The image of our major corporation chiefs as charismatic, decisive and heroic leaders has taken a battering in recent weeks. ‘Neutron’ Jack Welch at GE, Al ‘Chainsaw’ Dunlap and their ilk appear to be a dying breed.
The average tenure of chief executives has fallen to around three years. And last month, following the removal of the well-coiffured and rewarded Carly Fiorina from the top of Hewlett Packard, three archetypal representatives of the emperor-boss model received their come-uppance.
Michael Eisner’s departure from Disney Corporation was announced; Maurice ‘Hank’ Greenburg was ousted as chair and chief executive of American International Group; and former Worldcom CEO Bernie Ebbers went to prison for overseeing a £5bn accounting fraud and the largest bankruptcy in history.
Academic research has demonstrated the fallacy of the fashionable 1990s notion that these charismatic, hard-driven and driving individuals, commonly parachuted in from outside, could singlehandedly transform the fortunes of often ailing corporations.
In The Curse of the Superstar, Rhakesh Khurana demonstrated that their financial performance, after an initial upward spurt, invariably fell back below the pre-appointment levels. Jim Collins in Good to Great found that the leaders who succeeded in delivering outstanding performance over the long-term were much more likely to be quiet, modest individuals with lengthy company service than the charismatic import.
And, worst of all, last year a study published in Leadership Quarterly found no association between the level of charisma of chief executives and their company’s performance but a very strong relationship with their level of pay.
So, if today’s increasingly complex and fast-changing environments seem to be signalling the end of the ‘great white man’ model of leadership, what do the leaders of our major organisations need to do to succeed in the future?
This was the discussion topic at a CIPD seminar last month. And there was a high level of consensus among managers and academics, across public and private sectors. Success has more to do with what leaders enable others to do than with what they themselves actually do.
The skills and competencies of effective leaders in the extensive range of organisations studied by Professor Beverly Alimo-Metcalfe at Leeds University included: building a shared vision, creating effective teams, being open and accessible, networking, and facilitating change sensitively. Or, as Kevin White, the HR director at the Department of Work and Pensions, summarised, great leaders develop the vision of success in the future and then create the environment that enables their employees to achieve it.
Leadership in our most successful organisations today appears to have become a much more democratic concept, in two senses. First these characteristics are developed and dispersed widely rather than focused on an executive élite. At Dutch multinational TPG, selection for leadership development programmes is open to all staff through an online process. And, second, there is a recognition that successful leaders
depend on, and are made by, the led. Greenleaf’s 1970s concept of the ‘servant leader’ may be too radical for many, but the partner leader, displaying openness, humility and integrity, appears to be at work in our most successful organisations today.
A study of top-performing local authorities found that their staff not only felt better led and managed but also more involved in decision-making and given the chance to show their initiative. Managers listened to their ideas, which were well developed.
CIPD found a similar pattern among major retailers in our research on the links between people management and business performance. In one high-performing store, the manager described his job as being “to mobilise the team to achieve our goals…motivating people”. As a result, one of the staff told us: “We believe in this company; they look after us… we have a strong team; you want to do your job to the best of your ability.”
So the agenda for our business leaders needs to move away from traditional considerations of empire, ego and efficiencies to focus on the real business of energising, enabling and empowering people and organisations.