Guest Author: Ronald Recardo
During the last 20 years many books and articles have been written extolling the importance of leadership and specifically how to develop high performing leaders. Fortune 500 companies spend millions of dollars a year on sophisticated talent management/succession planning processes, corporate universities, and leadership development programs.
With all this effort and money being spent it begs the question, why are there so many empty suits in key leadership positions? Some would say that many of our senior leaders have learned a number of bad behaviors (e.g. they are too consensus oriented, avoid making tough decisions because enemies can bite you in the future, accept mediocre performance) that helped them survive the economic implosion of 2007 and the economic roller coaster we have been on since then.
Our firm sponsored a research study by interviewing over 200 high performing senior executives (rated as outstanding) that were employed by mid and large cap companies across a range of industries. The purpose of the interviews was to try and identify the attributes that separate the leaders who “walk on water” from those that are “treading water” or who are “underwater”.
Based on interviews with executives and personal experience in working with 100’s of clients we identified the top ten most important tenets for outstanding leadership;
- Leaders cannot save their company to prosperity. One of our observations over the last 10 years has been a growing trend in leaders being promoted based on their capability to fight fires or manage crises.Companies should learn from the GE model for developing leaders. Leaders who are targeted for General Manager level positions are put in different operating companies to gain experience in a wide range of business cycles from high growth and mature businesses/industries to retrenchment/turnarounds providing their executives with a much broader experience base. Different business cycles require different skill sets to be successful. This diversity of experience allows leaders to develop a much broader skill set and better strategic thinking skills.
Anyone with an eighth grade education can improve the financial performance of their organization by cutting costs – headcount reduction, curtailing travel and entertainment, and cutting back on R&D. Our study concluded that in downturns the highest performing leaders use cost cutting to stabilize their business and then quickly focus on implementing a targeted growth strategy to increase the top line.
Most organizations struggle with the growth side of the equation because they do not utilize the full range of growth engines and really do not know where their revenue is coming from. It is like a black hole. The internal growth engine is primarily composed of your planned marketing efforts (the 5 P’s – Product,Pricing, Positioning, Promotion, and People. Conversely the external growth engine is comprised of mergers and acquisition, joint ventures, strategic partnerships, licensing, and alliances. Many organizations tend to overly rely on the external growth engine if they have deep pockets because they offer the promise of a home run outcome. The downside is that organizations are often bidding against other players so the price becomes inflated and historically the success rate of these deals is relatively low. The highest performing leaders have recognized that an important byproduct of their strategic planning process is the mapping of revenues to each discrete growth platform. This simple step greatly improves the accuracy of financial forecasting and avoids the all too common creative writing exercise we call financial forecasting. Even if an economy is in the midst of a recession it does not mean an organization cannot grow. Just take a look at the list of the large gainers on-any of the finance websites.
- Good leadership does not equal being liked. Many executives interviewed believe there has been a considerable “dummying down” of senior leadership over the last 5 years. As the more mature leaders retire or cash out they are being replaced by new leaders who have become experts at corporate survival and managing up
As the older, more experienced, and often times more effective leaders have left the game (they retired, went to smaller companies, did something entrepreneurial) they have been replaced by younger leaders with stronger academic credentials. Often the new leaders were “ready now” in part because they developed the best corporate survival skills. These leaders became very adept at managing up and went to great extremes to avoid and not resolve conflict, and at times, avoiding making tough decisions. Another factor in promoting these behaviors is the inappropriate application of 3600 performance management systems that inadvertently rewarded leaders based on their popularity. The leaders who made the tough decisions were“beaten up” (and they altered their behavior to conform) or were forced out because they had threatened the old guard.
Another finding was that the most effective leaders did not assemble leadership teams or Boards of Directors comprised of their friends or yes people who have their backs. Their teams are comprised of abroad range of people who have different styles and capabilities, who feel they are empowered to question the status quo, they surfaced conflict, were not afraid to say no, and focused on value creation. They did not promote based on relationship management or pedigree but on generating results. The highest performing leaders were cognizant that they owned 51% of every vote or decision made within their team. They exercised their right when they felt their direct reports were going down the wrong pathway.
- Self awareness/high emotional intelligence is essential for engagement. Executive effectiveness is constrained by a leaders ability to read situations, properly discern other peoples feelings and understand verbal/non verbal cues. For those of you reading this article who are executives ask yourself the following questions:
- How often do you have a conversation with a corporate colleague and you walk away asking I know what they said, but what did they really mean?
- How many times as the senior-most person in a conversion have you perceived a person was filtering communications to make a bad situation a bit more tenable?
Perhaps the harder part of the equation is being able to use the cues you pick up to govern your own reactions to specific situations. In addition to developing skills for appropriately interpreting communications, cues, and messages, leaders must understand how they are being perceived and how to engage different stakeholder groups. Leaders must also manage emotions in both themselves and others they are interacting with to achieve their goals.
Daniel Goleman in his book entitled “Working with Emotional Intelligence” popularized the EI framework. He summarizes the following five main emotional intelligence constructs that leaders must master to optimize their effectiveness:
- Self Awareness: The ability to know one’s emotions, strengths, weaknesses, drives, values and goals and understand how they affect other people.
- Self Regulation: Being able to quickly discern when their emotions/behaviors are adversely effecting interactions and redirect accordingly.
- Social Skill: Managing interactions at a micro level and relationships at a macro level
- Empathy: Being cognizant of other peoples feelings and take into consideration those feelings when making decisions.
- Motivation: Balancing your need to achieve and generate results with the feelings and needs of those around you.
Next week, we will continue our discussion of the ten most important tenets for outstanding leadership.
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