After the Crisis
Contents:
These reflections are presented to nurture the development of such a new narrative, and to benefit from the feedback of Chairs of Committees and Ambassadors. Previous major crises, from the Great Depression to the stagflation of the s, profoundly changed both macroeconomics and macroeconomic policy. This session will discuss the extent to which OECD analysis and policy thinking has changed in the 10 years since the global financial crisis. The discussion will be based on a survey of Directorates and Committees. The results provide perspectives for a range of policy areas including trade, monetary and fiscal policy and challenges e.
This survey will also be complemented by details of OECD work which will help inform Members on the changes in the policy thinking, perspectives and methods of work, since the financial crisis. Committee Chairs will be invited to share work that they have advanced in their policy domain, that could be identified as being consistent with NAEC i. A new growth narrative needs to be underpinned by new techniques, methods and approaches.
Leadership through the crisis and after: McKinsey Global Survey results
This is an initiative launched by the Chief of Staff and the Chief Economist to galvanise the emerging practice in many directorates and committees to rely on the most advanced research techniques to analyse complex issues and develop policy recommendations. The Lab aims to promote experimentation within the OECD on innovative techniques and approaches such as agent-based modelling ABM , machine learning, big data applications, network analysis and behavioural economics.
The Lab will also provide a space for cross-Directorate collaboration and exchange. This aims to build safeguards, buffers and resilience to physical, economic, social and environmental shocks. Day 2 will bring together some of the leading actors in the crisis to debate what caused the crisis; its economic, social and political impacts; and how the financial system has changed, or should change.
The state of economics after the crisis will also be discussed. While economic growth has recovered, there remain vulnerabilities and risks, and therefore, economists and policy makers need to improve the way we understand the functioning and purpose of the economy.
The crisis was caused by a failure to run and to regulate competently the global economy and the firms that dominate it. This allowed huge imbalances to build up, and, when they reached a tipping point where they could no longer sustain their own weight, failure was sudden and brutal. The crisis revealed how some of the very strengths that had allowed the economy to expand, such as interconnectedness in its many guises, could be just as potent in provoking or aggravating its downfall.
When respondents look ahead to the period after the crisis, leadership and clear direction remain among the most important capabilities for managing performance chosen by 42 percent and 39 percent of respondents, respectively. Preventing the Next Crash. Did the crisis discredit the analyses based on this view and the policy advice it generated? A just concluded study by the Transnational Institute reveals that in 10 critical areas where major reform is needed, few to no measures have been taken to prevent a recurrence of Is China, in fact, still distant from a Lehman Brothers—style crisis? The challenges confronting the global economy demand a better understanding of how the economy works.
In this panel, key players in the crisis will draw lessons from what was happening in the financial system and how their instituions reacted. John Kay , Financial Times. The crisis showed that banks and financial market are not simply intermediaries between economic agents like companies and investors, and that they have an impact on the real economy in their own right.
This prompts questions about whether finance and investment can be used to drive job creation and income growth and act as a conduit for the global diffusion of innovation, expertise and the funding all these depend on. This panel will also discuss whether regulators and other actors have applied the lessons of the last crisis and whether the system is now more resilient. The financial crisis showed that the benefits of economic growth do not trickle down automatically. The long period of expansion before was characterised by growing inequalities of income, wealth and opportunities.
Our economic systems, with all their strengths and advantages, have been producing and perpetuating social disparity for decades, and inequality has widened since the crisis.
This has fuelled the perception that those who caused the crisis were saved by govenments at the expense of those who suffered. Many of the most needed leadership styles, now and in the future, are those used more frequently by women than by men. A new survey investigates how individual leaders lead and how that has changed in the past year. The online survey was in the field September 1—11, , and received responses from executives representing a range of regions, industries, and functional specialties.
Of these respondents, are men and are women. For example, respondents say that during the crisis they have seen far more leaders focus on monitoring individual performance—even though they see that as one of the least helpful ways of managing the crisis. The survey also asked about the organizational capabilities and leadership behavior organizations will need to thrive during the recovery and about the ways companies are approaching employee development and gender diversity in the crisis.
The kinds of leadership behavior that executives say will most help their companies through the current crisis, such as inspiring others and defining expectations and rewards, are the same ones they say will help their companies thrive in the future.
It is notable that these kinds of leadership behavior are the ones most used by women, who also have the greatest influence on many of the organizational capabilities executives agree are important for companies now and in the future, such as having inspiring leaders and a clear direction for companies. When asked which capabilities of organizations as a whole are most important for managing companies through the crisis, respondents choose two more often than any others: Respondents also say those two capabilities have become more important since the crisis began. In contrast, nearly a third say that the capability of shaping the overall corporate environment and ensuring shared values has become less important.
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When respondents look ahead to the period after the crisis, leadership and clear direction remain among the most important capabilities for managing performance chosen by 42 percent and 39 percent of respondents, respectively. Although only a third of the respondents rate innovation as the most important capability for managing through the current crisis, 46 percent consider it the most important one afterward.
This focus on innovation as an important factor for corporate performance after the crisis is consistent with findings in other McKinsey surveys. Executives say the two most critical kinds of individual leadership behavior for managing through the crisis are presenting an inspiring vision, cited by 48 percent, and defining expectations and rewarding achievement, close behind, at 47 percent Exhibit 2. These two are among the three that more executives have seen increase in use during the crisis than any others.
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However, the third and most frequently adopted one is monitoring individual performance and taking corrective action—even though that is perceived as among the least relevant for managing through the current crisis and afterward. Looking beyond the crisis, when we asked executives which kinds of behavior by individual leaders will be most important for managing their companies then, respondents selected the same ones that are important now: Further, these results are similar to the answers to a similar question asked in July , before the global economic crisis began: Another important leadership behavior for the future—challenging assumptions and encouraging risk taking and creativity—is not particularly prevalent today.
However, other research has shown that this kind of leadership is likely to reinforce innovation, the organizational capability seen as most important after the crisis. Gender diversity, a corporate performance driver , PDF— 1. The behavior executives see as most helpful for managing performance through and after the crisis—inspiration and defining expectations and rewards—has been shown by a previous McKinsey study to be used more often by female leaders.
Our own and other research has shown that women leaders are significantly likelier than men to define expectations and rewards and a bit likelier to be inspirational. Female leadership, a competitive edge for the future , PDF— 1. Leadership and direction are seen as the most important capabilities through the crisis and are two of the top three cited as most important for the long term.
Similarly, they are the two most positively influenced by having three or more women on a corporate board, our other work shows.
However, the results suggest that many companies have not developed robust programs to support and increase gender diversity. Further, two-thirds of the respondents say the crisis has not changed the programs their companies have in place to recruit, retain, promote, and develop women, while only 37 percent say the same for programs to retain, promote, and develop all employees.
Committee for the Abolition of Illegitimate Debt
Flexible working conditions are the single most frequently chosen action companies take in support of gender diversity, but even so, only 30 percent of the respondents say their companies have such a program Exhibit 4. Companies where gender diversity is a higher priority are likelier to be taking more measures. However, even where gender diversity is a top-three agenda item, only a third of the respondents say their companies have gender-specific hiring goals and programs.