The economic downturn has demonstrated spectacular shortcomings in the abilities of some business leaders, especially in the financial sector. In turn this has raised questions about the efficacy of leadership development and training. Fiona Nicholson finds out what has gone wrong and what 21st century leadership development should really look like.
 

In more prosperous times, it could be assumed that leaders were doing their job well and that leadership development was also ticking the right boxes.

But the recession has left no hiding place for mistakes made, as leadership expert John Adair points out: “The credit crunch has exposed everything that has been going wrong with leadership development.”

It’s time for a clear out of outdated practices, according to Paul Kearns, director of HR consultancy PWL: “Even if the recession hadn’t happened, this would still be a good time to re-think the whole concept of leadership development.” he observes: “The recession has simply pushed it further up the agenda.”

"The problem is that when business schools introduced leadership into the curriculum, they continued to teach management...it was purely a cosmetic amendment." John Adair

Kearns believes there has been a lack of measurement and analysis of return on investment, as he explains: “In the past money has been poured into leadership development, without knowing if it was actually making any difference.

“But since the recession took place, we are now looking at every penny and are being forced to ask much tougher questions about what leadership means and what we are getting from it.”

Failures of leadership development
One of the major failures of leadership development is evident in leadership behaviours, as Adair reveals: “We have seen that leadership in the financial sector has been characterised by complacency, arrogance and greed. None of which are symptoms of good leadership.”

And it’s not for the lack of training, as Kearns points out: “All banks have leadership development programmes, but clearly they didn’t work.”

He adds: “At RBS, Fred Goodwin ruled by fear. This approach might have worked well in the past, for organisations such as the army, during times of war. But as a leadership style it is just not suitable for a commercial enterprise in the 21st century.

“His approach was very outdated and despite his undoubted skills in other areas, he was just not a good leader.”

However, it’s not just the flaws and weaknesses in leaders’ behaviours that are seen to be to blame. The spotlight has also fallen on business schools. Were they not supposed to be teaching the right skills to ensure leaders would be well equipped to manage unexpected and unusual business circumstances?

Adair believes that a blurring of crucial differences between disciplines could be the source of the issue, as he observes: “The problem is that when business schools introduced leadership into the curriculum, they continued to teach management.

“All they did was change the buzz word. The content did not change at all. As a result, it was purely a cosmetic amendment.”

Adair also believes that businesses have placed too much faith in business schools generally and one in particular, to show them the way: “The approach to leadership development to date has been that Harvard Business School has all the answers, so we will just wait to see what they say and introduce it. This is rubbish and someone has to say so.”

The future
While leadership development may require an overhaul, it would be wrong for businesses to succumb to inertia during this period of change, says Professor Sharon Turnbull, director of the Centre for Applied Leadership Research: “The worst thing people could do would be to stop thinking about leadership development until the end of the recession and then re-evaluate it. It needs to be continuous and seamless.”

Turnbull is also optimistic that there need be no drastic changes to leadership development: “There are a number of aspects of leadership development that need to be re-thought, due to the impact of the recession, but there are no fundamental changes required,” she emphasises.

Although Adair believes that leadership development requires significant changes, his view is that the basis of good leadership remains the same: “The qualities required of a good leader have not changed,“ he says: “These are still enthusiasm, integrity and a tough and demanding approach, combined with fairness, warmth and humility.”

He adds: “We can see from recent events that some leaders have come adrift on integrity and humility.”

And these are now a priority says Turnbull: “Ethics and integrity have risen to the top of the leadership development agenda, due to the scandalous behaviour of some of the banks.

“We have seen from examples of leadership in the banking sector that they lost sight of ethical practices. They focused on profitability and the bottom line, which is crucial, but the leader needs to set the right tone for how the whole company should behave. I believe organisations will be taking a much closer look at their behaviour in future.”

"In future we are going to need to see hard evidence that time spent on leadership development is making a real difference." Paul Kearns, PWL

However, Turnbull does also foresee organisational change in the pipeline, as she reflects on the impact of the credit crunch: “Post recession, companies will have fewer staff, due to cost cutting and companies with fewer people need more leadership at all levels.

“No matter where someone sits in the organisation, they should look at how they can be a leader and show leadership qualities. Organisations will therefore need to make better use of people and give them the skills to enable them to lead upwards.”

Whatever changes may take place to the structure of leadership development, it must be closely monitored in future, says Kearns: “The way forward is evidence based leadership development. Just being seen to spend a week at Ashridge Management College or somewhere similar is not going to be enough.

“In future we are going to need to see hard evidence that time spent on leadership development is making a real difference.”

So, to sum up, leadership development requires at the very least some fine tuning, to equip the next generation of leaders.

According to the experts, 21st century leadership development should not slavishly adhere to the teachings of business schools. It should focus on integrity and ethics, as well as the other traditional qualities that good leadership demands. Everyone should take responsibility for and the opportunity to practice good leadership, at all levels of the organisation and leadership development must be closely monitored to ensure it is delivering - operationally and financially.