Money Matters

Developing leaders

Money Matters
By Kamran Hafeez
Mon, 08, 21

Companies have always needed leaders who are good at recognizing emerging challenges and inspiring organizational responses. That need is intensifying today as leaders confront, among other things, digitization, the power of data analytics, and the ability of artificial intelligence to automate the workplace and enhance business performance. The need for developing leaders has never been more urgent.

Developing leaders

Companies have always needed leaders who are good at recognizing emerging challenges and inspiring organizational responses. That need is intensifying today as leaders confront, among other things, digitization, the power of data analytics, and the ability of artificial intelligence to automate the workplace and enhance business performance. The need for developing leaders has never been more urgent.

Majority of the companies realize that to survive in today’s volatile, uncertain, complex, and ambiguous environment, they need leadership skills and organizational capabilities different from those that helped them succeed in the past. There is also a growing recognition that leadership development should not be restricted to the few who are CEOs, departmental heads or board members as employees across the board are increasingly expected to make consequential decisions that align with corporate strategy and culture. It’s important, therefore, that they be equipped with the relevant technical, relational, and communication skills. They need to be developed into leaders.

For years, companies have spent time and money on improving the capabilities of managers and on nurturing new leaders through various conferences and management/leadership programs. Unfortunately, there is overwhelming evidence that the plethora of services, books, articles, seminars, conferences, etc. -- a global industry that has been estimated to be now worth more than $50 billion -- are delivering disappointing results. According to a recent Fortune survey, only 7 percent of CEOs believed their companies are building effective global leaders, and just 10 percent said that their leadership development initiatives have a clear business impact.

So what is it that companies fail to recognize when focusing on initiatives for developing leaders? It is context, which is a critical component of successful leadership. A brilliant leader in one situation does not necessarily perform well in another. Most training initiatives and leadership development programs rest on the assumption that one size fits all and that the same group of skills or style of leadership is appropriate regardless of strategy, organizational culture, or the industry in which the company or the leader operates.

The fact is that each company has certain unique needs and depending upon the stage of its organizational and business development, specific leadership traits are required. In case of companies requiring its managers to support an acquisition led growth strategy, the company will probably need leaders brimming with ideas and capable of devising winning strategies for new or newly expanded business units. If the need is to grow by capturing organic opportunities, the company will probably want people at the top who are good at nurturing internal talent.

Focusing on context inevitably means equipping leaders with a small number of competencies (at best two to three) that will make a significant difference to performance. Instead, what we often find is a corporate wishlist with a long list of leadership standards, a complex web of dozens of competencies, and corporate values statements. Each is usually summarized in a seemingly easy to remember way outlining key traits and each on its own terms makes sense. In practice, however, what managers and employees often see is just a long list of corporate jargon and recommendations.

When a company cuts through the noise to identify a small number of leadership capabilities it considers essential for success in its business such as high quality decision making or stronger operational skills -- it achieves far better outcomes.

Most companies often fail to translate their company’s strategy into a leadership model specific to their needs. The implications are much more pronounced for organizations seeking to master today’s environment of accelerating disruption: leadership development efforts must be driven by those new strategic imperatives, translating them into growth priorities for individual managers, with an understanding for the degree of change required.

An important piece of the puzzle is enhancing the ability of leaders to adapt to different situations and adjust their behavior (something that requires a high degree of self-awareness and a learning mindset). Leaders with these attributes are much more prepared to lead amidst change when they are willing to change.

Then there are also key personal traits. Becoming a more effective leader often requires changing not only behavior but underlying mindset as well. Although most companies recognize this but are reluctant to address the root causes of why their leaders act the way they do.

Identifying some of the deepest, “below the surface” thoughts, feelings, assumptions, and beliefs is usually a precondition of behavioral change -- which is usually ignored in most development programs. Promoting the virtues of delegation and empowerment, for example, is fine in theory, but successful adoption is unlikely if the program participants have certain inherent insecurities or have a clear “controlling” mind-set (I can’t trust my people, I can’t lose my grip on the business; I’m personally accountable and only I should make the decisions, etc.). It’s true that some personality traits (such as being an extrovert or being a relationship person) are difficult to shift, but people can change the way they see the world and their values. Companies usually pay lip service to the importance of developing leadership skills by adding it as part of their HR manuals and training calendars but have no evidence or basis to actually quantify the value of their investment. If the company fails to track and measure changes in leadership performance over time in the absence of such appraisal systems and measures being in place, then they increase the odds that improvement initiatives or programs being run won’t be effective or be taken seriously.

As such there is no “silver bullet” that will singlehandedly make the difference between success and failure however certain priorities need to be focused upon more than others to ensure success in developing leaders.

Most important would be ensuring sufficient reach across the organization as it is important to the success of leadership development efforts. Organizations need to pursue interventions covering the whole organization, and to design programs in the context of a broader leadership development strategy.

Another key factor is organizational adaptability. Leadership development efforts have always foundered when participants learn new things, but then return to a rigid organization that disregards their efforts for change or even actively works against them. Given the pace of change today, adapting systems, processes, and culture that can support change enabling leadership development is critically important. This is particularly true for traditional owner managed businesses that continue to attempt to institutionalize and emphasize on delegation and empowerment but fail. What good is training their managers on such traits if the business will continue to be managed by its owners.

Also critical are formal appraisal mechanisms (such as the performance-management system, the talent-review system, and shifts in organizational structure) for reinforcing the required changes in core competencies and measurement of leadership development.

Most importantly however successful leadership development programs involve senior leaders acting as project sponsors, mentors, and coaches and to encompass adaptations to organizational systems aimed at reinforcing the new leadership model. It effectively needs to translate in bringing about a change with the organization itself to enable developing leaders.

Corporate boards and CEOs are under a lot of financial pressure and leadership development is not usually a priority as it does not make an impact on performance in the short run but as the pace of change for strategies and business models increases, so does the cost of lagging leadership development. If CEOs and their top teams are serious about long term performance and growth for their companies, they need to commit themselves to the success of developing leaders also. A key part of their leadership journey and part of their job is to develop other leaders. Many leaders are measured on their ability to do this. Some are successful; some are not.


The writer is a staff member