Excerpted from Commodity Trading Leadership.
Four major barriers can stand in the way of traders hoping to move into senior executive or general management positions:
Personality: Not all technically competent people make good leaders, and this is especially true in commodities trading. It is in the successful trader’s DNA to look after his or her own P&L and focus on the short term. The underlying attitudes and temperament that make traders successful will usually count against them unless mitigated by soft skills, among them emotional intelligence, which are mostly irrelevant to their lives as traders.
Motivation: Traders can do just as well or better financially by trading than they can by moving into an executive leadership role. Any trader moving into a leadership role must be motivated by more than money, at least in the short term.
Experience: Traders can become highly successful in their narrow field, but unless they gain exposure to the wider value chain they will not develop the strategic thinking capability essential in a leader. Many traders are too tactical to progress. They adopt a short-term disciplined approach to trading that is focused primarily on generating immediate profits and may therefore lack broader problem-solving skills.
Development: In many organisations, there is no clear path from trader to trading executive and beyond. Traders with the potential to move into leadership roles must be identified early and given opportunities to develop a broader set of skills. Companies must have a clear understanding of the range of skills, experience and qualities needed and where possible deploy sophisticated assessment tools that can predict the effectiveness of potential leaders.
Whether a trader makes a successful transition into management depends less on having an exceptional trading ability and more on the organisation’s capacity to plan for succession, to clear a pathway for talented traders with leadership ability to take on an executive role.
The succession process should concentrate on developing breadth rather than depth of experience through carefully managed and supervised delegation. The larger trading companies offer the opportunity to do broader, more strategic work, to operate in interdisciplinary teams, and to understand the detail and complexity of the supply chain, whatever commodity is at the start of the chain of business.
Learn more about the leadership challenges facing the global commodities market.