Group leaders are capable of collectively producing decisive results to crisis scenario: Study

A research conducted by Cass Business School has found the possibility of leadership groups collectively maintaining cohesion and acting decisively while facing a crisis.

The research -- 'Ambiguous Authority and Hidden Hierarchy: Collective Leadership in an Elite Professional Service Firm' -- examines the distinctive power dynamics revealed among peers in a professional service firm as they responded to an acute organisational crisis.

As they fought with the crisis, members in the firm's leadership group exercised considerable informal power under the cloak of ambiguity, highlighting the hidden hierarchy that existed within the collective. Their response also emphasised the significance of an individual 'heroic' leader within the group.

The study also suggests that collective leadership requires effective individual leaders, who can nurture the context in which collective leadership can flourish.

The author Prof Laura Empson has opined that the professional service firms provided an ideal example of collective leadership.

The firm is ranked in its sector's top five globally in terms of revenue, profitability, and the number of staff. At the time of the study (2009-10), it generated revenue of US$1,500 million, had 500 partners and employed 5,000 staff.

In 2008, the collapse of Lehman Brothers and the subsequent banking crisis caused a significant threat to the firm's core business, with the firm facing a sharp decline in income and limited scope to reduce costs as partner remuneration formed a substantial part of the cost base.

Using interviews, institutional archives and observation, Prof Empson's research focused on three specific aspects of the collective leadership group: composition, interaction, and situation (the response to the financial crisis).

The composition and authority of the collective leadership group were ambiguous, including the senior executive pair of Senior and Managing Partner, whose roles were deliberately not distinguished and had considerable overlap.

Power relations between the two were ambiguous but not contested. The group also included joint heads of practice, Board members and an unofficial management team.

Professor Empson found that when dealing with the crisis, the Senior Partner mobilised a hidden hierarchy within the group, recognising that the group's ambiguous authority, which had worked until this point, represented a major difficulty in dealing with the crisis.

"The senior partner first organised an initial highly confidential meeting to discuss the firm's response with a smaller group including some joint heads of practice and some Board members. He and the Managing Partner said they didn't have all the answers and wanted to get the 'best minds' round the table to share thoughts and ideas," expressed Empson.

After this meeting, the Managing Partner and Finance Director commenced formal contingency planning to develop a list of partners for restructuring.

Their list of selected partners was then rejected by the practice heads and the Board and was further refined by a subset of the leadership group, with practice heads challenging each other's lists. This caused conflict and disagreement but was ultimately resolved after forceful interventions from the Senior and Managing Partner.

The Senior and Managing Partner then sought to build support for decisive action within the wider collective leadership group and other influential colleagues within the partnership by establishing consensus for the decision and extending collective responsibility.

It was decided that 50 partners (10 per cent of the total) would be asked to leave and offered a substantial compensation package. A further 35 partners were asked to accept a reduction in their partnership equity. All 'restructured' partners accepted their packages.

Prof Empson found that the interviewees praised the Senior Partner for his deliberate yet unobtrusive leadership which resolved the crisis.