By Ulf Andreasson
Working for the Nordic Council of Ministers, I was asked a couple of years ago by the Secretary General at that time, Mr. Dagfinn Høybråten, to write a report on Nordic leadership ( Access the report here ). The topic had come as a suggestion from the Nordic governments, who saw a specific Nordic leadership style as something that separated the Nordic countries from how leadership is formulated and executed in other parts of the world.
Honestly, I hadn’t given a specific Nordic leadership style much consideration. However, as I started to think about it, one specific memory came to my mind. It was from when I lived for five years in China, 2008-13, working for the Embassy of Sweden. There was a concern that Swedish companies experienced problems recruiting talent: well-educated Chinese that would be essential for the company’s performance.
Said and done, I interviewed a substantial number of Chinese employees working for Swedish companies, and their (Swedish) managers. There was indeed a challenge to attract talent, since the companies couldn´t afford to pay the same wages as American, German or Chinese companies.
How did the companies handle this challenge? Well, they couldn’t afford to raise the salaries to the same levels as some other companies. The answer was instead good leadership. For example, they made sure that the Chinese staff got both responsibility and power when performing their daily tasks, that they had a good work-life balance, a chance to develop their skills and talent etc. – things that you can’t take for granted on the Chinese labour market but is the normal situation in the Nordic countries. But the leadership went further than just treating the staff well. The management also took matters such as sustainable development and social responsibility seriously, leading to employees taking pride in the organisation they worked for.
This was of course not true for all Swedish companies and managers but for most of them.
The leadership style helped the companies to recruit talent. Equally important was that the employees stayed in the company longer time – in China, at least at that time, workers frequently changed to other companies, in order get higher salaries. Staff at the companies I interviewed not only stayed in the companies for a longer time; when they changed, they very often went to another Nordic company. (Chinese employees didn’t distinguish between Swedish, Norwegian, Finnish, Danish or Icelandic companies – or the countries for that matter. They were all Nordic, and they tend to think of the Nordic countries as very similar: developed, egalitarian with strong welfare states and a high level of environmental protection etc.)
This indicated to me that there was something in the Nordic leadership style that was important. That brings us back to the task that our Secretary General gave me. I soon discovered that research confirmed my main impression from China: in short, the Nordic leadership style included a strong element of delegation of power and responsibility to employees. It also meant a high degree of consensus-seeking in the organisations. A Nordic leader also stresses the necessity of co-operation. In addition, he or she plays down their authority and often functions more as a coach for their employees rather than an authoritarian figure.
It is not difficult to recognise that the Nordic leadership style has significant value due to its ability to create conditions for high productivity, innovation and growth, while also providing high levels of satisfaction for employees and a good working environment. One researcher believes that discussing a specific Nordic leadership model is significant because of its aim to combine economic growth with democratic stability. It is a description that appears to make good sense.
But the Nordic leadership style goes beyond how you treat your employees. In the Nordic region companies have a closer and more symbiotic relationship with the surrounding society, particularly compared with American companies. This includes a different approach to accountability, not least in relation to maintaining relationships with stakeholders. These stakeholders can comprise different types. They could include, for example, customers and suppliers, as well as trade unions, volunteer organisations and individuals who may live near the company. You could say that Nordic companies do not limit their corporate responsibility to financial profit, but consider a much wider perspective. Many Nordic leaders would argue that there is no conflict between responsibility and maximising the value of your company, because in the long term, social and environmental issues become financial issues.
Research suggests that leadership styles around the world are very much influenced by values and culture in that specific region. On the deepest level, being a leader consists of ethical considerations, such as how democracy, human dignity, responsibility, obligations, rights and the individual’s role in relation to the community are viewed.
This brings us to the question why anyone should care. In her book On the Move. Lessons for the Future from Nordic Leaders, Pernille Hippe Brun addresses the same question. In the book she interviews 58 Nordic business leaders who all had one thing in common: they had grown up and been educated in the Nordic countries, but then left the region to pursue a career abroad. Brun’s answer concerns the ethical considerations behind the leadership style. She means that even though they are small countries, Nordic leaders know how to build great companies “ready to do good in the world, focused on more than just short-term profit and the bottom line”. Nordic leaders are leading the way “not only in business but in addressing issues relating to social infrastructure, sustainability, and well-being.”
Criticism against the Nordic leadership style of course also exists. One source of criticism is that it is in danger of coming close to the concept of ‘leaderless democracy’, where decisions are already taken by others in the organisation and not by the leader. Hence, there is a risk of leadership almost exclusively concerning administration and HR issues. One way to combat “leaderless democracy” is by having well-defined strategies. As I see it, that is one major success factor behind the successes of Novo Nordic, whose CEO Lars Sørensen has twice been propelled to the top of Harvard Business Review’s ranking of best-performing CEO in the world.
Interesting enough, my report received most attention outside the Nordic countries, and especially in Eastern Europe: in the Baltic countries, in Poland and Belarus, where I have travelled several times to talk about Nordic leadership. As I see it, they are countries in a state of rapid change looking for inspiration in their development from other countries around the world. Maybe the Nordic leadership in the future won’t be something specific for the Nordic countries, but something that also could be found in other parts of the world as well. Let’s hope so…