New model leaders: How leadership is changing
Are the days of 'rock star' CEOs over? Do we need collaborative networks over rigid hierarchies? Read on to find out how leadership models are changing and explore HR's role in getting them right.
For those wanting to buy a book on leadership, you have a lot of options: 92,369 of them to be precise. And that’s from Amazon at the time of writing; it may well have increased by now. When it comes to what makes good leadership, it seems everyone has an opinion – and a fair number have got a book deal out of it.
But although there’s a huge library (of varying quality) to browse, business remains surprisingly poor at effective leadership. Research last year from Hay Group revealed just 18% of UK leaders are able to create a high-performance environment and 53% are generating demotivating working climates. Separate research from DDI and The Conference Board found only 40% of leaders and 25% of HR professionals globally view their organisation’s leadership as high quality.
Evidence suggests organisations’ leadership strategies are failing to keep up with a fast-changing world. To bridge this gulf, the notion of what a leader looks like needs to change, according to Cliff Oswick, professor in organisational behaviour theory and deputy dean at Cass Business School. “The days of the ‘rock star’ CEO are behind us,” he says. “We don’t need leaders who demonstrate ‘strong leadership’. We need people who are inclusive, reflective and facilitate the ideas of others.”
Jill Ader, partner at executive search firm Egon Zehnder, echoes Oswick’s view that the ‘rock star CEO’ is a thing of the past – even if some refuse to believe it. “People throw that back at you with examples of CEOs like that who are successful now, but what got those people there won’t get people there in the future,” she says. “We will see change.”
Leading in a new world
Driving this change is a number of factors. First and foremost: technology. “Previously, leaders had to make decisions because you couldn’t send a memo and wait two weeks for it to come back,” explains Oswick. “Now, real-time [collaborative] decision-making is possible. Technology facilitates networks over hierarchies and enables more democratic forms of CEO activity.”
Simon Lloyd, HR director of Santander, agrees “technology is freeing things up” and cites growing complexity as one reason for leadership evolution. “Organisations have become very big and trying to impose a command and control structure doesn’t work,” he says.
Then there’s the pace of change. Betsy Sutter, corporate SVP and chief people officer at VMWare, has been leading HR at the technology company for 13 years. “Everything is changing rapidly and is so fluid,” she says. “You can’t expect to be able to scale, transform and win if you’re not creating agile models. If it’s top-down, it moves too slowly.”
And, however much you buy into generational differences, most experts agree younger employees have a different perspective. “Attitudes are changing,” believes Lloyd. “More people are coming in who are interested in the purpose of the organisation. You’re leading people from a much wider age range, and for that you’re going to need a different type of leader.”
Bernd Vogel, associate professor of leadership and organisational behaviour at Henley Business School and director of the Henley Centre for Engaging Leadership, adds that while it’s too simplistic to chalk everything up to age, expectations are shifting. “[Generation Y] is much more willing to express their need for co-creation. Twenty years ago, people had the same motivation, but thought they needed to learn their trade before they were allowed to speak up. That’s not happening any more.”
According to Oswick, this shift will fundamentally impact how organisations are structured. “Society has changed,” he says. “People want to be engaged, not led. They want autonomy, more of a stake and to feel part of a community.”
“People today join communities rather than companies,” agrees Sutter. “Leaders have to have a sense of what the community values and bring it all together.”
Alongside that, collaboration is becoming increasingly important, with an Australian study by Deloitte estimating it’s worth A$46 billion (£27 billion) per year to that country’s economy. Whether organisations are effectively harnessing it is a different matter. “Partnership is the most effective method for social integration and getting what one needs, but this is tempered in later life by old notions of what ‘leading’ is about,” says Wayne Clarke, founder of the Global Growth Institute.
“Words like ‘partnership’ and ‘collaboration’ don’t seem to fit with ‘profit’, ‘winning’ and ‘success’. But they are key to sustainable growth. My money would be on investing in any organisation where leaders are able to create a culture of ‘constructive interaction’.”
Worryingly, that’s not that many: only 27% of leaders in the DDI and The Conference Board research reported they were ‘very prepared’ to be the kind of leader that creates a workplace where employees deliver their best.
But although there’s a huge library (of varying quality) to browse, business remains surprisingly poor at effective leadership. Research last year from Hay Group revealed just 18% of UK leaders are able to create a high-performance environment and 53% are generating demotivating working climates. Separate research from DDI and The Conference Board found only 40% of leaders and 25% of HR professionals globally view their organisation’s leadership as high quality.
Evidence suggests organisations’ leadership strategies are failing to keep up with a fast-changing world. To bridge this gulf, the notion of what a leader looks like needs to change, according to Cliff Oswick, professor in organisational behaviour theory and deputy dean at Cass Business School. “The days of the ‘rock star’ CEO are behind us,” he says. “We don’t need leaders who demonstrate ‘strong leadership’. We need people who are inclusive, reflective and facilitate the ideas of others.”
Jill Ader, partner at executive search firm Egon Zehnder, echoes Oswick’s view that the ‘rock star CEO’ is a thing of the past – even if some refuse to believe it. “People throw that back at you with examples of CEOs like that who are successful now, but what got those people there won’t get people there in the future,” she says. “We will see change.”
Leading in a new world
Driving this change is a number of factors. First and foremost: technology. “Previously, leaders had to make decisions because you couldn’t send a memo and wait two weeks for it to come back,” explains Oswick. “Now, real-time [collaborative] decision-making is possible. Technology facilitates networks over hierarchies and enables more democratic forms of CEO activity.”
Simon Lloyd, HR director of Santander, agrees “technology is freeing things up” and cites growing complexity as one reason for leadership evolution. “Organisations have become very big and trying to impose a command and control structure doesn’t work,” he says.
Then there’s the pace of change. Betsy Sutter, corporate SVP and chief people officer at VMWare, has been leading HR at the technology company for 13 years. “Everything is changing rapidly and is so fluid,” she says. “You can’t expect to be able to scale, transform and win if you’re not creating agile models. If it’s top-down, it moves too slowly.”
And, however much you buy into generational differences, most experts agree younger employees have a different perspective. “Attitudes are changing,” believes Lloyd. “More people are coming in who are interested in the purpose of the organisation. You’re leading people from a much wider age range, and for that you’re going to need a different type of leader.”
Bernd Vogel, associate professor of leadership and organisational behaviour at Henley Business School and director of the Henley Centre for Engaging Leadership, adds that while it’s too simplistic to chalk everything up to age, expectations are shifting. “[Generation Y] is much more willing to express their need for co-creation. Twenty years ago, people had the same motivation, but thought they needed to learn their trade before they were allowed to speak up. That’s not happening any more.”
According to Oswick, this shift will fundamentally impact how organisations are structured. “Society has changed,” he says. “People want to be engaged, not led. They want autonomy, more of a stake and to feel part of a community.”
“People today join communities rather than companies,” agrees Sutter. “Leaders have to have a sense of what the community values and bring it all together.”
Alongside that, collaboration is becoming increasingly important, with an Australian study by Deloitte estimating it’s worth A$46 billion (£27 billion) per year to that country’s economy. Whether organisations are effectively harnessing it is a different matter. “Partnership is the most effective method for social integration and getting what one needs, but this is tempered in later life by old notions of what ‘leading’ is about,” says Wayne Clarke, founder of the Global Growth Institute.
“Words like ‘partnership’ and ‘collaboration’ don’t seem to fit with ‘profit’, ‘winning’ and ‘success’. But they are key to sustainable growth. My money would be on investing in any organisation where leaders are able to create a culture of ‘constructive interaction’.”
Worryingly, that’s not that many: only 27% of leaders in the DDI and The Conference Board research reported they were ‘very prepared’ to be the kind of leader that creates a workplace where employees deliver their best.
A collective approach
It would be impossible for one leader, however exceptional, to embody all the traits required for success in a volatile world. Instead, experts argue, leadership needs to be distributed. For Vogel, “collective leadership” has been “a real game changer” over the past few years. “We’ve moved away from the idea that leadership is about one individual,” he explains. “Leadership happens in relationships.”
Michael West, professor at Lancaster University Management School’s Centre for Performance-Led HR, has been working with healthcare charity The King’s Fund on how collective leadership could fix cultural problems in the NHS. “The traditional approach we’ve had to leadership is individually focused,” he says. “We haven’t thought of leadership as a collective and social process. How do we create a structure where everyone has the potential to be a leader, no matter where they sit in the hierarchy, and where leadership is an outcome of expertise?”
West argues collective leadership should help the NHS work across boundaries, encourage staff to innovate and speak out, and create a foundation of shared values. “It’s about creating leadership with an underpinning of shared core values,” he explains. “One of the problems we have is sending people away on leadership courses and them coming back with disparate values and behaviours. That means there’s no shared culture.”
In other words, organisations need to build their bench strength of leadership capability internally (only 15% of organisations rate their future bench strength as strong, according to DDI and The Conference Board) and establish strong core values.
Shared values
Having a clear set of values has helped the leadership team at organic baby food company Ella’s Kitchen remain “tied together”, says HR director Catherine Allen. “We may have different styles, but we have the values in common,” she explains.
Ella’s Kitchen was founded by entrepreneur Paul Lindley in 2006, but as the organisation has grown, he has spread power through the company. “Entrepreneurial businesses get to a point where one person cannot make all of the decisions,” says Allen. “In order to grow, you have to devolve responsibility and make accountabilities clearer. The values underpin the kind of decisions we are likely to make.”
The same is true of the leadership team at Covéa Insurance, says head of HR and learning Lisa Meigh. After going through a merger in 2012, establishing and honing a shared set of values for the newly formed executive team has been key. “[HR] has been spending more time supporting the execs than ever before, helping them behave as a well-oiled machine,” she says. “They share the same values, meaning we have the right people around that table influencing the decisions.”
Egon Zehnder’s Ader backs up the importance of shared values. “You can talk a lot about ethics, but it comes back to leaders understanding purpose, creating values for all stakeholders and meeting what society expects,” she says.
Allen points out that there is a danger of being too democratic and consultative. “You need to establish accountabilities,” she says.
And Vogel is clear that collective leadership doesn’t change accountability: “You need to distinguish between shared decision-making and shared accountability.”
In fact, says Oswick, getting too many people involved actually leads to the very thing organisations should avoid – group think. “While groups make better decisions than individuals, there’s a difference between that and everyone having a say,” he says. “If you have hundreds of people involved, they gravitate towards a safe option. It’s more about situations where there’s an opportunity for high-quality interaction.”
Santander’s Lloyd is wary of leadership teams falling into “group mindset”.
“Constructive conflict is positive,” he says. “If you can create the co-operative mindset, that lets constructive challenge grow. It comes back to purpose: what are we here for? Get people committed and aligned to the same goal, while taking responsibility for their bit. That takes out status and ego. It becomes about the organisational goal.”
West agrees: “Collective leadership is about leaders making the success of the organisation as a whole their priority.” The aim is to work across barriers, silos and hierarchies.
Breaking down barriers
Silos and hierarchies are anything but easy to break down. West says there are three major barriers. “One: command and control cultures are stuck – it’s hard to change culture,” he explains. “Secondly, as we traditionally run organisations in silos, it’s difficult to get people to accept that their responsibility is for the success of the organisation as a whole, not their individual area. Finally, people have to give up power, and they are reluctant to do so.”
Oswick admits “the reaction isn’t great” when he presents his theory. “When you’re talking about how power ought to be shared, [people in power] are not receptive,” he adds. “The people who get it are middle managers and younger people in senior positions.”
Lloyd says persuading leaders to give up on hierarchies can be difficult. “Status in the UK is an important thing,” he says. “We’re trying to move away from ‘this grade has this attached’ and making it more about your value in the organisation; being recognised and breaking down barriers, across as well as down. Hierarchies not only put barriers within a function, but between them.”
He attempts to role model the right behaviours himself by getting out and about and not following strict lines of hierarchy. Vogel says this is critical. “HRDs have to live this in their own department,” he says. “When it comes to leadership development, people can see if you’re doing command and control, while extolling the virtues of shared leadership.”
Mindset remains a major challenge, and this is where HR can make a major difference. Vogel advises “immersive and provocative learning”, such as bringing leaders into situations where a traditional command and control style will not work. Once the mindset has shifted, he recommends team coaching to drive home the importance of leading collectively.
Build or buy?
However, Oswick questions the value of training established leaders in radical new methods as “you could end up with a contrived form of inclusion”. He says HR needs to focus on selection.
“Psychometric tests have their place,” he advises. “Avoid strong profiles. Cut the dangerous people out of the pack. Interviews should seek to identify the right skills, subtly. Talk about group activities, making quality decisions, or who they admire as a leader. HRDs should reflect on how the world is changing and what they know about group decision-making, and apply that logic. Reappraise your view of what it means to be a good leader, and then think about how you develop individuals or recruit.”
However, when it comes to recruiting externally, Ader says there is a shortage of these leaders, meaning organisations have a responsibility to develop their own. “This shortage will only increase as the level of transformation increases,” she warns. “It’s not just Western companies looking for these leaders – Brazil, India and China want them too.”
John Mervyn-Smith, chief psychologist at executive search firm EG1, adds that bringing leaders in can often end badly: “It’s like a heart transplant: the culture rejects them. It’s not as simple as parachuting people in – culture is resistant.”
While it used to be standard to recruit for senior roles externally, based on experience, track record and competencies, Ader says this is no longer enough: “It’s still essential, but it’s insufficient. They need to be good for tomorrow’s world, not yesterday’s.”
Lloyd agrees HR must forecast what the organisation will need in future, and start preparing the right kind of leaders for sustainable success. “Leaders don’t appear overnight,” he points out. “We are trying to plot a three-year journey and work out what sort of person we want in three years time for ExCo roles and the level below. What’s important is getting the right leader for the right situation at the right time. That makes identification hugely important.”
It’s about forecasting ahead, but being prepared to flex and adapt. At VMWare, Sutter says HR has implemented more agile forms of leadership development. “We don’t do programmes,” she explains. “We start with the business need and design just-in-time development opportunities. Companies need to design in real-time. And whatever you build, get ready for it to change within a year.” Meigh adds that at Covéa, emerging leaders are being developed faster than ever before. “HR should be providing a robust, active, living succession plan,” she says.
Future vision
Overall, says West, HR’s role is to make sure any new leadership model is part of a strategic, rather than piecemeal, approach. “HR and OD shouldn’t be scratching around the edges, but recognising that leaders need to be embodying that compelling strategic narrative,” he says.
However, one thing HR should be wary of is being too directive, warns Mervyn-Smith. “There is a desperate need to have some understanding about what leadership is needed, and HR needs to drive that. It should be asking questions, not being prescriptive,” he says. “Is there scope for true leadership to come to the fore, or does it get stifled? HR sometimes contributes to that by wanting to define it.”
So where next for leadership? Will hierarchies really disappear? Oswick certainly believes so, although he admits it “sounds a bit radical”.
“Organisations of the future will be networks rather than hierarchies,” he predicts. “With webs of influence rather than formal positions.”
Others take a less extreme view. Vogel believes “we need a repertoire of leadership, with new and more traditional forms”.
Allen agrees: “You can have a strong, charismatic CEO and a relatively flat structure around them. I’m a believer in situational leadership. You may use different styles daily, or an organisation may be in a phase where one style is more appropriate.”
But whatever form it takes, leadership will remain the driving force behind organisational culture. “You have to build the right culture, and the only place that will ever come is the top of an organisation,” says Lloyd.
“Every interaction, by every leader, every day shapes the culture of the organisation,” adds West, neatly. Isn’t it time we started getting more of those interactions right?