The power of cooperation: the secret to Swedish success?

Is the Swedish approach to leadership really as special as people think? The Local asks a non-Swedish manager at telecom giant Ericsson for a frank appraisal of Swedes' so-called 'lagom' leadership style.

The power of cooperation: the secret to Swedish success?

Swedes may not be prone to boasting, but they tend to take pride in their leadership model and the success it seems to breed.

But do people who weren’t brought up with a ‘Swedish mindset’ also think Swedish leadership is really that special?

For answers, we caught up with David Moreno, a native of Spain who is now Head of Strategic Programs Practice at Swedish telecom giant Ericsson who is also enroled at the Stockholm School of Economics Executive MBA programme.

Raised and educated in Spain, David now manages a team of nearly 50 internal management consultants at Ericsson. He’s had a long career with both Swedish and international companies that’s taken him from Spain to places like the Netherlands, The Democratic Republic of Congo, and the US  before relocating to Sweden in 2009.

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As a result, David is well positioned to comment on how Swedish leadership compares to leadership styles practiced in other countries. Here’s what he had to say.

Swedes sometimes refer their leadership culture as “leadership the lagom way”, claiming Swedish leadership is less hierarchical. Is that perception true to reality?

Yes, it really is less hierarchical. Leadership in other countries is largely about setting goals and following up to make sure employees are delivering and it’s my way or the highway. There is typically a high organizational distance in other cultures.

But in Sweden, the manager’s role is more like that of a football coach. You guide and support, and a lot revolves around making sure everyone has the possibility to contribute to best reach the goal.

As a non-Swedish manager, is it positive or negative to work in a Swedish leadership culture, compared to what you’re used to from elsewhere?

I can only compare to the other countries I’ve worked in and, against those, I would definitely say it is  positive. Sure, it can feel a bit maddening at times: does everyone really need to have an opinion? Do we need one meeting to agree to have another meeting where we agree to have yet another meeting where we finally discuss content?

But, I'm nevertheless convinced that the Swedish leadership model is better. Of course, it can sometimes take a bit longer to really get started. But once you do get alignment in the group (the famous consensus)  and everyone understands the goals and one's own role in reaching them, i t is very powerful and very little can stop the process. It’s like a huge, unstoppable cargo ship plying through the ocean. And it's pretty cool to see.

Leadership in other countries can be perceived as more straightforward and effective, but I have experienced how it can be the opposite. The boss decides how things should be but, after the meeting, everyone goes off and thinks and acts differently anyway.

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There are upsides and downsides, of course, but I’d still choose the Swedish model ahead of others

Do you see other aspects of leadership that can be considered uniquely Swedish?

Swedish management culture is much more empathetic or, for lack of a better word, respectful. You make efforts not to hurt or upset employees and feedback is given constantly and in a way that is constructive . You tend to forget this in other places

I generally think that’s a good thing, but sometimes it can feel a bit much when people bend over backwards to avoid saying something that might be perceived as hurtful. This is an area where perhaps I’m not completely “Swedi-fied “, as my co-workers say I'm not afraid to address difficult and sensitive questions head-on

You have worked in Sweden and for Swedish companies for several years now. Do you see any changes in Swedish leadership?

Yes, actually. I see Swedes increasingly influenced by the American mentality. I think I’ve seen a trend towards more individualistic, competitive thinking, with more focus on words like “winning” and “beating competition”. Winning is of course important but we shouldn’t underestimate the power of  “cooperation”,  “communities” and “networks”

In my opinion, the Swedish leadership culture should be protected and be something other countries can observe and adopt.


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This article was produced by The Local Client Studio and sponsored by SSE Executive Education

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EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

The Swedish financial supervisory authority warned on Wednesday that rising interest rates could lead to house prices falling "quite sharply". How likely is it that this will happen?

EXPLAINED: Will Swedish housing prices plummet as interest rates rise?

What financial circumstances might make it difficult for borrowers to repay loans?

With an increase in the cost of living, including rising interest rates and rising electricity prices, there are plenty of circumstances that may make it difficult for borrowers – especially those holding large debts in relation to their income – to repay their mortgages.

Households with large debts are therefore more sensitive to an increase in interest rates, according to the Swedish financial supervisory authority, known in Swedish as Finansinspektionen (FI).

The agency published its annual Swedish Mortgage Market report on Wednesday.

“Large debts also mean a higher sensitivity if you were to suffer unemployment during an extensive recession,” said Henrik Braconier, the authority’s chief economist.

Other factors that could stretch borrowers’ finances include rising energy prices, higher food prices, and growing inflation.

“Apples, oranges, tomatoes have gone up by 30 percent,” said Américo Fernández, a household economist at SEB. “Wheat is coming from Ukraine and it’s getting harder and harder to get hold of.”


Will homeowners become unable to repay their mortgage loans?

Not according to Fernández.

“One of the last things Swedish households will fail to make their payments on is their mortgage and their houses,” he said. “They would rather decrease their spending on vacations abroad, or restaurants.”

The FI report noted that most new mortgages include margins that allow for fluctuations in the borrower’s finances. This means that mortgage holders have a cushion that allows them to handle financial changes.

“Our stress test shows that they can handle increases in the interest rate and also loss of income,” said Magnus Karlsson, FI’s director of macroanalysis. “New mortgages have margins in them calculating discretionary income, and will be able to absorb increases in interest rates and loss of income.”

SEB foresees an interest rise of up to three percent over the next two years, Fernández said,an increase that can be absorbed by most households.

Both Fernández and Karlsson agreed that if homeowners have to cut back on spending, those cuts will not come from debt repayment, but from their disposable income – the money they might ordinarily spend on entertainment, eating out, or travelling.

So while household spending may have to change, financial stability is not at stake for most households.

What’s going on with the housing market?

Right now, a record number of mortgage-holders have loans that are worth more than 4.5 times their income. This year, more than 14 percent of new mortgagors took on such large loans, compared to 6.3 percent last year.

A “low interest rate, increase in housing prices, increase in disposable real income and a housing market that is not functioning well” are all factors in the large debts that homeowners have incurred today, Karlsson argued.

Fernández noted that there is an imbalance between the low supply of housing and the high demand for housing, which is in part responsible for the high housing prices we see today.

He said a decrease in price of a few percentage points would not be surprising: “We’re coming from two years of exaggerated prices.”

Will housing prices begin to decrease after two years of increasing prices?

Calculations for three different scenarios tested by FI show that housing prices will decrease, Karlsson said.

While the agency does not predict housing prices, its report shows that under three different scenarios – the first an increase in mortgage interest rate, the second an increase in energy prices, and the third a combination of the first two with a reversal to pre-pandemic housing preferences – prices will decrease.

The Local Sweden reported last year about increasing housing costs in Sweden, spurred on in part by a desire for bigger homes further away from urban areas during the COVID-19 pandemic.

Fernández called the two years of increasing housing costs “surprising.”

“10-12 percent two years in a row, that’s historical in these uncertain times,” he said, noting that prices were still increasing in figures for March this year.

What sorts of housing will see the largest price decrease?

The FI report also included various scenarios of how the price of different types of housing may fluctuate based on changes in the interest rate.

One scenario assumed a 1 percent increase in interest rates this year and a 0.5 percent increase next year, and predicted that while the price of apartments owned in a cooperative – called bostadsrätter – would fall only slightly, the price of detached houses would fall by 10 percent.

Another calculation that accounted for rising electricity prices and a decline in new housing purchases found that the price of bostadsrätter and detached houses risked falling by an average of 30 percent.

Is there a plan to let borrowers end their mortgage terms early?

“We believe it needs to be simpler and more inexpensive for households to repay their mortgages early,” FI Director General Erik Thedéen is quoted as saying in a press release published by the agency on Wednesday.

To that end, Thedéen said at a press conference that the agency had sent a request to the government to change the calculation model for how banks are compensated when mortgages are terminated early.

“When you terminate a loan agreement and the bank incurs costs, it must be reimbursed,” Thedéen said. “But at present the banks are overcompensated, that is what our calculations show. If the government follows our line and changes the model and follows our line, then the banks must simply adapt.”

When asked about the likelihood of this request being granted, FI recommended reaching out to the Ministry of Justice for comment.

What does this mean for foreigners in Sweden?

If you’re already a mortgage holder, then as Karlsson and Fernández assured, mortgage calculations include a cushion that allow for changes in your financial circumstances.

If homeownership is in your future, housing prices may begin to decrease in the near future, so it’s worth keeping an eye on your local real estate listings.

By Shandana Mufti