions with somewhere between 50 to 65% of the available information. Decisions made with less than 50% of the information necessary to reduce a risk are reactionary and likely have not identified all options. Decisions made beyond gathering 65% of the information needed take more time, money and manpower, and consequently result in losing “opportunity cost” and increase the likelihood the competition will get there first.
There are times when managers can not choose when they take a risk, like Captain Sully Sullenberger, who employed his risk-taking judgement to “ditch” in the Hudson River and won big…all the passengers survived. Whatever the reason or circumstance, risk-taking is an increasing part of the energy industry and risk-taking acumen is an important criterion by which great leaders are defined.
The increasing value of risk-taking in the energy industry causes LeadAdvantage to conclude that companies should identify their over 40 risk-takers and engage them in developing their under 40 rising managers to better understand the behaviors influencing higher risk, higher return. In this time of increasing ambiguity, energy companies with appropriate risk-taking insight win.
LeadAdvantage is a female-owned leadership company that has been providing leadership development services for more than a decade to both U.S. and international companies to strengthen leadership behavior and promote effective organizational change.
E4 Carolinas is a non-profit organization which cultivates a collaborative Carolinas energy cluster to accelerate growth, employment, productivity and prosperity within the Carolinas energy economy.
Contact LeadAdvantage for more on our leadership processes for your management teams and high performers that will lead to continued success! To think, to act, to take away something real…
Other interesting posts: http://www.effectiveconnecting.com/blog
Sherri Baldwin is Principal of LeadAdvantage, Inc., a leadership and team training and development company, and is a registered Woman Owned Small Business (WOSB). Sherri and her team use a unique blend of businessrelevant, engaging and high-energy approaches to create an environment where leaders are individually equipped to navigate successfully through their specific business challenges to achieve a desired objective.