LDRLB | Archive | July 2012

Archives For July 2012

Three Solid Reasons for Leadership Development

Guest — July 27, 2012

Why is the process of finding a leader–whether to backfill someone or to fill a new role–often treated as an isolated event rather than an ongoing process? With the cost per hire only rising, why do so few organizations have a process for identifying and cultivating leaders within their existing talent pool?

Neil Nicoll, President and CEO of YMCA warned us in Finding Leaders for America’s Nonprofits: Commentaries that, “Until [we] become much more intentional about development of internal talent, we are doomed to an ever-growing leadership deficit.” That was three years ago.

Companies need to change the way they are sourcing leadership talent. Rather than look outward when a leader is needed, they should instead continuously look inward to identify candidates with leadership aptitude and invest in honing their skills with development programs.

Regardless of whether you ultimately hire leaders from within, simply having a leadership development program yields important benefits for any organization. Here are reasons to do it:

Leadership Programs Boost Employee Engagement

A study conducted by ACCOR found that although 90% of leaders say employee engagement impacts business success, 75% have no engagement plan or strategy. To that end, development programs give employees the opportunity to strive toward something more meaningful and valuable than their day-to-day work. And that makes them happy.

Leadership development is serious stuff. It takes time and dedication to make it work. If you’re going to adopt an official leadership development program, be sure to first identify your goals for the program.

Leadership Programs Increase Employee Performance

It’s hard to deny a linkage between development and performance. As John Robak, Executive Vice President and Chief Operating Officer at Greeley and Hansen, attests, “Those individuals in our organization who are inspired tend to outperform. That’s because the more well-rounded you are, the better you’re able to perform.”

Makes sense, right? The companies outperforming you certainly think so. In fact, the highest performing organizations spend 36% more on development than their less successful counterparts. And the organizations that are doing this effectively understand what their future needs are going to be, and understand how to engage their potentials and give them the opportunity to develop the skills that they need to succeed in the operation.

Leadership Programs Improve Retention Rates

Many organizations see investments in employee development–leadership development, in particular–as a gamble. If the employee leaves, those investments walk out the door and potentially into the hands of a competitor. For those who cite turnover as a reason not to invest in developing employees, though, the truth is that leadership development and opportunities are actually a leading retention strategy.

“Gen Y tends to be more fluid and move more frequently, which can be intimidating for employers worried about turnover. We see the exact opposite,” says Robak.

Don’t get me wrong–turnover is a valid concern, but if you’re hemorrhaging top performers, it’s rarely because you’ve invested too much in developing them.

Transparency is King in Leadership Development

As Roback points out, “In the absence of feedback, people tend to create their own.” Whatever decision is made–whether it’s a promotion from within or an external hire, it’s critical to communicate the why. Robak goes on to say that, “We don’t just want our message to be heard–we want to ensure it’s received.” Otherwise, all of your best intentions are for naught.

What successes have you had in developing leaders internally? What challenges is your organization faced with when developing a pool of leadership candidates?

Kyle Lagunas is an HR Analyst at Software Advice – an online resource for reviewing and selecting software. He reports on important news, interesting conversations, and what’s trending in the world of talent management, human resources, and recruiting.

In Leadership leadership development, talent management

Celebrity Leaders May Actually Be Falling Stars

David Burkus — July 25, 2012

Early on in my career, one of my professors shared a maxim I’ve tried to remember. He said, “the thing about leadership is that it inherently attracts the wrong kind of people.” Leadership carries with it a platform, a spotlight that shines brighter as an individual moves higher. A lot of people are drawn to leadership for the sake of that spotlight. Many organizations justify the spotlight; if the CEO is being interviewed on primetime news, they reason, then that has to be good for the company. The CEO is the face of the company and if he gets attention then so does the company.

Recent research points to a flaw in those assumptions. Professors Ulrike Malmendier and Geoffrey Tate recently examined the links between CEO status and firm performance. The researchers designed a paired comparisons study, examining CEOs who were recently given a status boost in the form of CEO awards from the media against a near-identical set of CEOs in similar industries who did not receive such awards.

They found that firms with award-winning leaders tended to underperform their comparison pair in terms of operating and stock performance. Ironically, as the firm’s performance was dropping, the CEOs compensation increased as a result of their status. In addition, the CEOs in the studied tended to spend less time leading their firm and more time engaged in high-status activities like writing books, giving speeches and sitting on outside boards. In total, it appears that trusting a “superstar” strategy has negative consequences for the organization.

Celebrity leaders may quickly develop into falling stars.

There is hope, however, as the firms in the study who showed strong corporate governance and well-defined shareholder rights did not experience a performance drop when their leaders won awards. Those firms did not appear to buy into the hype that the superstar leader alone would increase their performance. Instead, they made sure proper checks, balances, and monitors were in place to keep their celebrity leader from leading himself astray.

David Burkus is the editor of LDRLB. He writes, speaks, and serves on the faculty of management at Oral Roberts University’s College of Business.

In Leadership burkus, evidence-based management, Leadership, organizational performance, status

Is Business a Combination of Sport and War?

John Bell — July 23, 2012

The notion of business as a combination of sport and war was attributed to Emile Herzog (1885-1967), a French author who used the pen name, Andre Maurois. I’m going to admit at the outset that I was a strong proponent of Herzog’s concept for most of my career. However, now that I look back from the CEO afterlife, I realize that this view need not be pervasive.

The man who preceded me in the corner office lived by the credo that a company’s success wasn’t enough; the other guy had to fail. That may sound extreme. The truth of the matter was this: he was recruited to turn around a failing business on the verge of bankruptcy. When a business is in the red because of smart competitive maneuvers or its own strategic ineptitude, intense disdain for the competition emerges. It is the mindset of a company in a “turnaround.” Desperate times require desperate measures. As in war, a common enemy is a great place to unify and motivate a team behind a worthy cause. At the time, our cause was survival.

As for sport, the game of market share was an easy way to track success. We put our best efforts into creative and strategic maneuvers to tip the scales in our favor. With only 100% available to the players of the market share game, you knew whether your play(s) made you a winner or a loser. But hold on for a moment. The delusion is that market share is the “be all and end all” of business success. Proponents believe that dominant market share creates competitive advantage because of marketplace leverage and economies of scale.

This is the mentality of the old economy.

Old economy thinking works within known market space defined by industry boundaries and competitive rules. The 100% boundary can get crowded and those obsessed with winning or defending their territory often resort to non-strategic tactics. The tactic that works best to defend or build share in the short term is price cuts or special discounts. Be forewarned, this tactic destroys profits.

The new economy doesn’t operate that way. Sure, they work hard at improving their competitive positions within existing markets. But their leaders are farsighted. Their horizon is markets that do not exist. The key is to get to that future first. No one has done this better than Apple. They think big and they think bold. At the other end of the spectrum is Research in Motion. Thinking bold, and using bold as nomenclature (Blackberry Bold), are not the same.

Success in business does not have to hinge on the sport and war analogy. Yes, that mindset worked for me when the hungry wolf was at our door. But in my final years as CEO of a growing, profitable consumer packaged goods enterprise, it was senseless to engage in bitter wars that challenged margins. A competitor doesn’t have to fail; they too, can make a profit. But they cannot be permitted to lead; make them play catch-up by continuing to strategically innovate. That’s how I played the game. I suggest you do the same.

John Bell is a strategy consultant and former CEO of Jacobs Suchard (Kraft, Nabob). He is a contributor to Fortune magazine and a regular blogger at CEO Afterlife.

In Leadership bell, business, competition, mental models

Turning Teams Around

David Burkus — July 20, 2012

Turning around a losing organization is difficult. It’s tough to fix the leaks and keep people excited when the ship is sinking. If only there were a manual for turning a team around. Fortunately, Joe Frontiera and Daniel Ledil have been working on just such a manual, Team Turnarounds: A Playbook for Underperforming Teams. After five years of studying a variety of teams in business, sports and government, they argue that many turnarounds follow the same six-step process:

Lead Past Losing – evaluate your current state and accept your reasons for failure.

Commit to Growth – Communicate the better future.

Change Behaviors – Introduce new behaviors and best practices.

Embrace Adversity – Test the team and get better.

Achieve Success – Reach the turnaround and look to the future

Nurture Excellence – keep the focus on continuous success

Within Team Turnarounds, Frontiera and Leidl demonstrate these six stages by citing examples like Domino’s Pizza, the Indianapolis Colts, the Philadelphia Eagles (a personal favorite) and event the State of Michigan’s attempt to turnaround its economy. Team Turnarounds promises to deliever a proven method for turning around any team. I’m not sure that the lessons here will help every turnaround situation, but they can’t hurt. In addition, the stories in Team Turnarounds are entertaining and filled with ideas on how to turn your own team around, or sustain its success.

In Leadership book review, frontiera, Leadership, ledil, turnarounds

Why Learning Fast is Better Than Failing Fast

Max McKeown — July 18, 2012

[This is a guest post from Max McKeown. Max is a consultant, researcher and writer focused on innovation and strategy. This post is excerpted from his new book, Adaptability.]

The purpose of failure is not to fail; the purpose is to allow failure as part of learning. To be allowed to experiment and learn from those experiments is valuable. To learn to stop delivering success is potentially disastrous. Just as dangerous is learning to live with varying levels of failure without doing anything to improve the situation.

It can be too easy for individuals and groups to lower expectations. We’re not perfect, people start to say. We can’t be expected to do it all, they chorus. Well at least we can learn from our mistakes, they reassure each other even after the organization is bankrupt. The point is not to learn to failure, but to learn what works from failure.

Learning fast involves moving from knowing change is necessary to figuring out what to do differently and doing what is necessary. It is the complete movement from insight to action that is relevant to adaptability. You may not notice. You might not react. You may react too little, too late. You may under-react or even over-react.

Super-adaptation requires people to try and find ways of transcending the limitations of a particular situation. Those ways may be obvious but generally require creativity mixed with knowledge to discover and put into action. There has to be individual belief and desire to overcome constraints. There have to be opportunities for groups to put their insights to work.

Making the same mistakes for the same reasons is a failure to learn. Even making new mistakes for the same reasons is a failure to learn. The most effective adaptation happens when thought is given to the reasons for failure so that they can be avoided and new lessons learned. Why did it happen last time? What were the assumptions? Did the likely reasons for failure before we failed?

There’s a balance in adaptability between learning too slow and failing too fast. In 1940, Hitler issued the ‘fuhrer directive’ that stopped all research and development on projects that would take more than six months to deliver usable weaponry. As a result, he stopped smart minds adapting to the threat of the allies and handed an advantage to the allies who continued to experiment without unhelpfully inflexible deadlines.

Hating to fail in public doesn’t have to be about avoiding learning. Instead of playing safe, you can just play to win. You can refuse to waste valuable lessons by not trying again. Many organizations try things with disappointing results and stop. They may even try yet more things that fail and stop again. Others try things with disappointing results and refuse to change. But the smartest, most adaptive organizations identify something worth doing and keep on learning until they get it right.

In Innovation adaptability, failure, learning, mcKeown