Where Have All the Leaders Gone

...And how can HR get them back? Corporate heroes are retiring and disappearing in disgrace. The nature of leadership is changing. And HR is helping to fill the vacuum with a galaxy of new stars.

November 28, 2002
Five years ago, the U.S. economy was growing at unprecedented levels, thestock market was a breathless, never-ending party, and corporate leaders wereregarded as the overconfident heroes responsible for it all. Back then,executives were viewed as an elite group whose dogged focus on results allowedthem to transform companies, often single-handedly, and seemingly overnight.Then the economy imploded, sucking wealth, opportunity, and worker optimismalong with it. So where are those swaggering heroes now that we really needthem? That’s the question on everybody’s lips.

Jack Welch, Kenneth Lay, Bernard Ebbers--three years ago they were giants,leaders of American industry. Now they’re gone, either retired or disgraced.Even those who remain, such as Sandy Weill of Citigroup, Larry Ellison of OracleCorporation, and many others, are greatly diminished in stature. And yet, asindustry and the economy stumble, strong business leaders are more necessarythan ever. Where are the captains of industry when we need them? Is JeffreyImmelt a leader in the Welch mold at General Electric? Time will tell. Butclearly there is a vacuum at the top of American industry. Employees wantleaders but don’t see them.

According to a Workforce online poll conducted in September, 83 percent ofalmost 700 respondents believe there is a leadership vacuum in theirorganizations. A nationwide survey by Watson Wyatt shows that less than half--amere 45 percent--of employees have confidence in the job being done by seniormanagement. And the seventh national United States @ Work study by AonConsulting indicates that employees are less trusting of corporate leadershipnow than at any point since the survey began in 1997. What happened? Where didall the leaders go?

In actuality, leaders didn’t really go anywhere. What happened is that theeconomy changed, markets shrank, competition increased, and the job ofleadership became infinitely more challenging. It’s one thing to make moneywhen there’s money to be made. It’s quite another to keep your profits whenall around you are losing theirs.

"It takes a different set of skills to make lemonade out of today’slemons," says Hal Johnson, global managing partner, human resources, withHeidrick & Struggles, an executive search firm based in Chicago. "It takesdifferent, quicker, and broader leaders today than it took previously, when nomatter what you did, you made money."

But what does "different, quicker, and broader" mean in the real world?What are the traits essential for leaders in today’s profit- andintegrity-challenged corporate environment? Unfortunately, there is no clear-cutanswer.

Ask 10 researchers about vital leadership competencies and you’ll get 10different answers. For example, a profile of the 21st-century executive byStanton Chase International lists "ethics and morality" and "resultsorientation" as the top two characteristics of upper management. Research outof the University of Michigan indicates that effective leaders are those whomake the company’s mission compelling, and are responsive to the marketplace.Other consultants will try to convince you that change management, communicationskills, accountability, business acumen, or fearlessness should top the list ofnecessary traits. About the only thing consultants do agree on is that there isan enormous need for leadership development.

The topic of leadership has been making a comeback because of the country’seconomic and political uncertainty, says Robert Vecchio, the Schurz professor ofmanagement at the University of Notre Dame. "When people are in crisis, theywant others to comfort them and take a visible role in ending the crisis."

David Dotlich, a partner with CDR International, an executive developmentfirm in Portland, Oregon, agrees. "The hunger for leadership is greater in atough economy," he says. "People want leaders who can pull them out of thewilderness to better times."

The coast-to-coast hue and cry for corporate leadership has grown so loudthat executive search firms are being inundated with requests for people withleadership skills. "We used to not have requests for leaders," says KayeSalikof, vice president, training, for MRI Worldwide in Cleveland. "When theeconomy was going well, the notion of leadership was not as important. Buttoday, leadership is a word that appears so often on search assignments, it’salmost become a non-word. Every company wants leaders, but nobody defines it thesame way."

The notion that one person can set strategy and make allthe important decisions is painfully outmoded.

If you search through the books, talk to the consultants, and delve into theresearch, you begin to see that some common themes about contemporary leadershipdo emerge.The primary one is that in today’s fast-moving, highly decentralizedglobal organizations, the notion that one person can set strategy and make allthe important decisions is painfully outmoded. "The market is too complex andthings are moving too quickly for one person to be able to make all thedecisions," says David Brewer, a principal with The Leadership ConsultingGroup in San Francisco.

What this means is that leadership, at the very least, has to become a sharedresponsibility. While the person at the top can set and communicate thecorporate vision, executing that vision takes a lot more people working togetherthan it used to. Consequently, leaders have to be cultivated at all levels of anorganization. It could be that people are clamoring for leadership becausecompanies have not truly embraced the notion that many people in an organizationcan take on leadership responsibilities. In fact, in many companies, Dotlichsays, employees who do take charge for the good of the company are oftenpenalized by the corporate culture for doing so.

"There is a perceived lack of leadership today because the rewards forpeople below the top are not consistent with good leadership," he explains."People are still measured more on activities than outcomes. They are rewardedfor pleasing the boss, not leading the troops. Furthermore, in a lot oforganizations, people are not expected to lead, they are expected to parrot theparty line."

Dotlich believes that more employees could--andwould--become leaders intheir companies if the culture supported their efforts. However, he says, manycompanies work against the development of leadership by making it impossible foremployees to take the most appropriate actions on behalf of the company.

"For example, say I’m working with a client and I know that the rightthing to do to maximize the company’s penetration of that account would be toturn over the account to someone in another department," Dotlich says. "Butbecause I get paid based on how well I do personally, I don’t know if I wouldget credit for the sale, or if I could trust someone to do as good a job as Iwould. Even though I know the right thing to do for the company, I’m notlikely to do it because the culture wouldn’t support me."

You can do all you wantto identify and develop the skills necessary for good leadership, but if thecompany’s culture doesn’t support good leadership, it ain’t gonna happen.

And herein lies the heart of the leadership dilemma. You can do all you wantto identify and develop the skills necessary for good leadership, but if thecompany’s culture doesn’t support good leadership, it ain’t gonna happen.

The intersection of culture and leadership
    Larraine Segil, partner in the Los Angeles-based consulting firm The LaredGroup and author of Dynamic Leader, Adaptive Organization (John Wiley &Sons, 2002), has spent 19 years helping companies like Kodak and SunMicrosystems develop successful strategic alliances. Over the years, it becameclear to her that nothing would ruin an alliance faster than bad leadership. Inan effort to uncover the characteristics of good leadership--and thus, moresuccessful alliances--she conducted research in 100 companies to determine themost effective leadership traits. As the list of leadership characteristicsbegan to emerge, it became clear to Segil that those characteristics could notbe regarded in a vacuum.

"My research revealed that you can be a wonderful manager or leader, but ifyou have an organization that doesn’t support or enable you, you’re eithergoing to leave the company or put on the cloaks and clothes of a non-dynamicleader to protect your position."

What Segil discovered, in other words, was the same thing Dotlich has learnedin his years of work with companies: There is a symbiotic relationship betweenan organization and its leaders. "There is no final, model formula for goodleadership," she says. "What might work in one organization might not workin another."

To build good leaders then, HR professionals must first determine what thecharacteristics are of successful leaders in their own organization. Forinstance, leaders of a manufacturing company operating in a slow- or no-growthenvironment will face different challenges and require different skills thanleaders in global high-tech companies. The manufacturing leader might needenergy and commitment, for example, whereas the high-tech leader might rely moreheavily on risk-taking and the ability to manage change. While the ideal numberof leadership traits might vary between organizations, the overall number shouldbe relatively small--say, between 4 and 10--so that they can be easilysupported and evaluated.

Once the traits have been identified, Segil suggests, HR people can determinewhat kind of environment is necessary to support the traits and the managementprocesses that make that environment possible. For instance, if one of thecharacteristics of successful leaders in your company is risk-taking andfearlessness, then the organizational culture should permit failure, which is anatural by-product of risk-taking. Failure is more likely to be tolerated ifmanagers encourage people to share what they’ve learned from that failure.

To take another example, say that successful leaders in your company arethose who have the ability to identify and nurture talent in others. If that’sthe case, the culture must support talent development through ongoing learning.This is done by making training and education available for all employees. Afterall, a leader will not be able to nurture talent unless there is a framework fordoing it.

In the past, when HR people have considered raising the leadership bar, they’vetypically thought about whom they might hire, Segil says. "What the researchshows is that leadership is developed and nurtured far beyond the hiringprocess. You have to make the culture supportive of leadership--and ongoingleadership development--and HR has a key role in creating those supportingcharacteristics."

"Agood HR professional must have significant influence on defining explicitly andimplicitly what constitutes effective leadership."

Dotlich, who’s been in HR for more than 20 years both as practitioner andconsultant and is author of the book Unnatural Leadership (John Wiley &Sons, 2002), also believes that HR has a key role to play. "I firmly believe agood HR professional must have significant influence on defining explicitly andimplicitly what constitutes effective leadership," he says. HR managers mustbecome "general managers" of leadership, he adds. Instead of championing oneprocess such as succession planning or development or stock options as a way togrow the leadership pipeline, they must become generalists of leadership andunderstand how all the pieces of culture fit together to produce effectiveleaders.

For HR professionals to become general managers of leadership, Dotlich says,they must have an informed opinion on three things:

1. How the company honestly selects, rewards, and promotes effectiveleadership. One way to answer that is by looking around and asking: "Who getsahead around here?"

2. What talent and processes the company needs, given the challenges ofcurrent and future strategy, business model, competition, technology, andculture.

3. How to develop more of the competencies and processes the company needs,even if it’s inconsistent with current protocol.

How does HR start the conversation with upper management about these issues?"By putting their heads down and going in and starting the conversation,"Dotlich says. "But HR must have data; if they don’t, the conversation willgo nowhere." Ideally, the data should show what leadership behaviors arenecessary for organizational success, and how the culture--through theenvironment and management processes--is either supporting or squelching thosebehaviors.

J. Stewart Black, professor of business administration at the University ofMichigan at Ann Arbor and co-author of the book Leading Strategic Change(Financial Times Prentice Hall, 2002), emphasizes that HR isn’t the only oneresponsible for uncovering and understanding an organization’s leadershipcompetencies. But it is in a unique position to lead the process, and makeleadership support and development a priority.

In the current environment, where only a pale minority of workers believethat leaders are doing a good job, it’s obvious that people are hungry for abeacon to follow. HR can help light that signal by making it possible for all ofan organization’s leaders to shine.

Workforce, December 2002, pp. 29-32 -- Subscribe Now!