UK businesses rank 17th out of 21 countries for managerial effectiveness according to a recent wide-ranging survey. The 2010 Kenexa Research Institute survey Exploring Leadership and Managerial Effectiveness evaluated contributions from over 29,000 employees and found the UK scored just 47% for leadership effectiveness, way behind India, for example, who scored 72% and even more disappointingly below the global average of 55%.
Crucially, the report also highlighted the correlation between effective leadership and employee engagement. When leaders are rated ‘effective’ their business recorded ’employee engagement index’ scores of 91% against 17% when leaders are viewed as ineffective. That’s an employee engagement level five times lower and it highlights the role that HR professionals can play in raising the employee engagement and effective leadership levels of their organisations.
The report found that the UK’s most effective bosses were more likely to be found in the manufacturing, retail and healthcare sector. How ironic, knowing the state of the UK economy, that it also found that the least effective bosses were most likely to be found in government and the financial services industry!
I have to say that I’m not surprised at this result as, in my experience, these sectors are notoriously poor at ‘leading’ their people – they don’t tend to be particularly good at building internal cultures to support their key focus or value proposition.
The report concludes: “For their own effectiveness and for the sake of their organisations and the economy – UK leaders should look in the mirror, evaluate their own practices and commit to personal improvement. At the same time, UK organisations should review the approaches they use to recruit and develop their leaders.” I don’t think you can disagree, especially when you look at the figures.
The fast-paced economy that we now operate in is no longer influenced by the same performance metrics the traditional ‘product orientated’ businesses were founded on. Control, efficiency, delivery and profitability still have a part to play in business but how you lead a business and how you engage your people will affect organisational creativity, agility and innovation, and it’s these new assets and how you add them into the mix, which will drive true differentiation and ultimately shareholder return.
The UK’s leadership effectiveness score of 47% is not acceptable and it must be changed. But how? To tackle the leadership effectiveness issue we first need to understand the term ‘leadership’. In the same way as the word ‘innovation’ has been devalued over the last several years, leadership has suffered the same fate.
The word ‘innovation’ has now become the marketing department’s favourite buzzword with corporate strap lines and positioning statements all preaching innovativeness. So if everyone’s preaching innovation, where’s the true value?
The same can be said for leadership. The leadership title has now been firmly embedded into many corporate structures and senior managers automatically granted the prestigious title. UK businesses seem to have forgotten that the title cannot be selfimposed and it’s the employees who will bestow a great manager with the leadership badge.
So companies need to concentrate on developing exceptional managerial talent, managers who are ‘people centric’. Start initially by teaching them to become world-class masters at two things – involving your people and appreciating your people.The natural leaders will emerge and be chosen by your people.
This is even more important when you consider other findings from Kenexa’s research that reveal 68% of bosses had fallen into their role by ‘by accident’, with 63% of them having never received any management training. Yet businesses will consider some of these people as leaders.
The correlation between organisational performance and the quality of managers who are highly rated by their employees (maybe even branded leaders) meant that over a three-year period, businesses led by ‘highly rated leaders’ significantly outperformed businesses with ‘less effective leaders’ – with the top 25% of organisations generating shareholder return seven times that of the bottom 25%. This in itself should be a solid enough business case for investment in genuine management development and employee engagement.
The survey also suggested that while some business decisions will inevitably hurt or annoy employees, if leaders communicate the thinking behind such decisions in a clear and honest manner, staff will understand why such decisions have been made and may well view the leader as more effective. But I disagree with this and my perspective is this: if you’ve made a decision and then have to try and communicate the thinking behind it in the right way to minimise its impact, then you’re not ‘involving’ your people in the decision.
By not doing this you perpetuate the ‘them and us’ position and the decision is perceived as ‘your’ decision, not ‘our’ decision which wouldn’t need defending. Kenexa’s research backs this up by suggesting that the top two key priorities for leadership development are the need to build trust and the need to engage in open, honest, two-way communication.
The truth is that this isn’t rocket science, but whilst many find it easy to grasp conceptually and understand the need to do things differently, many don’t know how or where to start.
To initiate the change, HR people need to sit down with the senior team and have an honest conversation about what you do and how you do it. This is Alcoholics Anonymous for business, so egos should be left at the door. Preaching greatness, whilst not actually differentiating, is one of the biggest issues to deal with. It is human nature to want to be seen as good or great at what you do but it takes a really strong self-aware individual or team to recognise your true position and value proposition.
Organisations need to take the same view and have company-wide conversations about what they really want to achieve. I call this the ‘sat-nav’ approach because only when you know where you are can you plot a course to where and what you want to be.
Whatever industry or sector you’re in, where you want to be should hopefully be something bold – like creating a company with an entrepreneurial and innovative culture filled with amazingly talented and engaged people, followed by unwaveringly loyal customers.
But the reality is that most organisations don’t think this big. To really differentiate in the globalised, thousand miles-an-hour world we live and operate in you have to think and do differently. More successful companies embrace the philosophy that ‘innovation is a by-product of being exceptional’. In essence, you can’t celebrate averageness.
Unless you strive to be outrageously good at what you do, the chances of being truly different, innovative and world-class are remote. There’s also little chance of pitching higher up the league tables in the next Kenexa survey!
The bottom line is, differentiation and innovation is all about people and leadership – and in the new knowledge and experience economy we’re now in, that’s great news. Creating the right culture and engaging people to want to be exceptional is what the world’s leading, most innovative companies do best. They are talent-rich, entrepreneurial communities, collectively passionate about what they do and how they do it. So, whatever sector or market you are in, whatever product you sell or service you offer, you need to think of yourself as being in the ‘people business’.
Let me clarify that further. Most companies have a fair understanding of their customers and aspire to be ‘customer centric’. The really world-class ones have an even deeper understanding of their people. Being ‘people-centric’ is just as – maybe even more – important as being ‘customer centric’. Don’t think of your employees as ‘human capital’. They’re ‘people’, not resources, and they are your most valuable asset.
Real change has to start at the top, so if your organisation is now thinking in terms of being in the people business, appreciate their value to the company but most importantly their, as yet, untapped potential. Study some of the contemporary, genuine leaders in the world and you’ll see they have similar traits. They’re absolutely on fire, they’re dynamic and they’re inspiring. They’re passionate about the company, its people and its brand, and they demonstrate that they ‘live it and breath it’ every day.
So your managers need to become trustees of your people and create an holistic, company-wide culture of innovation, where shared purpose and the quest to become exceptional is just part of what you do. Then maybe we’ll see the UK back at the top of the leadership board where it belongs!
