Mark Loftus continues his series on modern leadership, this month focusing on the nature of leadership and the reasons we need it.
The CEO of one of my clients is facing a dilemma familiar to many CEOs. His Board want him to focus on building economic value, driving share price performance; they see the potential to sell the business in two to three years. The remuneration committee of the Board has carefully aligned the LTIP (long-term incentive plan) of the senior executive group to pay out big time if certain financial targets are met, and if the share-price surpasses a certain price.
Mean-time, the CEO has heard through staff surveys and listening sessions that the wider population of employees are looking for something inspirational from their senior leaders, something that they can get behind, something which goes beyond turning up for work and doing a decent job. Something which also goes beyond the idea of helping the already well-paid senior executives get even richer.
How does he square this circle?
So far, in these articles we have looked at the qualities that are needed if people are to follow us, which led to a core idea that people follow people because of the personal qualities they see in them, because of their character strengths. In the end, the televised debates between Cameron, Clegg and Brown probably gave us enough of an insight into their characters to enable us to choose, the next few months will reveal the wisdom of our choice.
Beyond understanding something about the nature of leaders we also need to understand the nature of leadership: what is it that leaders are for?
Starting with the obvious, organisations exist for a purpose. It would be odd to create an organisation and offer no definition of what it is there to do. We would not expect it to last long in a strange limbo of purposeless existence, yet many businesses are run on precisely these lines.
Is the purpose simply to make money? One CEO I worked with felt he had resolved issues by simply removing the dilemma: ‘This business is about making money, as much as possible, for ourselves and our shareholders. Period.’
It is a simple truth that all businesses need to make money to continue to exist. But to confuse this need with the purpose of the organisation is a major confusion. Try these two quotes, the first by Gary Hamel.
“Most companies strive to maximize shareholder wealth—a goal that is inadequate in many respects. As an emotional catalyst, wealth maximization lacks the power to fully mobilize human energies. It’s an insufficient defence when people question the legitimacy of corporate power. And it’s not specific or compelling enough to spur renewal.”
“Business must be run at a profit, else it will die. But when anyone tries to run a business solely for profit... then the business must die as well, for it no longer has a reason for existence.”
The words of Henry Ford, capitalist supreme in this second quote.
At the most fundamental level, we can see that the leaders role is to clarify, state and restate the purpose of the business. They need to do this in a way that enables the whole organisation to connect its energy and talents into pursuing this purpose. For me, none of the contenders for number 10 managed to articulate anything sufficiently convincing. We heard a lot about their intended policies, just as we hear a lot from senior executives about goals, objectives and kpi’s, but none of them created a sense of unifying purpose for the country.
Returning to our CEO, he needs to grapple beyond financial performance and he and his senior colleagues need to search in themselves and their business to find what their uniting purpose is. Then to articulate it, and embed it in the daily focus of their work.
The following statements of purpose come from ftse100 companies. Do you recognise any of them? Would any work for you as an employee? Do any draw you into wanting to find out more (to follow)? In my next article I will let you know which companies these come from.
To celebrate life every day, everywhere
We’re an international company focused on creating value for our shareholders
To improve the quality of human life by enabling people to do more, feel better and live longer
Our purpose is to build deep, lasting customer relationships which help our customers achieve what’s important to them
We exist to develop and manage talent; to apply that talent, throughout the world, for the benefit of clients; to do so in partnership; to do so with profit.
To be Trusted to Deliver Excellence is our central organising thought. It is what we aspire to become. It is the embodiment of the promise we make to our customers.
Creating purpose is about more than finding a form of words; the purpose truly needs to be the core of what the enterprise exists to do. But neither is creating purpose solely the province of senior leaders. Anyone who finds themselves in a position of leadership needs to start with the simple question ‘what are we here to do?’ and then to find and sustain focus for the group on this simple reality.
Read the other articles in Mark's leadership series: Good performance management demands leadership, Modern leadership: The three tests of leadership, What's the point of feedback?, Modern leaders: Time to look again.
Mark Loftus, is the director of The Thinking Partnership. He has 20 years of experience as an organisational consultant and is a recognised authority on emotional intelligence and the art of assessing senior leaders. He is a chartered clinical psychologist with an MPhil from London's Institute of Psychiatry and a degree in philosophy and psychology from Oxford University.
