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Level 5 leadership

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Leadership is always in the news. A leading speaking agency principal who arranges business briefing breakfasts says when evaluation forms ask attendees what subject they are most interested in, ‘leadership’ always tops the list.

At the departmental level of a corporations, managers are expected to be leaders and within small businesses, bosses and their managers know leadership skill can raise productivity, help to retain staff and be responsible for creating successful operations that provide increasingly fatter pay packets for all concerned.

Not too long ago, Australia saw a leadership caravan parade its stuff with ex-New York mayor, Rudy Giuliani; star of television program The Apprentice, Donald Trump and the man described as the CEO of the 20th century, Jack Welch, formerly of GE, beamed into various locations to explore the theme of Leadership from the Ground Up: Effectiveness in Changing Times.

Also on the card was the author of one of the most read books on leadership, Stephen Covey, who wrote Seven Habits of Highly Effective People and Brian Tracey, who penned the best-seller Fast Track to Business Success.

Tracey says enlightened leadership was central to business success. “The three most important qualities of leadership are vision, courage and tenacity,” he says. “Other qualities are important but lacking those three nothing will work.”

Vision not only sets the sights on success but it has to be shared with key stakeholders to make it happen. This should be supported by strategic thinking, goals and plans.

On courage, Tracey relied on the thoughts of Margaret Thatcher.

“The essence of all virtues at the sticking point is courage,” he says. “It’s the willingness to go forward, to take the risks without guarantees.”

He argues that the truly successful business people need this quality. Tenacity completes his leadership troika being the quality of a leader needed to overcome the things that go wrong business.

Common leadership traits

Tracey believes success for small operators can be enhanced by them recognising that they can’t do everything for themselves.

“Today in America, some 20 per cent of small business owners have business coaches,” he says. “The number of coaches has gone up by about 500 per cent in the last couple of years.”

But is leadership always Churchillian — tough and uncompromising? Hard man, Donald Trump, is the classic celebrity CEO who is known for his unwillingness to let soft, emotional issues get in the way of tough decisions.

Chainsaw Al Dunlap, who the late Kerry Packer brought in to the Nine Network to cut out the fat left behind by Alan Bond’s ill-fated ownership of the television network was also famous for his “take no prisoners” approach to corporate turnarounds.

This cliché of hard men leading their ‘troops’ into corporate battles actually has been questioned by one of the world’s most respected analysts of business leaders — Jim Collins — author of Good To Great and co-author of Built To Last.

Good To Great
tried to work out how and why some good companies ultimately became great companies. With a team of 20 from the University of Colarado’s Graduate School of Business, over five years, Collins set out to identify those organisations that became great and then tried to look for common traits in their leaders and their strategies to explain the greatness.

The companies he put in the great category, in terms of results had cumulative stock returns averaging 6.9 times the general market in a 15 year period to 2000.

To give you some idea of what that means Collins considers what happened to GE over that time. “To put that in perspective, General Electric (considered by many to be the best-led company in America at the end of the twentieth century),” he writes, “outperformed the market by 2.8 times over the fifteen years 1985 to 2000.”

The companies included Gillette, Kimberly-Clark, Wells Fargo, Fannie Mae, Abbott, Circuit City, Kroger, Phillip Morris, Pitney Bowes, Walgreens and Nucor.

Collins has come up with a number of reasons for the success of these companies but at the core was a similarity of leadership styles which he called Level 5 Leadership. And this was no slam, bam, thank you mam-type leadership. There were no chainsaws and celebrity CEOs among these leaders.

“We were surprised, shocked really, to discover the type of leadership required for turning a good company into a great one,” Collins admits. “Compared to high-profile leaders with big personalities who make headlines and become celebrities, the good-to-great leaders seem to have come from Mars.”

He uses adjectives such as quiet, self-effacing, reserved and in some cases even shy. However they were determined with strong wills but they didn’t have trouble with personal humility.

According to Collins Level 5 leaders can pull this critically important double play and their companies really benefit.

“They are more like Lincoln and Socrates than Patton or Caesar.”

They not looking for backslappers and it’s the company that’s more important than themselves. They are not shrinking violets and can make big decisions.”

Darwin Smith, the former CEO of Kimberly-Clark, who made the big decision to sell the mills, which for a paper business was a big call but he did throw the proceeds into what look like promising brands in the ‘70s called Kleenex and Huggies.

The business press called it “stupid” and Wall Street experts in the brokerage houses put a ‘sell’ rating on the stock.

Collins has dug up one of Smith’s great one-liners about his approach to leadership, which he revealed in retirement: “I never stopped trying to become qualified for the job.”

Leading great people

Another common leadership skill noted by Collins is his leaders’ intent “to get the right people on the bus”. Eventually, even if they needed to change the seating, once they had the right people they could make the decision of what route they were going to take to get to their destination.

“The main point is to first get the right people on the bus (and the wrong ones off the bus) before you figure where to drive it,” Collins concludes. “The second key point is the degree of sheer rigour needed in people decisions in order to take a company from good to great.”

And it’s not just in the selection process but in the kinds of debate these leaders permitted to bring out the best answers to the curliest of questions.

It’s no use having great people than as a leader being too fragile to hear what they say about you and more importantly your company. It is so obvious.

As has been referred to previously, the man described as the chief executive of the 20th century, Jack Welch, was the fearless leader of the US public company GE. But he wasn’t just a boss, he was a leader and in one year, he told a Sydney audience a few years back, he and his management team acquired nearly one new company a day!

He also revealed that every year the bottom 10 per cent of his workforce was ‘let go’ because he always wanted motivated people who really wanted to be with the company.

He admitted it was a tough policy but he reckons many of those who were shown the door came back to thank him because they needed the push to find another job that empowered them and gave greater satisfaction.

So, was Jack Welch wanting only A-grade workers, a leader or a simply a bastard?

Four distinct characters

David Peake, a cultural change specialist from Quantum Edge employees, says there are four distinct characters in the Australian workplace — the whinger, the survivor, the prisoner and the volunteer.

If you run a business, understanding this is vital to the kind of leader you ultimately will be seen as by your employees.

“Whingers don’t feel close to management and adopt an ‘us’ and ‘them’ mentality. They stay physically, but mentally they have resigned,” says Peake.

Ignored for promotion employees become survivors, telling people they have “survived in the place for ages”. More emotionally damaged is the employee who is described as a prisoner.

“The prisoner basically walks around the organisation with a spanner in their back pocket,” Peake explains. “All the energy they’ve put into the organisation has not come back to them in any shape or form.”

Peake says employees who bosses or leaders with  whingers, survivors or prisoners should know that they all probably started as volunteers looking for a positive experience and in many cases leadership had something to do with their new feelings towards the business and their new identity.

But it’s not all bad news if, as a boss, you think you have lost a lot of your volunteers. “Employees can actually move backwards and forwards,” Peake advises. “We can be in volunteer mode with some people and whinger mode with others.”

Lead from the front

Leaders can make or break their staff and so getting it right can have a big impact on the productivity of an operation.

Peake says leaders have to have values and philosophies that permeate the whole business. Building bridges for the future and showing that you care about your workers is a smart start.

The boss differs from a leader in the sense that they have respect for their ability to build bridges, but their stand-off or aloof ways don’t encourage staff to easily walk across their bridges.

The positive spin on Welch’s sacking policy was that he did keep 90 per cent and was big on incentives. He told his Sydney audience that he would always celebrate with his staff with a few drinks when they kicked some big goals.

And he really believed in rewards. “Don’t give them certificates,” he said. “People like money.”

Gerry Harvey of Harvey Norman knows leadership is a people management issue and is at one with Collins.

“There is nothing more important than to pick the right people and spend a lot of time with them,” he said.

Running a business requires someone to be an expert on people and the smart leader studies people because they are their staff, their suppliers and their customers.

If someone wants to model themselves on other leaders, Collins’ Level 5 leader concept is a good start but the question is: can someone teach themselves to be a leader?

Another tip is to not underestimate the value of getting some leadership coaching. You could go to classes or simply read a book or two but like any skill there are techniques which can really build up your capacity to lead. The army and navy have been creating leaders for centuries.

Want to be a better leader? Book a free business assessment with Switzer Business Coaching today. 

Published on: Wednesday, October 21, 2009

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