Successful business leaders need two things: a business to drive, and followers – colleagues, employees and customers – who believe in them enough to accept direction, and to join them on their journey.
But what do leaders do? What is the elusive combination of character traits and behaviours that makes some people worth following? Are there innate qualities or learned behaviours? Are great leaders born or made?
Researchers at the UQ Business School have studied all aspects of the elixir of leadership, working with students as they shape their careers, and with leaders already at the helm of businesses, seeking to strengthen their skills as managers and leaders.
In this article five of our experts answer the question: What do leaders do?
Leaders create trust
In November 2006, regulatory investigations of German engineering giant Siemens revealed that in “a system of organised irresponsibility that was implicitly condoned” sums of around 420 million euros (AU$530 million) were kept in off-book accounts to pay bribes to win contracts. Corruption came from the top. Senior executives authorised payments by signing post-it notes, easily removed to hide their involvement. Siemens’ brand was blackened, the integrity of its leadership questioned. But, says Dr Nicole Gillespie, Senior Lecturer in Management at UQ Business School, the company’s determination to put the situation straight shows they understood the power of trust as a pillar of successful business leadership. Siemens hired over 500 full-time compliance officers and a former Interpol official to head a new investigation unit. Then they went to work. An amnesty, introduced by the new CEO, brought 40 whistleblowers into the open, revealing the full extent of the problem, reaching deep into senior management. Strict new anti-corruption and compliance systems were established, and by 2008, more than half of Siemen’s global workforce of 400,000 had received anti-corruption training.
The company was beginning to put the damage behind them. Re-establishing stakeholder trust was the key challenge facing new CEO, Peter Löscher. Tough decisions had to be made, including over 900 internal disciplinary actions (including dismissals), revising company strategies to avoid competing in countries known for corrupt practises, and restructuring to simplify reporting systems and enhance accountability.
Understanding how to build and repair trust is a key leadership competency. After all, without trust, how can a leader influence followers and engender commitment? Gillespie has identified the characteristics people look for when judging the trustworthiness of leaders: competence – having the knowledge, skills and experience to do the job; benevolence – people want to feel their leaders have their best interests at heart; and integrity – the adherence to a set of clear principles, such as honesty and fairness. “If you consistently portray these three characteristics as a leader, you will be trusted by all but the most cynical,” she says. “Get them wrong and your reputation will suffer.”
Gillespie interviewed more than 80 research and development leaders and their team members. She believes every interaction offers the opportunity to reinforce or undermine trust in the leadership relationship, and suggests six ways leaders can build trust with their team:
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involve team members in all decisions and give them freedom to make their own decisions (empowering);
co-ordinate tasks and negotiate expectations and resources with external stakeholders (co-ordinating);
encourage individual strengths, help team members to meet their goals and to consider problems in new ways (coaching);
develop common values and goals in the team; role model competence and integrity; show benevolence through openness and being available when needed.
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You can nurture trust, Gillespie points out, but you cannot demand or control it. After all, “trustworthiness is in the eye of the beholder.”
Leaders facilitate strategy
The essence of strategy is a journey rather than a once a year conversation, agree John Steen, Senior Lecturer in Strategy, and Kevin Hendry, a UQ Business School Industry Fellow. A company’s strategic direction should be an ongoing discussion, not an annual set-andforget exercise. According to Hendry, the leader’s role is to facilitate this strategic conversation. “Setting the tone and guiding employees along the strategy path is the leader’s role. Good leaders need to be always asking: ‘does the strategy need to change?’ ”
“Many organisations have one strategy planning weekend each year,” he says. “That’s crazy – what if something changes? The notion of formulaic strategy planning puts you in a strait jacket. What use is a plan that is 100 pages long that no one reads?” Hendry adds that leaders should be having both strategic and operational conversations. “An operational conversation is asking things like ‘can we make a machine go faster?’ or ‘can we run three shifts instead of two?’ The strategic conversation asks ‘are we doing the right thing?’ or ‘are we providing the right dimensions of value?’ It’s easy to get caught up in being busy and it can be difficult to take half a day out and address the strategic questions.”
John Steen adds that skilled leaders are aware that the stages of the strategy process need to be supported by different conversations. “Sense-making conversations are vital in getting a shared understanding of the business challenges, but these are very different from a ‘making choices’ or ‘making it happen’ conversation”. “Business leaders tend to have a preference for a particular phase of the strategy process,” he adds. “Some prefer open dialogue and engagement with staff while others are more comfortable with making choices and determining budget and accountability. Leading strategy means adjusting your leadership style through the strategy process and getting out of your comfort zone. This is what makes strategic leadership so challenging.”
Leaders drive change
All organisations undergo periods of change. The changes may be fine-tuning, but, in some cases, changes are major, stressful, even urgent. It is the leader’s job to plan and drive these changes. “This involves explaining why changes are necessary,” says UQ Business School’s Professor of Management, Victor Callan. Callan divides his time between industry, where he advises leaders how to be more successful in delivering on both these small, and sometimes very large, changes. “The leader needs to be totally responsible for creating and maintaining the momentum for change, and success hinges on having leaders at all levels of the business who support the changes. When a business needs to be transformed, it is important to create a sense of urgency. The most effective approach is to have a clear vision and an easily communicated plan, then to proceed, step-by-step, getting small wins on the board early. Leaders do not lead from 50,000 feet away, but from within the company. When leaders aren’t visible during change, employees start to speculate.”
To drive change, Callan says leaders need self-confidence and a conviction that they are taking the business down the right path. “They also need to be effective, authentic communicators,” he says. “Leaders who are not great communicators must stay authentic to their own style and use team leaders and supervisors as key supporters and communicators. If you are clear about the purpose and the goals of the change you are driving and stick to your knitting, you will communicate with clarity and purpose.”
Leaders manage emotions
When it comes to doing business and, most importantly, when leading a business, emotions can get you into the top job, and make you successful once you are there. Professor Neil Ashkanasay and his research team at UQ Business School have focused on the emotional interaction between leaders and those around them. He has developed a five-level model of emotional interactions covering the full range from one-on-one to organisation-wide reach, and concludes that leaders need to have the judgment necessary to know what emotions and moods to display, and to be skilled at displaying them. On a day-to-day basis, a leader’s ability to manage and model appropriate emotions can set the mood of a business. Working days are filled with frustrations. By setting the right mood, leaders can help deal with these, transforming frustration into optimistic outlook about taking on challenges. Ultimately, how employees feel about their work affects how they deal with customers and how successfully they perform in their jobs. If a leader’s job is to motivate teams and convince them to implement the company vision, then well-judged, emotionally- engaged speeches have most impact. Indeed, when it comes to bringing people on board, Ashkanasay believes that emotional engagement can be more important than content.
Emotional Intelligence – a term first coined in the early 1990s – has become a predictor of job performance, and it’s has been shown that it may be the right combination of cognitive skills and emotional skills that differentiate great business leaders.
Leaders build teams
“An effective team is one where members are willing to contribute their expertise to deliver outcomes for which they are mutually accountable,” says Dr Neil Paulsen, Senior Lecturer in Management at UQ Business School. “When that happens, you’re hitting the sweet spot.” Strong leaders build an environment in which effective teams can flourish, creating a context in which high performance is possible and achievable. “It isn’t about having all the answers,” explains Dr Paulsen, “the leader’s contribution is in coordinating and connecting ideas and resources to enable the team to work effectively together to deliver desired outcomes.” Leadership style influences a strong team identity and effective cooperation between team members. Paulsen’s research has shown that this combination leads to increased innovation in scientific research groups. “Leaders who focus on those processes that make groups effective, and then develop a wide repertoire of skills and interventions that improve performance and put them into practice.”
He adds that leaders should not confine their team-building skills to the group for which they are responsible. Rather, leaders need to look laterally at how they relate across group boundaries, both inside and outside the organisation. “To handle the demands and complexities of the modern organisation, team leaders need to spend less time in direct contact with their teams and more time managing the context in which the teams operate. Effective leaders strategically manage at and across team boundaries to forge partnerships with other groups and organisations,” he says. “To achieve this, a leader needs to develop organisational acuity and become politically astute.”