Friday, June 17, 2011

How Great Leadership Traits Can Squelch Employee Commitment

Three leadership capabilities—strategic vision, supreme confidence and top-notch communication skills—go unquestioned as ones necessary to become the business world's next Jack Welch. However, this troika of traits actually can be toxic for business leaders.
Leadership books abound these days, imploring managers to be agile, set stretch goals and focus on execution. Three leadership capabilities—strategic vision, supreme confidence and top-notch communication skills—go unquestioned as ones necessary to become the business world's next Jack Welch.

Yet our experience in coaching leaders during the past 20 years actually shows that this troika of traits actually can be toxic for business leaders. When a CEO, business unit general manager or a functional head wants employees to embrace and adopt a new strategy, those who take their vision, confidence and communication skills to an excess can actually erode the commitment of their people.

How can that be? Doesn't every great leader have to know exactly where his organization needs to go, exude assurance that he will get them there, and eloquently explain the destiny and the path? Not if he wants employees—from his senior leadership team to the frontline worker—to pull out all the stops in making the strategy work.

By the way, rest assured that leaders increasingly need their people to go beyond the call of duty these days in implementing new strategies. Initiatives to improve operational efficiency, increase organic growth and achieve other key goals are increasingly complex and have shorter time windows to hit.

To understand why these three leadership traits can be damaging to securing employee commitment requires dividing leaders' job of gaining commitment into two categories: issues of content and context.

Every leader of a large-scale strategic initiative must sell his followers on the plan itself—what we call the content of the strategy. There are two basic content issues for leaders: demonstrating to employees that the plan is valid (that it is necessary and the right plan) and communicating the plan in language and concepts they understand (in other words, having clarity).

If employees don't feel the plan is valid or don't understand it (and therefore can't determine whether it is valid), they will not commit themselves to implementing it. That doesn't mean they won't appear to commit themselves. They will, in fact, nod in agreement when leaders tell them the plan is critical, and they will outwardly accept their responsibilities for executing it.

But even if the plan appears valid and clear, if leaders don't address the context issues employees won't embrace their duties. The context issues are the perceptions of those who must implement the strategy—their views about leaders themselves. Four fundamental perceptions set the context: leaders' credibility and sincerity; their courage to raise and address difficult problems and make difficult decisions; their competence in creating and executing the strategy; and their care and concern for those who will be affected by it.

Most leaders believe that getting the content issues of the strategy right is all that's required. Hence, they ignore the context issues. However, if employees have doubts about the honesty of their leaders, they will question just about anything they say about a new strategy—the need for it, how it must be done, when it must be accomplished, etc.

Employees also won't get behind leaders whose courage and resolve they question. By this we mean the leader's willingness to address the problems that will confront a new strategy and to make tough decisions (like removing people who are roadblocks).

If employees believe their leaders are courageous but not competent, they too won't get behind the strategy. That's because they won't believe that management will make the right decisions. And employees who question whether leaders care about them will ask themselves, "Is it worth it?" and "What's in it for me?"
Leaders who possess a grand vision for their strategies tend to make the development of the strategy an exclusive process, often blocking out key members of the top management team. When the strategy is wrapped up and handed to other management team members (and people below them) in a pretty box and bow, they will wonder what's ticking inside.

The CEO of a $1 billion company felt his HR, IT, finance and legal department heads had little to offer in developing the firm's strategy. Instead, he brought in five business unit heads to create the plan. This came back to haunt him.

The failure to get the support functions involved upfront resulted in their dropping the ball when it came time to implement the plan. They had neither the understanding of nor commitment to the plan that was necessary for it to be adopted rapidly. Rather than speed up the whole process by excluding the support functions from it, the CEO's exclusionary habits actually slowed down the organization's adoption of his strategy by a factor of two.

Contrast that with the style of Dave Mezzanotte, chief operating officer of CHEP. In 2004, to get his $3 billion pallet and container leasing company to implement a strategy of operational excellence, he purposefully included a broad range of managers up and down the organization in determining how to make the company's sprawling operations more efficient. Mezzanotte never told them he had the grand plan. Instead, he explained that he needed their help in coming up with it.

"It's foolish for any CEO to think he or she has all the answers," he says. "Increasingly, business leaders have to use the knowledge of the entire company to set a good direction—and make midcourse adjustments to it."

Two years later, CHEP's operating and financial improvements have been remarkable, including a 15 percent increase in return on capital (to 25 percent), and a $220 million increase in free cash flow.

The leadership trait of supreme confidence can worsen how employees perceive their leaders' sincerity, competence and courage. Leaders who exude confidence at all times tend to minimize problems or discourage them from being discussed (often unconsciously).

When he is convinced that every aspect of the strategy is correct, the leader sends off signals that he isn't open to feedback or criticism. Employees thus correctly believe that their leaders will dismiss problems that occur in implementing the strategy or fail to adjust it. That brings leaders' competence into question: Will they make the right decisions? Leaders who wear their confidence on their sleeves are not likely to make corrections to their strategy for fear it will reflect poorly on the original plan.

The CEO of a large services company displayed supreme confidence in just about every employee interaction he had, which had the effect of making him virtually unapproachable—particularly when he was wrong. When he unleashed a major initiative on his executive team to increase revenue and cut costs, their real commitment (i.e., what they say behind his back) was nearly zero. The initiative did not reach its goals.

Finally, leaders who are brilliant communicators can find their oratory and writing skills a commitment barrier as well. The more scripted and polished their communication is, the more those troops will wonder about what's not being said, especially about the impact on them. Authentic—not slick—communication commands the attention and respect of employees.

A large financial institution's cultural change initiative shows what happens when communications get too fancy. The company spent a million dollars on videos, banners, brochures, posters and town hall meetings to change the firm's culture. Everything was scripted for the CEO, who merely lent his name to the effort.

Big Mistake!

The executive team and managers levels below it were turned off by all the packaging and no live, direct words from the CEO. Not until the CEO took hold of the campaign and made it his own, including articulating the culture values he wanted the firm to uphold and talking directly with his management team, did his employees put stock in it.

In 2003, the way Steve Linehan, head of treasury operations at financial services giant Capital One Financial Corp., got his beleaguered staff to get behind a two-year plan to significantly improve treasury performance was to speak plainly about the challenging working conditions within the group and take meaningful actions to improve them. His associates were far less concerned about the way he expressed his plan—and far more concerned that he recognized and understood their issues.

"People in this business are way too smart for corporate-speak," Linehan says. "They want honest, from-the-gut answers. You'll lose them with anything else."

During the next 12 months, his function's environment and performance improved dramatically. Associates worked hard to "fortify funding," one key area of focus. They bolstered processes and risk management controls and worked closely with external investor groups. All this helped Capital One achieve an upgraded investment rating and significantly decrease cash management costs.

Grand vision, great confidence and eloquent communication skills are certainly leadership traits to admire. But in times when a company or a business function within it must change course dramatically, leaders who take those traits to excessive ends will find few employees who will truly get on board.

Letting the management team (and even workers below) help craft the vision, admitting that one doesn't have all the answers, and speaking genuinely will go much farther in getting employees to embrace and adopt the strategy.

Thanks to Gershon Mader and Josh Leibner / Crain Communications Inc. / Workforce Management


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