ORGANIZATIONAL LEADERSHIP by Richard Nelson

1. PERSONAL VISION AND COURAGE: The Basis for Effective Leadership

'Shaping a personal leadership vision poses a genuine challenge for all managers.';

How someone thinks about their job has an enormous impact on what they actually do. Many managers, when asked what their job is, refer to a service or product: ‘we deliver financial services’ or ‘we retail food’. These statements indicate, at best, a modest engagement with the leadership role.

Thinking through one's personal vision of leadership is a useful starting point. The focus should be on:

• the fundamental purpose of being a leader
• your view of the future, and therefore the direction you expect your people to follow
• how your values about business can shape your organization’s approach.

Shaping a personal leadership vision poses a genuine challenge for all managers. It takes courage to articulate deeply-held views that demonstrate the necessary conviction to be credible. Some feel embarrassed or lack inner conviction. Nevertheless, those with the determination to cut through the scepticism prevalent among people today will find that they command the respect of their people and have a platform for success.


2. BUSINESS PURPOSE AND DIRECTION – THE VISION

“It is critical that you engage your people in the process of shaping business purpose and direction”

Being clear in your purpose, your view of the future and how your values can shape the organization’s approach to achievement is the starting point for leadership. Thinking these elements through and articulating them to others provides the beginnings of the next stage in leading the whole or part of an organization.

Following this, it is critical that you engage your people in the process of shaping business purpose and direction. First, this involves establishing the organization’s business purpose. This clarifies why the organization exists, it’s ‘what you are in business for’. Beyond business purpose you need to outline future destiny. This means creating a vision to provide a direction that can be adjusted in relation to changes in the external environment. The fundamentals of business purpose and the vision of the future can be combined into a Vision for the organization.

But how well a Vision will inspire and support the organization’s capability to sustain success will not only depend on effective responses to external pressures. It must indicate how you will conduct relationships with your stakeholders: your people, customers, suppliers, communities in which you operate and shareholders. For your stakeholders, the Vision has to be convincing and compelling.


3. FOCUSING ACHIEVEMENT

“Strategic Goals will focus the whole business on what needs to be achieved”

Establishing business purpose and direction are essential pre-requisites for leading an organization. Purpose gives meaning to the business’s existence. This enables the leader to foster a sense of purpose among the organization’s people. Direction sets out the overall means by which the business plans to gain success and relate with its stakeholders.

Once business purpose and direction has been defined, possibly as a Vision, the leader needs to provide greater clarity with respect to what needs to be achieved. Such clarity can be delivered by formulating Strategic Goals or Missions. These are action-orientated statements of intent. Each Strategic Goal should specify the action required together with their corresponding measurable outputs and timeframes for completion. Among other things, Strategic Goals can be set for customer acquisition and retention, people performance, shareholder value and profitability.

The Strategic Goals will focus the whole business on what needs to be achieved. They provide straightforward mental clarity that, with the right leadership style, can galvanise the motivation of organization’s people.


4. PERFORMANCE MEASURES

“The means by which managers can tell whether or not the right results are being achieved”

So far we have looked at ‘personal vision and courage’, ‘business purpose and direction’ and ‘strategic goals’. Now we consider performance measures. These are the means by which managers can tell whether or not the right results are being achieved. It is important to have performance measures at all levels, from corporate through business units and departments to teams and individuals. Here we are concerned with the measures at the business level, either for a business unit in a corporation or a single entity, where one coherent strategic and cultural framework will provide success.

Performance measures need to be developed for the areas of business activity that are critical to the success of the enterprise. Hence the name, Critical Success Factors (CSFs) of which there should be ideally no more than ten for a coherent business. Typical CSFs are profitability, revenue generation, people performance, customer orientation and innovation and adaption to change. Popularised by David P Norton and Robert S Kaplan in their 1992 Harvard Business Review Balanced Scorecard article, they used the analogy of an airliner’s need for a range of controls to argue the case for a set of financial and non-financial measures to manage organizational success over time.

Each CSF needs to be complemented by Key Performance Indicators (KPIs). These are the measurement methods that show whether success has been achieved. There can be a number of KPIs for each CSF. However, it is useful to start with some that already have processes to capture measurement information. Example KPIs for revenue generation are revenue per product, revenue per customer, branch revenue etc. For customer satisfaction examples are number of complaints, retention rates, satisfaction survey rates etc. For people performance examples are staff turnover, employee satisfaction, lost working days and achievement of objectives.

Building a balanced set of performance measures is a major part of the foundations that will support organizational effectiveness. The process for creating such measures is critical and should involve all key management stakeholders.


5. CORE VALUES‘

'Values indicate the behaviour that can be expected from an organization, the style of operating and the beliefs of the leadership.'

Guiding principles or core values are now a common part of the organizational landscape, yet we frequently find that managers and employees are sceptical about the purpose and utility. When asked why, they reply that the values seem unrelated to other parts of the business or what they are expected to do. Another observation is that the values seem at odds with the actual practice of top management.

So what should values do in a 21st century organization? Primarily, values need to clearly support the organization’s purpose and direction and articulate how the organization will conduct its business. They must give an indication of how the business will relate to its stakeholders: customers, employees, shareholders, suppliers and the communities in which the business operates.

Values indicate the behaviour that can be expected from an organization, the style of operating and the beliefs of the leadership. They need to underpin the governance of the organization and the brand identity. Given the diverse nature of organizations, there are many examples - some values will focus people on the goals of the business e.g. profit driven, sales driven or service orientation, whilst others will emphasise the nature of the enterprise; professional, integrity, inventive, creative and open.

We have found two major problems with the way values are developed. Firstly, there has not been any diagnosis into those currently prevalent within the business, so the actual practices that are demonstrated by managers and employees can be vastly different from those suggested by the values. It is critical to have a clear diagnosis of current reality and in particular an understanding of the strengths that have made the organization successful. People will relate to values derived from positive characteristics they know. They are then more likely to commit to new aspirational values. Secondly, the principles must be defined in detail - single words are inadequate. The definitions need to explain purpose and align with the culture of the business.


6. COMPETENCIES AND BEHAVIOURS

‘Competencies and behaviours are the practical demonstration of the organization’s values.’

Competencies and behaviours have been a concern of organizations during the recent past. At a strategic level, some businesses have tried to focus their special value to customers by codifying their core competencies and then building capability in relation to these. This is important work because it focuses the business’s strengths and clarifies how employees should direct their efforts.

Others have concentrated on developing competency frameworks. These have defined the common knowledge, skills, behaviours and attitudes managers and employees need to execute tasks in order to gain the right business results.

Why have organizations been concerned with this area of development? Although a variety of reasons can be cited, they largely have the same aim - the desire to improve performance. Specifically, ever increasing competitive pressures and the consequent need to change have emphasised the need to achieve clarity with respect to competencies and behaviours.

Our position is that an organization’s competencies and behaviours should be used as a source of competitive advantage and to underpin the leadership of the business. However, the value to the business depends on some key principles of design that the development of competencies and behaviours should recognise. These are:

• Competencies and behaviours should demonstrate the organization’s core values.

• They should be fully aligned to the business’s measurement framework - driving results in relation to critical areas of success.

• The technical and commercial capabilities required in the business need to be embraced by the competencies and behaviours, even if every detailed professional and technical skill is not included.

In the article ‘Core Values’, we said that ‘values indicate the behaviour that can be expected from an organization’ and that they ‘need to underpin the governance of the organization and the brand identity’. Competencies and behaviours are the practical demonstration of the organization’s values. The importance of this cannot be underestimated. Equally critical is the alignment with the measurement framework. There must be a ‘clear line of sight’ for the application of competencies and behaviours to the work that needs to be done to achieve the right results.