Discussion Post - Organizational Leader Concept

Week 1: Oct 21 - 27

BMGT 365 7981 Organizational Leadership (2198)

Week 1: What is Meant by Leadership and Who are Leaders?

Theme 1: Understanding the nature of leadership helps to frame the viewpoint of a leader

Although many scholars have defined leadership, but the definition of leadership is dynamic. This week, we will discuss the definitions of leadership to understand the field of study upon which we are about to embark. The definition of leadership has significantly changed over the past generation to meet the needs of a contemporary business environment. In fact, many scholars have disagreed on the nature or essential characteristics of leadership but instead have offered a variety of perspectives as to what leadership is not. As we discuss the contemporary definitions of leadership, pay close attention to various definitions and compare them to those of prominent leaders today. Are they similar? If so how? If not, why not?

Read:

Pages 18-22 (you will read the rest next week) of: Gandolfi, F., & Stone, S. (2017). The Emergence of Leadership Styles: A Clarified Categorization. Review Of International Comparative Management / Revista De Management Comparat International, 18(1),

Simon Sinek on Leadership at TED

What is Leadership?

Aldrin, A., and Gayatri, R. (2014, August). Leadership Not a Title Nor a Position. International Journal of Current Research and Academic Review, 2(8), 356 – 366. Retrieved from http://www.ijcrar.c

Satel, G. (2014, June 1). To Create Real Change, Leadership Is More Important Than Authority

Theme 2: The evolution of leadership theory can help to explain what makes a good leader today.

The second theme for week 1 details how the definition of leadership has adapted to fit the changing business environment. Changes in the definition of leadership are reflected in how leadership has been viewed by scholars. Leadership theory took root in

p y p y the social science fields of sociology and psychology. People wanted to know what made a good leader and whether they could become a good leader by adapting the “good” traits. Debate still rages on in leadership research as to whether leadership is inborn or learned. By examining leadership theory this week, we will begin to define leadership in terms of answering the question of what should Biotech's leaders look like for success today. The evolution of leadership theory illustrates how leaders have perceived the act of leading and how the psychology of leading people interfaces with the real job of leading others. How one views and defines leadership influences the beliefs, values and behaviors maintained while leading and relating to others.

As mentioned earlier, leadership experts have perspectives/ theories about leadership. It is important to understand the history of leadership theories, because it will help define the way leadership is today. The business environment controls the view of the leader as it controls the actions needed for a company to survive. By reviewing the chart below and the leadership theories from the attached readings, it should become clear to you how leadership has evolved. Understanding how leadership theory has evolved to meet the needs of the organization over time will help to define us as leaders today.

Decade(s) 1950-60 1960-80 1980-2000

Theories Great Man/Trait Behavior/

Contingency

Influence

Organizational Structure

Vertical/

Pre-bureaucratic

Vertical Hierarchy/

Bureaucratic

Horizontal/Cross-Team

Leader View Single Hero Command and Control Team/Change Leade

Decade(s) 1950-60 1960-80 1980-2000 Environment Post-War Stable American Business

Growth/ Stable MNC Dominance/Japan

Model/ Chaotic

Source: Adapted from Daft, R. L. (2010). The leadership experience (5th ed.). Boston, MA: Cengage Learning

TAKE AWAY POINT FROM LEADERSHIP THEORY EVOLUTION

The flow from “Great Man” views of leadership to “Learning Leader” illustrates that the view of good leadership is colored by the demands of the business landscape of its time. Leadership and its definition is dynamic and complex. Leadership changes in response to the needs of the organization.

Presently, many business leaders are continuing to transition from the “Calm Chaos” of the latter half of the 20th century to the “Turbulent Chaos” of the 21st. Leaders are focusing on change management, facilitating vision and values to encourage high performance and continuous adaptation. New theorists, such as Jacob Morgan, are modeling the organizations of today blending the vertical structures of the 80’s and 90’s

with the flat structure of the 21st century. Morgan (2015b) maintains that it is costly and inefficient to dismantle the vertical structures that currently house many of the viable business organizations. Instead, Morgan (2015a) proposed a new structure known as a “flatarchy,” that can be relatively flat yet can create an ad hoc hierarchy to work on a project or function and then disband when finished. The organization can also have a loose hierarchy that can flatten when required and then return to a loose hierarchy when the need is over. The leader of today must find ways to transition quickly from the old to the new. Implementing fast change and getting people to accept and implement the change is the greatest task facing leaders.

The leader must combine the “soft” skills of leadership with the “hard” skills of management to effectively guide an organization.

Understanding the evolution of leadership theory helps a leader to define the contemporary concept of successful leadership by identifying strengths and weaknesses

of scholarly perspectives from the past to the current time, and explore the relationship of leaders to the business environment.

Introduce Yourself! Discussion Topic

References

Morgan, J. (2015a, July 20). The 5 Types of Organizational Structures: Part 2, 'Flatter' Organizations. Retrieved October 24, 2017, from https://www.forbes.com/sites/jacobmorgan/2015/07/08/the-5-types-of-organizational- structures-part-2-flatter-organizations/#33fcf6e6dac3

Morgan, J. (2015b, July 20). The 5 Types of Organizational Structures: Part 4, Flatarchies. Retrieved October 24, 2017, from https://www.forbes.com/sites/jacobmorgan/2015/07/15/the-5-types-of-organizational- structures-part-4-flatarchies/#6865b2ca6707

Read:

The Most Important Leadership Theories The Hersey-Blanchard Situational Leadership Theory The Relational Leadership Model What Does Leadership Look Like in the Future of Work?

Complete:

Review syllabus Post your introduction Participate in week 1 learning activities - Initial response due by Thursday, 11:59 p.m. eastern time. Follow up response due by Sunday, 11:59 p.m. eastern time.

0 % 0 of 5 topics complete

Kindly tell everyone a few facts about yourself and your aspirations. Provide:

How to Analyze a Case Study Word Document

Instructor Notes Web Page

BMGT 365 - Biotech Company Profile (Fall 2019) PDF document

Week 1 Discussion Discussion Topic

Your name Your major/minor Where you are in your degree program Who you work for and what you do How many other courses you are taking at the same time Why you are taking this course and what you are looking to get out of this course

Please note that the "Introduce Yourself" does not count toward participation in Week 1 learning activities

Week 1 Discussion

You will read the discussion below and follow the instructions provided. You will create the memorandum and submit in the discussion area. Post the entire memorandum into the discussion area rather than provide as an attachment.

Do not post in the discussion area until you have written the memorandum. If the seal is broken without posting, a zero for this assignment will be automatically assigned.

You will read the following scenario and provide the memorandum by Thursday, 11:59 p.m. eastern time. By Saturday, 11:59 p.m. eastern time, you will read the memoranda of your classmates and will comment on at least three other classmates addressing the following

Comment on the positive aspects of the memo posted by others. Comments on key leadership language that could be used to strengthen the memo.

Would you change your response in the memo? If so, why? if not, why not?

By Sunday, 11:59 p.m. eastern time, respond to the classmates who responded to your memorandum.

Read the Following Case Scenario

A recent survey was taken among employees at Biotech Health and Life Products (Biotech). The results were alarming, as it appeared the leadership has been less effective than in the past. Some of the common complaints seemed to focus on the lack of vision, a breakdown in communication and a lack of connection with staff.

You have read the results and as Vice President of Biotech, you completely agree with employees. Leadership is the cornerstone to success in any organization and to permit poor leadership can only spell trouble. It occurred to you that the place to start change was staring you in the face - the new management hires planned for Warehouse Operations in Dallas and Miami. Mumbling to yourself “but what do I want them to look like?” you decide that you must write a memo to HR Director, Jennifer Diaz to make sure the “right” description of a leader is asked for in the soon-to-be released job description. Scrambling around on the desk, you find the old job announcement so that you can make some changes. It reads, “Biotech is looking for experienced warehouse managers who focus on keeping the distribution speed high and shipping costs low. Manager must be able to motivate employees to keep distribution, packing, and shipping moving smoothly and efficiently. Must be someone who can handle a fast-paced environment, is used to meeting deadlines, is driven and results-oriented. Goal oriented and policy adherence critical to succeed in the department.”

Instructions

You will act as the Vice President of Biotech. Write a memorandum to the HR Director, Jennifer Diaz that explains the need for a new job announcement for managers at Biotech. The memorandum will explain how the business environment has changed the view of the leader and defines the vision you have based on synthesizing the course material about leadership theory and definition of a leader in today’s business environment opposed to leaders hired in the past.

In writing the memorandum, use the course material from week 1 (you may also use course material from week 2) to support the reasoning and conclusions made. You will

also use the Biotech Company Profile . Answer the following:

Explain how the existing job announcement for new hires was effective in the past based on the theories and view of leadership through the 1990’s. Explain why the leader of today would no longer fit the definition set out in the old announcement. Describe what a leader looks like today and what theories and leadership definitions support this description.

Memorandum Set Up

Create a Word or Rich Text Format (RTF) document (no pdf files allowed) using 12-point font. A memo is left justified with no indentations of paragraphs. A memo is single- spaced with a double space between paragraphs to make the memo easy to read.

In business, writing must be concise, easy to read and free of writing and grammatical errors.

You are required to use in-text citations with an associated reference list.

Use headings for each element. It is suggested that you set up the memo with all of the required headings and then fill in each section of the memo.

Use a memo format:

To:

From:

Date:

Subject:

Remember, you are sending this memo to the HR Director so this is a formal memo. Proof the memo carefully for typos, grammatical errors and ensure the memo conveys the points you are to address. Why? Because your work products is a reflection of who you are – it is your brand! A good brand can lead to future opportunities in an organization such as a promotion.

Make sure the memo is audience appropriate, concise, coherent, readable, uses appropriate terminology, is professional, provides a factual tone (no opinion and no recommendations), and is visually appealing.

Memorandum Requirements

You are sending this memo to the HR Director, Jennifer Diaz. Read the memo to ensure all required elements are present. You also need to use facts from the case scenario and course material to support the ideas and reasoning put forth.

The language in the announcement has to be just right so that Biotech attracts the best candidates. Therefore, it is important to help Jennifer capture the essence of a leader at Biotech.

Make suggestions about language that should appear in the job announcement that supports the definition and characteristics you derived for the leader of today. Provide an explanation so Jennifer knows why the specified language is important to convey the definition and characteristics of a leader;

Make suggestions about language that would not be in the job announcement for this leader;

Provide an explanation why the specific language should not be in the job announcement.

Not just anything is acceptable so make sure to read the course material and make wise selections in creating this memo.

The following items are required in writing the memo. Check off to ensure compliance to the following requirements.

Use the grading rubric while completing the project to ensure all requirements are met that will lead to the highest possible grade.

Third person writing is required. Third person means that there are no words such as “I, me, my, we, or us” (first person writing), nor is there use of “you or your” (second person writing).

Contractions are not used in business writing, so do not use them.

Students will not use direct quotation marks but will instead paraphrase. What this means is that you will put the ideas of an author or article into your own words rather than lifting directly from a source document. You may not use more than four consecutive words from a source document (including the case scenario) or change words in a passage as doing so would require direct quotation marks. Use a passage from a source document by putting into your own words (paraphrase) and attribute the passage to the source document. Changing words

from a passage does not exclude the passage from having to have quotation marks. If direct quotes are presented, they will not be included in the grading.

Use in-text citations and provide a reference list that contain a reference associated with each in-text citation.

Provide the page or paragraph number in every in-text citation presented. Refer to this link for more guidance on how to do this: In-Text Citations - Including Page or Paragraph Numbers

Self-Plagiarism: Self-plagiarism is the act of reusing significant, identical or nearly identical portions of

one's own work. You cannot re-use any portion of a paper or other graded work that was submitted to

another class even if you are retaking this course. You also will not reuse any portion of previously

submitted work in this class. A zero will be assigned to the assignment if self-plagiarized. Faculty do not

have the discretion to accept self-plagiarized work.

18 Volume 18, Issue 1, March 2017 Review of International Comparative Management

The Emergence of Leadership Styles:

A Clarified Categorization

Franco GANDOLFI1

Seth STONE2

Keywords: leadership, leadership styles, leadership categories, categorization

JEL classification: M12, M14

Introduction

The world is in the midst of a leadership crisis. Despite the fact that there is

a vast body of literature on leadership, it has remained one of the most misunderstood

business phenomena (Gandolfi & Stone, 2016). Thus, it becomes of paramount

importance to understand the consequences, both positive and negative, that emerge

from the various known and validated leadership styles found in modern-day

organizations. Further, it is critical to have metrics in the form of known attributes

of effective leadership to serve as a benchmark for the effectiveness of each

leadership style. A thorough understanding of both the potency and effectiveness of

recognized leadership styles will benefit the academic and professional communities

alike.

Therefore, the purpose of this article is to showcase the different leadership

styles in practice in organizations today and to provide a categorization of existing

leadership styles. A key objective of this research is to compare leadership styles to

a functional and comprehensive working definition of leadership. With this in mind,

1 Dr. Franco GANDOLFI, Georgetown University, Email: [email protected] 2 Dr. Seth STONE, Regent University, Email: [email protected]

Abstract

The study of leadership has become a prominent scholarly and professional focus

in an ever-changing, multi-dimensional globalized world. Despite abundant scientific and

anecdotal work on the effectiveness and potency of “good” leadership, several leadership-

related questions have remained unanswered. For instance, what does good, effective

leadership look like? What is a leadership ‘style’ at its most basic? What leadership styles

are at a leader’s disposal? While leadership may be seen as one of the most over-

researched topics, it remains one of the most misunderstood phenomena of our time

(Gandolfi & Stone, 2016). This conceptual paper addresses the notion of a leadership style

and purports to categorize the ever-increasing pool of leadership styles that emerge both

in scholarly and professional circles. The paper culminates in a graphic depiction of the

categorization of leadership styles based on the scientific work of Lewin, Lippit, and White

(1939).

Review of International Comparative Management Volume 18, Issue 1, March 2017 19

this work begins with a brief review of a working definition of leadership and the

key empirically researched attributes of effective leaders. The article then provides

a deeper analysis of the various leadership styles by juxtaposing them against the

authors’ working definition of leaders and the attributes of effective leaders, thereby

providing insights into the positive and negative attributes of each style. Next, the

paper focuses on a definition of what a leadership style is, and highlights various

styles of leadership. Finally, the paper showcases a categorization of leadership,

culminating in a graphic classification of leadership styles (Figure 1).

Defining Leadership

The study of leadership is not new and leadership definitions abound.

Various scholars have attempted to define leadership operationally and theoretically.

Gandolfi (2016) asserts that the combination of five components render a potent

working definition of leadership -(i) there must be one or more leaders, (ii)

leadership must have followers, (iii) it must be action oriented with a legitimate (iv)

course of action, and there must be (v) goals and objectives (Gandolfi, 2016). So

how can leadership be defined? Based on the presented five criteria the following

definition was selected for the purpose of this research:

“A leader is one or more people who selects, equips, trains, and influences

one or more follower(s) who have diverse gifts, abilities, and skills and focuses the

follower(s) to the organization’s mission and objectives causing the follower(s) to

willingly and enthusiastically expend spiritual, emotional, and physical energy in a

concerted coordinated effort to achieve the organizational mission and

objectives.”(Winston & Patterson, 2006, p. 7).

This definition was chosen for two important reasons. First, having surveyed

the leadership literature, Winston and Patterson (2006) provide a definition as it

relates to the components needed for defining leadership as stated above. Second, it

clearly demonstrates that leadership is not one-dimensional. In fact, it requires a deep

understanding about how people play a role in the ultimate success of the mission

and vision of the organization. How leaders develop and grow will be critical to the

effectiveness of the organization; their development as leaders must be intentional

for the organization to reach its stated objectives and goals.

Key Attributes of Effective Leadership

Given that many scholars, professionals, and thought leaders have weighed

into the conversation regarding the attributes of effective leadership, which views

matter most? Research reveals a clear line between those attributes of effective

leadership that are anecdotal in nature versus those that stem from scientific research.

While assertions based on observation and/or personal experience are undoubtedly

valuable marketing tools and often carry some practical wisdom, it is the authors of

20 Volume 18, Issue 1, March 2017 Review of International Comparative Management

this study’s assertion that they do not get the global leadership community any closer

to an understanding of desirable leadership style(s). This paper will focus exclusively

on known attributes of effective leadership grounded in scientific, empirical research.

Before delving into the attributes for effective leadership, it is important to

note two guiding principles, that is, (i) virtually everyone has some capacity to form

leadership relationships, and (ii) leaders are made and not born. Andersen (2012)

postulates that while some people are born with innate qualities and character

attributes that propel and/or accelerate their leadership journey, the vast majority of

people live in a practical reality where their leadership skills must be intentionally

cultivated to achieve their maximum potential leadership output. Such cultivation

cannot happen without relationships (Komives, Lucas, & McMahon, 1998). These

notions bring the conversation full-circle with regard to the guiding principles

provided by the authors of this paper.

Kouzes and Posner (2007) are widely regarded as authorities on the study of

leadership and have produced some of the most authoritative research on the subject

of leadership effectiveness. Over more than thirty years of global research, they have

arrived at five key attributes of effective leadership. These are; (i) to model the way,

(ii) to inspire a shared vision, (iii) to challenge the process, (iv) to enable others to

act, and (v) to encourage the heart (Kouzes & Posner, 2007).

Examining the attributes in more detail, first, to model the way means that

the leader personally demonstrates the behavior they desire or expect to see in their

followers (Brown & Posner, 2001). Second, to inspire a shared vision creates mutual

context between leaders and followers, while clearly demonstrating what the

organization values most (Kelly, 2000). Third, leaders who challenge the process ask

the question, “Why do we do this?” (Galbreath & Rogers, 1999, p. 169). This type of

leader will never be satisfied with a reply that suggests satisfaction with the status

quo (Galbreath & Rogers, 1999). The fourth attribute, to enable others to act, means

the leader does not seek dominant authority, rather the opposite, by giving away

power and decision making ability to followers (Russell, 2001). Fifth, to encourage

the heart is to show an outpouring of sincere care and provide genuine celebration

for achievements and success (Posner, 2015).

These five attributes of effective leadership are highly relational and require

intentional effort by the leader to put into practice, thus, tying directly back to the

two guiding principles for effective leadership that have been presented. It requires

leaders to open pathways for engagement throughout every level of an organization

and with all of its people. In fact, these attributes, once put into practice, are

significantly more follower-centric than leader-centric (Gandolfi & Stone, 2016).

Understanding the follower centricity of effective leadership will aid in

understanding the consequences of the leadership styles presented in a subsequent

section of this paper.

Review of International Comparative Management Volume 18, Issue 1, March 2017 21

What is a leadership style?

While much research exists addressing various leadership styles, there is a

surprising shortcoming of research that examines what a leadership “style” actually

is. It appears to be an unspoken and assumed element of the leadership styles

discussion. Perhaps, this lack of clarity contributes to the widely disparate views on

leadership, and may be one of the reasons that academicians and professionals have

not agreed on what constitutes leadership. Having said that, what exactly is a

leadership style?

First, a look at context is important to help understand why there are so many

different leadership styles. Clearly, the global business community has come a long

way from when Frederick Taylor gave the world the gift of scientific management.

As Buchanan (2013) explains, the world has moved through different phases of

leadership since the early part of the 20th Century. Historically speaking, there was

first the notion of “command-and-control” that prevailed into the 1980s, which was

followed by “empower-and-track” through the mid 2000’s, and, finally, the

“connect-and-nurture,” approach, which is the current approach (Buchanan, 2013).

While not every organization has tracked through this sequence in the provided

timeframe – some have not even caught up to the second phase, much less the third

that Buchanan presented - this progression provides a high level understanding and

illustrates dramatic shift points that may help explain why there are so many viable

leadership styles in existence. Further, the early theories of leadership made the

assumption that good leadership was based on traits (Shazia, Anis-ul-Haq, & Niazi,

2014). Whether it is personality, charisma, or physical features such as appearance,

many simply believed, and some still do today, that leaders are born and not made.

It was the notable psychologist Kurt Lewin and his team (1939) who

introduced through their research that leaders could be made and were not

necessarily just born. In their seminal work, Lewin, Lippit, and White (1939)

categorized and introduced three leadership styles that set the framework for future

styles to emerge (Martin, 2015) – autocratic, democratic, and laissez-faire.

Subsequent styles that emerged began to focus on the leader/follower relationship

and how the actions of one will impact the other (Shazia et al., 2014). This was a

significant step forward for the leadership styles movement. With this historical

understanding in mind, it appears as if the research and practice communities are far

from nearing the finish line when it comes to fully understanding and agreeing upon

an optimal leadership style. Thus, it is of paramount importance to understand and

define what a leadership style actually is.

Three key elements involved in pragmatically leading people have helped

researchers arrive at the myriad of existing leadership styles and will likely inform

new ones that have yet to emerge. First, Armandi, Oppedisano, and Sherman (2003)

note that leadership is about influencing a group of people in the direction of a

decided common goal. Whether one believes that leaders are born or made, scholars

and practitioners agree that leadership involves influence regardless of the chosen or

inherent style. While influence can be difficult to understand given its immeasurable,

22 Volume 18, Issue 1, March 2017 Review of International Comparative Management

intangible nature, influence forces movement both literally and philosophically.

Additionally, leadership is highly intentional. Rooke and Torbert (2005)

assert that differences among leaders are not determined by their philosophy of

leadership, personality, or even style of management, at least according to most

developmental psychologists. Instead, it is how they read and interpret their

surroundings and how those interpretations influence reactions in the midst of

challenges. Most successful leaders, no matter their preferred style, make

organizational decisions based on a process and philosophy of leadership. This

requires a high degree of self-awareness, emotional intelligence, and environmental

context both inside and outside the organization, all of which will never happen

accidentally (Rooke & Torbert, 2005).

A third key point is that leadership has as much to do with perception as it

does with reality. This should come as no surprise given how often business leaders

are heard using the common colloquialism ‘perception is reality’. Despite its

pithiness, there is great psychological power in this reality. According to McDermott,

Kidney, and Flood (2013), leadership effectiveness in the eyes of followers is closely

tied to the leader being driven, able to inspire, and prioritize needs, which in turn,

produces a sense of safety and calm for followers. Thus, if followers’ perceptions of

what they need in a leader are met, they will feel secure in their leader through a

multitude of different organizational circumstances.

With the understanding that influence, intentionality, and perception are

vital components of practical leadership, the authors of this paper define a leadership

style as follows:

“An intentional means by which a leader influences a group of people in an

organization to a widely understood future state that is different from the present

one.”

This operational definition intentionally leaves space in which a number of

different leadership styles can fit, with the hope of arriving at the most optimal

leadership style through a review of those that are currently accepted.

Styles of Leadership

The two most basic characterizations of the popular leadership styles that

are widely accepted and practiced today are (i) trait based and (ii) skills based styles

of leadership. These juxtapose one another and provide the oldest and most hotly

debated question in the study of leadership theory: Are leaders born or made?”.

Armandi, Oppedisano & Sherman (2003) state that when this old-age question is

discussed, it regularly takes a tone similar to “What came first, the chicken or the

egg?”. It should come as no surprise that this debate has seemed almost futile in

many discussions amongst academics and practitioners alike. While academic

researchers began trying to understand what the innate traits of a leader were early

in the 20th Century, what the trait theory fails to account for is that the environment

Review of International Comparative Management Volume 18, Issue 1, March 2017 23

both inside and outside an organization and the followers within an organization

influence their interaction with a leader (Armandi et al., 2003). In other words, this

confined understanding misses a significant portion of the big picture when it comes

to all that is involved in leading people and organizations. Indeed, such a short-

sighted view of leadership disqualifies the trait theory as an ideal leadership style for

today’s organizations, especially in light of the increasing complexity facing

organizations.

Not unlike the trait approach to leadership, the skills theory is entirely

leader-centric, yet completely counter to the trait approach in that the skills theory

states that leadership can be developed through the intentional approach of building

known and accepted leadership skills (Northouse, 2007). Thus, it presupposes that

leaders are made and not born. This appears to be a step in the ‘right’ direction from

a leadership development perspective, but again with such a limited view, this theory

would need to be significantly expanded to account for organizations and people.

However, this theory did provide some meaningful guidance for new theories that

would emerge over time.

Situational leadership theory, for instance, essentially boils down to

“situational favorability” (Horner, 1997, p. 271). This matches an organizational

situation to the skills of the leader in an effort to determine how positive or negative

the outcome of a particular organizational situation might be and what type of

leadership skill sets might be required, based on where the organization currently

stands or is attempting to go. This game of matchmaker would suggest that,

depending on conditions both inside and outside the organization, leadership could

change significantly and regularly over time; in contrast, long tenure for leaders has

the potential to produce organizational unrest with leadership. Situational leadership

theory deals with follower readiness for where the leader is attempting to take them

and the organization (Silverthorne, 2000). Thus, there are multiple forces at work in

attempting to match the appropriate leader within a given organizational situation.

This theory lacks the critical element of follower development presented in the

adopted definition of leadership in this research inferring instead that organizations

seek the right person for the right moment in time and little else. Thus, it is plausible

to conclude that there is not enough long-term sustainability tied to this theory to

make it the most ideal or desired leadership style.

The contingency leadership style is squarely based on the organization. It

proposes that the effectiveness of a leader will depend solely upon the organizational

context to determine if the leader’s style will be effective or ineffective (Northouse,

2007). This is a one-to-one relationship between the leader and the current reality of

an organization. Like situational leadership, the followers could have influence on

the contextual present of the organization. However, nowhere does this style take

into account the needs of those who are following the leader toward the

organizational mission.

Shifting gears once again, transactional leaders often tend to focus on

transactions in furtherance of a set of goals rather than show concern for the people

executing those goals (Yahaya & Ebrahim, 2016). While this style of leadership

24 Volume 18, Issue 1, March 2017 Review of International Comparative Management

focuses more on the interaction of the leader and the follower than each of the

previous examined styles, the focus is still on output and production, which is

ultimately for the benefit of the organization. Presumably, any set goals are more for

the benefit of the organization than for those who serve in it. In the transactional

leadership style, leader- or follower-orientation is predicated on a set of mutual

benefits (Tung, 2016). In other words, the leader makes it clear to the follower, if

you give me X, I will give you Y. Sales roles provide a great generic example here

and most often those roles are in the best interest of the organization. Thus, it may

be concluded that the transactional leadership style is a mission (organization) first

style of leadership.

The leader member exchange (LMX) style of leadership in its most basic

sense is about working dynamics; the more effective the working relationship is, the

closer the leader and follower are and, presumably, the follower becomes more

effective in their work, with the inverse also presumed to be true (Northouse, 2007).

This leadership style has been colloquially referred to as the “in club” and the “out

club”. This should make one question the health of these types of dynamics, as this

style suggests that being on the boss’s “good side” is the best path forward. It is

highly personal in nature, which brings its focus toward the leader/follower

orientation, or people (employees) first at the initial glance. However, the ultimate

measure of this style is about worker effectiveness, once again supporting the needs

of the mission before those of its people.

Transformational leadership is built on the premise of “idealized influence,

inspirational motivation, intellectual stimulation, and individualized consideration”

(Gregory, Moates & Gregory, p. 807). This style is highly people or employee centric.

The leader must appeal to the ideals of the followers in order to influence them. The

leader’s goal is to inspire the employees and motivate them toward the vision that

they have created for the organization. These leaders stimulate the intellect of their

followers by helping them be a part of the solution; such leaders genuinely care about

the individuals in the organization. This style is so close to servant leadership that it

can be difficult for many to distinguish between the two. The key point of

understanding when it comes to the transformational leadership style is that the

leader engages the followers as closely as he or she does, in order to solicit their

efforts in achieving the vision he or she has set, because, the leader knows that he or

she cannot achieve the vision alone. Thus, the transformational leadership style is

most definitely a mission (i.e., organization) first style of leadership.

Servant leadership represents the final leadership style to be explored in this

brief review and discussion of categorization. Based on the pioneering work of

Robert Greenleaf, who coined the term servant leadership in 1970, Spears (2004)

states that to become a great leader, the leader must first be a servant to those they

lead. Spears (2004) contends that Greenleaf’s ideas of real leadership or true

leadership only arise when there is a genuine motivation to help others with no

ulterior motives, essentially making it the primary driving force of the leader. In

servant leadership, the emphasis is clearly on the followers. As a direct consequence,

all other organizational priorities become secondary to this notion of serving those

Review of International Comparative Management Volume 18, Issue 1, March 2017 25

whom the leader leads. Thus, from a categorization of leadership styles perspective,

servant leadership is the only style that emerges that puts the people within the

organization ahead of its mission.

Categorization of leadership styles

Throughout decades of study, many leadership styles emerged to be

considered valid and effective. This is due to the fact that a leadership style is a

tangible demonstration of the process a leader chooses for leading (Shead, 2011).

While in itself quite accurate, such a vague definition of leadership styles naturally

lends itself to the emergence of several styles that have come to be accepted both in

the communities of research and practice. A review of the literature suggests that

noted scholars and practitioners cite as few as three styles, while others categorize

six, eight or in excess of twelve major styles. For instance, Blanken (2016) cites

charismatic, innovative, command and control, laissez-faire, pace setter, servant,

situational, and transformational leadership as legitimate leadership styles. Yet, even

in this attempt, several known and popular leadership styles are clearly omitted.

This begs the question as to how much we know about the categorization of

leadership styles? Shead (2011) asserts that there is not a singular right way to view

and understand the various leadership styles and suggests that varying views on

understanding leadership styles all contain value. While this very well may be true

and is a useful part of the ongoing leadership styles discourse, it does not help bring

further clarity to the discussion and could in fact, perpetuate more confusion and

uncertainty.

With this understanding, it becomes clear that a deeper understanding of the

categorization of leadership styles would be an invaluable addition to both the

academic and professional communities. Thus, having examined the wide ranging

categorization of styles, the authors of this article have reviewed the work of Kurt

Lewin and colleagues, Douglas McGregor, and Daniel Goleman and team, as each

of these individuals have contributed with their work in their respective time to the

study and understanding of leadership styles. This section also addresses another

aspect of the categorization of leadership styles from the perspective of leader-

centered versus follower-centered styles, all of which is explored with the aim of

bringing enhanced clarity to the leadership styles categorization discussion.

As previously stated, Lewin et al.’s (1939) work produced three leadership

styles, autocratic (also referred to as authoritarian), democratic (or participative), and

laissez-faire. Specifically, autocratic leaders are hands-on leaders who take charge

and set clear expectations for the what, when, why, and how tasks done by followers

should be completed. Autocratic leaders take sole responsibility for making

decisions without input from followers in the organization (Cherry, n.d.). Lewin et

al. (1939) believed that their second proposed leadership style, democratic leadership,

was largely the most effective style, as it promotes input on decisions, both large and

small, from followers within the organization and further promotes a spirit of

collaboration in the completion of goals and tasks (Cherry, n.d.). Presumably, the

26 Volume 18, Issue 1, March 2017 Review of International Comparative Management

democratic style would lend itself to more two-way communication between leaders

and followers as opposed to the one-way style of communication often seen within

autocratic leadership. Lewin et al’s (1939) third style, laissez-faire leadership,

translates to “leave well alone” (Pawar, 2014), where leaders are completely hands

off when it comes to how followers complete their tasks and provide significant

amounts of decision making authority amongst followers. Cherry (n.d.) notes that

while this style can be effective when there is a high degree of expertise and

motivation among followers, it can also create role confusion and become

demotivating when lack of clarity and vision from the leader persists. While each

style in each category of leadership styles offers its own benefits and disadvantages,

Lewin et al.’s (1939) early work was critical in laying the foundation for the more

formal study of the categorization of leadership styles and future study and the work

that would emerge in subsequent decades.

McGregor (1960) differed from Lewin et al. (1939) by classifying leadership

styles into two categories, centering his work around the orientation of how the

leader perceived his or her followers. McGregor (1960) postulated that leaders see

followers in one of two ways, termed “Theory X” or “Theory Y”. Accordingly, if a

leader sees his or her followers as responding only to orders connected with reward

and punishment, then the followers were unmotivated and uninspired, which would

fall under Theory X (Head, 2011). To the contrary, Theory Y suggests that a leader

sees his or her followers as passionate, highly motivated, and a group of people who

can critically think and make decisions on their own (Head, 2011). While these two

theories are starkly opposed, each fits nicely within one of Lewin et al’s (1939) three

leadership styles. A Theory X leader would by its own definition need to act as an

autocratic leader for tasks to be completed within an organization. Pawar (2014)

suggests that this type of leader likely has no time or inclination to consider the needs

of followers. On the other hand, a Theory Y manager would likely bend toward being

democratic leader (Pawar, 2014). One could also make the claim that a theory Y

leader could fall into the laissez-faire category of leadership if the right

circumstances presented themselves. While McGregor’s (1960) work represents a

valuable contribution to the study of leadership styles, his work, though taken from

a different vantage point, strengthens the case for the legitimacy of Lewin et al.’s

(1939) work.

Goleman, McKee, and Boyatzis (2002) posited the existence of six

leadership styles. He distinguished among coercive, authoritative, affiliative,

democratic, pacesetter, and coach. The coercive style is a command and control

approach that requires compliance; the authoritative style directs people to a

common vision created by the leader (Greenfield, 2007). Leadership power closely

aligns with the singular decision-making that is taken on by the autocratic leader as

described by Lewin et al. (1939). The coach, afilliative, and democratic leaders are

focused on things such as relationships, team building, consensus, and people

development respectively (Greenfield, 2007). Thus, these three follower-centric

styles match up closely with the democratic leader as defined by Lewin. The outlier

of Goleman et al.’s (2002) six leadership styles, the pacesetter, may not be what one

Review of International Comparative Management Volume 18, Issue 1, March 2017 27

might imagine it to be at first glance. The mentality of the pacesetter often leads to a

lack of trust in followers, thus causing the leader to undermine, albeit unintentionally,

the actions of the follower (Ackley, n.d.). When such a situation arises between

leaders and followers, it is highly plausible that the leader might take matters into

his or her own hands, thus potentially reverting to an autocratic style of leadership

to accomplish the goals they have set for the followers in a given situation. While

Goleman et al.’s (2002) vantage point provides an important insight, it may be

concluded that each of the six styles he presented found their roots in Lewin et al.’s

(1939) work.

Finally, Masslenikova (2007) suggested that leadership styles could be

categorized as either leader-centered or follower-centered. She posits that leader-

centered styles would include authoritarian, transactional, and charismatic leadership.

Particularly regarding authoritarian, or autocratic leadership, this certainly aligns

with Lewin et al.’s (1939) definition of an autocratic leader. In contrast, follower-

centered leadership styles would include participative, servant, and transformational

leadership (Masslenikova, 2007). Again, this validates Lewin et al.’s (1939)work in

that follower-centric leadership styles often hinge on the inclusiveness of the

democratic leader.

This brief review of the categorizations of leadership styles has revealed that

there are various ways they may be viewed and placed into meaningful categories.

Therefore, the authors of this paper propose the following categorization model in

the form of a continuum to provide a visual representation of how each of the

accepted leadership styles discussed tie directly back to Lewin et al.’s (1939) original

three leadership styles and viewed on a leader-centric versus follower-centric

continuum. This is graphically shown in Figure 1.

Figure 1. Categorization of leadership styles - Leadership styles continuum

Leader-Centric Follower-Centric

Autocratic Authoritative Coercive Transactional

Theory X Situational

Contingency

Democratic Skills Based Transformative Coach

LMX Affiliative

Democratic

Laissez-Faire Trait Based Theory Y Servant

Source: developed for this research study

28 Volume 18, Issue 1, March 2017 Review of International Comparative Management

Concluding Thoughts

This review of the categorizations of leadership styles has revealed that there

are various ways to view them and place leadership styles into meaningful categories.

A lot will depend on a person’s context or point of view on the most important

elements of leadership assessment. Clearly, most leadership scholars tie their work

back to Lewin et al.’s (1939) pioneering work with its three overarching leadership

styles. While many leadership styles have emerged and will continue to emerge,

most if not all have their roots in one of Lewin et al.’s (1939) three categories.

References

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made/#8ef6372ba27b.

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practice: a “case” in point," Management Decision, 41 (10), pp. 1076 – 1088.

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common-leadership-styles.

5. Brown, L. M. & Posner, B.Z. (2001). “Exploring the relationship between

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22 (6), pp. 274 – 280.

6. Buchanan, L. (2013). “Between Venus and Mars: 7 traits of true leaders,”

[Online] available at http://www.inc.com/magazine/201306/leigh-

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http://myweb.astate.edu/sbounds/AP/2%20Leadership%20Styles.pdf.

8. Galbreath, J. & Rogers, T. (1999)."Customer relationship leadership: a

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in a time of leadership crisis,” Review of International Comparative

Management, 17 (3), pp. 212 – 224.

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Realizing the Power of Emotional Intelligence.” Boston: Harvard Business

Press.

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perspective taking as an antecedent of transformational leadership behavior,"

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College Students What Want to Make A Difference,” San Francisco: Jossey-

Bass.

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Francisco: Jossey-Bass.

19. Lewin, K., Lippit, R., & White, R. K. (1939). “Patterns of aggressive behavior

in experimentally created social climates,” Journal of Social Psychology, 10,

pp. 271-301.

20. Martin, M. (2015). “What kind of leader are you? Traits, skills and styles,”

[Online] available at http://www.businessnewsdaily.com/2704-

leadership.html.

21. Maslennikova, L. (2007). “Leader-centered versus follower-centered

leadership styles,” Leader Advance Online, (XI), pp. 1 – 8.

22. McDermott, A., Kidney, R. & Flood, P. (2011). “Understanding leader

development: Learning from leaders,” Leadership & Organization

Development Journal, 32 (4), pp. 358 – 378.

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Hill.

24. Northouse, P. (2007). “Leadership: Theory and Practice (4th Ed.),” Thousand

Oaks: Sage Publications, Inc.

25. Pawar, D. V. (2014). “Leadership styles,” International Journal of Research

in All Things Multi Languages, 2 (7), pp. 12 – 14.

26. Posner, B. Z. (2015). "An investigation into the leadership practices of

volunteer leaders," Leadership & Organization Development Journal, 36 (7),

pp. 885 – 898.

27. Shazia, T. S., Anis-ul-Haq, A.M. & Niazi, GSK. (2014). "Leadership styles:

relationship with conflict management styles, "International Journal of

Conflict Management, 25 (3), pp. 214 – 225.

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http://www.leadership501.com/leadership-trait-theory/22/.

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culture perspective, "Leadership & Organization Development Journal, 21 (2),

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(fall), pp. 7 – 11.

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1,501,488 views | Apr 9, 2013, 10:06am

What Is Leadership?

Careers

Kevin Kruse Contributor

TWEET THIS

 Leadership is a process of social influence, which maximizes the efforts of others,

towards the achievement of a goal.

W h a t i s

L E A D E R S H I P ?

What is leadership, anyway?

Such a simple question, and yet it continues to vex popular consultants and lay people

alike. I’ve now written several books on leadership for employee engagement, and yet it

occurred to me that I never actually paused to define leadership. Let’s start with what

leadership is not…

Leadership has nothing to do with seniority or one’s position in the

hierarchy of a company. Too many talk about a company’s leadership referring to

the senior most executives in the organization. They are just that, senior executives.

Leadership doesn’t automatically happen when you reach a certain pay grade. Hopefull

you find it there, but there are no guarantees.

Today In: Leadership

Leadership has nothing to do with titles. Similar to the point above, just because

you have a C-level title, doesn’t automatically make you a “leader.” In all of my talks I

stress the fact that you don’t need a title to lead. In fact, you can be a leader in your plac

of worship, your neighborhood, in your family, all without having a title.

Leadership has nothing to do with personal attributes. Say the word “leader”

and most people think of a domineering, take-charge charismatic individual. We often

think of icons from history like General Patton or President Lincoln. But leadership isn

an adjective. We don’t need extroverted charismatic traits to practice leadership. And

those with charisma don’t automatically lead.

Leadership isn’t management. This is the big one. Leadership and management

are not synonymous. You have 15 people in your downline and P&L responsibility?

Good for you, hopefully you are a good manager. Good management is needed.

Managers need to plan, measure, monitor, coordinate, solve, hire, fire, and so many

other things. Typically, managers manage things. Leaders lead people.

So, again, what is Leadership?

Let’s see how some of the most respected business thinkers of our time define

leadership, and let’s consider what’s wrong with their definitions.

Peter Drucker: "The only definition of a leader is someone who has

followers."

Really? This instance of tautology is so simplistic as to be dangerous. A new Army

Captain is put in the command of 200 soldiers. He never leaves his room, or utters a

word to the men and women in his unit. Perhaps routine orders are given through a

subordinate. By default his troops have to “follow” orders. Is the Captain really a leader

Commander yes, leader no. Drucker is of course a brilliant thinker of modern business

but his definition of leader is too simple.

Warren Bennis: "Leadership is the capacity to translate vision into reality.

Every spring you have a vision for a garden, and with lots of work carrots and tomatoes

become a reality. Are you a leader? No, you’re a gardener. Bennis’ definition seems to

have forgotten “others.”

Bill Gates: "As we look ahead into the next century, leaders will be those

who empower others."

This definition includes “others” and empowerment is a good thing. But to what end?

I’ve seen many empowered “others” in my life, from rioting hooligans to Google worker

who were so misaligned with the rest of the company they found themselves

unemployed. Gates’ definition lacks the parts about goal or vision.

John Maxwell: "Leadership is influence - nothing more, nothing less."

I like minimalism but this reduction is too much. A robber with a gun has “influence”

over his victim. A manager has the power to fire team members which provides a lot of

influence. But does this influence make a robber or a manager a leader? Maxwell’s

definition omits the source of influence.

So what is leadership?

DEFINITION: Leadership is a process of social influence, which maximizes

the efforts of others, towards the achievement of a goal.

Notice key elements of this definition:

Leadership stems from social influence, not authority or power

Leadership requires others, and that implies they don’t need to be “direct report

No mention of personality traits, attributes, or even a title; there are many styles

many paths, to effective leadership

It includes a goal, not influence with no intended outcome

Lastly, what makes this definition so different from many of the academic definitions

out there is the inclusion of “maximizes the efforts”. Most of my work is in the area of

employee engagement, and engaged employees give discretionary effort.

I guess technically a leader could use social influence to just organize the efforts of

others, but I think leadership is about maximizing the effort. It’s not, “Hey everyone,

let’s line up and get to the top of that hill someday.” But rather, “Hey, see that hill? Let’

see how fast we can get to the top…and I’ll buy the first round for anyone who can beat

me up there.” So what do you think of my definition of leadership? Social influence,

others, maximize effort, towards a goal. Do those key elements work for you?



---

Kevin Kruse is the creator of the Leading for Employee Engagement eLearning

program for managers. and author of the bestselling book, Employee Engagement

2.0.

Watch on Forbes:

Kevin Kruse

EXCELLENT

PUBLISHERS

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Introduction

The power to choose and the power to change .

Leadership is defined as a process by which a person influences others to accomplish an objective and directs an organization in a way, that it makes it more coherent and cohesive .The process of influence is carried out by the attributes the leader possesses such as his beliefs, values, ethics, character, knowledge, and skills. The leaders should be highly motivated to inspire the employees and teams that they lead. Leaders must be able to dream big and lay down the path with such clarity that people should follow them; the vision should make a compelling case for action by seeing endless

possibilities without boundaries so that people can be drawn in for the cause It is important to understand what are the forces that influence the styles the leaders choose for themselves and the forces that influence their styles.

Leading is one important function of management only next to planning and organizing. It is the liveliest element in the management process. It initiates actions to translate the decisions into concrete actions. Managers have to lead their subordinates through guiding and motivating. Leading involves directing, influencing and motivating employees to perform essential tasks. Every manager has to act as a leader

A B S T R A C T

Leadership is defined as a process by which a person influences others to accomplish an objective and directs an organization in a way, that it makes it more coherent and cohesive. The process of influence is carried out by the attributes the leader possesses such as his beliefs, values, ethics, character, knowledge, and skills. The leaders should be highly motivated to inspire the employees and teams that they lead. Leaders must be able to dream big and lay down the path with such clarity that people should follow them; the vision should make a compelling case for action by seeing endless possibilities without boundaries so that people can be drawn in for the cause It is important to understand what are the forces that influence the styles the leaders choose for themselves and the forces that influence their styles.

KEYWORDS

Leadership, Followership, knowledge, and skills

Leadership Not A Title Nor A Position

Anitha Aldrin* and R.Gayatri

Department of Management Studies, St. Peter s University, Chennai - 600054 *Corresponding author

ISSN: 2347-3215 Volume 2 Number 8 (August-2014) pp. 356-366 www.ijcrar.com

Int. J. Curr.Res.Aca.Rev.2014; 2(8):356-366

357

in his area of operation which means he has to guide, instruct, lead and motivate his subordinates so as to use their skills, efficiency, capacity etc. for the benefit of his Organisation. He has to influence the behavior of his subordinates and get the work done through their collective efforts. Leadership qualities are required in order to conduct various managerial functions effectively. Each and every group of people engaged in a particular activity needs a leader in order to guide, co-ordinate and control their efforts. In this sense, leadership is required for the conduct of economic, social, political or cultural activities.

George Washington, Abraham Lincoln, Winston Churchill, Dr. Babasaheb Ambedkar, Mahatma Gandhi, Nelson Mandella, John F. Kennedy are world known political leaders while Henry Ford, J. R. D. Tata and S. L. Kirloskar are known leaders in the business world. Here, we are concerned only with the managerial leadership. Managerial leadership is that part of a manager's activities by which he influences the behavior of his subordinates towards a desired objectives or results.

Leadership is followership: A good leader leads but does not push. Effective leadership can guide a group towards certain ideals without exerting much force. Managers who possess the quality of guiding and directing the subordinates under inspired impulses can be called business leaders. Leadership is concerned with getting results through people and implies the Organisation of staff into productive teams, groups and departments. Leadership entrails the creation of human structures, their motivation and direction; the resolution of conflicts at the workplace, creating vision for the entire business and providing resources in support of this.

Manager can perform various managerial functions more effectively by providing

proper leadership to his subordinates. This makes leadership an inevitable aspect of management process itself. Leadership is essential for the success and stability of a business enterprise. Managers possessing leadership qualities are called business leaders. This leadership tips webpage is a general guide to modern ethical progressive leadership. See also the leadership theories article for explanations and summaries of the main leadership theories.

Explaining and understanding the nature of good leadership is probably easier than practising it. Good leadership requires deep human qualities, beyond conventional notions of authority. In the modern age good leaders are an enabling force, helping people and organizations to perform and develop, which implies that a sophisticated alignment be achieved - of people's needs, and the aims of the organization.

The traditional concept of a leader being the directing chief at the top of a hierachy is nowadays a very incomplete appreciation of what true leadership must be. Effective leadership does not necessarily require great technical or intellectual capacity. These attributes might help, but they are not pivotal. Good leadership in the modern age more importantly requires attitudes and behaviours which characterise and relate to humanity.

The concept of serving is fundamental to the leadership role. Good leadership involves serving the organization or group and the people within it. Ineffective leaders tend to invert this principle and consider merely that the leader must be served by the people. This faulty idea fosters the notion that leadership as an opportunity to take: to acquire personal status, advantage, gain, etc., at the expense of others, which is grossly wrong. Leadership is instead an

Int. J. Curr.Res.Aca.Rev.2014; 2(8):356-366

•

•

•

•

358

opportunity to give; to serve the organization, and crucially the people too. The modern notions of 'servant leader' and 'servant leadership' are attributed to Robert K Greenleaf (in his 1970 essay The Servant as Leader) however the philosophy and concept of leadership being a serving function rather than one that is served, is very old indeed and found in ancient civilisations and religious writings.

Leadership is centrally concerned with people. Of course leadership involves decisions and actions relating to all sorts of other things, but leadership is special compared to any other role because of its unique responsibilty for people - i.e., the followers of the leader - in whatever context leadership is seen to operate.

Many capabilities in life are a matter of acquiring skills and knowledge and then applying them in a reliable way. Leadership is quite different. Good leadership demands emotional strengths and behavioural characteristics which can draw deeply on a leader's mental and spiritual reserves.

The leadership role is an inevitable reflection of people's needs and challenges in modern life. Leadership is therefore a profound concept, with increasingly complex implications, driven by an increasingly complex and fast-changing world. Leadership and management are commonly seen as the same thing, which they are not. Leadership is also misunderstood to mean directing and instructing people and making important decisions on behalf of an organization. Effective leadership is much more than these.

Good leaders are followed chiefly because people trust and respect them, rather than the skills they possess. Leadership is about behaviour first, skills second.

This is a simple way to see how leadership is different to management:

Management is mostly about processes.

Leadership is mostly about behaviour.

We could extend this to say:

Management relies heavily on tangible measurable capabilities such as effective planning; the use of organizational systems; and the use of appropriate communications methods.

Leadership involves many management skills, but generally as a secondary or background function of true leadership. Leadership instead relies most strongly on less tangible and less measurable things like trust, inspiration, attitude, decision-making, and personal character. These are not processes or skills or even necessarily the result of experience. They are facets of humanity, and are enabled mainly by the leader's character and especially his/her emotional reserves.

Another way to see leadership compared with management, is that leadership does not crucially depend on the type of management methods and processes a leaders uses; leadership instead primarily depends on the ways in which the leader uses management methods and processes. Good leadership depends on attitudinal qualities, not management processes. Humanity is a way to describe these qualities, because this reflects the leader's vital relationship with people. While leadership is learned, the skills and knowledge processed by the leader can be influenced by his or hers attributes or traits, such as beliefs, values, ethics, and character. Knowledge and skills contribute directly to the process of leadership, while the other

" "

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attributes give the leader certain characteristics that make him or her unique. Skills, knowledge, and attributes make the Leader, which is one of the:

Factors of Leadership

There are four primary factors of leadership

Leader

You must have an honest understanding of who you are, what you know, and what you can do. Also, note that it is the followers, not the leader or someone else who determines if the leader is successful. If they do not trust or lack confidence in their leader, then they will be uninspired. To be successful you have to convince your followers, not yourself or your superiors, that you are worthy of being followed.

Followers

Different people require different styles of leadership. For example, a new hire requires more supervision than an experienced employee does. A person who lacks motivation requires a different approach than one with a high degree of motivation. You must know your people! The fundamental starting point is having a good understanding of human nature, such as needs, emotions, and motivation. You must come to know your employees' be, know, and do attributes.

Communication

You lead through two-way communication. Much of it is nonverbal. For instance, when you set the example, that communicates to your people that you would not ask them to perform anything that you would not be willing to do. What and how you communicate either builds or harms the

relationship between you and your employees.

Situation

All situations are different. What you do in one situation will not always work in another. You must use your judgment to decide the best course of action and the leadership style needed for each situation. For example, you may need to confront an employee for inappropriate behavior, but if the confrontation is too late or too early, too harsh or too weak, then the results may prove ineffective.

Also note that the situation normally has a greater effect on a leader's action than his or her traits. This is because while traits may have an impressive stability over a period of time, they have little consistency across situations (Mischel, 1968). This is why a number of leadership scholars think the Process Theory of Leadership is a more accurate than the Trait Theory of Leadership.

Various forces will affect these four factors. Examples of forces are: Your relationship with your seniors The skill of your followers The informal leaders within your organization How your organization is organized

Bass' Theory of Leadership

Bass' theory of leadership states that there are three basic ways to explain how people become leaders (Stogdill, 1989; Bass, 1990). The first two explain the leadership development for a small number of people, while the third one is the dominant theory today.

These theories are: Some personality traits may lead people naturally into leadership

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roles. This is the Trait Theory. A crisis or important event may cause a person to rise to the occasion, which brings out extraordinary leadership qualities in an ordinary person. This is the Great Events Theory. People can choose to become leaders. People can learn leadership skills. This is the Transformational or Process Leadership Theory. It is the most widely accepted theory today and the premise on which this leadership guide is based.

Management verses Leadership

While management and leadership have a great deal in common, such as working with people and accomplishing the goals of the organization, they do differ in their primary functions (Kotter, 1990):

Management's main function is to produce order and consistency through processes, such as planning, budgeting, organizing, staffing, and problem solving.

While leadership's main function is to produce movement and constructive or adaptive change through processes, such as establishing direction through visioning, aligning people, motivating, and inspiring.

Boss or Leader?

Although your position as a manager, supervisor, lead, etc. gives you the authority to accomplish certain tasks and objectives in the organization (called Assigned Leadership), this power does not make you a leader, it simply makes you a boss. Leadership differs in that it makes the followers want to achieve high goals (called Emergent Leadership), rather than simply ordering people around (Rowe, 2007). Thus you get Assigned Leadership by your position and you display Emergent Leadership by influencing people to do great things.

Total Leadership

What makes a person want to follow a leader? People want to be guided by leaders they respect and who have a clear sense of direction. To gain respect, they must be ethical. A sense of direction is achieved by conveying a strong vision of the future. When people are deciding if they respect you as a leader, they do not think about your attributes, rather, they observe what you do so that they can know who you really are. They use this observation to tell if you are an honorable and trusted leader or a self- serving person who misuses authority to look good and get promoted.

On the other hand, self-serving leaders are not as effective because their employees only obey them, not follow them. They succeed in many areas because they present a good image to their seniors at the expense of their workers. Good leadership is honorable character and selfless service to your organization. In your employees' eyes, your leadership is everything you do that effects the organization's objectives and their well-being.

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Int. J. Curr.Res.Aca.Rev.2014; 2(8):356-366

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The Two Most Important Keys to Effective Leadership

Trust and confidence in top leadership was the single most reliable predictor of employee satisfaction in an organization. Effective communication by leadership in three critical areas was the key to winning organizational trust and confidence:

Helping employees understand the company's overall business strategy.

Helping employees understand how they contribute to achieving key business objectives.

Sharing information with employees on both how the company is doing and how an employee's own division is doing. So in a nutshell

you must be trustworthy and you have to be able to communicate a vision of where the organization needs to go.

Principles of Leadership

Know yourself and seek self-improvement - In order to know yourself, you have to understand your be, know, and do, attributes. Seeking self-improvement means continually strengthening your attributes. This can be accomplished through self- study, formal classes, reflection, and interacting with others.

Be technically proficient - As a leader, you must know your job and have a solid familiarity with your employees' tasks. Seek responsibility and take responsibility for your actions - Search for ways to guide your organization to new heights. And when things go wrong, as they often tend to do sooner or later

do not blame others. Analyze the situation, take corrective action, and move on to the next challenge. Make sound and timely decisions - Use good problem solving, decision making, and planning tools.

Set the example - Be a good role model for your employees. They must not only hear what they are expected to do, but also see. We must become the change we want to see - Mahatma Gandhi

Know your people and look out for their well-being - Know human nature and the importance of sincerely caring for your workers.

Keep your workers informed - Know how to communicate with not only them, but also seniors and other key people.

Develop a sense of responsibility in your workers - Help to develop good character traits that will help them carry out their professional responsibilities.

Ensure that tasks are understood, supervised, and accomplished - Communication is the key to this responsibility.

Train as a team - Although many so called leaders call their organization, department, section, etc. a team; they are not really teams... they are just a group of people doing their jobs. Use the full capabilities of your organization - By developing a team spirit, you will be able to employ your organization, department, section, etc. to its fullest capabilities. Attributes of Leadership: BE, KNOW, and DO Respected leaders concentrate on Be, Know, and Do

what they are [be] (such as beliefs and character)

what they know (such as job, tasks, and human nature)

what they do (such as implementing, motivating, and providing direction).

Int. J. Curr.Res.Aca.Rev.2014; 2(8):356-366

362

BE a professional. Examples: Be loyal to the organization, perform selfless service, take personal responsibility.

BE a professional who possess good character traits. Examples: honesty, competence, candor, commitment, integrity, courage, straightforwardness, imagination. KNOW the four factors of leadership

follower, leader, communication, situation. KNOW yourself. Examples: strengths and weakness of your character, knowledge, and skills.

KNOW human nature. Examples: Human needs, emotions, and how people respond to stress.

KNOW your job. Examples: be proficient and be able to train others in their tasks. KNOW your organization. Examples: where to go for help, its climate and culture, who the unofficial leaders are.

DO provide direction. Examples: goal setting, problem solving, decision making, planning.

DO implement. Examples: communicating, coordinating, supervising, evaluating.

DO motivate. Examples: develop morale and esprit de corps in the organization, train, coach, counsel.

Environment

Every organization has a particular work environment, which dictates to a considerable degree how its leaders respond to problems and opportunities. This is brought about by its heritage of past leaders and its present leaders.

Goals, Values, and Concepts

Leaders exert influence on the environment via three types of actions:

The goals and performance standards they establish. The values they establish for the organization. The business and people concepts they establish. Successful organizations have leaders who set high standards and goals across the entire spectrum, such as strategies, market leadership, plans, meetings and presentations, productivity, quality, and reliability. Values reflect the concern the organization has for its employees, customers, investors, vendors, and surrounding community. These values define the manner in how business will be conducted.

Concepts define what products or services the organization will offer and the methods and processes for conducting business. These goals, values, and concepts make up the organization's personality or how the organization is observed by both outsiders and insiders. This personality defines the roles, relationships, rewards, and rites that take place.

Roles and Relationships

Roles are the positions that are defined by a set of expectations about behavior of any job incumbent. Each role has a set of tasks and responsibilities that may or may not be spelled out. Roles have a powerful effect on behavior for several reasons, to include money being paid for the performance of the role, there is prestige attached to a role, and a sense of accomplishment or challenge. Relationships are determined by a role's tasks. While some tasks are performed alone, most are carried out in relationship with others. The tasks will determine who the role-holder is required to interact with, how often, and towards what end. Normally the greater the interaction, the greater the

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liking. This in turn leads to more frequent interactions. In human behavior, its hard to like someone whom we have no contact with, and we tend to seek out those we like. People tend to do what they are rewarded for, and friendship is a powerful reward. Many tasks and behaviors that are associated with a role are brought about by these relationships. That is, new task and behaviors are expected of the present role- holder because a strong relationship was developed in the past, either by that role- holder or a prior role-holder.

Culture and Climate

There are two distinct forces that dictate how to act within an organization: culture and climate. Each organization has its own distinctive culture. It is a combination of the founders, past leadership, current leadership, crises, events, history, and size (Newstrom, Davis, 1993). This results in rites: the routines, rituals, and the way we do things. These rites impact individual behavior on what it takes to be in good standing (the norm) and directs the appropriate behavior for each circumstance.

The climate is the feel of the organization, the individual and shared perceptions and attitudes of the organization's members (Ivancevich, Konopaske, Matteson, 2007). While the culture is the deeply rooted nature of the organization that is a result of long- held formal and informal systems, rules, traditions, and customs; climate is a short- term phenomenon created by the current leadership. Climate represents the beliefs about the feel of the organization by its members. This individual perception of the feel of the organization comes from what

the people believe about the activities that occur in the organization. These activities influence both individual and team motivation and satisfaction, such as:

Organizational climate is directly related to the leadership and management style of the leader, based on the values, attributes, skills, and actions, as well as the priorities of the leader. Compare this to ethical climate

the feel of the organization about the activities that have ethical content or those aspects of the work environment that constitute ethical behavior. The ethical climate is the feel about whether we do things right; or the feel of whether we behave the way we ought to behave. The behavior (character) of the leader is the most important factor that influences the climate. On the other hand, culture is a long-term, complex phenomenon. Culture represents the shared expectations and self-image of the organization.

The mature values that create tradition or the way we do things here. Things are done

differently in every organization. The collective vision and common folklore that define the institution are a reflection of culture. Individual leaders cannot easily create or change culture because culture is a part of the organization. Culture influences the characteristics of the climate by its effect on the actions and thought processes of the leader. But, everything you do as a leader will affect the climate of the organization. For information on culture, see Long-Term Short-Term Orientation

Closer Look of Great Leadership

The road to great leadership that is common to successful leaders:

Challenge the process - First, find a process that you believe needs to be improved the most.

Inspire a shared vision - Next, share your vision in words that can be understood by your followers.

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Enable others to act

Give them the tools and methods to solve the problem.

Model the way - When the process gets tough, get your hands dirty. A boss tells others what to do; a leader shows that it can be done.

Encourage the heart - Share the glory with your followers' hearts, while keeping the pains within your own.

Leadership traits

Trait researchers often developed lists of characteristics that they believed were related to successful leadership. In creating such lists, some researchers mixed together very different attributes. For example, lists included some leadership traits that were aspects of behaviors and skills, in addition to other traits that were related to temperament and intellectual ability. These lists of traits typically included characteristics such as self-confidence, intelligence, ambition, perseverance, assertiveness, emotional stability, creativity, and motivation. The lists, however, were not exhaustive and typically omitted some important leadership attributes.

Today, many popular books on leadership continue the tradition of providing lists of traits that are thought to be central to effective leadership. The basic idea remains that if an individual possesses such traits, she or he will be a successful leader in any situation. In 1989, John W. Gardner published a study of a large number of leaders and concluded that there are some attributes that appear to make a leader successful in any situation. These traits included the following:

Physical vitality and stamina

Intelligence and action-oriented judgment Eagerness to accept responsibility Task competence Understanding of followers and their needs Skill in dealing with people Need for achievement Capacity to motivate people Courage and resolution Trustworthiness Decisiveness Self-confidence Assertiveness Adaptability/flexibility

One of the concerns about such lists is that the attributes typically associated with successful leaders are often perceived as male traits. Reportedly, when men and

women are asked about the other gender s characteristics and leadership qualities, significant patterns emerge, with both men and women tending to see successful leaders

Building Excellence

Leaders do not command excellence, they build excellence; one of the good qualities of a leader is to be a long-range strategic planner. "Long-range strategic planning requires a futuristic commitment, having accurate information, and practical implementation". The leadership scope included strategic planning, wisdom, relational skills, delegation, competence of judgment, art and skill of communication, boldness, vision casting, integrity,

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inspiration, patience, humble, disciplined and the gift of administration.

Excellence is being all you can be within the bounds of doing what is right for your organization. To reach excellence you must first be a leader of good character. You must do everything you are supposed to do. Organizations will not achieve excellence by figuring out where it wants to go, having leaders do whatever they have to in order to get the job done, and then hope their leaders act with good character. This type of thinking is backwards. Pursuing excellence should not be confused with accomplishing a job or task. When you do planning, you do it by backwards planning. But you do not achieve excellence by backwards planning. Excellence starts with leaders of good and strong character who engage in the entire process of leadership. And the first process is being a person of honorable character.

Conclusion

Character develops over a period of time. Many think that much of a person's character is formed early in life. However, we do not know exactly how much or how early character develops. But, it is safe to claim that character does not change quickly. A person's observable behavior is an indication of her character. This behavior can be strong or weak, good or bad. A person with strong character shows drive, energy, determination, self-discipline, willpower, and nerve. She sees what she wants and goes after it. She attracts followers. On the other hand, a person with weak character shows none of these traits. She does not know what she wants. Her traits are disorganized, she vacillates and is inconsistent. She will attract no followers.

A strong person can be good or bad. A gang leader is an example of a strong person with

a bad character, while an outstanding community leader is one with both strong and good characteristics. An organization needs leaders with both strong and good characteristics

people who will guide

them to the future and show that they can be trusted as the Leadership is doing the right things at right time .

References

Behavior in organizations. New York: McGraw-Hill.Vroom, V. H. (1976). Leadership. In M. Dunnette (Ed.),Handbook of industrial and organizational psychology

Bennis, W. (1989). On becoming a leader. Reading, MA: Addison-Wesley.

Bennis, W., & Nanus, B. (1985). Leaders: Strategies for taking charge. New York: Harper and Row.

Bennis, W., & Schein, E. H. (Eds.). (1966). Leadership and motivation: Essays of Douglas McGregor. Cambridge, MA: Massachusetts Institute of Technology Press.

Burns, J. M. (1978). Leadership. New York: Harper & Row.

DePree, M. (1987). Leadership is an art. East Lansing, MI: Michigan State University Press.

Drucker, P. F. (1954). The practice of management. New York: Harper and Brothers.

Fairholm, G. W. (1998). Perspectives on leadership: From scientific management to its spiritual heart.

Fairholm, G. W. (2000). Capturing the heart of leadership: Spirituality and community in the new American workplace. Westport, CT: Praeger.

Fairholm, M. R. (2004a). Conceiving leadership: Exploring five perspectives of leadership by investigating the conceptions and experiences of selected metropolitan Washington area

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municipal managers. Unpublished

Dissertation, The George Washington University, Washington, DC.

Fairholm, M. R. (2004b). Different perspectives on the practice of leadership.Public Administration Review, 64(5).

Fiedler, F. E., & Chemers, M. M. (1974). Leadership and effective management. Glenview, IL: Scott, Foresman and Company.

Follet, M. P. (1949). The essentials of leadership. In P. Graham (Ed.), Mary Parker Follet: Prophet of management (pp. 163-176). Boston: Harvard University Press.

Frick, D. M., & Spears, L. C. (Eds.). (1996). On becoming a servant leader: The private writings of Robert K. Greenleaf. San Francisco: Jossey Bass.

Greenleaf, R. K. (1977). Servant leadership. New York: Paulist Press.

Gulick, L. M., & Urwick, L. (1937). Papers on the science of administration. New York: Institute of Public Administration, Columbia University Press.

Gardner. J. W. (1989). On leadership. New York: Free Press.

Hofstede, G., & Hofstede G. J. (2005). Cultures and organizations: Software of the mind. New York: McGraw Hill.

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introduction to industrial and organizational psychology.

Homewood, IL: Dorsey Press. Peters, T., & Austin, N. (1985). A passion

for excellence: The leadership difference. New York: Random House.

Peters, T., & Waterman, R. H. (1982). In search of excellence. Cambridge, MA: Harper & Row.

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tags: Disruption, Influentials, Leadership, Social Networks

To Create Real Change, Leadership Is More Important Than Authority 2014 JUNE 1

by Greg Satell

Aspiring young executives dream of climbing the ladder in

order to gain more authority. Then they can make things

happen and create the change that they believe in. Senior

executives, on the other hand, are often frustrated by how

little power they actually have.

The problem is that while authority can compel action it

does little to inspire belief. Only leadership can do that.

It’s not enough to get people to do what you want, they

have to also want what you want or any change is bound

to be short lived.

That’s why change management efforts commonly fail. All too often, they are designed to

carry out initiatives that come from the top. When you get right down to it, that’s really the

just same thing as telling people to do what you want, albeit in slightly more artful way. To

make change really happen, it doesn’t need to be managed, but empowered.

Failures of Authority

In the 1850’s, Ignaz Semmelweis was the head physician at the obstetric ward of a small

hospital in Pest, Hungary. Having done extensive research into how sanitary conditions

could limit infections, he instituted a strict regime of handwashing and virtually eliminated

the childbed fever that was endemic at the time.

In 2005, John Antioco was the eminently successful CEO of Blockbuster, the 800-pound

gorilla of the video rental industry. Yet, despite the firm’s dominance, he saw a mortal threat

coming in the form of streaming video and nimble new competitors like Netflix. He initiated

an aggressive program to cancel late fees and invest in an online platform.

Things ended poorly for both men. Semmelweis, was castigated by the medical community

and died in an insane asylum, ironically of an infection he contracted while under medical

care. Antioco was fired by his company’s board and his successor reversed his reforms.

Blockbuster filed for bankruptcy in 2010.

While today the insights of Semmelweis and Antioco seem obvious, they did not at the time.

In the former case, it was believed that illness was caused by an imbalance of humours and in

the latter, the threat of online video seemed too distant to justify forsaking profits. Even

given their positions of authority, neither was able to overcome the majority view.

Majorities Don’t Just Rule, They Influence

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We tend to overestimate the power of influence. It always seems that if we had a little bit

more authority or were able to make our case more forcefully, we could drive our ideas

forward. Yet Semmelweis and Antioco had not only authority, but also the facts on their side

and were willing to risk their careers. They failed nonetheless.

In the 1950’s, the eminent psychologist Solomon Asch performed a series of famous

experiments that help explain why. He showed the chart below to a group of people and

asked which line on the right matched the line on the left.

It seems like a fairly simple task and it should be, but Asch, renowned for his ingenuity,

added a twist. All of the people in the room, except one, were instructed to give wrong

answer. By the time he got to the last person who was the true subject, most who

participated conformed to the majority view, even though it was obviously wrong.

While we like to think of ourselves as independent and free-thinking, the truth is that we are

greatly affected by the views of those around us. If you are in an office where people watch

silly cat videos, you’ll find yourself doing the same and laughing along. Yet often you’ll find

that they’re not nearly as funny when you watch them in different company.

The truth is that majorities don’t just rule, they also influence, even if the majority is

extremely localized and contextual.

How Change Really Happens

Conformity is never absolute. Even in Asch’s experiments, there were some who held out

much like Semmelweis and Antioco. We all have our points of conviction on which we are

unlikely to be swayed, other areas in which we need more convincing and still others that we

really don’t care enough about to form much of an opinion at all.

That, essentially is what the threshold model of collective behavior predicts. Ideas take hold

in small local majorities. Many stop there and never go any further, but some saturate those

local clusters and move on to more reluctant groups through weak ties. Eventually, a

cascading effect ensues.

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RELATED POSTS

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AWARD WINNING BOOKS

GREG SATELL

Harvard Business Review

MAPPING INNOVATION

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The best known example of the threshold model at work is the diffusion of innovations model

developed by Everett Rogers that is shown above. A small group of innovators gets hold of an

idea and indoctrinates a somewhat more reluctant group of early adopters to form local

majorities.

Before long, the more reticent denizens of those clusters soon find themselves outnumbered

and begin to conform, just as in Asch’s study. The new converts find themselves passing the

idea on to other social groups they belong to and the process continues until the idea has

grown far beyond its original niche.

When this happens, a cascade can form and even the laggards join in. Those who raised their

eyebrows and smirked at the very first cat video are finding themselves showing it to their

aunt at a wedding. Intuitively noting that it is already a crowd favorite, she laughs

approvingly.

Empowering The Lunatics

We can now see the failures of Semmelweis and Antioco for what they are. Rather than

seeking to lead a passionate band of willing innovators and build a movement, they sought

the authority to create wholesale change by forcing the undoctrinated against their will.

Instead of painstakingly building local majorities, they attempted to compel entire

populations.

Control is an illusion and always has been an illusion. It is a Hobbesian paradox that we

cannot enforce change unless change has already occurred. The lunatics always run the

asylum, the best we can do as leaders is empower them to run it right.

And that’s why change always requires leadership rather than authority. Respectable people

always prefer incumbency to disruption. Only misfits are threatened by the status quo. So if

you want to create real change, it is not power and influence that you need, but those who

seek to overthrow it.

– Greg

Note: An earlier version of this post appeared in Harvard Business Review

Related posts:

To Create Real Change, You Need To Do More Than Just Protest

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Frank Traylor PERMALINK June 1, 2014

Great post. Love ” the lunatics always run the asylum”

[Reply]

Greg Reply:

June 1st, 2014 at 2:05 pm

That’s great to hear! I’ve been accused:-)

– Greg

[Reply]

Forget About Influence And Change Management, It’s Time To Lead A

Revolution!

The Synchronized Organization

How To Create A Culture Of Change

How To Create A Movement Within Your Organizationfrom → All Posts, Management

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THE MOST IMPORTANT LEADESHIP THEORIES

Raul MALO Ş1 ABSTRACT This paper tries to highlight the most important leadership theories over the times and how different king of theories can influence the organization performance. Over the time there are several theories regarding leadership, and in this paper, after a elaborate study of the specialty literature, I tried to point out the most important leadership theories that I found very actual, and I believe that knowing them could influence in a positive way the organization future. I have been examined lots of theories from lots of authors and I extracted eight of them, namely: great man theories, trait theories, contingency theories, situational theories, behavioral theories, participative theories, management theories and relationship theories. KEY WORDS: theories, great man, trait, contingency, situational, behavioural, participative, management, relationship. JEL : M20 1. INRODUCTION Interest in leadership increased during the early part of the twentieth century. Early leadership theories focused on what qualities distinguished between leaders and followers, while subsequent theories looked at other variables such as situational factors and skill levels. There is a ever growing variety of theories to explain the concept and practice of leadership. I will focus of a overview of the more dominant or better known theories. Most theories view leadership as grounded in one or more of the following three perspectives: leadership as a process or relationship, leadership as a combination of traits or personality characteristics, or leadership as certain behaviors or, as they are more commonly referred to, leadership skills. In virtually all of the more dominant theories there exist the notions that, at least to some degree, leadership is a process that involves influence with a group of people toward the realization of goals. In my opinion, leadership is a dynamic and complex process, and that much of what is written these days tends to over-simplify this process. The paper goal here is to provide an overview that keeps things simple, without crossing into over-simplification, and for the most part refraining from any critiquing of the various theories. 2. THE EIGHT LEADERSHIP THEORIES It’s well known that we can find lots of leadership theories, the most important being eight of them, namely: great man theories, trait theories, contingency theories, situational theories, behavioral theories, participative theories, management theories and relationship theories. 1. "Great Man" Theories:

1 Lecturer PhD., Faculty of Economics, Eftimie Murgu University of Reşiţa, România, [email protected]

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Great man theories assume that the capacity for leadership is inherent – that great leaders are born, not made. These theories often portray great leaders as heroic, mythic and destined to rise to leadership when needed. The term "Great Man" was used because, at the time, leadership was thought of primarily as a male quality, especially in terms of military leadership. We all heard the phrase, "Great leaders are born, not made"? This quote sums up the basic tenant of the great man theory of leadership, which suggests that the capacity for leadership is inborn. According to this theory, you're either a natural born leader or you're not. The term "Great Man" was used because, at the time, leadership was thought of primarily as a male quality, especially in terms of military leadership. The great man theory of leadership became popular during the 19th-century. The mythology behind some of the world's most famous leaders such as Abraham Lincoln, Julius Caesar, Mahatma Gandhi, and Alexander the Great helped contribute to the notion that great leaders are born and not made. In many examples, it seems as if the right man for the job seems to emerge almost magically to take control of a situation and lead a group of people into safety or success. Historian Thomas Carlyle also had a major influence on this theory of leadership, at one point stating that, "The history of the world is but the biography of great men." According to Carlyle, effective leaders are those gifted with divine inspiration and the right characteristics (Carlyle T. (1888)). Some of the earliest research on leadership looked at people who were already successful leaders. These individuals often included aristocratic rulers who achieved their position through birthright. Because people of a lesser social status had fewer opportunities to practice and achieve leadership roles, it contributed to the idea that leadership is an inherent ability (Hirsch E.D. (2002)). Even today, people often describe prominent leaders as having the right qualities or personality for the position, implying that inherent characteristics are what make these people effective leaders. Sociologist Herbert Spencer suggested that the leaders were products of the society in which they lived (Spencer H. (1986)). In The Study of Sociology, Spencer wrote, "you must admit that the genesis of a great man depends on the long series of complex influences which has produced the race in which he appears, and the social state into which that race has slowly grown. Before he can remake his society, his society must make him." 2. Trait Theories: Similar in some ways to "Great Man" theories, trait theories assume that people inherit certain qualities and traits that make them better suited to leadership. Trait theories often identify particular personality or behavioral characteristics shared by leaders. If particular traits are key features of leadership, then how do we explain people who possess those qualities but are not leaders? This question is one of the difficulties in using trait theories to explain leadership. The trait approach to personality is one of the major theoretical areas in the study of personality. The trait theory suggests that individual personalities are composed broad dispositions. Consider how you would describe the personality of a close friend. Chances are that you would list a number of traits, such as outgoing, kind and even-

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tempered. A trait can be thought of as a relatively stable characteristic that causes individuals to behave in certain ways. Unlike many other theories of personality, such as psychoanalytic or humanistic theories, the trait approach to personality is focused on differences between individuals. The combination and interaction of various traits forms a personality that is unique to each individual. Trait theory is focused on identifying and measuring these individual personality characteristics. In 1936, psychologist Gordon Allport found that one English-language dictionary alone contained more than 4,000 words describing different personality traits. He categorized these traits into three levels (Allport G.W. el all (1936)):

• Cardinal Traits: Traits that dominate an individual’s whole life, often to the point that the person becomes known specifically for these traits. People with such personalities often become so known for these traits that their names are often synonymous with these qualities. Consider the origin and meaning of the following descriptive terms: Freudian, Machiavellian, narcissism, Don Juan, Christ-like, etc. Allport suggested that cardinal traits are rare and tend to develop later in life.

• Central Traits: These are the general characteristics that form the basic foundations of personality. These central traits, while not as dominating as cardinal traits, are the major characteristics you might use to describe another person. Terms such as intelligent, honest, shy and anxious are considered central traits.

• Secondary Traits: These are the traits that are sometimes related to attitudes or preferences and often appear only in certain situations or under specific circumstances. Some examples would be getting anxious when speaking to a group or impatient while waiting in line.

Trait theorist Raymond Cattell reduced the number of main personality traits from Allport’s initial list of over 4,000 down to 171, mostly by eliminating uncommon traits and combining common characteristics. Next, Cattell rated a large sample of individuals for these 171 different traits. Then, using a statistical technique known as factor analysis, he identified closely related terms and eventually reduced his list to just 16 key personality traits. According to Cattell, these 16 traits are the source of all human personality. He also developed one of the most widely used personality assessments known as the Sixteen Personality Factor Questionnaire (Catell R.B. (1965)). British psychologist Hans Eysenck developed a model of personality based upon just three universal trails:

• Introversion/Extraversion: Introversion involves directing attention on inner experiences, while extraversion relates to focusing attention outward on other people and the environment. So, a person high in introversion might be quiet and reserved, while an individual high in extraversion might be sociable and outgoing.

• Neuroticism/Emotional: This dimension of Eysenck’s trait theory is related to moodiness versus even- temperedness. Neuroticism refers to an individual’s tendency to become upset or emotional, while stability refers to the tendency to remain emotionally constant.

• Psychoticism: Later, after studying individuals suffering from mental illness, Eysenck added a personality dimension he called psychoticism to his trait theory. Individuals who

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are high on this trait tend to have difficulty dealing with reality and may be antisocial, hostile, non-empathetic and manipulative (Eyesenck H.J. (1992)).

3. Contingency Theories: Contingency theories of leadership focus on particular variables related to the environment that might determine which particular style of leadership is best suited for the situation. According to this theory, no leadership style is best in all situations. Success depends upon a number of variables, including the leadership style, qualities of the followers and aspects of the situation. 4. Situational Theories: Situational theories propose that leaders choose the best course of action based upon situational variables. Different styles of leadership may be more appropriate for certain types of decision-making. For example, in a situation where the leader is the most knowledgeable and experienced member of a group, an authoritarian style might be most appropriate. In other instances where group members are skilled experts, a democratic style would be more effective. Autocratic leadership, also known as authoritarian leadership, is a leadership style characterized by individual control over all decisions and little input from group members. Autocratic leaders typically make choices based on their own ideas and judgments and rarely accept advice from followers. Autocratic leadership involves absolute, authoritarian control over a group. Characteristics of Autocratic Leadership Some of the primary characteristics of autocratic leadership include:

• Little or no input from group members • Leaders make the decisions • Group leaders dictate all the work methods and processes • Group members are rarely trusted with decisions or important tasks

Benefits of Autocratic Leadership Autocratic leadership can be beneficial in some instances, such as when decisions need to be made quickly without consulting with a large group of people. Some projects require strong leadership in order to get things accomplished quickly and efficiently. Have you ever worked with a group of students or co-workers on a project that got derailed by poor organization, a lack of leadership, and an inability to set deadlines? If so, chances are that your grade or job performance suffered as a result. In such situations, a strong leader who utilizes an autocratic style can take charge of the group, assign tasks to different members, and establish solid deadlines for projects to be finished. In situations that are particularly stressful, such as during military conflicts, group members may actually prefer an autocratic style. It allows members of the group to focus on performing specific tasks without worrying about making complex decisions. This also allows group members to become highly skilled at performing certain duties, which can be beneficial to the group. Downsides of Autocratic Leadership Autocratic leadership can be beneficial at times, there are also many instances where this leadership style can be problematic. People who abuse an autocratic leadership style are often viewed as bossy, controlling, and dictatorial, which can lead to resentment among group members.

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Because autocratic leaders make decisions without consulting the group, people in the group may dislike that they are unable to contribute ideas. Researchers have also found that autocratic leadership often results in a lack of creative solutions to problems, which can ultimately hurt the performance of the group. While autocratic leadership does have some potential pitfalls, leaders can learn to use elements of this style wisely. For example, an autocratic style can be used effectively in situations where the leader is the most knowledgeable member of the group or has access to information that other members of the group do not. Democratic leadership, also known as participative leadership, is a type of leadership style in which members of the group take a more participative role in the decision- making process. Researchers have found that this learning style is usually one of the most effective and lead to higher productivity, better contributions from group members, and increased group morale. Characteristics of Democratic Leadership Some of the primary characteristics of democratic leadership include:

• Group members are encouraged to share ideas and opinions, even though the leader retains the final say over decisions.

• Members of the group feel more engaged in the process. • Creativity is encouraged and rewarded.

Benefits of Democratic Leadership Because group members are encouraged to share their thoughts, democratic leadership can leader to better ideas and more creative solutions to problems. Group members also feel more involved and committed to projects, making them more likely to care about the end results. Research on leadership styles has also shown that democratic leadership leads to higher productivity among group members. Downsides of Democratic Leadership While democratic leadership has been described as the most effective leadership style, it does have some potential downsides. In situations where roles are unclear or time is of the essence, democratic leadership can lead to communication failures and uncompleted projects. In some cases, group members may not have the necessary knowledge or expertise to make quality contributions to the decision-making process. Democratic leadership works best in situations where group members are skilled and eager to share their knowledge. It is also important to have plenty of time to allow people to contribute, develop a plan and then vote on the best course of action. 5. Behavioral Theories: Behavioral theories of leadership are based upon the belief that great leaders are made, not born. Rooted in behaviorism, this leadership theory focuses on the actions of leaders not on mental qualities or internal states. According to this theory, people can learn to become leaders through teaching and observation. 6. Participative Theories: Participative leadership theories suggest that the ideal leadership style is one that takes the input of others into account. These leaders encourage participation and contributions from group members and help group members feel more relevant and committed to the decision-making process. In participative theories, however, the leader retains the right to allow the input of others.

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7. Management Theories: Management theories, also known as transactional theories, focus on the role of supervision, organization and group performance. These theories base leadership on a system of rewards and punishments. Managerial theories are often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished. Learn more about theories of transactional leadership. Transactional leadership, also known as managerial leadership, focuses on the role of supervision, organization and group performance. This theory of leadership was first described in by sociologist Max Weber, and further explored by Bernard M. Bass in the early 1980s (Bass M., (1985)). Basic Assumptions of Transactional Leadership

• People perform their best when the chain of command is definite and clear. • Workers are motivated by rewards and punishments. • Obeying the instructions and commands of the leader is the primary goal of the

followers. • Subordinates need to be carefully monitored to ensure that expectations are met. This theory bases leadership on a system of rewards and punishments. Transactional leadership is often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished. In transactional leadership, rewards and punishments are contingent upon the performance of the followers. The leader views the relationship between managers and subordinates as an exchange - you give me something for something in return. When subordinates perform well, they receive some type of reward. When they perform poorly, they will be punished in some way (Burns J.M., (1978)). Rules, procedures and standards are essential in transactional leadership. Followers are not encouraged to be creative or to find new solutions to problems. Research has found that transactional leadership tends to be most effective in situations where problems are simple and clearly-defined. While transactional leadership can be effective in some situations, it is generally considered an insufficient and may prevent both leaders and followers from achieving their full potential. 8. Relationship Theories: Relationship theories, also known as transformational theories, focus upon the connections formed between leaders and followers. Transformational leaders motivate and inspire people by helping group members see the importance and higher good of the task. These leaders are focused on the performance of group members, but also want each person to fulfill his or her potential. Leaders with this style often have high ethical and moral standards. The concept of transformational leadership was initially introduced by leadership expert and presidential biographer James MacGregor Burns. According to Burns, transformational leadership can be seen when "leaders and followers make each other to advance to a higher level of moral and motivation." Through the strength of their vision and personality, transformational leaders are able to inspire followers to change expectations, perceptions and motivations to work towards common goals (Burns, J.M. (1978)). Later, researcher Bernard M. Bass expanded upon Burns original ideas to develop what is today referred to as Bass’ Transformational Leadership Theory. According to Bass,

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transformational leadership can be defined based on the impact that it has on followers. Transformational leaders, Bass suggested, garner trust, respect and admiration from their followers (Bass B.M. (1985)). Bass also suggested that there were four different components of transformational leadership.

• Intellectual Stimulation – Transformational leaders not only challenge the status quo; they also encourage creativity among followers. The leader encourages followers to explore new ways of doing things and new opportunities to learn.

• Individualized Consideration – Transformational leadership also involves offering support and encouragement to individual followers. In order to foster supportive relationships, transformational leaders keep lines of communication open so that followers feel free to share ideas and so that leaders can offer direct recognition of each follower unique contributions.

• Inspirational Motivation – Transformational leaders have a clear vision that they are able to articulate to followers. These leaders are also able to help followers experience the same passion and motivation to fulfill these goals.

• Idealized Influence – The transformational leader serves as a role model for followers. Because followers trust and respect the leader, they emulate this individual and internalize his or her ideals.

3. CONCLUSIONS In order to practice a efficient leadership is very important to know the theories that that is based on. How much the leaders know those theories can affect their capacity of leading the others into a performance of less performance activity. That fact of course affects the achieving of organizational goals. Somehow all this theories are connected and one period of time theory leads to another period of time theory. Therefore starting with the great man theories where it seems as if the right man for the job seems to emerge almost magically to take control of a situation and lead a group of people into safety or success, has developed the trait theories that often identify particular personality or behavioral characteristics shared by leaders. Contingency theories focus on particular variables related to the environment that might determine which particular style of leadership is best suited for the situation. Situational theories propose that leaders choose the best course of action based upon situational variables. This theory provides the main characteristics of autocratic and democratic leadership and lead to participative theories in witch leaders encourage participation and contributions from group members. In behavioral theory we find out that people can learn to become leaders through teaching and observation. Regarding management theories, here we have transactional leadership also known as managerial leadership focused on the role of supervision, organization and group performance. Finally the relationship theories, also known as transformational theories, focus upon the connections formed between leaders and followers. REFERENCES Allport, G.W. & Odbert, H.S. (1936). Trait-names: A psycho-lexical study. Psychological

Monographs, 47(211).

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Bass,B. M,(1985). Leadership and Performance. N. Y,: Free Press. Boeree, C.G. (2006). Gordon Allport. Personality Theories. Found online at

http://webspace.ship.edu/cgboer/allport.html Burns, J.M. (1978). Leadership. N.Y: Harper and Raw. Carlyle, T. (1888). On Heroes, Hero-Worship and the Heroic in History, Fredrick A. Stokes &

Brother, New York. Cattell, R.B. (1965). The scientific analysis of personality. Baltimore: Penguin Books. Eysenck, H.J. (1992). Four ways five factors are not basic. Personality and Individual

Differences, 13, 667-673. Hirsch, E.D. (2002). The New Dictionary of Cultural Literacy (Third Edition). Houghton

Mifflin Company, Boston. Riggio, R.E. (2009, March 24). Are you a transformational leader. Psychology Today. Found

online at http://blogs.psychologytoday.com/blog/cutting-edge-leadership/200903/are-you- transformational-leader

Spencer, H. (1896). The Study of Sociology, Appleton, New York. Straker, D. Great man theory. Changing Minds. Found online at

http://changingminds.org/disciplines/leadership/theories/great_man_theory.htm http://psychology.about.com/od/leadership/p/leadtheories.htm

Copyright of Annals of Eftimie Murgu University Resita, Fascicle II, Economic Studies is the property of Annals of Eftimie Murgu University Resita, Fascicle II, Economic Studies and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.

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The Hersey-Blanchard Situational Leadership® Theory

Choosing the Right Leadership Style for the Right People

What type of leadership do your people need?

© iStockphoto/oversnap

You've just finished training the newest member of your team. Now that he's

ready to start working, you give him the data he needs to enter into the

company's database, and you hurry off to a meeting.

When you return later that afternoon, you find that he hasn't done anything. He

didn't know what to do, and he didn't have the confidence to ask for help. As a

result, hours have been lost, and you have to rush to enter the data on time.

Although you may want to blame the worker, the truth is that you're as much to

blame as he is.

How can you avoid situations like this?

Management experts Paul Hersey and Ken Blanchard argue that these things

happen because leaders don't match their style of leadership to the maturity of

the people they're leading. When style and maturity aren't matched, failure is

the result.

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In this article, we'll review the Hersey-Blanchard Situational Leadership®

Theory, and we'll explain how it's used in different leadership situations.

Hersey-Blanchard Situational Leadership Theory

The Hersey-Blanchard Situational Leadership Theory was created by Dr Paul

Hersey, a professor and author of "The Situational Leader," and Ken Blanchard,

author of the best selling "One-Minute Manager," among others.

The theory states that instead of using just one style, successful leaders should

change their leadership styles based on the maturity of the people they're

leading and the details of the task. Using this theory, leaders should be able to

place more or less emphasis on the task, and more or less emphasis on the

relationships with the people they're leading, depending on what's needed to

get the job done successfully.

Leadership Styles

According to Hersey and Blanchard, there are four main leadership styles:

Telling (S1) – Leaders tell their people what to do and how to do it.

Selling (S2) – Leaders provide information and direction, but there's more

communication with followers. Leaders "sell" their message to get people on

board.

Participating (S3) – Leaders focus more on the relationship and less on

direction. The leader works with the team, and shares decision-making

responsibilities.

Delegating (S4) – Leaders pass most of the responsibility onto the follower

or group. The leaders still monitor progress, but they're less involved in

decisions.

As you can see, styles S1 and S2 are focused on getting the task done. Styles S3

and S4 are more concerned with developing team members' abilities to work

independently.

Maturity Levels

According to Hersey and Blanchard, knowing when to use each style is largely

dependent on the maturity of the person or group you're leading. They break

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maturity down into four different levels:

M1 – People at this level of maturity are at the bottom level of the scale.

They lack the knowledge, skills, or confidence to work on their own, and they

often need to be pushed to take the task on.

M2 – at this level, followers might be willing to work on the task, but they

still don't have the skills to complete it successfully.

M3 – Here, followers are ready and willing to help with the task. They have

more skills than the M2 group, but they're still not confident in their

abilities.

M4 – These followers are able to work on their own. They have high

confidence and strong skills, and they're committed to the task.

The Hersey-Blanchard model maps each leadership style to each maturity level,

as shown below.

Maturity Level Most Appropriate

Leadership Style

M1: Low maturity S1: Telling/directing

M2: Medium maturity, limited skills S2: Selling/coaching

M3: Medium maturity, higher skills but lacking

confidence

S3: Participating/supporting

M4: High maturity S4: Delegating

To use this model, reflect on the maturity of individuals within your team. The

table above shows which leadership style Hersey and Blanchard recommend for

people with that level of maturity.

Leadership Style Examples 1. You're about to leave for an extended holiday, and your tasks will be handled

by an experienced colleague. He's very familiar with your responsibilities,

and he's excited to do the job.

2. Instead of trusting his knowledge and skills to do the work, you spend hours

creating a detailed list of tasks for which he'll be responsible, and give full

instructions on how to do them.

3. The result? Your work gets done, but you've damaged the relationship with

your colleague by your lack of trust. He was an M4 in maturity, and yet you

used an S1 leadership style instead of an S4, which would have been more

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appropriate.

4. You've just been put in charge of leading a new team. It's your first time

working with these people. As far as you can tell, they have some of the

necessary skills to reach the department's goals, but not all of them. The

good news is that they're excited and willing to do the work.

5. You estimate they're at an M3 maturity level, so you use the matching S3

leadership style. You coach them through the project's goals, pushing and

teaching where necessary, but largely leaving them to make their own

decisions. As a result, their relationship with you is strengthened, and the

team is successful.

Situational Leadership® is a registered trademark of the Center for Leadership

Studies [1].

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rashidm wrote

Very simple and effective leadership style. Very interesting!

January 30, 2010

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3

In the previous chapter, we reviewed how theorists’ view of lead-ership has changed, from the belief that leaders are simply born to the idea that the best way to learn about leadership is to study the behaviors or practices of people who are viewed as leaders. The- orizing has evolved even further into an understanding of leader- ship as a complex process. Indeed, leadership is a transforming process that raises all participants to levels at which they can become effective leaders.

Leadership may best be understood as philosophy. At its core, understanding philosophy means understanding values. “Affect, motives, attitudes, beliefs, values, ethics, morals, will, commitment, preferences, norms, expectations, responsibilities—such are the con- cerns of leadership philosophy proper. Their study is paramount because the very nature of leadership is that of practical philosophy, philosophy-in-action” (Hodgkinson, 1983, p. 202). When we exam- ine historical leaders, we often are analyzing the values and ethics that characterized their leadership. It is critical that we each develop our own personal philosophy—one we hope will include the elements of the model presented in this chapter.

Chapter Overview

This chapter presents a relational model of leadership to consider in building your own personal philosophy. Each of the elements of

The Relational Leadership Model

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74 EXPLORING LEADERSHIP

the model is presented in detail to give you more information about each component.

Relational Leadership

Leadership has to do with relationships, the role of which cannot be overstated. Leadership is inherently a relational, communal process. “Leadership is always dependent on the context, but the context is established by the relationships we value” (Wheatley, 1992, p. 144). Although a person could exert leadership of ideas through persuasive writings or making speeches, most leadership happens in an interactive context between individuals and among group members. We emphasize once again: we view leadership as a relational and ethical process of people together attempting to accomplish positive change.

Chapter Two presented an overview of how leadership theories and models have changed over time. These changing frameworks are reflected in the descriptive terms that have been affixed to the word leadership. Examples of these leadership theories and concepts include situational, transforming, servant-leadership, authentic lead- ership, and principle-centered leadership. We have used the term relational leadership as a reminder that relationships are the focal point of the leadership process.

Relational leadership involves a focus on five primary compo- nents. This approach to leadership is purposeful and builds com- mitment toward positive purposes that are inclusive of people and diverse points of view, empowers those involved, is ethical, and rec- ognizes that all four of these elements are accomplished by being process-oriented.

The model provides a frame of reference or an approach to lead- ership in contemporary organizations. With these foundational philosophies and commitments, an individual can make a mean- ingful contribution in any organization. This model is not a leader- ship theory in itself, and it does not address the change outcomes

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for which leadership is intended. The Relational Leadership Model does not seek to describe the way leadership is currently practiced in all groups or organizations, but is an aspirational model that we propose in developing and supporting a healthy, ethical, effective group. It is a framework connecting five key elements that can serve as a responsive approach to leadership. Figure 3.1 offers a visual image of the elements of the model.

The components of relational leadership are complex concepts. Think about your own level of comfort or knowledge about each component as you read the related dimensions of each element. The model reflects how the organization’s or community’s purpose influ- ences the components of being inclusive, empowering, and ethical. For example, the purpose of the Habitat for Humanity Club on campus is to engage its members to assist in providing houses for those who cannot afford them on their own. The purpose includes others, empowers them to use their leadership and talents to make a difference, and is ethical in that it benefits others and improves the quality of life in a community. How that purpose is achieved (the process) is just as important as the outcome. How the goals are accomplished and how others are involved in the process matters

The Relational Leadership Model 75

In cl

usi ve Empowering

E t h i c a

l

Fig. 3.1

Purpose

Process

Figure 3.1. Relational Leadership Model.

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76 EXPLORING LEADERSHIP

in the leadership process. The purpose is vision-driven and not posi- tion-driven. Leaders and members promote the organization’s pur- pose through a shared vision and not for self-gain such as achieving a higher leadership position or fame.

Exhibit 3.1 identifies some important knowledge, attitudes, and skills that are embedded in each element. These reflect the knowl- edge, attitudes, and skills that would be helpful in understanding relational leadership. Brief applications of the core elements to the knowing-being-doing model conclude each section. For example, in order to practice inclusiveness, you must

• Know yourself and others; engage yourself in learning new information as you develop the competencies required in your role (knowledge)

• Be open to difference and value other perspectives (attitudes)

• Practice listening skills, coalition building, interper- sonal skills, and effective civil discourse (skills)

Knowing-Being-Doing

Individuals involved in the leadership process (leaders, members, co-creators, and so on) need to know themselves well before they can effectively work with others to influence change or achieve common purpose. It is not enough to simply drive an agenda or accomplish small or big wins. The leadership process calls for those engaged in it to be knowledgeable (knowing), to be aware of self and others (being), and to act (doing). The knowing-being-doing model represents a holistic approach to the leadership development of yourself and others. These three components are interrelated— the knowledge you possess can influence your ways of thinking, which can influence your actions. And it is also true that your beliefs and way of existing in this world (being) can influence your actions, which can influence your behaviors. This pattern of influ- ence is circular and not on a straight path.

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Other ways to view this holistic approach is by using the frame- work of knowledge, skills, and attitudes or head, heart, and prac- tice. Palmer (1998) uses the phrase “head, heart, and practice” to describe the paradoxes in teaching and what happens when we keep the head (knowing and intellect) separated from the heart (being) and even further separated from practice (doing). Palmer argues that we need a synthesis of all three components in the teaching process. The same applies in the leadership process.

The Army coined the phrase “know, be, do.” People will col- laborate with those who are credible (both leaders and members)— those who are knowing. Leaders need to demonstrate competence and maintain a certain amount of knowledge. Hesselbein and Shin- seki (2004) offer four levels of skills essential to leadership: inter- personal skills, conceptual skills (ability to think creatively), technical skills (expertise required for position), and tactical skills (negotiation, human relations, and other skills necessary to achieve objectives) (p. 12). Knowing is an ongoing process that allows lead- ers to continue to develop, learn, and grow.

In the Army, the “be” means knowing what values and attributes define you as a leader (Hesselbein & Shinseki, 2004). “Your char- acter helps you know what is right; more than that, it links that knowledge to action. Character gives you the courage to do what is right regardless of the circumstances or consequences” (p. 11). The Army’s acronym of leadership is LDRSHIP: Loyalty, Duty, Respect, Selfless service, Honor, Integrity, Personal courage (p. 11). That is the essence of the “be” of leadership. The Lao Tzu quotations throughout this book are another example of being. This Eastern reflection of having a sense of self and being centered in self-aware- ness is important to relating well with others.

The “doing” of knowing and being means acting. Character and knowledge are not enough in facilitating change in the leadership process. Doing attempts to produce results, accomplishes the vision, creates change, and influences others to act. Sometimes leaders will fail to act because of indecision or due to a fixation on perfection. “Competent, confident leaders tolerate honest mistakes that are not

The Relational Leadership Model 77

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78 EXPLORING LEADERSHIP

Purposeful

Inclusive

Empowering

How change occurs

Core elements of change

Role of mission or vision

Shared values

Common purpose

Self and others

Citizenship

Frames and multiple realities

Power

How policies or procedures block or promote empowerment

Personal mastery

Control is not possible

Hopeful

Committed

“Can do” attitude

Likes improvement

Commitment to social responsibility

Open to difference

Values equity

Web-like thinking

Believes everyone can make a difference

Believes each has something to offer

Self-esteem

Concern for others’ growth

Values others’ contributions

Willing to share power

Identifying goals

Envisioning

Meaning-making

Creative thinking

Involving others in vision-building process

Talent

development

Listening skills

Building coalitions

Framing and reframing

Civil discourse

Gate-keeping skills

Sharing information

Individual and team learning

Encouraging or affirming others

Capacity building

Promoting self- leadership

Practicing renewal

Knowing Leadership (Knowledge and Being Doing Component Understanding) (Attitudes) (Skills)

Exhibit 3.1. Relational Leadership Model Compared to Knowing- Being-Doing.

the result of negligence. A leader who sets a standard of ‘zero defects, no mistakes’ is also saying, ‘Don’t take any chances’” (Hes- selbein & Shinseki, 2004, p. 15).

Learning is an outcome of the knowing-being-doing develop- mental model or feedback system. Be attuned to how new learning

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The Relational Leadership Model 79

Ethical

Process- Oriented

How values develop

How systems influence justice and care

Self and others’ values

Ethical decision- making models

Community

Group process

Relational aspect of leadership

Process is as important as outcomes

Commitment to socially responsible behavior

Confronting behavior

Values integrity

Trustworthy

Authentic

Establishes sense of personal character

Responsible

Expects high standards

Puts benefit to others over self- gain

Values process as well as outcomes

Quality effort

Develops systems perspective

Being congruent

Being trusting

Being reliable

Having courage

Using moral imagination

Collaboration

Reflection

Meaning making

Challenge

Civil confrontation

Learning

Giving and receiving feedback

Knowing Leadership (Knowledge and Being Doing Component Understanding) (Attitudes) (Skills)

is changing your attitudes and behaviors or is changing you in gen- eral. It is important to reflect upon how and what you are learning as you go through those cycles. “Leaders promote learning in at least three ways: through their own learning on a personal level, by help- ing others in their units [organizations] learn, and by shaping and contributing to an organizational culture that promotes learning” (Hesselbein & Shinseki, 2004, p. 133).

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80 EXPLORING LEADERSHIP

As you continue reading this and the following chapters, con- sider how this model is adding to your knowledge. How can you take this information and incorporate it into your beliefs surround- ing leadership? What actions can you take with this new knowl- edge? Consciously examining your thoughts, feelings, and actions allows you to continue to learn and grow both as a leader and as a human being.

Relational Leadership Is Purposeful

Being purposeful means having a commitment to a goal or activity. It is also the ability to collaborate and to find common ground with others to facilitate positive change. Creating positive change can mean working hard toward resolving differences among participants, finding a common direction, and building a shared vision to improve the organization or enhance others in some way. Even if a participant does not have a vision, that person knows enough to ask others, “Remind me what we are working toward. What do we all hope will happen?” Trusting the process, several in the group will chime in with their ideas, and someone will have the talent to express those words in terms of the vision and purpose that will bring nods of agreement from nearly every person present. It is important that all group members be able to articulate that purpose and use it as a driving force. That is an essential element in rela- tional leadership.

The conventional paradigm of leadership often asserts that the positional leader must have a clear vision. Research, however, has shown two primary types of vision activity: personalized vision and socialized vision (Howell, 1988). Personalized vision refers to a per- son, usually the person with legitimate authority, announcing a dream or plan and imposing it on others. Participants seem to have little choice and must adopt this vision, which results in varying degrees of personal ownership or commitment. Jack Welch, the for- mer CEO of General Electric (GE), is an excellent example of an

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authoritative leader with a personalized vision. Although Jack Welch was a strong leader with a public presence, he did not sin- gle-handedly raise the profile of GE. Even though Jack Welsh had the legitimate power to do so, it did not automatically ensure com- mitment from his employees. He started his tenure as CEO as a commanding leader and then, over time, developed a more human- istic leadership approach that inspired GE’s employees with a val- ues-based vision (O’Toole, 2003).

Socialized vision is building a vision from among group mem- bers, recognizing that people support what they help create. Shar- ing vision does not mean that each person must create and possess a vision, but that each person must be involved in the process of building a vision with others. “Effective leaders don’t just impose their vision on others, they recruit others to a shared vision. Espe- cially in our digital age, when power tends to coalesce around ideas, not position, leadership is a partnership, not a sinecure” (Bennis & Thomas, 2002, p. 137). Think about your personality preferences. Do you think creatively and see possibilities in everything, or are you shaking your head right now, thinking “No way!” Do you have ideas about your future and a vision of how things might be? Such a vision is a picture of “a realistic, credible, attractive future” for yourself or your organization (Nanus, 1992, p. 8).

After hearing a presentation on empowering leadership and the importance of shared vision, one of our colleagues approached the presenter. She said, “I just am not creative or cannot articulate a vision. I am practical and realistic. I feel capable but am more of a maintainer than a builder. I can keep things going more than I am able to think them up in the first place.” The first piece of advice that organization consultant Burt Nanus (1992) shares with those trying to avoid failures in organizational vision is, “Don’t do it alone” (p. 167).

Being purposeful with a group vision that includes a positive change effort helps you set priorities and make decisions congruent with that dream. “Vision animates, inspirits, and transforms purpose

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into action” (Bennis & Goldsmith, 1994, p. 101). This action com- ponent to vision is described well by the engraving in an eigh- teenth-century church in Sussex, England:

A vision without a task is but a dream, a task without a vision is drudgery, a vision and a task is the hope of the world.

(From Transcultural Leadership, p. 106, by G. F. Simons, C. Vázquez, & P. R. Harris. Copyright © 1993,

with permission from Elsevier.

“To be motivating, a vision must be a source of self-esteem and common purpose. . . . The core of the vision is the organization’s mission statement, which describes the general purpose of the orga- nization” (Yukl, 1989, p. 336). One approach that is used by exec- utives to develop shared visions is an exercise involving magazine articles. Organizational members are asked to identify their favorite magazine or a magazine closely related to the organization’s purpose and write a feature story that will describe the organization in the future (four or five years from the present time) using headlines (Yukl). This powerful activity allows everyone to dream together and to begin the visioning process using creativity, imagination, and passion.

Your individual, purposeful commitment to the shared vision of a group project means you will do your part, share resources, and support your teammates because you expect the same of them. Vision guides action. “It’s not what a vision is, it’s what a vision does” (Kazuo Inamori, as cited in Senge, 1990, p. 207). A vision of a homecoming weekend reaching the broadest possible group of alumni will guide all the committee’s choices about how to diver- sify that event.

“Success can be measured in many ways such as reaching your

goal, involving new groups or individuals with new perspectives, and

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creating awareness or change. In the organizations I have been

involved with, success has come by including those who are highly

motivated and want to make a difference and have a clear under-

standing of the goal to be achieved. When this happens, it becomes

easier to accomplish tasks because everyone is working towards the

same goal. It is beneficial to utilize special groups or individuals who

have expertise on your project to gain new insight, help motivate oth-

ers, and provide additional resources and support.”—Brynn DeLong

is a member of the Blue Chip Leadership Program and majors in

political science at the University of Arizona.

A vision inspires energy and purpose. Retired General Norman Schwarzkopf observed, “I have found that in order to be a leader, you are almost serving a cause” (Wren, 1994, p. 4).Purposeful par- ticipants have emotionally identified with a purpose and a dream. “There is no more powerful engine driving an organization toward excellence and long-range success than an attractive, worthwhile, and achievable vision of the future, widely shared” (Nanus, 1992, p. 3).

Working for Positive Change

One common purpose that pulls people together is working toward change. Change processes can have various motives associated with them. The Relational Leadership Model supports positive change— that is, change that improves the human condition and that does not intentionally harm others. The antithesis of this is facilitating change that is destructive, like the attacks on the World Trade Cen- ter in New York City. When facilitating a positive change process, the means justify the ends.

Rost (1991) proposes that leadership happens when the group intends to accomplish change, not just when they do accomplish change. Having the intention of improving a situation, accom- plishing a task, or implementing a common purpose is part of the change process. Change may not happen for many reasons, but the

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core fact that the group intended to make a difference is central. John Parr (1994), president of the National Civic League, writes, “Positive change can occur when people with different perspectives are organized into groups in which everyone is regarded as a peer. There must be a high level of involvement, a clear purpose, ade- quate resources, and the power to decide and implement” (p. xiii).

Some situations are profoundly hard to change. It is hard to move away from the status quo—the way things are. Change theory pro- poses that change often begins when something unfreezes a situa- tion. The cycle is often presented as unfreezing ! changing ! refreezing. This “unfreezing” may be caused by a trigger event, such as a carjacking in a remote campus parking lot, a campus riot fol- lowing a sporting event, or a disappointingly small attendance at a group’s expensive activity. People pay attention to the problem with a focus they did not have prior to the incident. Unfreezing may also occur when external policies change—when a new law is enacted, for example. Unfreezing makes it possible to address an issue or pol- icy that has not commanded the attention of those who need to address it. The change process is then engaged and the issue is addressed.

Even after a change is implemented, it would be an error in these times even to consider any issue “refrozen.” Instead, it is best to consider the outcome to be “slush,” so that the solution is seen not as final but as permeable and open to be readdressed easily. It may be best to consider solutions as automatically open for review, regularly evaluated, and flexible. The classic change model (Lewin, 1958), describing the change process as moving from the present state through a transition state to a desired state, still works, but we encourage a caution that the desired state should now be viewed as less rigid.

Change can be thought of as moving some situation away from the status quo to a different place. To understand why that move- ment is hard, examine the driving forces pushing for change and the resisting forces striving to keep change from happening to pre-

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serve the status quo. Clearly, not all change is appropriate or sup- portable. When it is, the driving forces working toward change should be enhanced and the restraining forces minimized. This “force-field analysis” is a useful method for identifying aspects of the situation that could enhance change (Lippitt, 1969, p. 157).

Kotter and Cohen (2002) refer to the concept of “removing bar- riers in the mind” as another reason why people are resistant to change or to changing. “After years of stability, incremental change, or failed attempts at change, people can internalize a deep belief that they are not capable of achieving a leap. They may not say out loud ‘I can’t do it,’ but at some level they feel it, even when it is not true” (p. 112). It is important to understand that the mind can both disempower and empower individuals toward change.

We are constantly faced with the dynamic tension of how things are and how we think they ought to be. This “is-ought” dichotomy asks us to face reality but work toward true transformative change, real change—to move toward the more hopeful vision. This “cre- ative tension” brings energy to the change effort (Senge, 1990, p. 150). Connecting personal hopes and commitments to a group vision is a creative process. This process can be time-consuming. As we describe more fully in Chapter Seven, when a group is newly formed, the process of building a group vision can be energetic and hopeful if the group quickly comes to agreement and commitment, or it can be anxious and cautious if the group shows little agree- ment. When joining an ongoing group in which a vision has already been established, new participants have to determine whether they can connect to that vision or feel they can help shape the contin- ued evolution of the group’s vision over time.

Relational Leadership Is Inclusive

Being inclusive means understanding, valuing, and actively engag- ing diversity in views, approaches, styles, and aspects of individual- ity, such as sex or culture, that add multiple perspectives to a group’s

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activity. As a foundation for valuing inclusion, you will have a chance to explore your own attitudes and attributes in Chapter Four and examine those of others in Chapter Five. Exhibit 3.1 highlights aspects of being inclusive to illustrate how you might explore this component. It means understanding how different groups or indi- viduals might approach issues from different perspectives or frames, maintaining the attitudes that respect differences, and valuing equity and involvement. It means thinking of networks and webs of connection instead of seeing issues and problems as isolated and discrete. Being inclusive embraces having the skills to develop the talent of members so they can be readily involved. Listening with empathy and communicating with civility are communication skills that facilitate the inclusion of others. Inclusiveness breeds new lead- ership and creates a positive cycle that sustains the quality of an organization over time.

You saw in the last chapter that although many things seem unpredictable and even unconnected, there is unity in nature; seem- ingly unrelated parts influence each other as well as the whole. By applying these concepts to the leadership world, we learn to under- stand that the group or organization represents unity or wholeness built from and influenced greatly by the smallest subunits of that system. “As we move away from viewing the organization as a com- plex of parts and deal with it as a unity, then problems met in lead- ership can make more sense and solutions become obvious” (Fairholm, 1994, p. 59).

Individuals are important because they concurrently represent and influence the whole. The purpose, vision, and values of the whole come to life as each individual member describes and applies them. The goal is not to overcome the variations and differences among participants—indeed, those variations bring creativity and energy—but to build shared purpose. “Leading others to lead them- selves is the key to tapping the intelligence, the spirit, the creativ- ity, the commitment, and most of all, the tremendous, unique potential of each individual” (Manz & Sims, 1989, p. 225).

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“When, as a leader, you are able to empower others and create a

sense of community among members, everyone will be compelled to

contribute their unique talents. The group will then meet its potential

to fulfill its purpose.”—Gina Pagel is a volunteer for the American

Cancer Society Relay for Life and the president of the Student Wis-

consin Education Association Chapter at Edgewood College.

Being inclusive means developing the strengths and talent of group members so they can contribute to the group’s goals.

Leaders enhance the learning of others, helping them to develop their own initiative, strengthening them in the use of their own judgment, and enabling them to grow and to become better contributors to the organization. These leaders, by virtue of their learning, then become leaders and mentors to others. (McGill & Slocum, 1993, p. 11)

It is not sufficient just to be a participative leader involving group members in the work of the organization. Organizations have to go further and recognize that in many cases the organizational culture has to change to effectively involve people who have dif- ferent backgrounds and different views and who may not embrace the dominant cultural norms. In addition to its practice, the lan- guage of inclusivity is exceptionally important. How we talk about people in the organization, how we refer to them (colleagues ver- sus subordinates or participants versus followers), and how the orga- nization is structured are indicators of inclusive environments (Hesselbein, 2002). Think about the message being sent by using the word we instead of the word I. You might engage in a conver- sation with someone and hear an excessive use of the word I from that person. What impression did that individual make on you? Did you feel engaged in the conversation? Hesselbein describes the model of inclusion best by stating, from her own experiences,

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Building the inclusive, cohesive, vibrant institution does indeed require the biggest basket in town—for it has to have room for all of us. Not just the favored few, those who look alike and think alike, but all who are part of the community of the future. When equal access pre- vails, the synergy of inclusion propels us far beyond the old gated enclaves of the past into the richness of oppor- tunities that lie beyond the walls. (p. 20)

Groups would benefit by examining practices that might block inclusivity. A group might be so accustomed to voting on every decision that it has alienated members who find this process uncom- fortable. Those members might like to use a consensus model of decision making to ensure that the views of all are included in each significant decision. For example, the extreme use of Robert’s Rules of Order has the potential to cut off discussion when issues are unre- solved and the direction is unclear. Another illustration is when a student union program committee traditionally provides music or movies of interest to only one segment of the campus. They would need to examine that practice and involve others with different interests in order to diversify programming. Organizational prac- tices, such as always meeting at 9 P.M., might exclude the involve- ment of people such as adult learners and those who cannot be on campus at that time because of family or work obligations, or because commuting is a problem. When the group realizes, for example, that no commuter students, or students of color, or men are involved in their activities, that should be a signal that some- thing is wrong. Other ways of communicating and consulting with people should be found, as should other ways of including diverse interests in group decision making.

Involving Those External to the Group

Being inclusive also means identifying the shareholders and stake- holders external to the group who have some responsibility (a share) or interest (a stake) in the change that is being planned. It would

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be exclusive, not inclusive, for a group to assume that they should or could accomplish a major change alone. For example, an orga- nization like the Latino Student Union might seek to change a campus practice about how scholarship programs are advertised to new Latino students. Being inclusive means the Latino Student Union should also consider which other campus groups or offices might be stakeholders in resolving this issue because they have a shared interest or could be affected by the consequences of any action (Bryson & Crosby, 1992). The Latino Student Union might then reach out to form coalitions or some involvement with such groups as the Council of Black Fraternity and Sorority Chapters, the Black Student Union, the Multicultural Affairs Committee of the Student Government Association, and other related student organizations like the Honors Program. In addition, the Latino Stu- dent Union should identify the shareholders in resolving the issue— the Financial Aid Office, the Dean of Students Office, and the Office of Minority Affairs. These offices would each want to get the word out to students about their programs and need not be thought of as negative or antagonistic to the changes. They might in fact appreciate help in resolving problems they too experience in the current process.

Stakeholders may not all hold the same view of a problem, and they may not all seek the same solutions. Bryson and Crosby (1992) clarify how a stakeholder’s position on an issue (ranging from high support to high opposition) is influenced by the importance with which they view the issue (ranging from least important to most important). This makes stakeholders’ responses more understand- able (see Figure 3.2). As they work toward being more inclusive, relational leaders will want to assess possible stakeholder reactions in determining their approaches.

Even if stakeholders disagree on an issue, they should be involved. Involvement helps stakeholders gain new views on issues and may build support among various stakeholders toward an intended change. They also bring in an outside viewpoint, which contributes to the overall knowledge of the group. Stakeholders

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might see dimensions of an issue that the group is blind to. Build- ing support and forming coalitions are related skills for relational leaders.

Relational Leadership Is Empowering

“Thriving on change demands the empowerment of every person in the organization—no ifs, ands, or buts” (Peters, 1989, p. xiv). Empowerment has two dimensions: (1) the sense of self that claims ownership, claims a place in the process, and expects to be involved, and (2) a set of environmental conditions (in the group or organi- zation) that promote the full involvement of participants by reduc- ing the barriers that block the development of individual talent and involvement. Empowerment is claimed (“I have a legitimate right to be here and say what I feel and think”) as well as shared with oth- ers (“You should be involved in this; you have a right to be here too; tell us what you think and feel”). Being empowering means mitigat- ing aspects of the environmental climate that can block meaningful involvement for others. Empowering environments are learning cli- mates in which people expect successes yet know they can learn from

Fig. 3.2

Perspective or stand on the issues D

eg re

e of

im po

rt an

ce to

t he

s ta

ke ho

ld er

Problematic

High SupportHigh Opposition

High Importance

Low Importance

Low Priority

Antagonistic Supportive

Figure 3.2. Responses of Stakeholders to Shared Issues and Goals. Source: Adapted from Bryson & Crosby (1992), p. 268. Used with permission.

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failures or mistakes. It is important to establish organizational envi- ronments that empower others to do and to be their best.

The root word in the concept of empowerment is power. Under- standing power dynamics is essential in moving toward a philo- sophical commitment to empowerment. Where possible, positional leaders must be willing to share their power or authority, and par- ticipants must be willing to assume more responsibility for group outcomes. Power has traditionally been viewed on a zero-sum basis. Conventional approaches assumed that if one person in an organi- zation is very powerful, then someone else has less power. In truth, different types of power exist concurrently among people in any kind of relationship. Power dynamics range from power “over” (autocratic approaches) to power “with” (collaborative approaches) or power “alongside” (collegial approaches). Some approaches to leadership would go further and describe power “from,” referring to the authority and power afforded to a leader from a group of partic- ipants. Effective positional leaders know that their power and abil- ity to be effective comes from the members of their group—their participants (Kouzes & Posner, 1987).

Sources of Power

How a person uses power and reacts to the power of others must be examined in relational leadership. In their classic work, French and Raven (1959) identify five primary sources of power that individu- als bring to their relationships with others. These bases of social power are expert power, referent power, legitimate power, coercive power, and reward power.

Expert power is the power of information or knowledge. Exper- tise may come through professional development and formal edu- cation (such as that received by engineers or dentists), from possessing specific information (such as remembering the results of a recent survey or knowing the rules in the student handbook), or from extended experience (such as being the mother of three chil- dren or being a seasoned baseball player). We trust experts and give

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them power over us based on their assumed higher level of knowl- edge or experience.

Referent power refers to the nature and strength of a relationship between two or more people. Think of the wise senior who is so highly regarded that her words carry great weight in the group discussion.

Legitimate power is due to the formal role a person holds, usu- ally because he or she has the responsibility and authority to exert some degree of power. For instance, the president of a student orga- nization has power to make certain decisions due to the nature of his or her role. However, those in authority generally know that their legitimate power is fragile.

Coercive power influences individuals or groups through impos- ing or threatening punitive sanctions or removing rewards or ben- efits. Coercion accomplishes behavior change but usually at great cost to the relationships among those involved. Because leadership is an influence relationship, it is essential that this influence be “noncoercive” (Rost, 1993, p. 105).

Conversely, reward power influences behavior through the abil- ity to deliver positive outcomes and desired resources. Rewards may be extrinsic, like raises, plaques, or special privileges. They may also be intrinsic—intangibles like praise or support.

You may intentionally use some source of power. For example, you might prepare very well before a meeting so you will be an expert on some topic. Conversely, others may attribute some source of power to you without your knowing what is happening, as, for example, when someone fears your disapproval because you have referent power. To empower ourselves and others, it is essential to understand power.

Understanding Power

In many cases, we give power away. We do it when we do not trust our own opinion if it contradicts that of an expert. We assume the expert knows more. Yet when the doctor too readily concludes that

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you just need bed rest and you know it’s something more serious, you should insist that your doctor explore other alternatives. When the person with legitimate power announces a plan or an approach, we give power away if we do not say, “We would like to talk about that first because we might have some additional ideas that would be helpful.” We may also have power attributed to us that is unde- served. When the group assumes that because you are an English major you would be best at writing the group’s report, they may be in error.

Power is not finite and indeed can be shared and amplified. Some think that power should be framed differently and seen with a similar frame as love: the more you give away, the more you get. If the leadership paradigm of your colleagues is very conventional, they may see the sharing of power as indecisiveness or an avoidance of responsibility. Others may abuse the power shared with them, but those in legitimate authority roles who share their power usually find that they build stronger groups.

For the society to get its work done, leaders and the systems over which they preside must be granted some measure of power. It is a common experience for leaders today to have far less power than they need to accomplish the tasks that we hand them. They must have the power to get results (Gardner, 2003, p. 201).

Gardner goes on to say that those who hold power must be held accountable. Leaders are in a greater position of power when they hold themselves accountable first before waiting for others to imple- ment a system of checks and balances.

Hoarding power in leadership risks negative responses from oth- ers, such as sabotage, withdrawal, resistance, anger, and other behaviors that would contradict the positive goals and objectives of the group. “The key gift that leaders can offer is power” (Bolman & Deal, 2003a, p. 341). When people can use and hear their voices in the life of an organization or community, they will feel a sense of justice and a belief that they matter.

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Self-Empowerment

Empowerment is claiming the power you should have from any position in the organization. Self-empowerment then is the recog- nition that you have a legitimate right to be heard and the self-con- fidence to be part of a solution or the change process. “The E-word by itself, is a non sequitur unless it’s used with self-discovery . . . it provides a means of empowering yourself as you explore your nat- ural, educational, and professional attributes in sizing up your lead- ership prospects” (Haas & Tamarkin, 1992, p. 35). Murrell (1985, pp. 36–37) presents six methods through which you might become empowered:

1. Educating (discovering/sharing information and knowledge)

2. Leading (inspiring, rewarding, directing)

3. Structuring (creating structural factors such as arranging your day, bringing people to the table, changing policies or processes so that the change lives beyond the people who created it)

4. Providing (making sure others have resources to get their job done)

5. Mentoring (having close personal relationships)

6. Actualizing (taking it on—being empowered—claiming it)

Valuing the empowerment of all members creates a larger group of participants or citizens who generally take more ownership of group tasks and processes and who feel committed to the outcomes of the change.

Mattering and Marginality

Empowerment places you at the center of what is happening rather than at the edges, where you might feel inconsequential. This may be understood best by examining the concepts of mattering and marginality. Schlossberg (1989b) has extended and applied the work

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of sociologist Morris Rosenberg on mattering to her own work in studying adults in transition. “Mattering is a motive: the feeling that others depend on us, are interested in us, are concerned with our fate . . . [which] exercises a powerful influence on our actions” (Rosenberg & McCullough, as cited in Schlossberg, 1989b, p. 8). In new situations, in new roles, or with new people, we may feel marginal, as if we do not matter unless the group welcomes us and seeks our meaningful involvement. In contrast, mattering is the feeling that we are significant to others and to the process. Think of the anxiety and perhaps marginalization of potential new mem- bers coming to their first meeting of the Campus Environmental Coalition—or any group. They could be scarcely noticed, become isolated, and perhaps be ignored, or they could be welcomed, involved, and engaged, and know that they matter. Think about the positive feelings imparted to a first-year student when an upper-class veteran of an organization requests his or her opinion on an issue.

Empowering Environments

Groups, organizations, or environments can promote mattering or can keep people on the periphery—in the margins. We need envi- ronments that promote the development of the human spirit on a local scale, thus creating a “fundamental shift of mind, in which individuals come to see themselves as capable of creating the world they truly want rather than merely reacting to circumstances beyond their control” (Kiefer & Senge, 1984, p. 68).

Empowerment is likely to happen in organizational environ- ments where people recognize that things can always be better than they are now. These organizations expect to learn and seek new solutions. Empowering organizations seek to eliminate fear or humiliation and operate on trust and inclusivity. If you do not feel empowered in a particular group, you might assess the dynamics in the organization to see if they are encouraging or controlling. There may be an in-group and an out-group, and those in the out-group are excluded from access to information and opportunities to shape

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decisions (Kohn, 1992). If the organizational dynamics are basically supportive, however, perhaps you need to enhance your self-empow- erment by building competencies, networks, or attributes to let you make a meaningful contribution.

Empowerment and delegation are not the same thing. A leader cannot give tasks to participants to do, no matter how important those assignments may be, and simply assume that participants will subsequently feel empowered. Indeed, if the leader retains a great deal of power or control when delegating, participants may feel manipulated, unprepared, resentful, or victimized. Conversely, if a positional leader has clearly acted congruently in sharing authority and responsibility with the group and has its trust, then sharing tasks can be empowering and can enhance community. Empower- ment is achieved by enabling the involvement of group members and conveying faith in them.

“I was recently elected President of the Executive Board at Endicott

College, after residing as Vice President of my class for a year. The

role of the executive board is to organize and run the Student Gov-

ernment Association (SGA). As the new Executive President, I plan

to make some changes in the organization of the SGA. I am planning

on making more class officers be involved in the activities and events

run by the SGA. I aspire to make everyone feel as though they have

a significant role in every issue that comes across SGA’s path. I

believe when people feel that they are important they realize their

potential. They also realize that when contributing to a greater whole,

much personal satisfaction is gained. Once an individual is given the

chance to take action and lead, they become more involved and ded-

icated on their own thereafter because they realize what they are

accomplishing makes such a difference to the community.”—Elyse

Goldstein is vice president of the class of 2007 at Endicott College

and a student curator of the David Broudo Gallery.

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Relational Leadership Is Ethical

A seven-year-old goes into the grocery store with his father. Upon arriving home, the father discovers that little Johnny has a pocket- ful of candy that was not a part of the purchase. Horrified at Johnny’s stealing, the father demands that Johnny return the candy to the store, confess to the store manager, apologize for his behav- ior, and promise never to steal from any store again. For some of us, an incident like this was our first real lesson in what is good and what is bad, what is virtuous and what is immoral. Early in our lives, in lessons such as this one, we were taught to value honesty over dishonesty, kindness over cruelty, and doing the right thing over breaking the law.

Ethical and Moral Leadership

The Relational Leadership Model emphasizes ethical and moral leadership, meaning leadership that is driven by values and stan- dards and leadership that is good—moral—in nature. The language we use to examine ethical, moral leadership is of utmost importance. Some have a tendency to use the terms ethics and morals inter- changeably (Henderson, 1992; Walton, 1988). Others differentiate between them, yet draw a strong relationship between ethics and morals (Shea, 1988). Shaw and Barry (1989) define ethics as “the social rules that govern and limit our conduct, especially the ulti- mate rules concerning right and wrong” (pp. 2–3).

The derivation of ethics is from ethos, from the Greek words for “character” and “sentiment of the community” (Toffler, 1986, p. 10). Other definitions of ethics include “the principles of conduct gov- erning an individual or a profession” and “standards of behavior” (Shea, 1988, p. 17). Being ethical means “conforming to the stan- dards of a given profession or group. Any group can set its own eth- ical standards and then live by them or not” (Toffler, 1986, p. 10). Ethical standards, whether they are established by an individual or

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an organization, help guide a person’s decisions and actions. For the purposes of this model, ethics will be defined as “rules or standards that govern behaviors” (Toffler, 1986, p. 10).

Stephen Covey, author of the best-selling book The 7 Habits of Highly Effective People (1989), uses the metaphor of “leadership by compass” to illustrate principle-centered leadership (p. 19). Princi- ples, like values, ethics, standards, and morals, “provide ‘true north’ direction to our lives when navigating the ‘streams’ of our environ- ments” (p. 19).

Professions often establish codes of ethics or standards that serve as normative expectations for people in a particular profession. Lawyers must adhere to the American Bar Association’s code of ethics for attorneys, and the American Medical Association pro- motes a code of ethics for physicians. Every McDonald’s restaurant prominently displays a code of standards that pledges excellence in its food and service. Upon closer examination, these organizations are promoting standards by which they expect professionals and employees to live.

Moral means “relating to principles of right and wrong” (Toffler, 1986, p. 10) or “arising from one’s conscience or a sense of good and evil; pertaining to the discernment of good and evil; instructive of what is good or evil (bad)” (Shea, 1988, p. 17). Morals are com- monly thought to be influenced by religion or personal beliefs. Moral leadership is concerned with “good” leadership; that is, lead- ership with good means and good ends.

Our philosophy of leadership is values-driven. Again, our defi- nition underscores this: leadership is a relational and ethical process of people together attempting to accomplish positive change. Using this phi- losophy, leaders and followers act out of a sense of shared values— the desire to cause real change and a commitment to mutual purposes. The actions of leaders and participants emanate from a set of values, which we hope are congruent and shared. Values are “freely chosen personal beliefs” (Lewis, 1990, p. 9) or the “guiding principles in our lives with respect to the personal and social ends

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we desire” (Kouzes & Posner, 1993, p. 60). Simply stated, values are our personal beliefs.

Although there is much disagreement in the leadership litera- ture over definitions and theory, and about whether leadership is values-neutral or values-driven, it is safe to say that most people expect leaders to do the right thing. In a 1988 Gallup poll of 1,200 workers and managers, 89% of the respondents “believed it was important for leaders to be upright, honest, and ethical in their dealings” (Hughes, Ginnett, & Curphy, 1993, p. 170). Unfortu- nately, only 41% of those surveyed believed that their supervisor exhibited these qualities (Hughes et al.). A 2003 Gallup Poll on Governance found that only 53% of those surveyed had “a great deal” or “a fair amount” of trust in the government of their state (Jones, 2003, p. 1). Trust in state governments has declined since the events of September 11, 2001. Securing and keeping the trust of your constituencies is central to leadership. When 1,500 exec- utives from 20 countries were asked what the requirements were for an ideal chief corporate officer, personal ethics was ranked at the top of the list (Kidder, 1993). A Gallup Youth Survey con- ducted in 2003 revealed that 67% of youth between the ages of 13 and 17 reported “a great deal” to “a fair amount” of cheating in their schools, with half of them indicating that they also cheated (Kidder, 2005, p. 267).

As leaders and citizens, our challenge today is to close the gap between our expectations of ethical leadership and the reality of fre- quent breaches of ethical conduct by our leaders. We need bold, courageous leadership—leadership that is by word and deed ethical and moral. It is encouraging that a growing number of people express their abhorrence of the breaches of ethical conduct by national and local leaders and that a vast majority of the populace believe that ethics play a critical role in leadership.

John Gardner (1990) thoughtfully makes the connection between shared values and a moral commitment to do the right thing. He reflects:

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In any functioning society everything—leadership and everything else—takes place within a set of shared beliefs concerning the standards of acceptable behavior that must govern individual members. One of the tasks of leadership—at all levels—is to revitalize those shared beliefs and values, and to draw on them as sources of motivation for the exertions required of the group. Lead- ers can help to keep the values fresh. They can combat the hypocrisy that proclaims values at the same time that it violates them. They can help us understand our his- tory and our present dilemmas. They have a role in cre- ating the state of mind that is the society. Leaders must conceive and articulate goals in ways that lift people out of their petty preoccupations and unite them toward higher ends. (p. 191)

Gardner implies that leadership “toward higher ends” is ethical in nature and includes positive, constructive ends rather than results or outcomes that are destructive, harmful, or immoral.

To underscore the importance of the relationship between lead- ership and ethics, we join with those scholars who propose that ethics is the central core of leadership. Without a commitment to doing the right thing or a sound code of ethical standards, leader- ship cannot emerge. Although some argue that the phrase “ethical leadership” is redundant because leadership cannot be experienced without an element of ethics, we feel that leadership that lacks eth- ical behavior and actions is anything but leadership. Consider the example of Adolf Hitler. Indeed, right now you may be thinking that Hitler was a leader but you are averse to what he was leading, and some leadership theorists would agree with you. We share the views of other scholars, however, that Hitler’s actions were not aligned with our notions of leadership. They were acts of dictator- ship (Burns, 1978).

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Burns (1978) elevates the importance of values and ethics in the leadership process through his theory of transforming leadership. He notes that “the ultimate test of moral leadership is its capacity to transcend the claims of multiplicity of everyday wants and needs and expectations, to respond to the higher levels of moral develop- ment, and to relate leadership behavior—its roles, choices, style, commitments—to a set of reasoned, relatively explicit, conscious values” (p. 46). Aligned with Burns’s bold thinking to cast leader- ship in a moral foundation is the recent shift in societal views, from leadership as values-neutral to leadership as values-driven (Beck & Murphy, 1994; Bok, 1982, 1990; Gandossy & Effron, 2004; Kouzes & Posner, 2002; Northouse, 2004; Piper, Gentile, & Parks, 1993). Moral or ethical leadership is driven by knowing what is virtuous and what is good.

Leading by Example

As an exercise, a leader and a participant must ponder soul-search- ing questions such as, What do I stand for? How far am I willing to go to advance the common good or to do the right thing? Based on their research on leaders, Kouzes and Posner (1987) propose five practices of exemplary leadership. One of these practices is “Mod- eling the Way” or practicing what one preaches. Leaders “show oth- ers by their own example that they live by the values that they profess” (p. 187). What one stands for “provides a prism through which all behavior is ultimately viewed” (p. 192).

Leading by example is a powerful way to influence the values and ethics of an organization. This means aligning your own values with the worthy values of the organization. Exemplary leadership includes a congruency between values and actions. The aphorism attributed to Ralph Waldo Emerson—“What you do speaks so loudly that I cannot hear what you say”—implies an even greater emphasis on the importance of values being congruent with actions. Nobel Peace Prize recipient Jimmy Carter is the first contemporary

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president said to have pursued higher goals after the presidency. Indeed, his work in diplomacy and in community service such as Habitat for Humanity attests to the congruence between his values and his actions. It is one thing to profess values and quite another to act on them.

Terry (1993) provides a cautionary note that action without authenticity erodes what can be considered ethical or moral lead- ership. Terry defines authenticity as “genuineness and a refusal to engage in self deception” (p. 128). Being true to oneself as a leader is a prerequisite for ethical and moral leadership.

The task of leading by example is not an easy one. Most, if not all, leaders begin with the goal of wanting to do the right thing. Some leaders get derailed by peer pressure or the temptation to trade leading for the common good with leading for personal gain or the uncommon good. What sustains ethical and moral leadership is a stubborn commitment to high standards, which include hon- esty and trustworthiness, authenticity, organizational values, and doing the right thing. It takes courage and chutzpah to stand among your peers and advocate a decision that is right yet unpopular. Imag- ine the tremendous courage of a fraternity chapter member or ROTC junior officer who says, “No, I do not think we should make our pledges drink until they pass out and then drop them off naked in the woods. It is not only dangerous but it is not how I want to bring them into our brotherhood. I won’t be a part of it, and I hope you will not either. I will help plan activities that are fun and more worthwhile, but we cannot do this.” Or the courage of a student who steps in and stops his peers from flipping over a car during a campus riot.

“To handle ethical dilemmas, the single most important quality to

remember is to be honest with yourself and others. Tell the parties

involved honestly and openly how you feel about the particular issue.

Help them understand delicately your position, but stand strong in

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the dilemma. One other important aspect is listening and not jump-

ing to conclusions.”—Andrea Jean Grate, from Alfred University, was

a director of student orientation.

Although it appears that we are stating the obvious by stressing the importance of leading by example and with integrity, there are, regrettably, numerous accounts of local and national leaders who have been caught embezzling, putting humans at risk for the sake of profit, and hiding the truth. Richard M. Nixon began his presi- dency with good intentions and then succumbed to political cor- ruption. Leading with integrity is not a neat and tidy process, yet it probably is the driving force that allows leaders to continue in their capacities. We will return to the topic of ethical leadership in Chap- ter Six with a closer examination of ethical decision making, ethi- cal theories, and creating and sustaining ethical environments in groups and organizations.

Relational Leadership Is About Process

Process refers to how the group goes about being a group, remain- ing a group, and accomplishing a group’s purposes. It refers to the recruitment and involvement of members, how the group makes decisions, and how the group handles the tasks related to its mis- sion and vision. Every group has a process, and every process can be described. Processes must be intentional and not incidental. The process component of the Relational Leadership Model means that individuals interact with others and that leaders and other partici- pants work together to accomplish change. The process creates energy, synergy, and momentum.

When asked how her view of the universe as orderly in its chaotic state has influenced her work with organizations, Wheatley (1992) observed, “The time I formerly spent on detailed planning and analysis I now use to look at the structures that might facilitate

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relationships. I have come to expect that something useful occurs if I link up people, units, or tasks, even though I cannot determine precise outcomes” (p. 43–44). When groups design and implement ethical, inclusive, empowering processes that further a shared pur- pose, they can trust the processes to take them through difficult times, resolve ambiguous tasks, and be assured that together they will be better than they might be individually.

Too often, processes devalue the people involved by being highly controlled, valuing winning at all costs, excluding or shutting out those who have an interest in change, or expecting everyone to think and act alike. Attending to the process means being thought- ful and conscious of how the group is going about its business, so participants might say, “Wait a minute. If we do it this way, we’ll be ignoring the needs of an important group of students and that is not our intent.” Wheatley (2003) believes that we live in a process world. She states that “we would do better to attend more carefully to the process by which we create our plans and intentions. We need to see these plans, standards, organization charts not as objects that we complete, but as processes that enable a group to keep clar- ifying its intent and strengthening its connections to new people and new information” (p. 516).

Several key processes are essential to relational leadership. These processes include collaboration, reflection, feedback, civil con- frontation, community building, and a level of profound under- standing called meaning making. We will discuss several of these here and in subsequent chapters. Being process-oriented means that par- ticipants and the group as a whole are conscious of their process. They are reflective, challenging, collaborative, and caring. Being process-oriented means being aware of the dynamics among people in groups. Many groups jump right into the task or goal and lose a focus on the process. When participants focus on the process of group life or community life, they are forced to ask, Why do we do things this way? How could we be more effective? Participants ensure that the groups keeps working and learning together.

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Cooperation and Collaboration

Competition seems embedded in many of our American structures. The adversarial legal system, sports teams, the game of poker, and the competitive free market economy all illustrate the way compe- tition permeates our shared life. It is hard to imagine a different par- adigm. Even while avoiding trying to beat others and not needing to always be number one, many people feel a strong need to com- pete with themselves. Perhaps they need to better that last exam grade or beat their last video game score.

In the early 1980s, researchers at the University of Minnesota reviewed 122 studies conducted over a fifty-year period on the role of competitive, cooperative, or individual goal orientations in achieve- ment. Researchers concluded that “cooperation is superior to com- petition in promoting achievement and productivity” (Johnson, Maruyama, Johnson, Nelson, & Skon, 1981, p. 56). They further dis- tinguished the strong benefits of cooperation (not competition) in the internal functioning of the group from the incentives when com- peting with other external groups (Johnson et al.). Working cooper- atively with other participants is a desirable process.

Studies consistently show that members of various kinds of groups prefer positional leaders and colleagues who establish coop- erative or collaborative relationships with them instead of compet- itive relationships (Kanter, 1989; Spence, 1983; Tjosvold & Tjosvold, 1991). Even a group member who enjoys competition in athletics is not likely to enjoy working in a setting such as a sports team, committee, study group, or job site in which others are com- petitive and try to beat each other or use competitive practices like withholding information or degrading others’ contributions. Indeed, “the simplest way to understand why competition generally does not promote excellence is to realize that trying to do well and try- ing to beat others are two different things” (Kohn, 1992, p. 55). A person’s best work is done under conditions of support and cooper- ation, not under fear, anxiety, or coercion.

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The concepts of cooperation and collaboration are different.

Collaboration is more than simply sharing knowledge and information (communication) and more than a rela- tionship that helps each party achieve its own goals (cooperation and coordination). The purpose of collab- oration is to create a shared vision and joint strategies to address concerns that go beyond the purview of any par- ticular party. (Chrislip & Larson, 1994, p. 5)

Wood and Gray (1991) assert that “collaboration occurs when a group of autonomous stakeholders of a problem engage in an inter- active process, using shared rules, norms, and structures, to act or decide on issues related to that domain” (p. 146). For example, Microsoft and Intel collaborated on developing wireless applica- tions for PDAs and smart phones. These companies had a shared vision that was achieved by working together rather than in com- petition with each other. Former presidents George H. W. Bush and Bill Clinton, who were once in fierce political competition with one another, worked collaboratively on natural disaster relief projects in the face of the Southeast Asian tsunami in 2004 and Hurricane Katrina in 2005.

Both cooperation and collaboration are helpful processes: coop- eration helps the other person or group achieve their own goals, whereas collaboration joins with another person or group in setting and accomplishing mutual, shared goals. The “collaborative premise” is a belief that “if you bring the appropriate people together in constructive ways with good information, they will create authentic visions and strategies for addressing the shared concerns of the organization or community” (Chrislip & Larson, p. 14). It would be cooperation for the Habitat for Humanity group to send their membership recruitment flyer out with the Food Cooperative flyer to save postage or for them to attend another group’s event. It would be collaboration for those two groups and several others with a common environmental purpose to design a new flyer to attract

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new members to these shared causes or to work collaboratively together to plan a larger event.

“Part of being a leader is being a participant as well because by being

a leader, you need to lead by example. Taking part in whatever you

are leading will show that you are proud and enthusiastic to be

involved with your particular group. Other members will also respect

the fact that you are not only a leader, but that you are humble

enough to participate like everyone else.”—Betsy Dedels is a mem-

ber of Phi Beta Kappa and team captain of intramural volleyball. She

majors in sociology at the University of Kentucky.

For the group to be effective, all members must be prepared to do their part.

Chapter Two described how music provides a good metaphor for this kind of teamwork. Musicians must be individually skilled and committed, yet know that they are part of a collective—a team. Further, imagine a performance of jazz music with improvi- sational dance. Both dancers and musicians find wonderful rhythms and sounds, simultaneously interpreted, shaping each other’s work. The collaboration, respect, and commitment to their common pur- poses as dancers and musicians are obvious. Yet those artists did not just walk into a studio and create movement. The dancers knew their bodies and the musicians knew their instruments. They knew how and why and when to react. Their self-awareness of their own strengths, limits, talents, and abilities created the collabora- tion in their joint effort. In a parallel manner, think of a terrific class project in which individuals volunteer their knowledge and skills (“I can do the PowerPoint presentation” or “I can call those businesses for donations”), and the division of labor starts to shape a strong project. Knowing yourself well and seeking to know the members of the group creates a group atmosphere conducive to col- laboration.

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Meaning Making

Leadership requires a process of truly understanding (that is, mak- ing meaning) throughout the shared experience of the group. Mean- ing has both cognitive (ideas and thoughts) and emotional (feelings) components, which “allows a person to know (in the sense of understand) some world version (a representation of the way things are and the way they ought to be) and that places the person in relation to this world view” (Drath & Palus, 1994, p. 4). Part of this meaning making involves the recognition that in our rapidly changing world, we are continually challenged to see that data become information, information becomes translated into knowledge, knowledge influences understanding, understanding translates into wisdom, and wisdom becomes meaningful thought and action. Imagine this flow as

DATA ! INFORMATION ! KNOWLEDGE ! UNDERSTANDING ! WISDOM !

THOUGHT AND ACTION

Meaning making is “the process of arranging our understanding of experience so that we can know what has happened and what is happening, and so that we can predict what will happen; it is con- structing knowledge of ourselves and the world” (Drath & Palus, 1994, p. 2). Drath and Palus make it clear that two understandings of the word meaning guide our thinking about meaning and leader- ship. One use is when symbols, like words, stand for something. This process of naming and interpreting helps clarify meaning and is essential for the perspectives needed in reframing and seeing mul- tiple realities. For example, one person might call a particular action lawlessness, and another might call it civil disobedience. What one person might call destructive partying, another might see as group bonding and celebration. Coming to agreement on the interpreta- tions of symbolic words and events helps a group to make meaning. Senge (1990) refers to these as “mental models.”

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The second use of the word meaning involves “people’s values and relationships and commitments” (Drath & Palus, 1994, p. 7). People want to matter and to lead lives of meaning. When some- thing is of value, one can make a commitment, find personal pur- pose, and risk personal involvement—it matters, it has meaning. In contrast, if something is meaningless or of no value, then it does not engage emotion and build commitment. However, we should be careful not to judge too quickly. Sometimes, important matters may seem to have no value. For example, a group of students expressing concern about getting to their cars in remote parking lots after late-night classes deserves a careful hearing. Those listening may be student government officers who live in nearby residence halls or campus administrators who have parking spaces near their buildings. The relational empathy skill of trying to see things from the perspective of another will validate that meaning. (Refer to Chapter Five for more on relational empathy.)

Understanding how we make meaning helps a group frame and reframe the issues and problems they are seeking to resolve. The framing process involves naming the problem and identifying the nature of interventions or solutions that might be helpful. If a prob- lem is framed as, “The administration won’t provide money for addi- tional safety lighting,” it leads to a set of discussions and strategies focused on changing the administration. Reframing means finding a new interpretation of the problem that might create a new view that helps a group be more productive (Bryson & Crosby, 1992). Reframing this same problem might bring a new awareness of coali- tions, shareholders, and stakeholders if it were readdressed as, “How can we unite the talent of our campus to address the problem of a dramatic rise in crimes against women?”

Reflection and Contemplation

Vaill (1989) proposes that the rapid pace of change and the need to make meaning from ambiguous material requires individuals and groups to practice reflection. Reflection is the process of pausing,

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stepping back from the action, and asking, What is happening? Why is this happening? What does this mean? What does this mean for me? What can I learn from this? Lao Tzu (Heider, 1985) encour- ages time for reflection:

Endless drama in a group clouds consciousness. Too much noise overwhelms the senses. Continual input obscures genuine insight. Do not substitute sensational- ism for learning. Allow regular time for silent reflection. Turn inward and digest what has happened. Let the senses rest and grow still. Teach people to let go of their superficial mental chatter and obsessions. Teach people to pay attention to the whole body’s reaction to a situa- tion. When group members have time to reflect, they can see more clearly what is essential in themselves and others. (p. 23)

Smith, MacGregor, Matthews, and Gabelnick (2004) believe that “reflective thinking should be metacognitive” (p. 125). Metacognition is “thinking about one’s thinking—now considered essential for effective learning and problem solving” (p. 126). Reflection can be accomplished when a group intentionally dis- cusses its process. If groups discuss their process at all, they usually reflect only on their failures. They try to find out what went wrong and how to avoid those errors again. To be true learning organiza- tions, groups also need to reflect on their successes and bring to every participant’s awareness a common understanding of answers to such questions as, Why did this go so well? What did we do together that made this happen? How can we make sure to work this well together again? Horwood (1989) observes that “Reflection is hard mental work. The word itself means ‘bending back.’ . . . The mental work of reflection includes deliberation . . . rumination . . . pondering . . . and musing” (p. 5). Reflection is a key process in becoming a learning community.

In a study of successful leaders, Bennis (1989) observed that these effective leaders encouraged “reflective backtalk” (p. 194).

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They knew the importance of truth telling and encouraged their colleagues to reflect honestly what they think they saw or heard. “Reflection is vital—at every level, in every organization . . . all [leaders] should practice the new three Rs: retreat, renewal, and return” (p. 186). One form of group reflection is when the group processes (discusses) a shared experience. As a difficult meeting winds down, any participant (or perhaps the group’s adviser) might say, “Let’s take time now at the end of this meeting to process what we liked about how we handled the big decision tonight and what we think we should do differently next time.” Reflection is also use- ful for keeping a group on track. A group might intentionally review its goals and mission in the middle of the year and discuss how their activities are supporting that mission or whether they should be redirected. Reflection is an essential component of a process to keep individuals and the whole group focused and intentional.

Contemplation is a form of reflection that allows us to think deeply about the events around us, our feelings, and our emotions. Chickering, Dalton, and Stamm (2006) describe contemplation as “the cerebral metabolic process for meaning making. The food that we chew and swallow, that then enters our stomach, only nourishes us, only becomes part of our bloodstream, muscles, nerves, and body chemistry when it is metabolized” (p. 143). The experiences of life operate in a similar way. In the absence of reflection and contem- plation, the knowledge that we acquire and the experiences that we go through can “end up like the residue from food we don’t metab- olize” (p. 143). Reflective practices allow us to think about what is occurring around us and to us and then to make meaning from those experiences.

What Would This Look Like?

You will acquire many leadership skills over time. It is easy to con- fuse some management tools—like running meetings or planning agendas—with real leadership. Using the principles of relational leadership, you can reframe typical skills like agenda planning so

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that they are more effective. The goals of the agenda for your group meeting will not be just to get through the topics to be presented or decided in the quickest time but will involve the most people, empower voices that might have been excluded before, make sure no one is railroaded and that fair decisions are made, involve oth- ers in building an agenda, and use collaborative practices.

Remember the times you have been to a meeting whose leader made all the announcements. A small group of two or three in- group members seemed to run the whole show, and you never said a word. We have all had that experience. You felt marginalized and might have wondered why you even bothered to attend. Think of a meeting in which people disagreed hotly and then someone quickly moved to vote on an issue. A vote was taken with the resulting majority winning and a dissatisfied minority losing or feel- ing railroaded.

Imagine the differences in a meeting whose positional leader or convener says, “It is our custom to make sure everyone is involved and heard before we try to resolve issues. The executive committee has asked three of you to present the key issues on the first agenda item; we will then break into small groups for fifteen minutes to see what questions and issues emerge before we proceed and see what we want to do at that point. In your discussion, try to identify the principles that will be important for us to consider in the decision we eventually make.” Even if you do not agree with this approach, you would feel more comfortable suggesting a different model because the tone of the meeting is one of involvement and partici- pation.

Chapter Summary

Conditions in our rapidly changing world require that each of us become effective members of our groups and communities in order to work with others toward needed change and for common pur- pose. The way we relate to each other matters and is symbolic of

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our social responsibility. Taking the time needed to build a sense of community in a group acknowledges that relationships are central to effective leadership. Relational leadership is purposeful, inclu- sive, empowering, ethical, and about process. Attention to those practices builds a strong organization with committed participants who know they matter.

What’s Next?

After understanding the various ways leadership has been viewed and the current need for new models of leadership that value rela- tional approaches, it is essential to understand people as participants in those relationships. Perhaps the most important person to under- stand is you. The next chapter, which begins Part Two, encourages you to explore aspects about yourself that are important in leader- ship; following that is a chapter exploring aspects of others and how they may be different from yours. The final chapter in Part Two addresses the importance of integrity in the leadership process and in establishing relationships with others.

Chapter Activities

1. Think of a leader whom you would consider to be a role model, someone who practices what he or she preaches and lives by high standards. Think of local, national, or historical exemplars. What is it about the role model you identified that qualifies that person as an exemplary leader? What values does he or she profess, and what practices does he or she con- sistently live by?

2. Describe your leadership philosophy using all three compo- nents of the knowing-being-doing model.

3. Describe your leadership compass. What principles or ethics guide your personal life and your leadership?

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4. Identify a situation in which you successfully used one or more of French and Raven’s sources of power. What con- tributed to your effective use of each of those sources of power? Think of an example of a leader who abused one of these sources of power. What were the consequences of that person’s leadership?

5. As you review the five elements of this Relational Leadership Model, which are most comfortable for you and why? Which involve knowledge, skills, or attitudes that you have not yet learned or developed?

6. In their simplicity, models often omit concepts that could have been included. What concepts would you add to any of the five elements of this model, or what new elements do you think should be included?

Additional Readings

Bennis, W. G., & Thomas, R. J. (2002). Geeks and geezers: How era, values, and defining moments shape leaders. Boston: Harvard Business School Press.

Chrislip, D. D., & Larson, C. E. (1994). Collaborative leadership: How citizens and civic leaders can make a difference. San Francisco: Jossey-Bass.

Drath, W. H., & Palus, C. J. (1994). Making common sense: Leadership as mean- ing-making in a community of practice. Greensboro, NC: Center for Cre- ative Leadership.

Gandossy, R., & Effron, M. (2004). Leading the way: Three truths from the top companies for leaders. Hoboken, NJ: Wiley.

Kouzes, J. M., & Posner, B. Z. (2002). The leadership challenge (3rd ed.). San Francisco: Jossey-Bass.

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What Does Leadership Look Like In

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Jacob Morgan Contributor

A few months back while I was doing a keynote in Mumbai, I had the pleasure of

meeting Dr. N.S. Rajan. Dr. Rajan is the author of a new book, Quote Me if You Can, as

well as Group Chief Human Resources Officer and a member of the Group Executive

Council of Tata. The Tata group is composed of 100 companies with over 600,000

employees globally. It is one of the largest organizations in the world with companies

offering a broad range of services and commodities. Each company has a body and min

of its own, with Tata being the soul.

As Group CHRO, Dr. Rajan works with the CHRO in every company in the Tata group,

providing critical leadership and spearheading diversity initiatives. He believes in

putting the effort forth to create more effective and better leaders with a concept simila

to servant-based leadership. While managers focus on the task to be completed, the

process to complete it, and supervising a set of people to get there, the leaders role is

more ambiguous. They must envision, set new directions, and inspire and value their

team. To be a leader, it is absolutely essential to listen to people and understand their

needs.

Leaders at Tata follow a parenting model. They aren’t intrusive but rather lend a helpin

hand in a positive way. Leaders have to learn to exercise power prudently, and to

combine passion and compassion. Leadership is evolving due to the changes of the

world, such as downturns in economy and technological advances. Organizations must

continue to adhere to their values as leadership evolves -- considering ethics when

promoting or creating leaders, as well as experience and competence.

Today In: Leadership

What you will learn in this episode:

• How leadership is changing

• The role of leaders

• How millennial leaders are different

• Diversity in leadership

 00:00:00 Ep 78: Leadership And The Future Of Work : With Dr. N.S. Rajan the Group Chief Human Resources O�cer …

 Info  Episodes  Share

Jacob is an Author, speaker and futurist. His latest book, The Future of Work: Attract New Talent,

Build Better Leaders, and Create a Competitive Organization, explores ... Read More

• Important skills and qualities of a good leader

• Trends shaping the future of leadership

• How leadership has changed over the past few years

• Shared vision

Jacob Morgan is a keynote speaker, author and futurist. For more, subscribe to his

newsletter or visit TheFutureOrganization.

Jacob Morgan

BMGT 365 Organizational Leadership Biotech Company Profile 1

Biotech Health and Life Products Company Profile

Welcome to Biotech! The assessment projects for this class will examine different facets of the leadership of Biotech Health and Life Products, Inc. You will be exploring leadership within Biotech with the driving question of “what skills does a Biotech leader need to lead the company now and in the future?”

History Wilford Barney was a young apprentice working for Peter Ulan, owner of a small apothecary shop in Yonkers, New York. During his apprenticeship, Barney created a general energy elixir that was based on a home remedy of his mother’s back in Ireland. The elixir was produced specifically for many of Ulan’s special customers. Made of all natural ingredients the elixir provided B12 and other vitamins to promote a healthy immune system. The energy boost was noticeable after only a week’s use. The reputation of the elixir grew.

In 1922, Barney took over Ulan’s apothecary shop renaming the business, Barney’s Apothecary. At that time, Barney decided to bottle his elixir and sell the formula to everyone rather than selected customers. Barney also gave bottles of the elixir to local peddlers who sold the product along with their wares receiving a commission on each bottle they sold. By 1929, the product was well known in Yonkers. Encouraged by the success in Yonkers Barney decided to branch out to New York City.

In 1932, Barney built a small manufacturing plant near the store where he mixed and bottled the elixir for sale. By 1934, Barney expanded sales by putting the elixir in a quarter of the apothecary shops in New York City. Sales were booming and customers inquired about other products that Barney’s had.

In 1936, Barney started a new product called Night Relief, another of his mother’s recipes. This product offered relief from night sweats and anxiety caused by menopausal symptoms or nerves. When this product proved a “secret success” with the ladies, Barney decided to bring his mother, Irene, from Ireland, and put her to work making new natural products. With his mother’s help, Barney grew the business into a small but successful manufacturer of natural “life products”. Barney coined “life products” because the products tracked natural life events in the human body and attempted to improve the customer’s discomfort in dealing with them.

The name of the company was changed to Barney’s Elixir and Life Products. The business continued to grow and with his mother’s death in 1938 the company had a gross revenue of $178,000 a year. The depression took a toll on company profits

BMGT 365 Organizational Leadership Biotech Company Profile 2

but people still needed the boosts to their health and were able to afford Barney’s products as opposed to the medicine offered by doctors and hospitals. During World War II the company supplied the troops with a natural caffeine (Stay Clear) product that would keep soldiers awake for long periods of time and heighten their mental alertness. Government contracts derived from Stay Clear boosted the revenue of the company considerably and ushered in a new wave of interest of natural products.

By 1950 Barney turned over the reins of the daily operations of the business to his children but remained on the Board of his family owned company. By this time, the company had expanded its manufacturing plants and sales nationally to include Detroit, Michigan, Los Lunas, New Mexico, Chicago, Illinois and Atlanta, Georgia. The revenue of the company was now close to 2.5 million dollars.

In the 1960’s the social climate in America had changed and pharmaceutical companies took on greater importance in the treatment of people’s health. The discovery of new drugs and better health care shifted the confidence in the American perspective away from natural products to traditional western medicine. Although the counter culture of America still supported natural supplements, popularity for Barney’s products waned.

In 1965, Wilford’s granddaughter, Geraldine, took over the Research and Development Department (R&D) after receiving a degree in chemistry from Harvard. She had been trained as a child by her grandmother, Wilford’s mother, and knew how the recipes should look. However, she had new ideas and with the approach of the 1970’s, was ready to join the “Anjolie perfume commercial” lifestyle depiction of a 70’s women that “they could bring home the bacon and fry it up too.”

Due to the downturn in sales by 1970, the company turned to other countries for its sales base. Starting in Germany and other European countries where natural products are highly credible, Barney began to license the sale of the company’s products to local manufacturers. The name recognition grew and by the 1980’s the company was grossing over 4 million dollars in gross sales. The company moved to overseas operations and manufactured in Germany. Wilford Barney died in 1981 shortly after seeing his first grandchild, Maximillian Barney, take over the President’s positon of the company.

Studying the trends in the 1990’s about the resurgence of natural health products “Max” as he liked to be called, decided it was time for Barney’s to focus on the new interest in homeopathic and natural products especially at home in America where sales were static. In 1996, Max, wanting to get a sleeker and more modern feel to the company’s products changed the company name and logo. No longer was Barney’s a mom and pop operation but now were part of the Biotech nutraceutical market. Barney’s Elixir and Life Products was now Biotech Health and Life Products. While the products would continue to show the old Barney logo, for name recognition the new logo would take prominence on the packaging.

By 2000 the company was grossing about 1.1 billion in sales with an increase in market share. By 2012, Biotech had a 20% market share of the supplement business

BMGT 365 Organizational Leadership Biotech Company Profile 3

with approximately $20 billions of sales. The growing interest in the bio-nutraceutical marketplace was catching the attention of the big pharmaceutical companies. Glaxo, Merke and Dupont began a massive shift to the new biotech business products.

Currently sales for the company are at $35 billion. Maximillian Barney is still President and CEO. The stock is still held by the family and all senior management positions are held by family members.

Current Company Vision: To help provide everyone with the healthiest life possible in the most natural of ways.

Current Mission: To develop products that are safe, effective, affordable and natural with the customer’s health always their primary goal.

Current Fact Sheet

Headquarters Yonkers, New York Worldwide web address www.biotechlife.com President Maximillian Barney 2016 Gross Sales US$ 35 billion Employees 35,000 in 6 countries worldwide

Manufacturer Operations

United States Detroit, Michigan, Los Lunas, New Mexico, Chicago, Illinois and Atlanta, Georgia

Europe Wittllch, Germany, Baltimore, Ireland Asia Pacific Melbourne, Australia Latin America and Caribbean Sao Paulo, Brazil Canada

Product Lines

Major Competitors

Alberta, Canada

Protein and Fitness; Personal Care, Nutraceuticals, Vitamins and Food Supplements

Protein and Fitness-GNC, Personal Care- Nestle Skin Care- Galderma, SA; Glaxo, Merke, General Mills. Vitamins and Food Supplements- GNC, Natures Plus, Natrol, Nature’s Way, Nature’s Bounty, Hain Celestial Group, Inc, Schiff Nutrition International, Nestle, General Mills, Now Foods and New Chapter

BMGT 365 Organizational Leadership Biotech Company Profile 4

BIOTECH BUSINESS PHILOSOPHY AND STRATEGY

Biotech has determined its long-term goal planning pattern should be no longer than 3 years. Three years seems more flexible than the seven-year planning pattern previously used as change in the business climate is making it imperative to be more flexible. The need for innovation and competitive advantage ideas are the main focus for the next two years along with the company’s commitment to becoming a triple bottom line company. Sustainability both for profit and planet is foremost in the minds of the leadership. The development of a triple bottom line company is in the best interest of the company because of the need to keep a strong natural product image link to the community and the desire for the company to be socially responsible. Protection of the suppliers and control over product quality is critical to the development of a sound “life product.”

Current Growth Plans

Business and Sales Biotech is looking to expand to Saudi Arabia in the next year. Currently products sold through European division but demand is great in the Arab countries. Although the company would like to sell in Israel as well, Arab countries are seen as a more lucrative expansion opportunity. Expansion of the production capacity in Sao Paulo is being considered as company can no longer keep up with sales projections.

Product Development Biotech is looking to develop its cosmetic and food lines. Currently have lip balms but seeks to make a line of lipsticks, foundation, powder, eye makeup and cleaners from natural ingredients. Development of natural flavorings and whey products are under consideration.

BMGT 365 Organizational Leadership Biotech Company Profile 5

BIOTECH’S CORE VALUES The leadership of Biotech has identified four core values. These values are used as guidance in strategy, mission, and vision creation. They are: Customer-Centricity, Innovation, Knowledge, and Sustainability. Customer-Centricity Currently there is a company-wide accountability to the customers and the entire workforce is expected to provide an extraordinary customer experience in every product made. Customer relations are considered to be both internal and external; for those located at central Headquarters, those employees “out in the field” are considered just as much a customer as the person buying Biotech’s products.

Innovation Development of organizational structure and culture changes are being made to introduce more collaborative decision making as well as bringing the divisions closer together in the area of shared resources and communication. Emphasis is to encourage the exchange of ideas, create an environment that fosters new ideas and makes change easier in implementation.

Knowledge Biotech is a firm whose foundation and history is deeply rooted in research and development. Using knowledge to lead change is at the heart of Biotech’s value system. Another aspect to knowledge is the “tribal knowledge” that is inherently known by the Barney family that lead the company, and their long-time loyal employees. Sustainability Currently, Biotech has commitments to build housing for several communities in Brazil and India where natural pharmaceutical ingredients are produced. The program reflects the company’s strong commitment to become a triple bottom line company by the year 2021, and its core value of sustainability. Biotech defines sustainability as both “for profit” and “for planet”.

BMGT 365 Organizational Leadership Biotech Company Profile 6

BIOTECH’S CURRENT CORPORATE CULTURE

Barney’s new image of a sleek, less clan-like organization has resulted in a family that is less than cohesive. Still, the family leaders are committed to maintaining the businesses’ cultural heritage because of the sense of unity and belonging, and to provide employees with a better understanding of the previous generations and to show how far the company has come. It is believed that the cultural heritage of the business demonstrates support for collaborative decision making something the company has successfully promoted throughout the organization. The family sees its employees as being customers and therefore encourages a customer-centric culture. Employees are encouraged to look at their work through the perspective of the customer and to make decisions using the customer’s viewpoint. Biotech is concerned that the stateside organization is driving the overseas divisions and that new ideas are being encouraged because of the cultural differences in staff. Customer innovation workshops ran by the various divisions have highlighted that R&D in Europe and Australia are differences in customer preferences from US customer preferences. It is believed that US controlled resources are ignoring these product preferences and are thus impeding sales overseas. Corporate leaders are examining the matter in an attempt to answer this cultural gap. Current Organizational Structure

The company has a geographical division structure. However, within each division is a functional structure with production and sales at the hub. R&D, HR, IT and Finance have small staff in each division whose primary job is to liaise with headquarters to implement the decisions made.

Executive Director South America

Division

Executive Director North American

Division

Executive Director European Division

Executive Directive

Asia Division

President and CEO Maximillian Barney

Housed in headquarters is the R&D, Purchasing, HR, IT, and Finance Divisions

Helpful Hints to Use for Study and Writing Projects PART ONE:

How to Analyze a Case Study

Knowing how to analyze a case will help you attack virtually any business problem.

A case study helps students learn by immersing them in a real-world business scenario where they can act as problem-solvers and decision-makers. The case presents facts about a particular organization or decision. Students are asked to analyze the case by focusing on the most important facts and using this information to determine the opportunities and problems facing that organization, the people within the organization or decision. Students are then asked to identify alternative courses of action to deal with the problems or decision they identify.

A case study analysis must not merely summarize the case. It should identify key issues and problems, outline and assess alternative courses of action, and draw appropriate conclusions. The case study analysis can be broken down into the following steps (FICER):

1. Facts- select the most important facts surrounding the case. 2. Issues-identify the most important issues in the case 3. Courses of action-Specify alternative courses of action. 4. Evaluate- each course of action. 5. Recommend- the best course of action.

Let's look at what each step involves.

1. Identify the most important facts surrounding the case. Read the case several times to become familiar with the information it contains. Pay attention to the information in any accompanying exhibits, tables, or figures. Many case scenarios, as in real life, present a great deal of detailed information. Some of these facts are more relevant than others for problem identification. One can assume the facts and figures in the case are true, but statements, judgments, or decisions made by individuals should be questioned. Underline and then list the most important facts and figures that would help you define the central problem or issue. If key facts and numbers are not available, you can make assumptions, but these assumptions should be reasonable given the situation. The "correctness" of your conclusions may depend on the assumptions you make.

2. Identify the key issue or issues. Use the facts provided by the case to identify the key issue or issues (or decision) facing the person(s) or organization. Many cases present multiple issues or problems. Identify the most important and separate them from more trivial issues. State the major problem or challenge facing the company or person(s). You should be able to describe the problem or challenge in one or two sentences. You should be able to explain how this

problem affects the strategy or performance of the organization or person(s). You will need to explain why the problem occurred.

3. Specify alternative courses of action. List the courses of action the company or person(s) can take to solve its problem or meet the challenge it faces. For instance, for information system-related problems, do these alternatives require a new information system or the modification of an existing system? Are new technologies, business processes, organizational structures, or management behavior required? What changes to organizational processes would be required by each alternative? What management policy would be required to implement each alternative? Remember, there is a difference between what an organization "should do" and what that organization actually "can do". Some solutions are too expensive or operationally difficult to implement, and you should avoid solutions that are beyond the organization's resources. Identify the constraints that will limit the solutions available. Is each alternative executable given these constraints? Be practical in your approach to selecting courses of action. Creating courses of action requires thinking outside the box. To do this think about all the people (company as well) involved in the action, what stake they may have in the action, and how best to meet their objectives. Sometimes “walking around in everyone’s shoes” will give you a new insight to the situation or issue and thus lead to a new course of action.

4. Evaluate each course of action. Evaluate each alternative using the facts and issues you identified earlier, given the conditions and information available. Identify the costs and benefits of each alternative. Ask yourself "what would be the likely outcome of this course of action? State the risks as well as the rewards associated with each course of action. Is your recommendation feasible from a technical, operational, and financial standpoint? Be sure to state any assumptions on which you have based your decision.

5. Recommend the best course of action. State your choice for the best course of action and provide a detailed explanation of why you made this selection. You may also want to provide an explanation of why other alternatives were not selected. Your final recommendation should flow logically from the rest of your case analysis and should clearly specify what assumptions were used to shape your conclusion. There is often no single "right" answer, and each option is likely to have risks as well as rewards.

Quick Summary

How to Analyze a Case Study FICER

1. Facts- select the most important facts surrounding the case. 2. Issues-identify the most important issues in the case 3. Courses of action-Specify alternative courses of action.

4. Evaluate- each course of action. 5. Recommend- the best course of action.

Adapted From: Pearson How to analyze a case study wps.prenhall.com/bp_laudon_essmis_6/21/5555/1422312.../index.html

PART TWO: Writing in the third person is a must for all of your projects. In case you have a hard time understanding the difference here is a short article that will help explain the differences. The article contains good examples of the way to use each voice of speech.

The Three Persons of Speech

Week 2: Oct 28 - Nov 3

BMGT 365 7981 Organizational Leadership (2198)

Week 2: Leadership Styles, Traits, Attributes, and Competencies

Theme 1: Leadership characteristics are demonstrated in a leader’s style.

Traits are characteristics that are ingrained in an individual. Traits are not easily learned or unlearned. For example, the introvert is unlikely to become the life of the party. On the other hand, leadership attributes are personal qualities or characteristics that can be learned and are typically described in the context of behaviors – values, habits, character, or motives. Leadership competence is a mix of leadership skills and behaviors that lead to an increase in performance.

Read:

Leadership: Do traits matter?

Critical Skills: Leadership - In the Library search under Comstock (author) and Critical Skills: Leadership (title).

Leadership Competencies

10 Traits of Great Business Leaders

Leaders at all Levels

Theme 2: Leadership style should fit the person, the organization, and the job. It should be situational in nature.

The way a leader sets the direction, implements plans and motivates people to accomplish a task is known as a leadership style. It cannot be emphasized enough that leadership style is not a one size fits all type of cloak. A leadership style must fit those that are led, the company and the job. The following story about leadership style illustrates theme two.

Alan Robbins started Plastic Lumber Company when he saw a way to help the planet by converting plastic milk and soda bottles into fake lumber while still making money in

doing so. Robbins had strong opinions on how to run his company. He had an expectation that decisions be made in teams with participation from everyone. Sound familiar? To accomplish this goal, Robbins spent a long time on the factory floor chatting with employees, sounding them out on how best to get the job done. Robbins soon learned that this was not working. Most of his low-skilled employees simply wanted clear direction and a set of standards and expectations for doing the work. The freedom that Robbins’ laissez-faire leadership style encouraged led to frequent confusion, employee absences, tardiness, and fights on the factory floor. Employees came to work under the influence of drugs and/or alcohol. Robbins’ style undermined his authority in the eyes of many workers (Aeppel, 1998).

Although Robbins believed in his laissez-faire leadership style, he had to force himself to adapt a direct style with factory workers to save the business and instill order.

Would Robbins style fit better at Google than on the factory floor? While reading and preparing for this week, consider the aspects of style that relate to a leader’s ability to build relationships and keep the organization competitive.

Reference:

Aeppel, T. (1998, Jan 14). Losing faith: Personnel disorders sap a factory owner of his early idealism. The Wall Street Journal, A1-A14. Retrieved from http://webcache.googleusercontent.com/search? q=cache:3yZwVDukHUQJ:info.wsj.com/college/lessonplans/mgmt_lp5.pdf+&cd=2&hl=en &ct=clnk&gl=us

In week one, we learned that a leader must define leadership both personally and within the context of the organization. A successful leader should adopt a leadership style that fits his or her definition and the organization’s definition of leader. The choice of leadership style should enhance the point of view of the leader, the culture of the organization as well as the job and situation at hand.

The following notable leadership styles will be examined this week:

Leadership Styles

Charismatic Laissez-Faire Situational

Visionary/Innovative Steward Transactional

Instructor Notes Web Page

Pace Setter Democratic Transformational

Command/Coercive Servant Participative

Many of the leadership styles have emerged from the theories discussed in week 1. Others have evolved from combined elements of different theories to create the characteristics, behaviors, attitude and values of the successful leader.

Read:

Pages 22-28 of (continued from last week):Gandolfi, F., & Stone, S. (2017). The Emergence of Leadership Styles: A Clarified Categorization. Review Of International Comparative Management / Revista De Management Comparat International, 18(1),

Are Leaders Born or Made?

8 Most Common Leadership Styles

Situational Leadership

The Impact of Leadership Style on Employee Commitment

Leadership Style, Emotional Intelligence, and Organizational Effectiveness

Organizational Effectiveness

The Effective Organization: Five Questions to Translate Leadership into Strong Management

Complete:

Team Deliverable #1: Job Announcement due in Assignment Folder by Sunday, 11:59 p.m. eastern time.

0 % 0 of 1 topics complete

e Academy of Management Executive. 1991 Vol. S No. 2

Leadership: do traits mctter?

Shelley A. Kirkpatrick and Edwin A. Locke, University of Maryland

Executive Overview

Article

48

The study of leader traits has a long and controversial history. While research shows that the possession of certain traits alone does not guarantee leadership success, there is evidence that effective leaders are different from other people in certain key respects. Key leader traits include: drive (a broad term which includes achievement, motivation, ambition, energy, tenacity, and initiative): leadership motivation (the desire to lead but not to seek power as an end in itsell); honesty and integrity; sell-confidence (which is associated with emotional stability): cognitive ability; and lcnowledge of the business. There is less clear evidence for traits such as charisma, creativity and flexibility. We believe that the key leader traits help the leader acquire necessary skills: formulate an organizational vision and an effective plan for pursuing it; and take the necessary steps to implement the vision in reality.

Few issues have a more controversial history than leadership traits and characteristics. In the 19th and early 20th centuries, "great man" leadership theories were highly popular. These theories asserted that leadership qualities were inherited, especially by people from the upper class. Great men were, born, not made (in those days, virtually all business leaders were men). Today, great man theories are a popular foil for so-called superior models. To make the new models plausible, the "great men" are endowed with negative as well as positive traits. In a recent issue of the Harvard Business Review, for example, Slater and Bennis write,

"The passing years have . . . given the coup de grace to another force that has retarded democratization-the 'great man' who with brilliance and farsightedness could preside wth dictatorial powers as the head of a growing organization."1

Such great men, argue Slater and Bennis, become "outmoded" and dead hands on "the flexibility and growth of the organization." Under the new democratic model, they argue, "the individual is of relatively little significance."

Early in the 20th century, the great man theories evolved into trait theories. ("Trait" is used broadly here to refer to people's general characteristics, including capacities, motives, or patterns of behavior.) Trait theories did not make assumptions about whether leadership traits were inherited or acquired. They simply asserted that leaders' characteristics are different from non-leaders. Traits such as height, weight, and physique are heavily dependent on heredity, whereas others such as knowledge of the industry are dependent on experience and learning.

The trait view was brought into question during the mid-century when a prominent theorist, Ralph Stogdill, after a thorough review of the literature concluded that "A person does not become a leader by virtue of the possession of some combination of traits. "2 Stogdill believed this because the research showed that no traits were universally associated with effective leadership and that

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Leadership: Do Traits Matter? Kirkpatrick, Shelley A.; Locke, Edwin A. The Executive; May 1991; 5, 2; ABI/INFORM Global pg. 48

Kirkpatrick and Locke

situational factors were also influential. For example, military leaders do not have traits identical to those of business leaders.

Since Stogdill's early review, trait theory has made a come back, though in altered form. Recent research, using a variety of methods, has made it clear that successful leaders are not like other people. The evidence indicates that there are certain core traits which significantly contribute to business leaders' success.

Traits alone, however, are not sufficient for successful business leadership-they are only a precondition. Leaders who possess the requisite traits must take certain actions to be successful (e.g. formulating a vision, role modeling, setting goals). Possessing the appropriate traits only makes it more likely that such actions will be taken and be successful. After summarizing the core leadership traits, we will discuss these important actions and the managerial implications.

The Evidence: Traits Do Matter

The evidence shows that traits do matter. Six traits on which leaders differ from non-leaders include: drive, the desire to lead, honesty/integrity, self-confidence, cognitive ability, and knowledge of the business. 3 These traits are shown in Exhibit 1 .

Drive The first trait is labeled "drive" which is not to be confused with physical need deprivation. We use the term to refer to a constellation of traits and motives reflecting a high effort level. Five aspects of drive include achievement motivation, amibition, energy, tenacity, and initiative.

Achievement. Leaders have a relatively high desire for achievement. The need for achievement is an important motive among effective leaders and even more important among successful entrepreneurs. High achievers obtain satisfaction from successfully completing challenging tasks, attaining standards of excellence, and developing better ways of doing things. To work their way up to the top of the organization, leaders must have a desire to complete challenging assignments and projects. This also allows the leader to gain technical expertise, both through education and work experience, and to initiate and follow through with organizational changes.

The constant striving for improvement is illustrated by the following manager who took charge of a $260 million industrial and office-products division:4

After twenty-seven months on the job, Tom saw his efforts pay off: the division had its best first quarter ever. By his thirty-first month, Tom felt he had finally mastered the situation . . . . [Tom] finally felt he had the structure and management group in place to grow the division's revenues to $400 million and he now turned his attention to divesting a product group which no longer fit in with the growth objectives of the division.

Drive: achievement, ambition, energy, tenacity, initiative Leadership Motivaton (personalized vs. socialized) Honesty and Integrity Self-confidence (including emotional stability) Cognitive Ability Knowledge of the BusineBB Other Traits (weaker support): charisma, creativity/originality, flexibility

Exhibit 1. Leadership Traits

49

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Academy of Management Executive

Managers perform a large amount of work at an unrelenting pace. To perform well, a leader needs to constantly work toward success and improvement. Superior managers and executives are concerned with doing something better than they or other have ever done it. For example, at PepsiCo only "aggressive achievers" survive. Similarly, Thomas Watson of IBM has been described as "driven throughout by a personal determination to create a company larger than NCR. "5 This brings us to a second related motive: ambition.

Ambition. Leaders are very ambitious about their work and careers and have a desire to get ahead. To advance, leaders actively take steps to demonstrate their drive and determination. Ambition impels leaders to set hard, challenging goals for themselves and their organizations. Walt Disney, founder of Walt Disney Productions, had a "dogged determination to succeed" and C.E. Woolman of Delta Air Lines had "inexhaustible ambition."

Effective leaders are more ambitious than nonleaders. In their 20-year study, psychologists Ann Howard and Douglas Bray found that among a sample of managers at AT&T, ambition, specifically the desire for advancement, was the strongest predictor of success twenty years later. The following character sketches of two managers who successfully progressed illustrate the desire for advancement:6

I want to be able to demonstrate the things I learned in college and get to the top," said Al, "maybe even be president. I expect to work hard and be at the third level within 5 years, and to rise to much higher levels in the years beyond that. I am specifically working on my MBA to aid in my advancement. If I'm thwarted on advancement, or find the challenge is lacking, I'll leave the company.

[He] had been promoted to the district level [after 8 years] and certainly expected to go further. Although he still wouldn't pinpoint wanting to be president (his wife's dream for him), he certainly had a vice presidency (sixth level) in mind as early as year 2 in the study, after his first promotion.

Even at age 70. Sam Walton. founder of Wal-Mart discount stores. still attended Wal-Mart's Saturday morning meeting. a whoop-it-up 7:30 a.m. sales pep rally for 300 managers.

50

The following sketches characterize two less ambitious individuals:

Even though Chet had the benefits of a college degree, his below-average scholastic performance did not fill him with confidence in his capabilities. He hedged a bit with his interviewer when asked about his specific aspirations, saying he wasn't sure what the management levels were. When pressed further, he replied, "I'd like to feel no job is out of my reach, but I'm not really possessed of a lot of ambition. There are times when I just want to say, 'To hell with everything.' "

After [his] promotion to the second level, he looked more favorably upon middle management, but he still indicated he would not be dissatisfied to stay at the second level. [He] just seemed to take each position as it came; if he ever looked ahead, he didn't appear to look up.

Energy. To sustain a high achievement drive and get ahead, leaders must have a lot of energy. Working long, intense work weeks (and many weekends) for many years, requires an individual to have physical, mental, and emotional vitality.

Leaders are more likely than nonleaders to have a high level of energy and stamina and to be generally active, lively, and often restless. Leaders have been characterized as "electric, vigorous, active, full of life" as well as possessing the "physical vitality to maintain a steadily productive work pcce.'" Even at age 70, Sam Walton, founder of Wal-Mart discount stores, still attended Wal-Mart's Saturday morning meeting, a whoop-it-up 7:30 a.m. sales pep rally for 300 managers.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

Kirkpatrick and Locke

The need for energy is even greater today than in the past, because more companies are expecting all employees, including executives, to spend more time on the road visiting the organization's other locations, customers, and suppliers.

Tenacity. Leaders are better at overcoming obstacles than nonleaders. They have the "capacity to work with distant objects in view" and have a "degree of strength of will or perseverance. "8 Leaders must be tirelessly persistent in their activities and follow through with their programs. Most organizational change programs take several months to establish and can take many years before the benefits are seen. Leaders must have the drive to stick with these programs, and persistence is needed to ensure that changes are institutionalized.

An example of heroic perseverance in the face of obstacles, from American history, is the tale of John Paul Jones, a captain in the newly formed American Navy. On September 25, 1779, John Paul Jones, aboard the Bonhomme Richard, engaged in battle with the English ship, Serapis off the cost of England. After being bombarded with cannon fire by the Serapis, having two old cannons explode causing a fire, and being fired at by their supposed ally, the Alliance, Jones appeared to have lost the battle. When asked to surrender in the face of almost certain defeat, Jones made his immortal reply: "I have not yet begun to fight."

Determined to sink the Serapis, Jones spotted an open hatch on the Serapis' deck and ordered a young sailor to climb into the rigging and toss grenades into the hatch, knowing the English had stored their ammunitions there. After missing with the first two grenades, the third grenade disappeared into the hatchway and was followed by a thunderous explosion aboard the Serapis. Engulfed in flames, the English captain surrendered to Jones. Even though the entire battle had gone against him, John Paul Jones was determined not to give up, and it was this persistence that caused him to finally emerge victorious.

It is not just the direction of action that counts, but sticking to the direction chosen. Effective leaders must keep pushing themselves and others toward the goal. David Glass, CEO of Wal-Mart, says that Sam Walton "has an overriding something in him that causes him to improve every day . . . . As long as I have known him, he has never gotten to the point where he's comfortable with who he is or how we're doing." Walt Disney was described as expecting the best and not relenting until he got it. Ray Kroc, of McDonald's Corporation, was described as a "dynamo who drove the company relentlessly."9 Kroc posted this inspirational message on his wall:

Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with great talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence, determination alone are omnipotent.

Persistence, of course, must be used intelligently. Dogged pursuit of an inappropriate strategy can ruin an organization. It is important to persist in the right things. But what are the right things? In today's business climate, they may include the following: satisfying the customer, growth, cost control, innovation, fast response time, and quality. Or, in Tom Peters' terms, a constant striving to improve just about everything.

Initiative. Effective leaders are proactive. They make choices and take action that leads to change instead of just reacting to events or waiting for things to happen;

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that is, they show a high level of initiative. The following two examples from consultant Richard Boyatzis of McBer and Company illustrate proactivity: 10

I called the chief, and he said he couldn't commit the resources, so I called the budget and finance people, who gave me a negative response. But then I called a guy in another work group who said he was willing to make a trade for the parts I needed. I got the parts and my group was able to complete the repairs.

One of our competitors was making a short, half-inch component and probably making $30,000-$40,000 a year on it. I looked at our line: we have the same product and can probably make it better and cheaper. I told our marketing manager: "Let's go after that business." I made the decision that we would look at it as a marketplace rather than looking at it as individual customers wanting individual quantities. I said, here's a market that has 30,000 pieces of these things, and we don't give a damn where we get the orders. Let's just go out and get them. We decided we were going to charge a specific price and get the business. Right now we make $30,000-$40,000 on these things and our competitor makes zero.

Effective leaders must not only be lull ol drive and ambition, they must want to lead others.

Power is an "expandable pie," not a fixed sum: effective leaders give power to others as a means ol increasing their own power.

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Instead of sitting "idly by or [ waiting] for fate to smile upon them," leaders need to "challenge the process."

Leaders are achievement-oriented, ambitious, energetic, tenacious, and proactive. These same qualities, however, may result in a manager who trys to accomplish everything alone, thereby failing to develop subordinate commitment and responsibility. Effective leaders must not only be full of drive and ambition, they must want to lead others.

Leadership Motivation Studies show that leaders have a strong desire to lead. Leadership motivation involves the desire to influence and lead others and is often equated with the need for power. People with high leadership motivation think a lot about influencing other people, winning an argument, or being the greater authority. They prefer to be in a leadership rather than subordinate role. The willingness to assume responsibility, which seems to coincide with leadership motivation, is frequently found in leaders.

Sears psychologist Jon Bentz describes successful Sears executives as those who have a "powerful competitive drive for a position of . . . authority . . . [and] the need to be recognized as men of influence."!' Astronauts John Glenn and Frank Borman built political and business careers out of their early feats as space explorers, while other astronauts did not. Clearly, all astronauts possessed the same opportunities, but is was their personal makeup that caused Glenn and Borman to pursue their ambitions and take on leadership roles.

Psychologist Warren Bennis and colleague Burt Nanus state that power is a leader's currency, or the primary means through whcih the leader gets things done in the organization. A leader must want to gain the power to exercise influence over others. Also, power is an "expandable pie," not a fixed sum; effective leaders give power to others as a means of increasing their own power. Effective leaders do not see power as something that is competed for but rather as something that can be created and distributed to followers without detracting from their own power.

Successful managers at AT&T completed sentence fragments in the following manner:12

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Successful leaders are open with their followers. but also discreet and do not violate confidences or carelessly divulge potentially harmful information.

"When I am in charge of others I find my greatest satisfactions." "The job I am best fit for is one which requires leadership ability." "I depend on others to carry out my plans and directions."

A manager who was not as successful completed the sentence fragment "Taking orders . . . " with the ending "is easy for it removes the danger of a bad decision."

Successful leaders must be willing to exercise power over subordinates, tell them what to do, and make appropriate use of positive and negative sanctions. Previous studies have shown inconsistent results regarding dominance as a leadership trait. According to Harvard psychologist David McClelland, this may be because there are two different types of dominance: a personalized power motive, or power lust, and a socialized power motive, or the desire to lead. 13

Personalized Power Motive. Although a need for power is desirable, the leader's effectiveness depends on what is behind it. A leader with a personalized power motive seeks power as an end in itself. These individuals have little self-control. are often impulsive, and focus on collecting symbols of personal prestige. Acquiring power solely for the sake of dominating others may be based on profound self-doubt. The personalized power motive is concerned with domination of others and leads to dependent, submissive followers.

Socialized Power Motive. In contrast, a leader with a socialized power motive uses power as a means to achieve desired goals, or a vision. Its use is expressed as the ability to develop networks and coalitions, gain cooperation from others, resolve conflicts in a constructive manner, and use role modeling to influence others.

Individuals with a socialized power motive are more emotionally mature than those with a personalized power motive. They exercise power more for the benefit of the whole organization and are less likely to use it for manipulation. These leaders are also less defensive, more willing to take advice from experts, and have a longer-range view. They use their power to build up their organization and make it successful. The socialized power motive takes account of followers' needs and results in empowered, independent followers.

Honesty and Integrity Honesty and integrity are virtues in all individuals, but have special significance for leaders. Without these qualities, leadership is undermined. Integrity is the correspondence between word and deed and honesty refers to being truthful or non-deceitful. The two form the foundation of a trusting relationship between leader and followers.

In his comprehensive review of leadership, psychologist Bernard Bass found that student leaders were rated as more trustworthy and reliable in carrying out responsibilites than followers. Similarly, British organizational psychologists Charles Cox and Cary Cooper's "high flying" (successful) managers preferred to have an open style of management. where they truthfully informed workers about happenings in the company. Morgan McCall and Michael Lombardo of the Center for Creative Leadership found that managers who reached the top were more likely to follow the following formula: "I will do exactly what I say I will do when I say I will do it. If I change my mind, I will tell you well in advance so you will not be harmed by my actions. "1 4

Successful leaders are open with their followers, but also discreet and do not violate confidences or carelessly divulge potentially harmful information. One subordinate in a study by Harvard's John Gabarro made the following remark about his new president: "He was so consistent in what he said and did, it was

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easy to trust him." Another subordinate remarked about an unsuccessful leader, "How can I rely on him if I can't count on him consistently?"15

Professors James Kouzes, Barry Posner, and W.H. Schmidt asked 1500 managers "What values do you look for and admire in your superiors?" Integrity (being truthful and trustworthy, and having character and conviction) was the most frequently mentioned characteristic. Kouzes and Posner conclude:

Honesty is absolutely essential to leadership. After all, if we are willing to follow someone, whether it be into battle or into the boardroom, we first want to assure ourselves that the person is worthy of our trust. We want to know that he or she is being truthful, ethical, and principled. We want to be fully confident in the integrity of our leaders.

Effective leaders are credible, with excellent reputations, and high levels of integrity. The following description (from Gcbcrro's study) by one subordinate of his boss exemplifies the concept of integrity: "By integrity, I don't mean whether he'll rob a bank, or steal from the till. You don't work with people like that. It's whether you sense a person has some basic principles and is willing to stand by them."

Bennis and Nanus warn that today credibility is at a premium, especially since people are better informed, more cautious, and wary of authority and power. Leaders can gain trust by being predictable, consistent, and persistent and by making competent decisions. An honest leader may even be able to overcome lack of expertise, as a subordinate in Gabarro's study illustrates in the following description of his superior: "I don't like a lot of the things he does, but he's basically honest. He's a genuine article and you'll forgive a lot of things because of that. That goes a long way in how much I trust him."

Self-Confidence There are many reasons why a leader needs self-confidence. Being a leader is a very difficult job. A great deal of information must be gathered and processed. A constant series of problems must be solved and decisions made. Followers have to be convinced to pursue specific courses of action. Setbacks have to be overcome. Competing interests have to be satisfied. Risks have to be taken in the face of uncertainty. A person riddled with self-doubt would never be able to take the necessary actions nor command the respect of others.

Self-confidence plays an important role in decision-making and in gaining others' trust. Obviously, if the leader is not sure of what decision to make, or expresses a high degree of doubt, then the followers are less likely to trust the leader and be committed to the vision.

Not only is the leader's self-confidence important, but so is others' perception of it. Often, leaders engage in impression management to bolster their image of competence; by projecting self-confidence they arouse followers' self-confidence. Self-confident leaders are also more likely to be assertive and decisive, which gains others' confidence in the decision. This is crucial for effective implementation of the decision. Even when the decision turns out to be a poor one, the self-confident leader admits the mistake and uses it as a learning opportunity, often building trust in the process. Manor Care, Inc., for example, lost over $21 million in 1988 when it was caught holding a large portion of Beverly Enterprise's stock. Chairman and CEO Stewart Bainum, Jr. stated, "I take full and complete responsibility for making the acquisition. " 1 6 Considered to be the "best managed company in the [nursing home] industry," Manor Care's stock has rebounded, and it seems to be making a comeback. Less successful managers are more defensive about failure and try to cover up mistakes.

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Leaders have often been characterized as being intelligent, but not necessarily brilliant and as being conceptually skilled.

Emotional Stability. Self confidence helps effective leaders remain even-tempered. They do get excited, such as when delivering an emotionally-charged pep talk, but generally do not become angry or enraged. For the most part, as long as the employee did his/her homework leaders remain composed upon hearing that an employee made a costly mistake. For example, at PepsiCo, an employee who makes a mistake is "safe . . . as long as it's a calculated risk."

Emotional stability is especially important when resolving interpersonal conflicts and when representing the organization. A top executive who impulsively flies off the handle will not foster as much trust and teamwork as an executive who retains emotional control. Describing a superior, one employee in Gcbcrro's study stated, "he's impulsive and I'm never sure when he'll change signals on me."

Researchers at the Center for Creative Leadership found that leaders are more likely to "derail" if they lack emotional stability and composure. Leaders who derail are less able to handle pressure and more prone to moodiness, angry outbursts, and inconsistent behavior, which undermines their interpersonal relationships with subordinates, peers, and superiors. In contrast, they found the successful leaders to be calm, confident, and predictable during crisis.

Psychologically hardy, self-confident individuals consider stressful events interesting, as opportunities for development, and believe that they can influence the outcome. K. Labich in Fortune magazine argued that "By demonstrating grace under pressure, the best leaders inspire those around them to stay calm and act intelligently. '' 1 7

Cognitive Ability Leaders must gather, integrate, and interpret enormous amounts of information. These demands are greater than ever today because of rapid technological change. Thus, it is not surprising that leaders need to be intelligent enough to formulate suitable strategies, solve problems, and make correct decisions.

Leaders have often been characterized as being intelligent, but not necessarily brilliant and as being conceptually skilled. Kotter states that a "keen mind" ( i . e . , strong analytical ability, good judgement, and the capacity to think strategically and multidimensionally) is necessary for effective leadership, and that leadership effectiveness requires "above average intelligence," rather than genius.

An individual's intelligence and the perception of his or her intelligence are two highly related factors. Professors Lord, DeVader, and Alliger concluded that "intelligence is a key characteristic in predicting leadership perceptions. " 1 8

Howard and Bray found that cognitive ability predicted managerial success twenty years later in their AT&T study. Effective managers have been shown to display greater ability to reason both inductively and deductively than ineffective managers.

Intelligence may be a trait that followers look for in a leader. If someone is going to lead, followers want that person to be more capable in some respects than they are. Therefore, the follower's perception of cognitive ability in a leader is a source of authority in the leadership relationship.

Knowledge of the Business Effective leaders have a high degree of knowledge about the company, industry, and technical matters. For example, Jack Welch, president of GE has c P h l) in engineering; Geroge Hatsopolous of Thermo Electron Corporation, in the years preceding the OPEC boycott, had both the business knowledge of the impending need for energy-efficient appliances and the technical knowledge of

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thermodynamics to create more efficient gas furnaces. Technical expertise enables the leader to understand the concerns of subordinates regarding technical issues. Harvard Professor John Kotter argues that expertise is more important than formal education.

Effective leaders gather extensive information about the company and the industry. Most of the successful general managers studies by Harvard's Kotter spent their careers in the same industry, while less successful managers lacked industry-specific experiences. Although cognitive ability is needed to gain a through understanding of the business, formal education is not a requirement. Only forty percent of the business leaders studied by Bennis and Nanus had business degrees. In-depth knowledge of the organization and industry allows effective leaders to make well-informed decisions and to understand the implications of those decisions.

Other Traits Charisma, creativity/originality, and flexibility are three traits with less clear-cut evidence of their importance to leadership. 19 Effective leaders may have charisma, however, this trait may only be important for political leaders. Effective leaders also may be more creative than nonleaders, but there is no consistent research demonstrating this. Flexibility or adaptiveness may be important traits for a leader in today's turbulent environment. Leaders must be able to make decisions and solve problems quickly and initiate and foster change.

There may be other important traits needed for effective leadership, however, we believe that the first six that we discussed are the core traits.

The Rest of the Story A complete theory of leadership involves more than specifiying leader traits. Traits only endow people with the potential for leadership. To actualize this potential, additional factors are necessary which are discussed in our forthcoming book The Essence of Leadership (written with additional authors).

Three categories of factors are discussed here: skills, vision, and implementing the vision. Skills are narrower in meaning than traits and involve specific capacities for action such as decision making, problem solving, and performance appraisal.

The core job of a leader, however, is to create a vision-a concept of what the organization should be. To quote Bennis and Nanus, "a vision articulates a view of a realistic, credible, attractive future for the organization, a condition that is better in some important ways than what now exists. A vision is a target that beckons. "20 Next the leader must communicate this vision to followers through inspirational speeches, written messages, appeals to shared values and above all through acting as a role model and personally acting in a way that is consistent with the vision. Third, the leader must develop or at least help to develop a general strategy for achieving the vision (i.e. a strategic vision).

Implementing the vision requires at least six activities:

I . Structuring. Today's effective organizations have minimal bureaucracy: small corporate staffs, few layers of management and large spans of control. The leader must insure that the organization's structure facilitates the flow of information (downward, upward, and diagonally). Information from customers regarding product quality and services is especially crucial.

2. Selecting and Training. Leaders must make sure that people are hired who have the traits needed to accept and implement the vision. Maintaining and upgrading skills is assured by constant training, as is commitment to the organization's vision.

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Effective leaders do not just reward achievement, they celebrate it.

3. Motivating. Leaders cannot achieve the vision alone; they must stimulate others to work for it too. They must generate enthusiasm, commitment, and compliance. Besides communicating the vision, effective leaders use at least six procedures to motivate followers.

Formal authority. The leader is the "boss" and must use his or her legitimate power constructively. The leader must start by asking directly for what he or she wants. Thriving on Chaos author Tom Peters said that if one wants something, then "Just ask for it."

Role Models. Leaders must behave the way they wish their followers would behave. For example, if they want subordinates to be customer-oriented, they should spend time themselves talking to customers. This has far more influence on employees than just telling them that customers are important.

Build subordinate self-confidence. If employees have been carefully selected and trained, such confidence will be justified. Jay Conger calls the process of strengthening subordinates' belief in their capabilities "empowerment. "21

Delegation of authority. Giving autonomy and responsibility to employees also creates empowerment. In their book Superleadership, Charles Manz and Henry Sims

22 argue that delegating authority actually enhances the power of leaders by

helping their subordinates become capable of attaining organizational goals. Effective delegation, of course, pre-supposes that subordinates are capable of holding the responsibilities they are given (as a result of extensive training and experience).

Specific and challenging goals. 23 Ensuring that subordinates have specific and challenging goals lead to higher performance than ambiguous goals. Challenging goals are empowering, because they demonstrate the leader has confidence in the follower. Goals must be accompanied by regular feedback indicating progress in relation to the goals. Feedback, in tum, requires adequate performance measurement.

For goals to be effective employees must be committed to them. Inspiration, modeling, training, and delegation all facilitate commitment.

Rewards and punishments. Effective leaders are not tolerant of those who reject the vision or repeatedly fail to attain reasonable goals. Rewards (and punishments) send messages not only to the employee in question but also to others; followers often direct their own actions by looking at what happens to their peers. People may learn as much or more by observing models than from the consequences of their own actions. 24 Rewards may include pay raises, promotions and awards, as well as recognition and praise. Effective leaders do not just reward achievement. they celebrate it.

4. Managing Information. Leaders have a profound influence on how information is managed within the organization. Effective leaders are effective information gatherers because they are good listeners and encourage subordinates to express their opinions. They stay in contact with the rest of the organization by, in Tom Peters' terms, "wandering around." Leaders actively seek information from outside the organization. Good leaders also disseminate information widely so that followers will understand the reasons for decisions that are made and how their work fits into the organization's goals. At the same time, effective leaders try not to overwhelm subordinates with too much information.

5. Team Building. Achieving goals requires collaboration among many (in some cases, hundreds of thousands) individuals. Leaders need to help build effective

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teams, starting with the top management team. 25 While an effective leader cannot do everything, he or she can insure that everything gets done by hiring, training, and motivating skilled people who work together effectively. And they, in turn, can build effective teams of their own.

6. Promoting Change and Innovation. Finally, effective leaders must promote change and innovation. The vision, since it pertains to a desired future state, is the starting point of change. This must be reinforced by constant restructuring, continual retraining to develop new skills, setting specific goals for innovation and improvement, rewarding innovation, encouraging a constant information flow in all directions and emphasizing responsiveness to customer demands.

* * *

It is clear that leadership is a very demanding activity and that leaders who have the requisite traits-drive, desire to lead, self-confidence, honesty (and integrity), cognitive ability, and industry knowledge-have a considerable advantage over those who lack these traits. Without drive, for example, it is unlikely that an individual would be able to gain the expertise required to lead an organization effectively, let alone implement and work toward long-term goals. Without the desire to lead, individuals are not motivated to persuade others to work toward a common goal; such an individual would avoid or be indifferent to leadership tasks. Self-confidence is needed to withstand setbacks, persevere through hard times, and lead others in new directions. Confidence gives effective leaders the ability to make hard decisions and to stand by them. A leader's honesty and integrity form the foundation on which the leader gains followers' trust and confidence; without honesty and integrity, the leader would not be able to attract and retain followers. At least a moderate degree of cognitive ability is needed to gain and understand technical issues as well as the nature of the industry. Cognitive ability permits leaders to accurately analyze situations and make effective decisions. Finally, knowledge of the business is needed to develop suitable strategic visions and business plans.

Management Implications Individuals can be selected either from outside the organization or from within non- or lower-managerial ranks based on their possession of traits that are less changeable or trainable. Cognitive ability (not to be confused with knowledge) is probably the least trainable of the six traits. Drive is fairly constant over time although it can change; it is observable in employees assuming they are given enough autonomy and responsibility to show what they can do. The desire to lead is more difficult to judge in new hires who may have had little opportunity for leadership early in life. It can be observed at lower levels of management and by observing people in assessment center exercises.

Leaders do not have to be great men or women by being intellectual geniuses or omniscient prophets to succeed. but they do need to have the "right stuff" and this stuff is not equally present in all people.

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Two other traits can be developed through experience and training. Knowledge of the industry and technical knowledge come from formal training, job experience, and a mentally active approach toward new opportunities for learning. Planned job rotation can facilitate such growth.Self-confidence is both general and task specific. People differ in their general confidence in mastering life's challenges but task-specific self-confidence comes from mastering the various skills that leadership requires as well as the technical and strategic challenges of the industry. Such confidence parallels the individual's growth in knowledge.

Honesty does not require skill building; it is a virtue one achieves or rejects by choice. Organizations should look with extreme skepticism at any employee who behaves dishonestly or lacks integrity, and should certainly not reward dishonesty in any form, especially not with a promotion. The key role models for honest behavior are those at the top. On this issue, organizations get what they model, not what they preach.

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Conclusions

Regardless of whether leaders are born or made or some combination of both, it is unequivocally clear that leaders are not like other people. Leaders do not have to be great men or women by being intellectual geniuses or omniscient prophets to succeed, but they do need to have the "right stuff" and this stuff is not equally present in all people. Leadership is a demanding, unrelenting job with enormous pressures and grave responsibilities. It would be a profound disservice to leaders to suggest that they are ordinary people who happened to be in the right place at the right time. Maybe the place matters, but it takes a special kind of person to master the challenges of opportunity. Let us not only give credit, but also use the knowledge we have to select and train our future leaders effectively. We believe that in the realm of leadership (and in every other realm), the individual does matter.

Endnotes This article is based on a chapter of a forthcoming book by Edwin A. Locke, Shelley A. Kirkpatrick, Jill K. Wheeler, Jodi Schneider. Kathryn Niles, Harold Goldstein, Kurt Welsh, & Dong-OK Chah, entitled The Essence of Leadership. We would like to thank Dr. Kathryn Bartol for her helpful comments on this manuscript.

1 P. Slater and W.G. Bennis, "Democracy is Inevitable," Harvard Business Review, Sept-Oct. 1990, 170 and 1 7 1 . For a summary of trait theories. see R.M. Stogdill's Handbook of Leadership, New York: Free Press, 1974). For reviews and studies of leadership traits, see R.E. Boyatzis, The Competent Manager (New York: Wiley & Sons, 1982); C.J. Cox and C.L. Cooper, High Flyers: An Anatomy of Managerial Success (Oxford: Basil Blackwell): G.A. Yuki. Leadership in Organizations (Englewood Cliffs. NJ: Prentice Hall, 1989), Chapter 9.

2 R.M. Stogdill, "Personal Factors Associated with Leadership: A Survey of the Literature," Journal of Psychology, 1948, 25, 64.

3 See the following sources for evidence and

further information concerning each trait: l) drive: B.M. Bass's Handboook of Leadership (New York: The Free Press, 1990); K.G. Smith and J.K. Harrison, "In Search of Excellent Leaders" (in W.D.Guth's The Handbook of Strategy, New York: Warren, Gorham, & Lamont, 1986). 2) desire to lead: V.J. Bentz. "The Sears Experience in the Investigation, Description, and Prediction of Executive Behavior," (In F.R. Wickert and D.E. McFarland's Measuring Executive Effectiveness, (New York: Appleton-Century-Crofts, 1967); J.B. Miner, "Twenty Years of Research on Role-Motivation Theory of Managerial Effectiveness," Personnel Psychology, 1978, 31, 739- 760. 3) honesty/integrity: Bass. op cit.; W.G. Bennis and B. Nanus, Leaders: The Strategies for Taking Charge (New York: Harper & Row, 1985); J.M. Kouzes and B.Z. Posner, The Leadership Challenge: How to Get Things Done in Organizations (San Francisco: Jossey-Bass); T. Peters. Thriving on Chaos (New York: Harper & Row, 1987); A. Rand, For the New Intellectual (New York: Signet, 1961). 4) self-confidence: Bass, op cit. and A. Bandura, Social Foundations of Thought and Action: A Social

Cognitive Theory, (Englewood Cliffs, NJ: business: Bennis and Nanus, op. cit.; J.P. Prentice-Hall). Psychological hardiness is discussed by S.R. Maddi and S.C. Kobasa, The Hardy Executive: Health Under Stress (Chicago: Dorsey Professional Books, 1984); M.W. McCall Jr. and M.M. Lombardo, Off the Track: Why and How Successful Executives get Derailed (Technical Report No. 21. Greensboro. NC: Center for Creative Leadership. 1983). 5) cognitive ability: R.G. Lord, C.L. DeVader, and G.M. Alliger. "A Meta-analysis of the Relation Between Personality Traits and Leadership Perceptions: An Application of Validity Generalization Procedures," Journal of Applied Psychology, 1986; 61, 402-410: A. Howard and D.W. Bray, Managerial Lives in Transition: Advancing Age and Changing Times (New York: Guilford Press, 1988). 6) knowledge of the business: Bennis and Nanus, op. cit.; J.P.Kotter, The General Managers (New York: MacMillan); Smith and Harrison, op. cit.

4 From J.J. Gabarro, The Dynamics of Taking Charge (Boston: Harvard Business School Press. 1987).

5 All PepsiCo references are from B. Dumaine, "Those highflying managers at PepsiCo," Fortune, April 10, 1989, 78-86. The Watson quote is from Smith and Harrison, op. cit., as are the Disney and Woolman quotes in the following paragraph.

6 The four quotes are from Howard and Bray. op. cit.

7 From Kouzes and Posner, op. cit .. pp. 122 and V.J. Bentz. op cit. The Sam Walton quote is from J. Huey. 'Wal-Mart: Will it take over the world?," Fortune, January 30, 1989, 52-59.

8 From Bass, op. cit. 9 The Walton quote is from Huey. op. cit., and

the Kroc quote is from Smith and Harrison, op. cit. The quote on Kroc's wall is taken from Bennis and Nanus, op. cit.

1 ° From Boyatzis, op. cit. Also, Kouzes and

Posner.op. cit. stress the importance of leader initiative.

I I From Bentz. op. cit. 12 From Howard and Bray. op. cit. 13 The distinction between a personalized and

a socialized power motive is made by D.C. McClelland, "N-achievement and entrepreneurship: A longitudinal study,"

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Journal of Personality and Social Psychology, 1965, I, 389-392. These two power motives are discussed further by Kouzes and Posner, op. cit. 14 From McCall and Lombardo, op cit.

15 From Gabarro, op. cit. 16 K.F. Girard examines Manor Care in "To

the Manor Born," Warfield's, March, 1989, 68-75. 17 From K. Labich, "The Seven Keys to

Business Leadership," Fortune, October 24, 1988. 58-66.

18 From Lord, DeVader. and Alliger. op cit. 19 For research on charisma. see Bass, op. cit.

and H.J. House. W.D. Spangler. and J. Woycke, "Personality and charisma in the U.S. presidency: A psychological theory of leadership effectiveness (Wharton School. University of Pennsylvania, 1989, unpublished manuscript), on creativity/originality, see

Howard and Bray. op. cit. and A. Zaleznik, The Managerial Mystique (New York: Harper and Row. 1989); on flexibility. see Smith and Harrison, op. cit.

20 From Bennis and Nanus, op. cit. 21 From J.A. Conger, Charismatic Leadership:

The Elusive Factor in Organizational Effectiveness (San Francisco: Jossey-Bass. 1988).

22 C. Manz and H.P. Sims. Superleadership: Leading Others to Lead Themselves (New York: Prentice Hall, 1989).

23 See E.A. Locke and G.P. Latham, A Theory

of Goal Setting & Task Performance (Englewood Cliffs, NJ: Prentice Hall, 1990).

24 See Bandura, op. cit. 25 See D.C. Hambrick, "The top management

team: Keys to strategic success," California Management Review, 1987, 30, 1-20.

About the Authors

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Shelley A. Kirkpatrick is a doctoral student in the organizational behavior program at the University of Maryland, College Park. She holds a BS in industrial/organizational psychology from Bowling Green State University. Her research interests include leadership and motivation. She is co-author of the forthcoming book The Essence of Leadership.

Edwin A. Locke is chair of the Management and Organization faculty at the University of Maryland, College Park. He is an internationally known behavioral scientist with over 135 articles and five books to his credit. He is most well known for his work on goal setting, most recently summarized in his book with Gary Latham entitled A Theory of Goal Setting and Task Performance (Prentice Hall, 1990). He is also a co-author of the forthcoming book The Essence of Leadership. Dr. Locke is a fellow of the American Psychological Association, the American Psychological Society, and the Academy of Management.

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Critical Skills: Leadership.

Comstock, Nancy W.

Salem Press Encyclopedia, 2019. 4p.

Article

Leadership

Motivation (Psychology)

Authority

Leadership is the ability to guide, persuade, or motivate others as head

of a group or organization. It differs from management or authority in

that a positive connotation is typically attached to the concept of

leadership—especially in educational and professional situations—while

more official roles sometimes can evoke resentment or even some level

of fear. (However, it should be noted that negatively influential leaders

exist as well, such as dictators and crime kingpins.) Managers can

accomplish necessary tasks, such as planning and coordinating

projects, hiring help, and solving problems, but leaders also use social

influence to inspire others to achieve a common goal. Good leaders are

usually looked upon with respect for the role they play in influencing

others, meeting goals, and making positive changes.

2295

98402056

Research Starters

Critical Skills: Leadership

Leadership is the ability to guide, persuade, or motivate others as head of a group or organization. It differs

from management or authority in that a positive connotation is typically attached to the concept of leadership—

especially in educational and professional situations—while more official roles sometimes can evoke

resentment or even some level of fear. (However, it should be noted that negatively influential leaders exist as

well, such as dictators and crime kingpins.) Managers can accomplish necessary tasks, such as planning and

coordinating projects, hiring help, and solving problems, but leaders also use social influence to inspire others

to achieve a common goal. Good leaders are usually looked upon with respect for the role they play in

influencing others, meeting goals, and making positive changes.

Styles of leadership. Public

domain, via Wikimedia

Commons

Model of Trait Leadership By

Zaccaro, C. Kemp, & P. Bader

(Zaccaro, C. Kemp, & P. Bader,

2004) [CC-BY-SA-3.0

(http://creativecommons.org/licens

sa/3.0)], via Wikimedia

Commons

While some personality traits, such as extraversion, patience, and a passion for developing ideas can help a

person become a leader, most leadership skills can be learned. Collaboration, communication, respect, and

honesty are integral to leadership and can be honed through education and experience. Although much

attention has been paid to executive leadership in business, strong political, education, and community leaders

are also necessary to ensure human rights, justice, social development, education, and other aspects of the

common good. It is up to leaders to provide inspiration and motivation to accomplish shared goals, while

followers must be willing to make changes and take on new responsibilities as their part in achieving the end.

Leadership is not a gendered trait; however, many studies have found that in school groups comprised of both

sexes, the presence of boys inhibits the expression of leadership among the girls. Research has indicated that,

in general, men tend to assert leadership in terms of power and direct attention to tasks and goals, while

women tend to exhibit leadership in terms of personal connections and group decision making. While

traditional accounts of history have emphasized male-dominated leadership, power or authority is not in fact

necessary for leadership; the ability to look at problems in new ways, engage others, and maximize the group's

effort is the most helpful factor in working toward a desired outcome. The ability of many women to quickly and

easily form useful relationships has been recognized as one of many effective ways to lead.

Leaders within a business, organization, or religious congregation help accomplish each group's goals. While

an ambitious entrepreneur may provide a quality product or service that allows people to live more comfortably,

a charismatic community leader may change the lives of thousands, or even millions. Men and women such as

Mahatma Gandhi, Susan B. Anthony, Mary Harris "Mother" Jones, and Martin Luther King Jr. led people into

freedom, helped secure equal rights, and inspired their followers to education and better lives.

Core Skills & Competencies

Leadership positions carry with them a variety of responsibilities and expectations. The Definitive Leadership

Competencies Guide lists 121 competencies for leadership, which include both professional duties and

personal traits cited from various models used by prominent business organizations. Organizational leaders

are expected to set strategies, make decisions, solve problems, and manage personnel, projects, and

everyday assignments. They need excellent communications skills, an appreciation of diversity, and the ability

to build and maintain relationships.

Leadership also involves developing a vision and managing any changes needed to reach a goal. The leader

succeeds both by serving as an example and by guiding followers or employees. For instance, a business

leader provides staff members with individual supervision as they begin new projects and includes appropriate

follow-up to ensure they have the resources, time, and feedback needed to complete their work correctly. The

leader delegates tasks and cultivates talented employees who show interest and potential in taking on more

responsibility. For example, a manager who names a conscientious employee team leader or encourages an

administrative assistant to research new clients has assessed the workers' talents, shown confidence in their

abilities, encouraged learning, and developed a relationship with the individuals. The employees are then more

likely to embrace the challenge and feel valued and rewarded for their efforts. In a community organization or

educational situation, a leader might ask for volunteers to complete tasks for a project or request the help of

promising participants. This also requires support and follow-up to ensure work is completed on time.

On a personal level, a business or community leader is expected to be ethical, caring, flexible, and

approachable, as well as ambitious, decisive, politically savvy, and in possession of technical expertise. While

that can be a lot to ask of one person, in many cases the bright, ambitious beginner who is gaining experience

for a future rise to the top is more than willing to make the effort. A young leader climbing the ladder of an

organization will accept opportunities to develop his or her professional skills, whether through training, a

mentor, or simply stretching to accept every challenge and opportunity to learn. For example, the young

executive who is willing to move from location to location to receive promotions not available in the home office

enriches his or her business skills, contacts, and knowledge of the organization. He or she also is likely to rise

through the ranks more quickly than the person who declines a transfer, even when it would provide valuable

experience and new challenges. Similarly, a budding politician might start as president of the local school

board, but will volunteer for committees or campaigns on the county or state level to gain experience and make

personal connections within the political system.

Educational leaders can have a profound effect on the success of the teachers and students of their

institutions, according to a review of research conducted by the Wallace Foundation. Like other leaders, school

leaders such as principals and superintendents choose objectives, direct their completion, and help establish

motivation and teamwork among employees and members of the community. Competencies for educational

leaders fall into three main categories: strategies and purposes, working with people, and redesigning or

developing the organization's structure. The study concluded that strong leadership in both the school and the

district is vital to the successful implementation of educational reforms, and that only classroom teachers have

a greater influence on student learning than administrative leaders.

Many schools also place increasingly heavy emphasis on student leadership as a sign of distinction and high

performance. Many competitive colleges and universities expect applicants to have demonstrated some form

of leadership in school, sports or other extracurricular activities, or in the community.

Research & Theory

How a person becomes an effective leader has been debated since far back in the history of civilization. In

ancient times, philosophers believed virtue was the basis of leadership. Socrates (c. 470–399 BCE) paid with

his life for expressing his concerns that Greek leaders and citizens cared more for reputation than for real

wisdom. Plato (c. 428–348 BCE), a student of Socrates, also revered wisdom and taught that leadership tied to

virtue and justice should be valued for its own sake, rather than for gaining power and wealth as many leaders

practiced. Despite these ideas, in many cases systems arose in which leadership was considered an innate

trait and often was consolidated as power in ruling families and dynasties. Various traditions and religious

beliefs were developed to sustain such practices, such as the Christian concept of divine right of kings. Other

prominent leaders gained power through military prowess.

Many cultures attempted to instill positive elements of leadership in their kings, queens, or other absolutist

rulers, often through a traditional code of conduct for elites or a sense of duty to subjects or followers. In some

cases philosophers or other advisers helped dictate the principles of good leadership. In China, for example,

Confucius (551–479 BCE) said that the king's power came from a greater source and that he should be an

example of virtue for his people. While such efforts met with some success, many cultures experienced great

inequality as unelected leaders in government and religion often abused their power and established systems

to hand their privileges on to chosen successors regardless of their leadership skills.

Traditional models of leadership would dominate for hundreds of years, with refinements coming as societies

advanced. In addition to poor leaders empowered through hereditary systems, societies also faced effective

but ruthless leaders who used the skills and principles of leadership for their own benefit rather than the good

of the people. The sixteenth-century work The Prince by Niccolò Machiavelli served as a sort of leadership

manual for rulers of the time, advocating that power could best be acquired and wielded by influencing

followers with fear rather than admiration. It gave rise to the use of the term "Machiavellian" to describe

cunning, duplicitous ethics in leadership or other areas.

In the nineteenth century, new theories on the origins of leadership began to appear. The Scottish historian

Thomas Carlyle suggested in the 1840s that heroes—military leaders in particular—had a strong influence on

major events in history. The idea became known as the Great Man Theory of Leadership, implying that leaders

were born, not made, and were, in keeping with the times, men and not women. Further, the theory suggested

that it was these few who turned the course of history—as in the cases of Napoleon Bonaparte or Winston

Churchill—and business—as with men such as Andrew Carnegie and John D. Rockefeller. In time, Carlyle's

theory was replaced by more modern philosophies recognizing that while many of these "great men" were

undoubtedly strong leaders, they did not embody leadership in all its forms. Most scholars came to understand

that any great leader is still a product of various social forces and no one person is innately set to shape

history.

During the mid-twentieth century, the trait theory of leadership emerged as psychologists began to study what

types of personalities were associated with successful leaders. To some extent, the trait theory assumes that

there is one best way to lead, whether in military exercises, business, or education. Trait studies have

examined both physical qualities, such as height and appearance, and facets of personality, such as

motivation, self-confidence, honesty, and extraversion, in an effort to predict leadership. However, twin studies

have shown that inborn traits account for only about 30 percent of influence on successful leaders, while 70

percent remains with external factors such as environment and individual experiences.

Reactions to the trait theory include behavioral theories that claim leaders could be made by conditioning

individuals' behavior, much as Pavlov's dogs were conditioned to salivate at the sound of a bell. Later,

contingency theories argued that different people could be effective leaders in different situations. The potential

leader's success depends upon several factors, including his or her personality, the cooperation of those to be

led, and the task to be completed. Some scholars defined three categories: authoritarian, democratic, and

laissez-faire leadership. These styles differ largely in the amount of power and control delegated to followers,

with authoritarian leaders giving none, democratic leaders giving some, and laissez-faire leaders giving near-

total control.

In the late twentieth century, scholars studying the experiences of women in leadership positions in the field of

education found what they called relational leadership, in which women leaders used their feminist experiences

to stimulate change in their schools. Using vision, intuition, collaboration, caring, and courage to develop a new

approach to the familiar problems of administering schools, they found relationships the key to change.

A theory of business leadership was introduced following the economic collapse of banks and major industrial

companies in the early twenty-first century. It identified two major forms of leadership, called transformational

and transactional leadership that function in different ways. Transactional leadership is based on the leader

providing some form of reward to followers; it is seen as a highly traditional form of leadership.

Transformational leadership, in contrast, requires a high level of integrity and honesty, a charismatic

personality, and the ability to challenge followers, drawing from them creativity and collaborative efforts. In a

sense, transformational leadership brings the idea of leadership full circle, back to the ancient philosophy of

virtuous leaders.

Bibliography

Couto, Richard A. "Leadership and Values." Political and Civic Leadership: A Reference Handbook. Thousand

Oaks, California: SAGE Publications, 2010. 24-25. Print.

Kruse, Kevin. "What Is Leadership?" Forbes. Forbes, 9 Apr. 2013. Web. 23 Dec. 2014.

http://www.forbes.com/sites/kevinkruse/2013/04/09/what-is-leadership/2/

"Leadership Competencies." Society for Human Resource Management. SHRM, 2014. Web. 29 Dec. 2014.

http://www.shrm.org/research/articles/articles/pages/leadershipcompetencies.aspx

"Leadership Principles." Institute for Transformational Leadership. Georgetown University School of Continuing

Studies, 2016. Web. 20 May. 2016.

"Leadership Theories." Unit 6: Leadership. University of Leicester, 2014. Web. 29 Dec. 2014.

http://www.le.ac.uk/oerresources/psychology/organising/page‗04.htm

McCleskey, Jim Allen. "Situational, Transformational, and Transactional Leadership and Leadership

Development." Jour. of Business Studies Quarterly 5.4 (2014): 117–130. Print.

Minderovic, Zoran. "Leadership." The Gale Encyclopedia of Psychology. Ed. Bonnie Strickland. 2nd ed.

Detroit: Gale, 2001. 379-380. Gale Virtual Reference Library. Web. 29 Dec. 2014.

Regan, Helen B. and Gwen H. Brooks. Out of Women's Experience: Creating Relational Leadership. Thousand

Oaks, California: Corwin Press, 1995. 2-3. Print.

Sorenson, Georgia J., and George R. Goethals. "Leadership Theories: Overview." Encyclopedia of Leadership.

Ed. George R. Goethals, Georgia J. Sorenson, and James MacGregor Burns. Vol. 2. Thousand Oaks,

California: SAGE Reference, 2004. 867-874. Gale Virtual Reference Library. Web. 23 Dec. 2014.

Copyright of Salem Press Encyclopedia is the property of Salem Press. The copyright in an individual article

may be maintained by the author in certain cases. Content may not be copied or emailed to multiple sites or

posted to a listserv without the copyright holder's express written permission. However, users may print,

download, or email articles for individual use.

Source: Salem Press Encyclopedia, 2019, 4p

Item: 98402056

Leadership Competencies  

March 1, 2008

View SHRM’s Competency Model

SHRM’s Competency Model identifies what it means to be a successful HR professional—

across the performance continuum, around the globe, from early to executive career levels.

The competency model and the resources developed based on the model provide the

foundation for talent management throughout the HR lifecycle.

Introduction

Leadership competencies are leadership skills and behaviors that contribute to superior

performance. By using a competency-based approach to leadership, organizations can better

identify and develop their next generation of leaders. Essential leadership competencies and global

competencies have been defined by researchers. However, future business trends and strategy

should drive the development of new leadership competencies. While some leadership

competencies are essential to all firms, an organization should also define what leadership attributes

are distinctive to the particular organization to create competitive advantage.

Essential Leadership Competencies

A focus on leadership competencies and skill development promotes better leadership. However,

skills needed for a particular position may change depending on the specific leadership level in the

organization. By using a competency approach, organizations can determine what positions at which

levels require specific competencies. Researchers at the Center for Creative Leadership have

identified some essential leadership competencies that are consistent among organizations. They

divide the overall structure into competencies for leading the organization, leading the self and

leading others in the organization (see Figure 1).

When selecting and developing leaders, HR professionals should consider the competencies that

the individual possesses and compare those to the ones that need further development for success

in a leadership role. By looking at his/her current competencies and comparing those to the skills

necessary to fill a leadership position, organizations can make better informed decisions in hiring,

developing and promoting leaders.

Figure 1: Leadership Competencies

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3

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Leading the organization:

-managing change

-solving problems and making decisions

-managing politics and influencing others

-taking risks and innovating

-setting vision and strategy

-managing the work

-enhancing business skills and knowledge

-understanding and navigating the organization

Leading the self:

-demonstrating ethics and integrity

-displaying drive and purpose

-exhibiting leadership stature

-increasing your capacity to learn

-managing yourself

-increasing self-awareness

-developing adaptability

Leading others:

-communicating effectively

-developing others

-valuing diversity and difference

-building and maintaining relationships

-managing effective teams and work groups

Source: Adapted from McCauley, C. (2006). Developmental assignments: Creating learning experiences

without changing jobs. Greensboro, N.C.: Center for Creative Leadership Press. Permission granted from the

Center for Creative Leadership to republish CCL's Model of Leader Competencies.

Global Leadership Competencies

Developing successful global leaders is a competitive advantage for multinational organizations. In

addition to essential leadership competencies, global leaders face special challenges that require

additional competencies. To clarify, a global leader is commonly defined as someone that cultivates

business in a foreign market, sets business strategy at a global level and manages globally diverse

6

and diffused teams.  According to a Conference Board research report, 73% of managers agree that

domestic business leadership and global leadership differ in the skills required. Some of the

challenges that global leaders may face are managing a diverse group of employees and business

processes; adaptively approaching problems and challenges; adjusting to new values and cultures;

and adapting to different types of business and personal stressors.

To address the unique challenges of global leaders, researchers have identified global leadership

competencies that can contribute to success. Among these global competencies, developing a

global mindset, cross-cultural communication skills and respecting cultural diversity are paramount

to succeeding in the global workplace. Morgan McCall and George Hollenback studied successful

global leaders and developed a list of common competencies specific to the global leader (see

Figure 2).  HR practitioners can use global leadership competencies to support the development of

leaders and thus the overall global business strategy.

Figure 2: Global Executive Competencies

▪ Open-minded and flexible in thought and tactics

▪ Cultural interest and sensitivity

▪ Able to deal with complexity

▪ Resilient, resourceful, optimistic and energetic

▪ Honesty and Integrity

▪ Stable personal life

▪ value-added technical or business skills

Source: McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of international

experience. Boston, MA: Harvard Business School Publishing.

Business Trends and Strategy Drive New Leadership Competencies

According to the 2008 SHRM report, Changing Leadership Strategies, the rise of competition caused

by the knowledge economy and globalization will bring significant changes in the leadership

strategies for organizations.  Given the future business environment trends, researchers agree that

the most important leadership competencies will include effective change management, developing

talent/teams and being an effective collaborator/network builder. In fact, since competencies

should be driven by future business strategy, it is important to consider the major business trends of

the future.  The Center for Creative Leadership (CCL) identified some future business trends that

will affect the leadership skills needed to support business (see Figure 3).

In addition to looking at future business trends to shape the development of leadership

competencies, organizations must also look to the specific strategy and preferred business results of

the particular organization. By creating competency models that reflect the future strategy of the

business and the important results to stakeholders (i.e., customers, shareholders, investors),

organizations can successfully create a leadership brand.14 Dave Ulrich and Norm Smallwood

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 11

12

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define a leadership brand as "a reputation for developing exceptional managers with a distinct set of

talents that are uniquely geared to fulfill customers' and investors' expectations." Researchers have

found that when investors have confidence in the leadership talent of an organization, share price

will increase.  By creating a unique leadership brand via leadership competencies that produce

results to stakeholders, organizations gain a competitive advantage.

Figure 2: Global Executive Competencies

▪ Open-minded and flexible in thought and tactics

▪ Cultural interest and sensitivity

▪ Able to deal with complexity

▪ Resilient, resourceful, optimistic and energetic

▪ Honesty and Integrity

▪ Stable personal life

▪ value-added technical or business skills

Source: McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of international

experience. Boston, MA: Harvard Business School Publishing.

Literature and Research

The Leadership Skills Strataplex: Leadership Skill Requirements across Organizational Levels

The authors of this article conceptualized and empirically tested a strataplex model for leadership

skills. Leadership skills are divided into four broad categories: cognitive, interpersonal, business and

strategic. The "strataplex" model refers to how the four categories of skills vary based on respective

management levels in an organization. The researchers tested the model on more than 1,000 new,

midlevel and senior managers. The results showed that higher levels of management in the

organization required greater leadership skills. The most important skill across all the levels of

leadership was cognitive skill. This skill is thought to be the basis of all leadership skills because it

encompasses the ability to acquire new knowledge and learn new ways of solving problems.

Interestingly, business skills and strategic skills were the two most important skills to acquire when

moving into high levels of leadership. This research is important because it empirically demonstrates

that leadership skills do differ at different management levels on the career ladder. Most importantly,

business acumen and strategic skills must be acquired to be effective at the higher levels of

management/leadership. HR professionals should take into account the change in competencies

required as managers move into higher level leadership positions.

Managers' Justice Perceptions of High Potential Identification Practices

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High potentials are often regarded as the possible future leaders of an organization. Consequently,

the process of identifying high potentials is very important to both succession planning and

leadership development practices in an organization. The purpose of this research was to identify

the various processes that organizations are using to identify high potential leaders and how the

employees perceive the fairness of the process. Researchers distributed a survey at a leadership

conference to leaders from a variety of organization sizes and industries. The survey asked

questions about the high potential identification process as well as the perceived fairness of the

process. The findings revealed that competencies were used to identify high potentials 69% of the

time. The most important competencies used to identify high potentials were orientation toward

results, communication skills, adaptability, strategic skills and ability to make decisions. Additionally,

the survey found that the high potential identification process, the communication of the process and

evaluation were all significantly related to feelings of perceived fairness. This example illustrates how

leadership competencies can be used in the workplace. A fair process for identifying high potentials,

such as a competency approach, may lead to higher perceived fairness.

Transformational Leadership and Market Orientation: Implications for the Implementation of Competitive Strategies and Business Unit Performance

This article explores the relationship between competencies of the organization and firm

performance. The researchers hypothesize that competitive strategies link organization

competencies to firm performance. Specifically, this study investigated the link between

transformational leadership as an organizational competency and the competitive strategies of

marketing differentiation, innovation differentiation and low-cost strategies. These competitive

strategies are thought to have positive benefits to firm performance.

More than 200 organizations from a range of industries were included in the research sample. The

results showed that transformational leadership was significantly related to market orientation. In this

study, the authors define market orientation in terms of culture. The organization culture clarifies

values and norms that positively contribute to customer satisfaction and worth. Transformational

leaders are thought to impact and help form the organizational culture. Transformational leadership

was also positively linked to marketing differentiation and low-cost strategies. Further, market

differentiation was positively related to firm performance metrics. Consequently, the competency of

transformational leadership was found to have a positive impact on firm performance through market

differentiation. The results imply that one way to advance market orientation is to develop the

competency of transformational leadership. This study shows that leadership competencies can

have an impact on the bottom line of organizations through competitive strategies. HR professionals

can influence firm performance by identifying and developing key leadership competencies in the

organization.

In Closing

19

Leadership competencies can be used to effectively select, develop and promote leaders in an

organization. Certain factors such as business strategy and future trends should be taken into

account when creating leadership competencies. All business strategies are different and HR

practitioners should use the business strategy, including the global business strategy, to drive the

use of competencies in selecting and developing leaders. By effectively building a unique set of skills

for the organization's leaders, the firm will sustain competitive advantage.

Online Resources

Hay Group: www.haygroup.com

Center for Creative Leadership: www.ccl.org

The Conference Board: www.conference-board.org

SHRM Research Quarterly: Leadership Development: Optimizing Human Capital for Business

Success: www.shrm.org/Research/Articles/Pages/default.aspx

Results Based Leadership: www.rbl.net

End Notes

[1] Society for Human Resource Management. (2007). The 2007-2008 workplace trends list.

Alexandria, VA: Author.

[2] Brownwell, J. (2006, Fall). Meeting the competency needs of global leaders: A partnership

approach. Human Resources Management, 45(3), 309-336.

[3] Mumford, T., Campion, M., & Morgeson, F. (2007). The leadership skills strataplex: Leadership

skill requirements across organizational levels. The Leadership Quarterly, 18, 154-166.

[4] Garonik, R., Nethersell, G., & Spreier, S. (2006, Winter). Navigating through the new leadership

landscape. Leader to Leader, 30-39.

[5] Spencer, S., & Watkin, C. (2006). Potential for what? Retrieved January 4, 2007, from

www.haygroup.com.

[6] Caligiui, P. (2006). Developing global leaders. Human Resource Management Review, 16, 219-

228.

[7] Caligiui, P. (2006). Developing global leaders. Human Resource Management Review, 16, 219-

228.

[8] Kramer, R. (2005). Developing global leaders: Enhancing competencies and accelerating the

expatriate experience. New York: The Conference Board.

[9] Rosen, R., Digh, R., Singer, M. & Phillips, C. (2000). Global literacies: Lessons on business

leadership and national cultures. New York: Simon & Schuster.

[10] McCall, M., & Hollenbeck, G. (2002). Developing global executives: The lessons of international

experience. Boston, MA: Harvard Business School Publishing.

[11] Society for Human Resource Management. (2008).Changing leadership strategies. Workplace

Visions, 1.

[12] Barret, A., & Beeson, J. (2002). Developing business leaders for 2010. New York: The

Conference Board.

[13] Robinson, M., Sparrow, P., Clegg, C., & Birdi, K. (2007). Forecasting future competency

requirements: A three-phase methodology. Personnel Review, 36(1), 65-90.

[14] Intagliata, J., Ulrich, D., & Smallwood, N. (2000). Leveraging leadership competencies to

produce leadership brand: Creating distinctiveness by focusing on strategy and results. Human

Resource Planning, 23(3), 12-23.

[15] Ulrich, D., & Smallwood, N. (2007, Jul-Aug). Building a leadership brand. Harvard Business

Review, 85(7/8), 93-100.

[16] Ulrich, D. & Smallwood, N. (2007). Leadership Brand. Boston, MA: Harvard Business School

Publishing

[17] Mumford, T., Campion, M., & Morgeson, F. (2007). The leadership skills strataplex: Leadership

skill requirements across organizational levels. The Leadership Quarterly, 18, 154-166.

[18] Jerusalim, R. & Haursdorf, P. (2007). Managers' justice perceptions of high potential

identification practices. Journal of Management Development, 26(10), 933-950.

[19] Menguc, B., Seigyoung, A., & Shih E. (2007). Transformational leadership and market

orientation: Implications for the implementation of competitive strategies and business unit

performance. Journal of Business Research, 60, 314-321.

Project Team

Project leaders: Courtney Ledford, SHRM Research Intern; Nancy R. Lockwood, MA, SPHR, GPHR,

Manager, HR Content Program

Project contributor: Steve Williams, Ph.D., SPHR, Director, Research

Editor: Nicole Gray, Copy Editor

Disclaimer

This article is published by the Society for Human Resource Management (SHRM). All content is for

informational purposes only and is not to be construed as a guaranteed outcome. The Society for

Human Resource Management cannot accept responsibility for any errors or omissions or any

liability resulting from the use or misuse of any such information.

178,396 viewsSep 5, 2014, 11:44am

10 Traits Of Great Business Leaders

Entrepreneurs I write about the Gig Economy, entrepreneurs and the future of work.

Micha Kaufman Contributor

This article is more than 2 years old.

Whether you’re a freelancer, small-business owner, or full-timer, to climb the ladder,

you must know how to lead the pack. Are you destined to be the big boss or be bossed

around? To find out, take a look at these 10 characteristics shared by great

business leaders:

1. Persistence, Persistence, Persistence

In the 1890s, Henry Ford came up with the Ford Quadricycle, a vehicle made up of a

frame mounted on four large bicycle wheels with an ethanol-powered engine. Needless

to say, it wasn’t a success. Ford later founded the Ford Motor Company, invented

the Model T, and became one of the wealthiest men in the world. Do you try, fail, and

pick yourself back up again? Bingo!

2. Thick skin. Rhino-thick.

Walt Disney ’s editor at the Kansas City Star told him that he had no good ideas

and lacked imagination. He could have taken the harsh words to heart and given up the

creativity ghost. Instead he went on to become the most successful animator of all time,

winning 22 Academy Awards, creating characters like Mickey Mouse, and opening his

own theme park. Today, Walt Disney is one of the world’s most ubiquitous household

name brands, synonymous with creativity.

3. An Eye for Talent

It takes a village to make amazing things happen. That’s why great leaders surround

themselves with other great minds. Steve Jobs was always on the hunt for talent in

unique ways, like accepting invitations to lecture at universities so he could scout

F +0%

DIS +0%

potential employees. Jobs personally interviewed over 5,000 applicants during his

lifetime, managing all the hiring for his team.

Today In: Entrepreneurs

4. Can’t Get No Satisfaction

What do Google, Yahoo, and Facebook have in common? All are billion dollar

companies that started in dorm rooms. Great business leaders are never satisfied and

continually strive to take their business to the next level. As Ingvar Kamprad, the

founder of IKEA, said, “The most dangerous poison is the feeling of achievement. The

antidote is to every evening think what can be done better tomorrow.”

5. Fearlessness

When Richard Branson was younger, his aunt bet him that he couldn’t learn to swim

during their family vacation. After failing to master the skill during the trip, on the drive

home, he asked his father to pull over the car. He jumped into a river, swam, and won

the bet. Today, Branson, the founder of the Virgin Group, which is made up of over 400

companies, believes in a philosophy of taking risks and stepping out of your comfort

zone. “You don’t learn to walk by following rules,” Branson said. “You learn by doing,

and by falling over.”

The Forbes eBook Of Motivational Quotes Discover the timeless advice that the world’s great thinkers, billionaires, writers and businesspeople have to offer.

6. Owning Your Mistakes

After Amazon deleted copies of unauthorized versions of Animal Farm and 1984 from

users’ Kindles, there was an immediate negative backlash. Not only did Amazon cop to

the mistake in an official press statement, CEO Jeff Bezos personally apologized,

admitting that the company’s solution to the problem was “stupid, thoughtless, and

painfully out of line with our principles.” He also offered, “deep apologies to our

customers.”

7. Toughness

If you want to lead in the business world, you’re going to have to stand up for yourself.

“When somebody challenges you, fight back. Be brutal, be tough,” advised Donald

Trump. Michael Bloomberg agreed, saying at a commencement ceremony that, “In the

business world, it’s dog-eat-dog,” and, “you occasionally have to throw some elbows.”

8. Winning Friends and Influencing People

But don’t take the tough act too far. People work better for managers they like. John D.

Rockefeller said, “The ability to deal with people is as purchasable as a commodity as

sugar or coffee and I will pay more for that ability than for any other thing under the

sun.” Mark Cuban put things a little more simply: “People hate dealing with people who

are jerks. It’s always easier to be nice than to be a jerk. Don’t be a jerk.”

9. Singular Vision

It all starts with an idea. Howard Schultz envisioned a single brand with coffeehouses

across the globe. He turned that dream into a reality and founded Starbucks. “I think if

I am an Internet entrepreneur, probably best known as the co-founder and CEO of Fiverr.com, my fifth venture to

date. Launched in early 2010, Fiverr is a global marketpl... Read More

you’re an entrepreneur, you’ve got to dream big, and then dream bigger,” he said. “It’s

seeing what other people don’t see and pursuing that vision.”

10. Powerfully Passionate

Above all, a true leader is passionate about whatever venture he or she is undertaking.

As Jobs said, “You have to be burning with an idea, or a problem, or a wrong that you

want to right. If you’re not passionate enough from the start, you’ll never stick it out.”

Oprah Winfrey also had some powerful words on the subject. “Passion is energy,” she

said. “Feel the power that comes from doing whatever excites you.”

Let me know what traits you think make a great business leader @MichaKaufman.

Micha Kaufman

Global Human Capital Trends 2014 Engaging the 21st-century workforce

A report by Deloitte Consulting LLP and Bersin by Deloitte

Contents Introduction | 2

Global Human Capital Trends 2014 survey: Top 10 findings | 7

Lead and develop

Leaders at all levels | 25

Corporate learning redefined | 35

Performance management is broken | 45

The quest for workforce capability | 55

Attract and engage

Talent acquisition revisited | 65

Beyond retention | 75

From diversity to inclusion | 87

The overwhelmed employee | 97

Transform and reinvent

The reskilled HR team | 107

Talent analytics in practice | 117

Race to the cloud | 127

The global and local HR function | 137

Editors | 145

Acknowledgements | 146

Global Human Capital leaders | 147

Human Capital country leaders | 148

Introduction Engaging the 21st-century workforce

AS we begin 2014, global organizations have left the recession in the rear-view mirror and are positioning themselves aggres- sively for growth. Sluggishness has given way to expansion. Retrenchment has been replaced by investment. The need for caution has been superseded by the need to take action.

Yet as the economic recovery takes hold, businesses realize that the workforce today has changed. Skills are scarce, workers have high expectations, and Millennials are now in charge. Enter the 21st-century workforce.

The 21st-century workforce is global, highly connected, technology-savvy, and demand- ing. Its employees are youthful, ambitious, and filled with passion and purpose. Millennials are a major force—but so are older workers, who remain engaged and valuable contribu- tors. Critical new skills are scarce—and their uneven distribution around the world is forcing companies to develop innovative new ways to find people, develop capabilities, and share expertise.

Awakening to a new world: After the Great Recession

Future observers may look back at 2014 as a turning point: the time when the global recession ended and businesses put plans in place for a new wave of growth. But as this growth begins, companies are finding that

they are dealing with a workforce with dif- ferent demographics, different demands, and different expectations.

The world is much more global and interdependent

Globalization is a key theme in our research. In 2013, the developing countries contributed 50 percent of the world’s GDP.1 This is expected to grow to 55 percent by 2018, a significant increase in business opportunity centering on these newer economies.2 And these countries now have a large buying seg- ment: The global middle class is expected to increase from 1.8 billion in 2009 to 3.2 billion in 2020, with Asia’s middle class tripling in size to 1.7 billion by 2020.3

Trends in leadership, talent acquisition, capability development, analytics, and HR transformation are all impacted by globaliza- tion. Companies that learn to leverage global talent markets while localizing their HR strate- gies will be poised for strong performance.

Mobile, social, and cloud computing continue to explode

Technology has transformed the workplace. At the start of 2008, there were only 3 million Apple iPhone® mobile devices in the world.4 At the end of 2013, according to a Gartner estimate, there were 1 billion smartphones and more than 420 million iPhone mobile devices

Global Human Capital Trends 2014: Engaging the 21st-century workforce

2

shipped.5 Facebook had a million users in 2004, 100 million users in 2008, and an esti- mated 1.23 billion registered users today.6 And according to Forrester estimates, cloud com- puting will grow from a $41 billion business in 2011 to a $241 billion business by 2020.7

All this technology has transformed the world of recruiting, the world of education and training, the world of analytics, and even the way we work. Today we are online 24/7 and relentlessly flooded with information, mes- sages, and communications.

Not only has technology become a critical and pivotal part of human resources, but we have also identified a new human capital issue discussed in this report: the overwhelmed employee. Organizations face an imperative to find ways to absorb more technology while simultaneously making it simple.

Demographic shifts are creating a diverse, multi- generational workforce

As the world’s population grows, the global workforce is getting younger, older, and more urbanized. Millennials are entering the work- force in greater numbers and reshaping the talent markets with new expectations. They are projected to make up 75 percent of the global workforce by 2025, and they are letting us know that they are ready to take the lead . . . soon.8 But as new research shows, Millennials want to be creative. They want to run their own businesses. They want accel- erated career growth. In the words of one manager: “They don’t want a career, they want an experience.”9

Baby Boomers, although some started to retire in 2008, are refusing to leave their field.

For both financial reasons and reasons of pro- fessional satisfaction, many are extending their working lives—benefiting from the incredible longevity dividend shared the world over.

These two trends are producing the most multi-generational workforce in history. How can companies manage this highly diverse set of employees when their needs vary widely? How can organizations change their strategy for performance management to address these new workforce dynamics?

Global social, political, and regulatory shifts are changing the focus of business

Employee engagement and retention are directly related to the social fabric of business. In the fall of 2011, we witnessed the Occupy Wall Street movement, starting in New York and spreading around the world. The bound- aries between business and social issues are blurring as corporate social responsibility and “conscious capitalism” reshape business and talent markets. Consumer and talent markets are making new demands on businesses, with social and community concerns rising to new levels of priority. Regulation, particularly in the financial markets, continues to grow as the role of regulators continues to expand.

How can companies cultivate an ethos of mission, purpose, and conscious capitalism to attract and engage a workforce highly aware of these issues?

Technology is changing how we work and the skills we need

Finally, technology has changed the nature of collaboration, expertise sharing, and the skills one needs to succeed. Collaborative

Critical new skills are scarce—and their uneven distribution around the world is forcing companies to develop innovative new ways to find people, develop capabilities, and share expertise.

Introduction

3

technologies continue to make it possible for teams to work in remote locations across the world, easily accessing experts within and out- side the organization. Machine learning and artificial intelligence are disrupting one wave of workers and opening new career opportunities in analytics, machine-assisted manufacturing, and the service industries.10 The skills we need today and in the future are dramatically differ- ent than what they were only five years ago.

2014: A time for action These changes in the workforce and

workplace are significant, disruptive, and here today. How can human capital strategies power companies to thrive in this era of rapid change?

Our research shows a significant gap between the urgency of the talent and leader- ship issues leaders face today and their organi- zations’ readiness to respond. On every critical issue—leadership, retention and engagement, learning and development, analytics— execu- tives recognize the need to take action, but express reservations about their team’s ability to deliver results.

One of the most important takeaways from this research is the fact that doing more is not enough. Today companies have to manage people differently – creating an imperative to innovate, transform, and reengineer human capital practices.

The 2014 Global Human Capital Trends report, developed after months of extensive global research, provides guidance and recom- mendations for these important strategies.

Three key areas of strategic focus

This year’s 12 critical human capital trends are organized into three broad areas:

• Lead and develop: The need to broaden, deepen, and accelerate leadership develop- ment at all levels; build global workforce capabilities; re-energize corporate learning by putting employees in charge; and fix performance management

• Attract and engage: The need to develop innovative ways to attract, source, recruit, and access talent; drive passion and engage- ment in the workforce; use diversity and inclusion as a business strategy; and find ways to help the overwhelmed employee deal with the flood of information and distractions in the workplace

• Transform and reinvent: The need to create a global HR platform that is robust and flexible enough to adapt to local needs; reskill HR teams; take advantage

Figure 1. Three key areas of strategic focus

Lead and develop Attract and engage Transform and reinvent

Leaders at all levels: Close the gap between hype and readiness

Talent acquisition revisited: Deploy new approaches for the new battlefield

The reskilled HR team: Transform HR professionals into skilled business consultants

Corporate learning redefined: Prepare for a revolution

Beyond retention: Build passion and purpose

Talent analytics in practice: Go from talking to delivering on big data

Performance management is broken: Replace “rank and yank” with coaching and development

From diversity to inclusion: Move from compliance to diversity as a business strategy

Race to the cloud: Integrate talent, HR, and business technologies

The quest for workforce capability: Create a global skills supply chain

The overwhelmed employee: Simplify the work environment

The global and local HR function: Balance scale and agility

Global Human Capital Trends 2014: Engaging the 21st-century workforce

4

of cloud-based HR technology; and implement HR data analytics to achieve business goals

One of the largest global human capital surveys

When we set out to identify the top 12 global business challenges in talent manage- ment, leadership, and HR, we drew upon more than 15 years of research to examine the range of issues and the most effective solutions in the market. We also surveyed 2,532 business and HR leaders in 94 countries around the world, making it one of the largest global surveys of its kind.

This year, recognizing that global trends vary by a company’s size, location, and growth rate, we are not only publishing our global perspectives, but also giving you access to our data so you can draw your own conclusions. In the spirit of big data and analytics, we have

created an interactive tool, the Human Capital Trends Dashboard, that allows you to drill into our survey data, investigate what it means, and apply it to your industry, your geography, and your company size.

Taking the next step The goal of this research is to give execu-

tives insight and perspective, while identify- ing solutions to help them set priorities for the coming year. We remain convinced that some of the biggest opportunities for com- panies to improve growth, innovation, and performance center squarely on how business leaders reimagine, reinvent, and reinvigo- rate human capital strategies—informed by a deeper understanding of the new 21st- century workforce.

We look forward to hearing from you as you dive into this report and reflect on what it means for your organization.

Explore the Human Capital Trends Dashboard at http://www.deloitte.com/hcdashboard.

Introduction

5

Endnotes

1. Chris Giles and Kate Allen, “Southeastern shift: The new leaders of global economic growth,” Financial Times, June 4, 2013.

2. International Monetary Fund.

3. Linda Yueh, “The rise of the global middle class,” BBC News, June 18, 2013.

4. Global Human Capital Trends 2014 is an independent publication and has not been authorized, sponsored, or otherwise approved by Apple Inc. iPhone® is a trademark of Apple Inc., registered in the United States and other countries.

5. Gartner estimates, January 7, 2014, http:// www.gartner.com/newsroom/id/2645115.

6. Facebook, “Key facts,” http:// newsroom.fb.com/Key-Facts.

7. Larry Dignan, “Cloud computing market: $241 billion in 2020,” ZDNet, April 22, 2011, http:// www.zdnet.com/blog/btl/cloud-computing- market-241-billion-in-2020/47702.

8. Josh Bersin, “Millennials will soon rule the world: But how will they lead?” Forbes, http://www.forbes.com/sites/ joshbersin/2013/09/12/millenials-will-soon- rule-the-world-but-how-will-they-lead/.

9. Deloitte, The Millennial survey 2013, http://www2.deloitte.com/global/en/ pages/about-deloitte/articles/millennial- survey-positive-impact.html.

10. Erik Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Pros- perity in a Time of Brilliant Technologies (New York: W. W. Norton and Company, Inc., 2014).

Global Human Capital Trends 2014: Engaging the 21st-century workforce

6

Global Human Capital Trends 2014 survey Top 10 findings

TO gain insights into the 2014 global human capital trends, we conducted a survey in the last quarter of 2013 that included 2,532 business and HR leaders in 94 countries. The survey covered the major industries and all of the world’s geographies (survey demograph- ics are summarized in the appendix to this chapter). Our goal was to better understand the priorities and preparedness of executives and HR professionals around the world, and to provide insight on what leaders can do to drive the talent and HR agenda.

This chapter provides a summary of our top findings from the global survey. We are also making views of the data available through the Deloitte Human Capital Trends Dashboard tool, which will be available on our websites.

Finding 1. Leadership, retention, HR skills, and talent acquisition are the top global trends in perceived urgency

Across all respondents to our global survey this year, companies cite four issues as the most urgent: leadership, retention and engagement,

the reskilling of HR, and talent acquisition and access (see figures 1 and 2).

Building global leadership is by far the most urgent: Fully 38 percent of all respondents rated it “urgent,” almost 50 percent more than the percentage rating the next issue “urgent.” Companies see the need for leadership at all levels, in all geographies, and across all functional areas. This continuous need for new and better leaders has accelerated. In a world where knowledge doubles every year and skills have a half-life of 2.5 to 5 years, leaders need constant development. This ongoing need to develop leaders is also driven by the changing expectations of the workforce and the evolving challenges businesses are facing, including two major themes underlying this year’s trends: globalization and the speed and extent of tech- nological change and innovation.

The second most urgent issue today is retention and engagement—a topic that often has no clear owner within HR or the busi- ness. Our research shows that “we all own this issue”: HR, top leadership, and all levels of management. As we discuss in the main report, companies should redefine their engagement strategy to move from keeping people to attracting them and creating a passionate and

Explore the Human Capital Trends Dashboard at http://www.deloitte.com/hcdashboard.

Top 10 findings

7

compassionate place to work. Further, compa- nies will benefit from having a clear point of view on how business executives, line leaders, and HR can more effectively work together and address this challenge.

The third most urgent issue is the reskill- ing of HR. This finding suggests that the HR and talent functions are in the midst of a transformation. HR is not making the grade as companies move away from HR as people administration to a focus on people perfor- mance. An essential part of this change is the

upskilling, reorganization, and transformation of HR and its relationship with business lead- ers and issues.

The fourth most urgent issue is talent acqui- sition and access. This continues to be one of the most important things companies do. In a skills-constrained environment, a company’s ability to find, attract, and access highly skilled people is critical to success. This area is going through a significant disruption as a result of globalization, technology, social media, chang- ing workforce expectations, and the shrinking

Figure 2. Global trends categorized by urgency

Highly urgent (≥25% of respondents rate as “urgent”)

Urgent (20–24% of respondents rate as “urgent”)

Important (10–19% of respondents rate as “urgent”)

• Leadership • Retention and engagement • Reskilling HR

• Talent acquisition and access • Global HR and talent management • HR technology • Overwhelmed employee • Talent and HR analytics 

• Performance management • Workforce capability • Diversity and inclusion • Learning and development

Graphic: Deloitte University Press | DUPress.com

Leadership

Retention and engagement

Reskilling the HR function

Talent acquisition and access

Workforce capability

Talent and HR analytics

Global HR and talent management

Learning and development

Performance management

HR technology

The overwhelmed employee

Diversity and inclusion 16%

21%

21%

18%

11%

21%

20%

15%

24%

25%

26%

38%

43%

44%

47%

50%

59%

51%

51%

60%

51%

52%

53%

48%

30%

27%

24%

24%

24%

21%

22%

21%

20%

19%

17%

11%

11%

8%

8%

8%

5%

8%

6%

5%

5%

5%

3%

4%

Not important Somewhat important Important Urgent

2,506

2,497

2,471

2,472

2,454

2,471

2,276

2,491

2,465

2,457

2,447

2,414

Number of respondents

Figure 1. Perceived urgency of 12 global trends

Global Human Capital Trends 2014: Engaging the 21st-century workforce

8

half-life of skills and technical knowledge. Tools such as LinkedIn, Facebook, Twitter, and others are changing recruiting into a strategic function focused on marketing, branding, and new tools and technologies.

Finding 2. Companies report generally low levels of readiness to respond to the trends

Overall, survey respondents reported generally low levels of readiness to respond to the 12 global trends in our survey (figure 3).

In fact, on average across all trends, 36 percent of respondents reported they were “not ready” as opposed to 16 percent reporting they were “ready”—meaning that they were more than twice as likely to say they were “not ready” versus “ready” for the trends they see com- ing. Only in workforce capability did more than three-quarters of respondents feel either “somewhat ready” or “ready” to address the trend. These findings are sobering, given that each trend was rated “important” or “urgent” by at least 60 percent of respondents, while the top five trends were all rated “important” or

Graphic: Deloitte University Press | DUPress.com

Workforce capability

Learning and development

Retention and engagement

Diversity and inclusion

Leadership

Reskilling the HR function

Global HR and talent management

Talent acquisition and access

Performance management

The overwhelmed employee

HR technology

Talent and HR analytics 11%

15%

10%

15%

13%

16%

15%

15%

20%

17%

24%

15%

43%

40%

47%

42%

49%

47%

49%

50%

46%

52%

51%

61%

46%

45%

44%

43%

38%

37%

37%

35%

34%

30%

25%

24%2,418

2,474

2,462

2,352

2,475

2,434

2,181

2,430

2,412

2,377

2,384

2,422

Percent

Figure 3. Reported readiness for global trends

Not ready Somewhat ready Ready

Number of respondents

Figure 4. Perceived capability shortfalls

Significant capability shortfalls (>40% rate as “not ready”)

Large capability shortfalls (31–40% rate as “not ready”)

Some capability shortfalls (20–30% rate as “not ready”)

• Talent and HR analytics • HR technology • Overwhelmed employee • Performance management

• Talent acquisition and access • Global HR and talent management • Reskilling HR • Leadership • Diversity and inclusion

• Retention and engagement • Learning and development • Workforce capability

Top 10 findings

9

“urgent” by at least 75 percent of respondents (figure 1).

More than 40 percent of respondents reported their companies were “not ready” to address talent and HR analytics, HR technol- ogy, the overwhelmed employee, and per- formance management—the lowest levels of readiness among all the trends (figure 4). These low reported levels of readiness and prepared- ness are a warning signal, considering the high levels of urgency and importance attributed to the trends in the global survey.

Figure 5 maps the 12 trends according to respondents’ ratings of both their urgency and their companies’ readiness to deal with them. Urgency is shown on the horizontal axis, with higher numbers indicating greater urgency;

readiness is shown on the vertical axis, with higher numbers indicating greater readiness. The resulting grid shows a clustering of the trends in the lower right, underscoring one of the major findings in the survey: the gap between these trends’ perceived importance and companies’ readiness to address them.

Finding 3. The largest capability gaps are reported in leadership, analytics, reskilling HR, talent acquisition and access, and the overwhelmed employee

To further highlight the near-pervasive gap between urgency and readiness, we calculated an index score for each trend that we call the

Graphic: Deloitte University Press | DUPress.com

Urgency

R e a d

in e ss

Somewhat ready: 50

Figure 5. Global trends mapped against urgency (horizontal) and company readiness (vertical)

Leadership

Global HR and talent management

Diversity and inclusion

Learning and development

The overwhelmed employee

Retention and engagement

Performance management

Talent and HR analytics

HR technology

Workforce capability

Talent acquisition and access

Reskilling the HR function

30

40

50

60

40 50 60 70

70

30

So m

ew h a t

re a d

y (5

0 )

1 0

0 =

R ea

d y g

f 0

= N

o t

re a d

y

Somewhat important (33.3) 100 = Urgent g f 0 = Not important Important (66.6)

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among the different trends.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

10

Deloitte Human Capital Capability Gap Index, a figure that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is calculated by taking an organi- zation’s self-rated readiness and subtracting its urgency, normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself

100 percent capable and ready to address the issue, the capability gap would be zero. These index scores, which are almost always negative, provide a “weighting” of gaps to help identify the biggest areas of need.

As figures 6 and 7 show, leadership (gap of -34) and analytics (gap of -30) are the areas with the biggest gaps between urgency

Graphic: Deloitte University Press | DUPress.com

-35 -30 -25 -20 -15 -10 -5 0

-9

-12

-16

-22

-23

-24

-25

-26

-27

-27

-30

-34Leadership

Talent and HR analytics

Reskilling the HR function

Talent acquisition and access

The overwhelmed employee

HR technology

Performance management

Retention and engagement

Global HR and talent management

Workforce capability

Diversity and inclusion

Learning and development

The Human Capital Capability Gap Index Readiness - Urgency

Figure 6. Capability gap index for 12 global trends

Figure 7. Capability gaps grouped according to importance

Highly urgent (gap of -30 or more)

Urgent (gap of -25 to -29)

Very important (gap of -20 to -24)

Important (gap of -1 to -19)

• Leadership • Talent and HR analytics

• Reskilling HR • Talent acquisition and

access • Overwhelmed employee • HR technology

• Performance management • Retention and engagement • Global HR and talent

management

• Workforce capability • Diversity and inclusion • Learning and development

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

Top 10 findings

11

•• ---......

and readiness, and hence the most impor- tant areas on which to focus investment. Reskilling HR, talent acquisition, dealing with the overwhelmed employee, and the need to replace HR technology are close behind, with gap scores of between -25 and -27, inclusive. These indicate areas where companies need to rethink their strategies and reengineer their current approaches.

The challenges of revamping performance management, addressing retention and

engagement, and improving HR globalization received gap scores of between -20 and -24. These areas reflect a need to rethink HR strate- gies to deal with the 21st-century workforce.

The areas of workforce capability, diversity and inclusion, and learning and develop- ment also require attention. When weighted by importance, the gap between urgency and readiness is the smallest in our index, but these areas still represent potential opportunities for improvement.

Graphic: Deloitte University Press | DUPress.com

Asia Pacific Western Europe

Central and Eastern Europe

Africa Middle

East North

America South

America

Less importantMore important

62

94

126

126

160

170

209

198

201

237

292

86

188

230

202

244

256

286

287

286

316

346

466

34

39

65

59

76

89

89

92

120

111

101

155

80

86

123

135

111

141

150

157

168

218

200

246

51

95

115

117

120

155

160

183

188

178

192

278

74

168

210

228

215

255

222

279

305

287

297

447

91

137

199

208

207

226

263

319

337

374

355

439

114

(24%)

(19%)

(19%)

(20%)

(24%)

(27%)

(24%)

(25%)

(31%)

(22%)

(24%)

(25%)

(33%)

(38%)

(39%)

(33%)

(47%)

(43%)

(41%)

(34%)

(45%)

(34%)

(36%)

(40%)

(13%)

(8%)

(11%)

(10%)

(15%)

(15%)

(13%)

(11%)

(19%)

(12%)

(10%)

(13%)

(31%)

(17%)

(21%)

(22%)

(21%)

(24%)

(21%)

(19%)

(26%)

(23%)

(21%)

(21%)

(20%)

(19%)

(20%)

(19%)

(23%)

(26%)

(23%)

(22%)

(29%)

(19%)

(20%)

(24%)

(28%)

(34%)

(36%)

(37%)

(41%)

(43%)

(32%)

(33%)

(48%)

(31%)

(31%)

(38%)

(35%)

(27%)

(34%)

(34%)

(40%)

(38%)

(37%)

(38%)

(53%)

(40%)

(36%)

(37%)Leadership

Retention and engagement

Workforce capability

Global HR and talent management

Learning and development

Talent acquisition and access

HR technology

Talent and HR analytics

Reskilling the HR function

Performance management

The overwhelmed employee

Diversity and inclusion

466 34

Figure 8. Regions where top five trends are most important

Figures in each cell represent the number of respondents who viewed the given trend as one of the top five most important, and who felt that the trend would be important in the given region. Percentages are calculated on the total number of respondents who selected the given trend as one of the five most important overall.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

12

Finding 4. Leadership is the top priority in developed and growing economies

We asked our respondents to identify in which of seven global geographies their top five trends were most important. As figure 8 shows, leadership, the most important overall trend in our survey, was identified as highly important in five of seven global regions: Asia Pacific, Western Europe, Central and Eastern Europe, North America, and South America. Note also that, in these regions, retention and engagement is a high priority as well, with North America facing the most acute need in this area.

This geographic pattern of leadership’s perceived importance corresponds to global regions of business growth and opportunity. Asia and North America were rated as the two highest areas of growth in our survey, and Western Europe is undergoing a difficult economic transformation. Emerging econo- mies (Middle East, Africa, and, to a degree,

South America) also report leadership as a top priority, balanced with the need for workforce capability, HR globalization, retention, and talent acquisition.

Finding 5. While global trends are similar around the world, program needs vary by region

While most geographies have broadly similar priorities across the human capital trends, there are some variations, as figure 9 shows. North America reports the highest level of challenge from the overwhelmed employee. Asia Pacific- and South America-based com- panies report the need for improved workforce capabilities more strongly than companies in other geographies. Western Europe sees a greater need to reskill and transform HR than other regions.

This finding suggests that regional eco- nomic forces and cycles have an impact on human capital priorities. In figure 9, the high

Figure 9. Priority areas for companies across different regions (by rank, top three only)

Asia Pacific Western Europe

Central and Eastern Europe Africa Middle East

North America

South America

Above global average

(+11% or greater)

Trends are in line with global

averages

Trends are in line with global

averages

Performance management

(17%)

Diversity and inclusion (106%)

Learning and development

(64%)

Workforce capability

(47%)

Learning and development

(127%)

Retention and engagement

(58%)

Workforce capability

(47%)

HR technology (14%)

Workforce capability

(13%)

Retention and engagement

(31%)

Talent and HR analytics (25%)

HR technology (24%)

Below global average (-11%

or greater)

The overwhelmed

employee (-19%)

Global HR and talent

management (-14%)

Retention and engagement

(-12%)

Workforce capability (-27%)

Retention and engagement

(-23%)

Performance management

(-22%)

Diversity and inclusion (-50%)

Talent and HR analytics (-40%)

Global HR and talent

management (-33%)

Trends are in line with global

averages

HR technology (-38%)

Reskilling HR (-24%)

Talent acquisition and access (-21%)

Diversity and inclusion (-19%)

Learning and development

(-18%)

Workforce capability (-47%)

Performance management

(-11%)

Top 10 findings

13

urgency that companies in Africa, Latin and South America, and the Middle East report for many of the trends is striking. This under- scores the value of HR and leadership teams understanding these variations and accom- modating regional workforce priorities and dynamics as they globally hire, manage, and lead their people.

Finding 6. Human capital priorities vary by industry, with one exception: Leadership

Different industries have different talent priorities—with one major exception (figure 10): Every industry sees leadership as its top priority. Retention and engagement was almost as consistently rated a high priority: It was the No. 2 trend for six of the eight industry groups.

Differences among industries include:

• Technology companies, life sciences, health care, professional services, and oil and gas companies rate talent acquisition and access particularly high, reflecting the important need in these industries to find key people with unique technical skills.

• Energy companies, life sciences companies, and technology, media, and telecommuni- cations companies—three industries going through significant transformations—rate the need to reskill HR as a particularly high priority.

• Professional services companies, public sec- tor organizations, and energy and resources companies rate building workforce capabili- ties particularly high—in the top two or three slots.

Finding 7. “Excellent” HR companies and teams focus more intensely on the urgent global human capital trends

Our survey asked respondents to rate the overall performance of their HR and talent organizations and programs. When we looked at self-assessed “excellent” or “high perform- ing” HR and talent teams, we found that they rated the top trends higher in urgency and importance (on average, seven percentage points more) compared to those who rated themselves “adequate” or “average” performers. These trends included:

1. Leadership: Rated as “urgent” or “impor- tant” by 88 percent of high performers vs. 85 percent of average performers

2. Talent acquisition and access: Rated as “urgent” or “important” by 85 percent of high performers vs. 74 percent of average performers

3. Reskilling HR: Rated as “urgent” or “impor- tant” by 84 percent of high performers vs. 76 percent of average performers

4. Retention and engagement: Rated as “urgent” or “important” by 83 percent of high performers vs. 79 percent of average performers

5. Talent & HR analytics: Rated as “urgent” or “important” by 82 percent of high perform- ers vs. 71 percent of average performers

These findings suggest that top HR teams are even more focused on certain business and talent priorities, including leadership, talent acquisition, delivering a high-performing and highly engaged workforce, improving the HR function, and building analytics capability, than most companies’ HR teams.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

14

I I I I I

1 J- -1 - -1

L J L _ _l

- -- _I- -J

I I I I

Finding 8. Business leaders have less confidence in their organization’s readiness to deal with future trends than HR leaders

Our survey included the perspectives of both business leaders and HR leaders. For the five trends identified as most urgent overall, we observed substantial differences between

business leaders’ and HR leaders’ views on their organizations’ readiness for these trends. These differences were more pronounced for larger organizations—those with more than 10,000 employees. Among these organizations, business leaders rate their organizations’ readi- ness to address the top trends an average of 13 percentage points lower than HR’s assessment of readiness in leadership, reskilling HR, the globalization of HR, retention and engage- ment, and talent and HR analytics (figure 11).

Figure 10. Areas of priority for different industries (by rank and percentage)

Global Trend Consumer business

Energy and resources

Financial services

Life sciences and health

care Manu-

facturing Professional

services Public sector

Technology, media & telecom

1 (86%) Leadership 1 (85%) 1 (86%) 1 (89%) 1 (90%) 1 (84%) 1 (84%) 1 (84%) 1 (89%)

2 (79%) Retention and engagement

2 (81%) 2 (79%) 2 (83%) 4 (78%) 2 (78%) 2 (79%) 5 (75%) 2 (80%)

3 (77%) Reskilling the HR function

3 (76%) 2 (79%) 3 (77%) 2 (82%) 3 (76%) 4 (76%) 4 (76%) 3 (79%)

4 (75%) Talent acquisition and access

7 (69%) 3 (78%) 4 (76%) 4 (78%) 6 (71%) 3 (78%) 8 (67%) 2 (80%)

5 (74%) Workforce capability

6 (70%) 3 (78%) 6 (71%) 6 (73%) 5 (72%) 2 (79%) 2 (80%) 5 (77%)

6 (72%) Talent and HR analytics

6 (70%) 5 (71%) 6 (71%) 3 (80%) 7 (66%) 5 (73%) 6 (71%) 4 (78%)

7 (71%) Global HR and talent management

5 (71%) 4 (75%) 5 (73%) 8 (70%) 4 (74%) 7 (69%) 10 (57%) 6 (76%)

8 (70%) Learning and development

4 (72%) 7 (66%) 7 (68%) 9 (69%) 8 (64%) 4 (76%) 3 (78%) 8 (67%)

9 (69%) Performance management

8 (68%) 7 (66%) 7 (68%) 6 (73%) 9 (63%) 6 (72%) 9 (65%) 7 (70%)

10 (68%) HR technology 9 (67%) 6 (70%) 9 (66%) 7 (71%) 11 (61%) 8 (67%) 6 (71%) 5 (77%)

11 (65%) The overwhelmed employee

10 (62%) 8 (59%) 8 (67%) 5 (74%) 10 (62%) 6 (72%) 7 (68%) 9 (64%)

12 (59%) Diversity and inclusion

11 (56%) 9 (56%) 10 (63%) 10 (57%) 12 (55%) 9 (64%) 10 (63%) 10 (55%)

Percentages indicate the percentage of respondents rating each trend as “urgent” or “important.”

Graphic: Deloitte University Press | dupress.com

Top 10 findings

15

While HR teams may understand their current programs, capabilities, and readiness in these areas, these results hint that business leaders may not. If this is so, then this finding highlights the importance of HR leaders and teams improving their engagement with busi- ness line leaders, ensuring that HR is focusing on critical business concerns, and partner- ing with the business effectively to share HR’s capabilities and services. Of course, the finding may also point to underlying gaps that busi- ness leaders believe HR leaders need to address more fully.

Finding 9. HR and talent executives grade themselves a C-minus for overall performance

When asked respondents to rate their orga- nizations’ HR and talent programs on a scale from excellent to underperforming, the HR organizations in our survey showed a minor improvement over last year’s self-assessment. In 2013, 37 percent of respondents felt that their overall HR and talent programs were “underperforming” or just “getting by.” This year, that number dropped to 34 percent.

While this improvement is a positive sign, the general picture is still one of widespread perceived mediocrity. If we evaluate HR

Graphic: Deloitte University Press | DUPress.com

Leadership Non-HR

Reskilling the HR function

Non-HR

Global HR and talent management

Non-HR

Retention and engagement

Non-HR

Talent and HR analytics Non-HR 7%

12%

11%

20%

19%

18%

10%

13%

12%

16%

35%

47%

50%

53%

36%

54%

42%

51%

48%

56%

57%

41%

38%

27%

45%

29%

48%

36%

40%

28%510

185

513

179

480

180

504

185

508

181

HR

HR

HR

HR

HR

Not ready Somewhat ready Ready

Figure 11. Business and HR leaders’ perceptions of readiness for the top five trends (among organizations with more than 10,000 employees)

Graphic: Deloitte University Press | DUPress.com

2014

2013 14%

10%

23%

24%

38%

31%

21%

30%

3%

5% GPA 1.5: C-

GPA 1.3: D+

ExcellentGoodAdequateGetting byUnderperforming

Figure 12. HR’s global report card: Trending toward “C-”

Global Human Capital Trends 2014: Engaging the 21st-century workforce

16

organizations’ overall self-assessed capabilities using a traditional grade-point scale (see figure 12), where “excellent” is a 4.0 or A, “good” is a 3.0 or B, “adequate” is a 2.0 or C, “getting by” is a 1.0 or D, and “underperforming” is a 0.0 or F, then this year’s respondents rated themselves at the equivalent of a C-minus—in contrast to last year’s D-plus. In 2014, twice as many global respondents gave their HR and talent programs an F as gave them an A (10 percent versus 5 percent). While this is not intended as a criticism of HR in general, it does reflect how challenging it is to build a world-class HR function and how far companies believe they are from this goal.

Finding 10. Companies worldwide plan modest increases in talent and HR investments in 2014

Forty-seven percent of responding compa- nies expect to increase their HR investments in 2014, with 13 percent anticipating increases of 5 percent or more. Eight percent of respon- dents expect to decrease these investments,

and 39 percent are planning to invest at the same level (figure 13).

Taking the weighted average across these increases, we found that 2014 should see a gen- eral growth in spending on HR of 1.32 percent. While this is a relatively small number, it is positive, indicating that companies are rec- ognizing the need to invest in human capital and the value derived from those investments. Similar research shows a significant increase in spending in talent acquisition, training, reskill- ing, and employee engagement programs, with a flat to declining investment in HR staff and technology.

Toward a 21st-century talent agenda: Are HR and business leaders ready?

The global Human Capital Trends 2014 survey strives to present critical insights for business and HR leaders on both their HR and talent priorities and their readiness to deal with the future. Given evolving business needs and a changing global employee landscape, there is a complex set of urgent and important

Graphic: Deloitte University Press | DUPress.com

Significantly increase (more than 5%)

Increase (1-5%)

Remain the same

Decrease

Significantly decrease

Not applicable 144

44

164

987

873

320

6%

2%

6%

39%

34%

13%

Figure 13. Plans to invest in HR over next 12–18 months

Number of respondents

Top 10 findings

17

human capital challenges that require atten- tion. At the top of the list are:

• Leadership

• Retention and engagement

• Reskilling HR

• Talent acquisition and access

• Global workforce capabilities

At the same time, new challenges, including talent and HR analytics as well as the “over- whelmed employee,” are being added to the human capital agenda.

While the priorities and challenges are clear—and seem to resonate in importance across industries and geographies—the readi- ness of HR teams to respond to these chal- lenges is less certain. For almost every trend we identified, readiness scores lagged, in many cases substantially, behind the trend’s per- ceived urgency. In large organizations (those

with more than 10,000 employees), we saw the largest differences between business and HR leaders in their assessments of the readiness to respond to important trends.

Perhaps HR executives are being tough on themselves and their functions when they grade themselves an overall C-minus. But given the importance that both business and HR leaders place on the human capital and talent agenda, 2014 is a moment both to reflect on what else can be done and to take action: focusing on what more can be done, what should be done differently, and what might be improved to move the needle in this critical area.

Our findings outline an agenda that can guide business and HR leaders pivot- ing between the recession and future growth strategies. The trends discussed in the bal- ance of this report represent opportunities for improvement in leadership and development, acquisition and engagement, and transforming and reinventing HR to support business priori- ties in a changing world.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

18

In the fourth quarter of 2013, Deloitte Consulting’s global Human Capital practice conducted an extensive survey of HR and busi- ness leaders to understand their priorities and readiness to address 12 global HR and talent

trends. The survey included 2,532 respondents from 94 countries around the world. The key survey demographics are summarized in the following charts.

Appendix: Global Human Capital Trends 2014 survey demographics

Top 10 findings

19

Graphic: Deloitte University Press | DUPress.com

Large (10,001+)

Medium (1,001–10,000)

Small (1–1,000) 41%

31%

28%

1,032

793

707

HR

Non-HR 33%

67%

829

1,703

Board level

C-suite

Vice president

Senior manager

Manager

Individual contributor 13%

21%

27%

15%

14%

10%

336

523

672

384

352

265

Organization Level in organization

Job function

North America

Western Europe

Asia

Africa

Latin and South

America Central and

Eastern Europe

Oceania

Nordic countries

Middle East

Not specified

1%

1%

2%

3%

6%

11%

14%

13%

23%

24%

17

32

51

74

157

276

347

337

575

612

Work region

Financial services

Professional services

Consumer business

Manufacturing

Other

Technology, media, and

telecom

Energy and resources

Public sector

Life sciences and health care

Real estate 1%

6%

7%

8%

11%

11%

13%

13%

14%

15%

35

150

178

199

283

287

333

340

354

373

Industry group

United States

South Africa

India

Canada

Luxembourg

Japan

Spain

Belgium

China

Australia

United Kingdom

Poland

Argentina

Mexico

Switzerland

Brazil

Ireland

Chile

Portugal

Germany

Kenya

Uruguay

Netherlands

All others 17%

1%

1%

1%

1%

1%

1%

2%

2%

2%

2%

2%

2%

2%

3%

3%

3%

4%

4%

5%

5%

6%

11%

19%

428

31

32

34

34

36

37

40

40

46

49

53

57

58

64

66

79

99

103

118

133

150

266

479

Country

Figure 14. Respondent demographics N = 2,532

Southeast Asia 2%54

Global Human Capital Trends 2014: Engaging the 21st-century workforce

20

Authors

Jeff Schwartz, global Human Capital leader, Marketing, Eminence, and Brand Deloitte Consulting India Pvt Ltd [email protected]

Jeff Schwartz is the practice leader for the Human Capital practice in US India, based in New Delhi, and the global leader for Human Capital Marketing, Eminence, and Brand. A senior advisor to global companies, his recent research focuses on talent in global and emerging markets. He is a frequent speaker and writer on issues at the nexus of talent, human resources, and global business challenges.

Bill Pelster, leader, Integrated Talent Management Deloitte Consulting LLP [email protected]

Bill Pelster is a Deloitte Consulting LLP principal with over 20 years of industry and consulting experience. In his current role, he is responsible for leading the Integrated Talent Management practice, which focuses on issues and trends in the workplace. In his previous role as Deloitte’s chief learning officer, Pelster was responsible for the total development experience of Deloitte professionals, including learning, leadership, high potentials, and career/life fit. Additionally, he was one of the key architects of Deloitte University.

Josh Bersin, principal and founder, Bersin by Deloitte Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Josh Bersin founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and is a popular blogger. He has spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

Top 10 findings

21

Endnotes

1. David Russell Schilling, “Knowledge doubling every 12 months, soon to be every 12 hours,” IndustryTap, April 19, 2013, http://www. industrytap.com/knowledge-doubling-every- 12-months-soon-to-be-every-12-hours/3950.

2. Eric Bloom, “Your technology skills have a two year half-life and 6 ways to stay current,” IT World, October 24, 2011, http://www. itworld.com/career/216141/your-technology- skills-have-two-year-half-life-and-6-ways- stay-current; Natalie Harp, “John Seely Brown—A new culture of learning,” https:// sites.psu.edu/natalieharp/2010/06/12/ john-seely-brown-a-new-culture-of- learning/, accessed February 17, 2014.

3. The weighted average of 1.25 percent for HR investments is calculated by assuming average increases and decreases of 2.5 percent (given the range of 1–5 percent) and significant increases and decreases of 5 percent.

4. For more information, please see Karen O’Leonard, The corporate learning factbook® 2013: Benchmarks, trends, and analysis of the US training market, Bersin by Deloitte, January 2013, www.bersin.com/library or www.bersin. com/factbook. This information is based on research that will be published throughout 2014 in a series of Bersin by Deloitte reports on the topic of high-impact HR.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

Lead and develop

f

Leaders at all levels Close the gap between hype and readiness

FOR companies around the world, a short-age of leaders is one of the biggest impedi- ments to growth. This challenge is particularly acute today as the global recovery strengthens, companies seek to rapidly grow their busi- nesses in new markets, and older leaders begin to retire at accelerating rates.

Leadership needs today are far broader and deeper than merely developing the next CEO or even building the C-suite pipeline. Companies face leadership gaps at every level of the organization. These gaps can only be filled through a sustained and systemic commitment to leadership development that identifies potential leaders earlier, brings young leaders online faster, develops senior leaders later in their careers and keeps them on the job longer, and builds new leadership pipelines at every level of the company.

The executives in our 2014 global survey viewed leadership as the highest-priority issue of all the issues we asked them about, with

86 percent rating it “urgent” or “important.” Yet, despite the acknowledged importance of leadership, most companies feel they are not meeting the challenge (figure 1):

• Only 13 percent of companies in our survey rate themselves “excellent” in providing leadership programs at all levels—new leaders, next-generation leaders, and senior leaders

• 66 percent believe they are “weak” in their ability to develop Millennial leaders, while only 5 percent rate themselves as “excellent”

• Over half (51 percent) have little confidence in their ability to maintain clear, consistent succession programs

• Only 8 percent believe they have “excel- lent” programs to build global skills and experiences

• Companies face an urgent need to develop leaders at all levels—from bringing younger leaders online faster to developing leaders globally to keeping senior leaders relevant and engaged longer.

• Leadership remains the No. 1 talent issue facing organizations around the world, with 86 percent of respondents in our survey rating it as “urgent” or “important.” Only 13 percent of respondents say they do an excellent job developing leaders at all levels—the largest “readiness gap” in our survey.

• 21st-century leadership is different. Companies face new leadership challenges, including developing Millennials and multiple generations of leaders, meeting the demand for leaders with global fluency and flexibility, building the ability to innovate and inspire others to perform, and acquiring new levels of understanding of rapidly changing technologies and new disciplines and fields.

Leaders at all levels

25

Developing 21st-century leadership skills

Not only are companies not developing enough leaders, but they are also not equipping the leaders they are building with the critical capabilities and skills they need to succeed.

Today’s market environment places a pre- mium on speed, flexibility, and the ability to lead in uncertain situations. At the same time, the flattening of organizations has created an explosion in demand for leadership skills at every level.

Our research shows that foundational and new leadership skills are in high demand, including:

• Business acumen: Understanding the core business well

• Collaboration: Having the ability to build cross-functional teams

• Global cultural agility: Managing diversity and inclusion

• Creativity: Driving innovation and entrepreneurship

• Customer-centricity: Enhancing effective customer relationships

• Influence and inspiration: Setting direc- tion and driving employees to achieve business goals

• Building teams and talent: Developing people and creating effective teams

A highly successful global technology com- pany, for example, discovered that it needed four leadership archetypes: entrepreneurs who can start a business; scale leaders who can build up a business; efficiency leaders who reduce costs and improve operations; and fix-it leaders who turn businesses around.

Graphic: Deloitte University Press | DUPress.com

5%

8%

8%

10%

13%

17%

28%

36%

39%

39%

43%

49%

66%

56%

52%

51%

44%

34% Providing executive involvement

and ownership of leadership development

Providing leadership programs for all levels (new, next generation,

senior leaders)

Maintaining clear and current succession plans and programs

Including global skills and experiences in leadership program

Providing experiential, role-based leadership programs

Providing focused leadership programs for millennials

1,175

1,162

1,154

1,034

1,142

1,099

Figure 1. Current leadership programs falling short

Number of respondents

% of total number of responses

HR executives’ assessment of leadership program capability levels ExcellentAdequate Weak

Today’s market environment places a premium on speed, flexibility, and the ability to lead in uncertain situations.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

26

•

•

•

•

•

•

•

The core capabilities for leadership are well understood. Yet Deloitte’s experience over the last decade suggests that the quality of leaders is declining. This would mean that companies need to reexamine and redesign their leader- ship development programs.

Our survey suggests this has become a highly urgent challenge for corporate leaders worldwide, especially in Brazil, Mexico, and the Netherlands. Executives in few countries appeared to be prepared to meet this challenge (figure 2).

Graphic: Deloitte University Press | DUPress.com

Figure 2. Urgency vs. readiness: Who is leading, who is lagging?

Spain

Kenya

Argentina

Mexico

Chile

South Africa

Ireland

Brazil

United Kingdom

Netherlands

China

United States

Poland

Switzerland

India

Canada

Germany

Japan

Luxembourg Australia

Belgium

Portugal

All others

Uruguay

30

40

50

60

40 50 60 70 80

Netherlands

Brazil

Japan

Mexico

Belgium

Australia

Poland

South Africa

United States

Argentina

Uruguay

Canada

China

All others

Switzerland

United Kingdom

Germany

Chile

Luxembourg

India

Spain

Ireland

Kenya

Portugal-15

-21

-22

-26

-29

-29

-29

-29

-30

-32

-32

-32

-33

-34

-35

-36

-37

-37

-38

-40

-43

-48

-50

-51

Capability gap grid

Leadership

Capability Gap Index (readiness – urgency)

So m

ew h a t

re a d

y (5

0 )

1 0

0 =

R ea

d y g

f 0

= N

o t

re a d

y

100 = Urgent gImportant (66.6)Somewhat important (33.3) f 0 = Not important

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Leaders at all levels

27

Building the pipeline takes investment, time, and expertise

Building a leadership pipeline requires a high level of sustained investment. The entire industry of leadership development repre- sents a $14 billion marketplace.1 High-impact2 companies in the United States spend more than $3,500 per person each year to develop mid-level leaders and over $10,000 to develop senior leaders.3

Strong leadership programs target leaders at all levels. At the early stages in the leader- ship pipeline, potential leaders need to acquire core skills in supervision and management, with frequent assignments to round out their skills. Later in their careers, rising leaders must understand all the business functions and how to run a P&L. As executives, leaders must learn business and product strategy and gain experi- ence driving change among large teams.

It is also critical to understand that, despite the proliferation of leadership fads, there are no shortcuts to building a leadership team that is broad and deep. A new leader typically needs 18 months before feeling fully comfortable in a new role; for a mid-level leader, the time period stretches from 24 to 36 months.4

Creating new leadership paths While most companies develop somewhat

rigid leadership tracks, they may be better served by developing paths to leadership that are more flexible.5 Some leaders will move into a top role quickly due to situational needs or local talent gaps. Others will develop over the course of many years.

High-performing companies now develop leaders locally, tapping into local

cultural experiences of potential leaders in each country.

In a recent study of top leadership progres- sion at a major energy company, we found that the paths for successful leaders in China were dramatically different than those for leaders in the United States.6 US-based leaders took a more traditional path through a pre-defined set of business assignments; successful leaders in China were promoted much more rapidly. This discovery led top management to rethink the company’s traditional model and enable local teams to be more flexible in the leaders they develop.

The importance of leadership strategy

Building leaders requires more than a portfolio of training programs. Senior execu- tives should create a culture that broadens the opportunity for leaders to develop in new ways. This means putting potential leaders in positions that stretch them beyond their current skill sets, and continuously coaching and supporting leaders so they can build their capabilities as rapidly as possible. While this is increasingly well known, in our experience it is simply not widely adopted and practiced.

This process is relevant to all levels of the organization and to all generations of employ- ees. High-potential Millennial leaders are looking to be identified early and placed on accelerated development timetables. Mid- career leaders are looking for challenging roles that allow them to make capability leaps— deepening and broadening their leadership skills to prepare them for more senior roles and new business challenges.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

28

LESSONS FROM THE FRONT LINES

Building a “pathway” to leadership

ANZ, a leading Australian bank and financial services provider, set out to transform itself into a “super-regional bank,” focusing on achieving aggressive growth outside its home markets of Australia and New Zealand. To meet these goals, ANZ had to ensure that its leaders had the distinctive set of capabilities necessary for the transition.

The first phase of the program built the foundation for organizational leadership in the region through the development of a unique ANZ leadership model with the full commitment of senior executives. The model identifed leaders at all levels and critical leadership transition points.

The competencies necessary for success were aligned to the new super-regional strategy and leadership model, and the company designed a “leadership pathway program,” including a set of bespoke learning programs for each leadership level, to support the development of super-regional leaders through enhanced leadership and business skills.

In the second phase, the pathway program was deepened through the adoption of an informal online learning tool implemented widely across the bank. A generalist bankers program brought the new strategy to one organizational level; an executive leader program was required for senior executives; and recommended learning was introduced for first-time managers. A speaker series brought the strategy to life for all staff.

Currently, in the third phase, the program has adopted a model of leaders teaching leaders, with a renewed focus on identifying and targeting high-potential leaders for the executive leader program. Thus far, over 5,400 people have completed programs in the pathway, logging close to 110,000 hours of learning. Business results for the bank have continued to improve throughout the strategy’s implementation. The bank is increasing its rate of internal leader promotions as well.

Thanks to a high level of commitment to the strategy throughout the company, measures of employee engagement have risen significantly, and senior executives are actively building and demonstrating the culture change necessary to achieve the strategy’s goals.

Leadership development at all levels enables mission success

Few organizations face more pressing demands for leadership than the United States Department of Defense.7

With more than 1.4 million men and women on active duty, 1.1 million serving in National Guard and Reserve forces, and 718,000 civilian personnel, the Department of Defense requires leaders at all levels capable of understanding complex security threats around the world, making split-second life-or-death decisions, and achieving mission success—all in highly volatile, ambiguous, and constantly changing environments.

To accomplish this goal, the department invests heavily in developing well-rounded leaders at all levels. Leadership training is embedded into every stage of a military member’s career. Completion of this training is typically required for promotion and advancement, so leadership is effectively built into the department’s performance and rewards system.

Prospective officers—the high-potential leaders of the military—undergo four years of progressively more challenging leadership training, either at a service academy or in an ROTC (Reserve Officers Training Corps) program, before they receive their commissions or first assignments. Officer candidates are pushed into leadership roles early and often, allowing them to continually build their leadership skills over time.

Upon graduation, officers typically receive leadership training at every stage of their careers. Those officers that reach the highest levels of command typically attend at least three formal schools, with specific leadership training that ranges from several weeks to up to nine months. During this time, officers focus solely on improving their leadership skills and are free from day-to-day assignments that distract them from their training.

At every stage in their career, officers are pushed to expand their leadership skills through training and hands-on field experience. Critical skills such as teamwork, clear communication, contingency planning, adaptability, time management, and aligning priorities and strategy are continually reinforced. The result is a leadership training program that embodies best practices and builds leaders at every level of the organization.

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Where companies can start

BUILDING a global leadership pipeline takes time, investment, and executive focus. Potential starting points include:

• Engage top executives to develop leader- ship strategy and actively govern lead- ership development: Focus on gaining executive commitment to the process. Two trends are gaining traction. First, compa- nies are involving their executive teams, and increasingly boards of directors, in the leadership process by providing them visibility to and soliciting their input on the leadership pipeline, gaps, and programs. Second, business leaders are recognizing that their direct involvement in leadership pipelines and gaps is critical for anticipating challenges in developing and implementing future strategies.

• Align and refresh leadership strategies and development to evolving business goals: Different business goals—growth, innovation, quality, new markets, acquisi- tions—require different combinations of leadership experiences and capabilities. As businesses, technology, and competi- tive and regulatory environments rapidly change, companies are challenged to create new types of leaders with more varied and deeper leadership experiences.

• Focus on three aspects of developing leaders:

– Develop leaders at all levels. Companies are run by first-line supervisors and middle management. Invest in these levels as well as in top leadership roles.

– Develop global leaders locally. The days of expatriate leaders are over; high-per- forming companies build local leaders from the ground up.8

– Develop a succession mindset. It takes years to build great leaders; the pipeline should be growing continuously.

• Implement an effective leadership pro- gram: Each company needs a unique lead- ership program. Successful organizations often ensure that their programs feature current leaders teaching future leaders—an idea that has been around for some time, but just not practiced widely enough. Assign a top business and HR executive to take responsibility and be prepared to spend significant time and money. In developed markets this can be in the range of $2,000 and $10,000 per leader every year. Focus on how to develop leaders more quickly by simplifying competency models, using action learning, and assessing leaders with analytics.9

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BOTTOM LINE As in previous years, leadership continues to top the priority list in the 2014 Human Capital Trends survey. The challenge is to develop leadership pipelines that are global, broad, and deep, reaching to every level of the organization. This involves a significant investment of time and resources and a commitment to leadership from the board and executive team. Perhaps the biggest challenge is for business and HR leaders to ask whether they are confident that they are doing enough and whether they are exploring new approaches to move the needle on their business’s leadership requirements.

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Authors

Adam Canwell, Human Capital leader, Deloitte Australia Deloitte Touche Tohmatsu [email protected]

Adam Canwell has a strong track record of working with leadership teams on identifying priorities and leading programs to effectively deliver change. He has deep experience in the design and delivery of leadership programs to increase their performance. Canwell has an MSc in organizational change from Oxford/ HEC. He also holds master’s and bachelor’s degrees from Oxford University, where he studied philosophy, politics, and economics.

Vishalli Dongrie, Talent, Performance, and Rewards leader, Deloitte India Deloitte Consulting India Pvt Ltd [email protected]

Vishalli Dongrie is considered one of India’s most impactful leaders in talent management, leadership, and organization design. In the talent, performance, and rewards space, she has led large international assignments in leadership capability building, top management assessment and development centers, career paths, and succession planning. Dongrie holds a doctorate in human resources and organizational behavior and has worked in the Middle East, Asia Pacific, the United States, and Europe in her tenure of 15 years with Deloitte.

Neil Neveras, global Leadership Services leader Deloitte Consulting LLP [email protected]

Neil Neveras helps clients solve their most complex leadership and talent challenges in areas including strategy, competencies, assessment, program design, succession planning, coaching, career paths, and success metrics. Clients are typically CXOs in Fortune 500 companies across industries. Prior to working at Deloitte, Neveras was director of executive programs at Wharton. His global work experience includes work in China, India, Malaysia, Singapore, Czech Republic, France, Denmark, Italy, Spain, Germany, the United Kingdom, and the United States.

Contributors Simon Holland, Kim Lamoureux

Heather Stockton, Human Capital leader, Deloitte Canada Deloitte Canada [email protected]

Heather Stockton is global Human Capital leader for the financial services industry. She is a member of the board in Deloitte Canada and chair of the talent and succession committee. Through her work in developing and executing strategic plans, Stockton has become an advisor to executives who are undertaking business transformation, undergoing merger integration, and changing their operating model. She has extensive experience in talent strategy and leadership development for leaders and boards.

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Endnotes

1. Karen O’Leonard and Laci Loew, Leadership development factbook® 2012: Benchmarks and trends in US leadership development, Bersin & Associates, July 2012, www.bersin.com/ library or www.bersin.com/ldfactbook.

2. “High-impact” learning organizations (HILOs) are those in the top 10 percent of the Bersin by Deloitte benchmarking database, measured by business outcomes, learning effectiveness, learning alignment, and learning efficiency. See www.bersin.com/library for more details.

3. O’Leonard and Loew, Leadership development factbook® 2012.

4. Consulting done for a major oil company.

5. Laci Loew and Stacia Sherman Garr, High- impact leadership development, Bersin & Associates, October 2011, www.bersin. com/library or www.bersin.com/hild.

6. Katherine Jones and Karen O’Leonard, Leadership development in China: Building bench strength in the world’s largest marketplace, Bersin by Deloitte, April 2013, www.bersin.com/library.

7. Interviews with various Department of Defense personnel.

8. Katherine Jones, Karen O’Leonard, and Josh Bersin, Global leadership: Developing tomorrow’s leaders around the world, Bersin & Associates, September 2012, www.bersin.com/library.

9. O’Leonard and Loew, Leadership development factbook® 2012.

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Corporate learning redefined Prepare for a revolution

BACK in 1999, Cisco CEO John Chambers predicted that the Internet would trans- form education so completely it would “make email usage look like a rounding error.”1 While it took nearly 15 years, that day has finally arrived.

The explosive growth of online learning— from the pioneering Khan Academy and edX to Coursera and dozens of MOOCs (massive open online courses)—is democratizing educa- tion for millions by putting learners at the center of the education process.2 We estimate that more than 24 million people have tried online education, and most young employees today come to work ready and excited to build their job skills through online learning.

Yet, at a time when employees should be able to access training as easily as a YouTube video, most training and development orga- nizations have not kept pace with advances in technology or the evolution toward employee- centered learning.

As figure 1 indicates, more than two-thirds (71 percent) of executives believe their com- panies are “weak” when it comes to using advanced media. Slightly more than six in ten say they are also “weak” in providing mobile

and social learning (63 percent) and using MOOCs as development tools (67 percent).

The need to rationalize learning and development spending

Traditional employee training represents a $130 billion global market.3 While most orga- nizations spend millions of dollars on training today, most are not sure exactly where this massive investment is spent or what results, if any, it delivers.

One of the biggest problems is the uncoor- dinated structure of learning and development itself. Our research and conversations with clients show a surprising lack of discipline and structure within the training function at many companies. Only 49 percent of organizations have a senior leader running the training func- tion and fewer than 45 percent have a written business plan for learning.4

With little leadership or planning, it is not surprising that most companies see a lot of waste and redundancies. One chief learn- ing officer told us the company had 7,000 courses listed in its training catalog and nearly 60 percent were duplicative. Rationalizing

• Traditional employee training is being revolutionized by flipped classrooms, learning- centric models, and an explosion of content delivered over a variety of new online and mobile platforms.

• More than two-thirds of companies in our global survey see this trend as “urgent” or “important,” yet only 6 percent believe they have mastered the content and technology capabilities needed to make online learning an accessible tool and a compelling experience for their employees.

• By empowering employees to become equal partners in the learning process, HR organizations can foster a culture of development and growth—driving performance, engagement, and career development.

Corporate learning redefined

35

and consolidating these programs is clearly a crucial first step in creating a next-generation learning environment.

Continuous learning and the move from “push” training to “pull” learning

Historically, most training programs have followed a “push” model. An employee was invited to a training session in a classroom at a specified time, listened to a series of lec- tures, and was sent back to work. Content was pushed down to employees based on the training department’s schedule and success was measured by how many employees attended the class.

Today’s employees typically have different expectations of how to acquire and develop skills. Younger Millennial and Generation X workers expect training and support to be as readily and rapidly accessible as a Google search. In this “pull” model, learning and development is a continuous process, with training pulled seamlessly through comput- ers or mobile devices anywhere, anytime. The training class schedule has been replaced by the mouse click and the screen tap.

As careers become longer and more diverse, the half-life of skills also becomes shorter and shorter, placing a premium on continuous training and development. Millennials can look forward to multi-chapter careers lasting 50 years, with career paths that cross many businesses and functions.

To address the new dynamics of the 21st- century employee, companies are replacing tra- ditional training classrooms with a tapestry of easy-to-use learning approaches and resources. These new tools allow employees to continu- ously upgrade skills by incorporating learning into everyday work experience and progressing at their own rate.

Companies in Ireland, Spain, and Luxembourg report that they are successfully making the transition from traditional train- ing to individual learning. While companies in China and Brazil understand this need, they appear less prepared to act (figure 2).

A new employee-employer contract offering tours of duty

Underlying this shift in the way people learn and acquire skills is what Reid Hoffman, founder of LinkedIn, calls the new “employee- employer contract.”5 Companies no longer

Graphic: Deloitte University Press | DUPress.com

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Figure 1. Slow adoption of leading-edge learning tools

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Global Human Capital Trends 2014: Engaging the 21st-century workforce

36

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Graphic: Deloitte University Press | DUPress.com

Figure 2. Urgency vs. readiness: Who is leading, who is lagging?

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

provide employees a lifetime career. Instead, they offer “tours of duty”—assignments for a period of time that gives employees new skills, education, and a set of experiences that pro- vide benefits over a lifetime.

Under this new contract, skills are acquired and developed rapidly. Employees become

not only more capable, but more loyal to the organization. According to our research, employee development is one of the biggest drivers of retention and engagement.6 In other words, tours of duty create employees who are not only more capable, but also more engaged and motivated.

Corporate learning redefined

37

LESSONS FROM THE FRONT LINES

Transforming corporate learning drives business change

In fall 2007, employee engagement at Canadian-headquartered TELUS, a national telecommunications company, sat at 53 percent. Learning took place solely at formal training events and open leadership was a foreign concept to the company’s 40,000+ employees. Collaborative technologies were nowhere to be found, and customers scored the company low when asked if they would recommend TELUS to others.

Fast forward to fall 2013: 83 percent of employees are engaged and 73 percent of customers are likely to recommend TELUS.

How did this transformation happen? TELUS took many actions to drive change.

To foster a culture of learning, in 2009, the organization launched its Learning 2.0 model, which redefined learning as equal parts formal, informal, and social. Collaborative technologies—including video- and photo-sharing, blogs, micro-blogging, wikis, virtual worlds, gamification, and instant messaging—encouraged employee alignment and the adoption of the new learning model.

To properly benchmark and assess Learning 2.0, TELUS developed its own internal “return on performance” metric system. Between 2009 and 2013, team member return on performance increased from 62 percent to 75 percent, proving that effective learning can drive performance.

In 2010, the organization launched the TELUS Leadership Philosophy (TLP)—an enterprise-wide open and collaborative leadership framework that promotes consistency in performing, managing, and leading. TLP represented an important shift in leadership strategy. Today, all team members are encouraged to take the lead.

TLP is now embedded into recruitment, onboarding, learning, succession planning, and performance development. As a result, TELUS saw its leadership engagement rise to 82 percent by 2013.

Transforming learning and development to align with business strategy

A global diversified health and well-being company with thousands of employees in over 80 countries embarked on a series of strategic restructuring programs—including operations, corporate culture, and business processes—to meet a rapidly changing business environment. The company knew that this restructuring could likely succeed only if its learning function were reshaped as well, realigning it with the company’s new strategic business objectives.

The company’s goal was both ambitious and necessary: to transform a learning program scattered across different business units into an integrated, global learning function with measureable results and cost transparency.

The company’s “as-is” assessment identified significant opportunities to increase the quality of learning and development while generating savings of up to 15 percent on total learning spending. Thousands of older, often- unused offerings were eliminated; others were reassessed to determine their alignment with business strategy and ability to advance critical skills.

In the course of these changes, learning became more employee-centric and more mobile. Content is no longer prescribed for each employee. Instead, employees and their managers construct individualized programs based on career plans and performance goals.

By transforming corporate learning, the organization laid the foundation for a global corporate university. Today it offers specialized academies and shared services that are fully focused on building the critical capabilities the company needs around the world.

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Reinvent learning and development by putting employees in charge

As employees become active drivers of the learning experience, HR’s role in the process becomes both more interesting and more critical.

Today’s effective learning and develop- ment organizations should strive to become facilitators of learning and curators of con- tent, not just developers and deliverers of training programs. They bring to this task a deep understanding of the capabilities and skills companies need to successfully execute their business plans and achieve their performance goals.

Employees are asking—and being asked— to take responsibility for developing their skills continuously over the course of their careers. In a “pull” learning environment, workers take it upon themselves to find information, educate themselves, and share their own expertise. In fact, our research shows that creating this type of learning culture, where employees willingly share skills and knowl- edge, is now one of the most important factors in business success.7

Companies are experimenting with strate- gies that enable employees to share what they learn on the job—and they are getting positive results. BT, for instance, encouraged video sharing by field service agents over the last five years and found that customer service quality improved threefold.8

Where companies can start

HOW can organizations reengineer their learning strategy to address an explo- sion of content and a flipped model in which employees are more empowered to manage their careers? Starting points include:

• Rationalize training: Know where the training budget is being spent and use this knowledge to rationalize training. Categorize training spending, identify areas of overlap, bring in a senior leader to accel- erate the transition, and set up standard services for technology, content manage- ment, authoring tools, and other parts of the learning architecture.

• Redesign training roles: Embrace leader- led training and subject-matter authored content and bring social and collaborative learning into every program offered.

• Create content curators: Establish HR as curators of content and facilitators of experiences, not merely content archivists. Experiment with the fast-growing areas of employee-authored content, mobile learning, gaming, and other advanced learning techniques.

• Standardize, simplify, and integrate learn- ing technology: Employees want a single place to access content, share experiences, and find formal programs. Simple, inte- grated, mobile-enabled learning platforms drive adoption.

• Assess your learning culture: Do your managers help develop people or just drive the numbers? Does your organization stop and reflect? Are your leaders open to bad news? Is employee development truly important and valued in your organization?

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BOTTOM LINE Corporate training today requires content, context, and deep expertise. Companies should rationalize their HR spending, develop a global learning architecture, and shift the focus from “delivering training” to “developing capability.”

Many leading companies focus on putting the learner in charge (flipping corporate training in the same way schools are experimenting with flipped classrooms), building mastery, improving time to autonomy, and unlocking the power of expertise to ensure it is shared throughout the firm. Effective corporate learning encourages a culture of growth, empowering employees and driving performance, engagement, and career development.

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Authors

Josh Haims Deloitte Consulting LLP [email protected]

Josh Haims brings more than 15 years of consulting experience to the clients that he supports. He leads Deloitte’s Learning Solutions practice and is the co- lead of the global Learning Solutions team. Haims specializes in delivering talent, performance, and rewards projects, including enterprise learning strategy and training program design, strategic change management, and talent strategies in a variety of industries.

Contributors John Hagel, Jen Stempel

Bill Pelster, leader, Integrated Talent Management Deloitte Consulting LLP [email protected]

Bill Pelster is a Deloitte Consulting LLP principal with over 20 years of industry and consulting experience. In his current role, he is responsible for leading the Integrated Talent Management practice, which focuses on issues and trends in the workplace. In his previous role as Deloitte’s chief learning officer, Pelster was responsible for the total development experience of Deloitte professionals, including learning, leadership, high potentials, and career/life fit. Additionally, he was one of the key architects of Deloitte University.

Josh Bersin, principal and founder, Bersin by Deloitte Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Josh Bersin founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and is a popular blogger. He has spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

Bernard van der Vyver, global Learning Solutions leader Deloitte Consulting BV [email protected]

Bernard van der Vyver is a leading advisor on human capital matters, focusing on learning and development. By merging his background in technology and its effective use with the development of people, he brings a unique strength to the HR domain. As global Learning Solutions leader, he aspires to grow and strengthen the global learning community by leveraging knowledge and expertise to deliver learning solutions that bring unique value to clients.

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Endnotes

1. Anna Muoio, “Cisco’s quick study,” Fast Company, September 30, 2000, http://www. fastcompany.com/41492/ciscos-quick- study, accessed on January 27, 2014.

2. Josh Bersin, “The MOOC marketplace takes off,” Forbes, November 30, 2013, http://www.forbes.com/sites/joshber- sin/2013/11/30/the-mooc-marketplace- takes-off/, accessed on January 27, 2014.

3. Karen O’Leonard, The corporate learning factbook® 2014: Benchmarks, trends, and analysis of the U.S. training market, Bersin by Deloitte, January 2014, www.bersin.com/ library or www.bersin.com/factbook.

4. David Mallon, Janet Clarey, and Mark Vickers, The high-impact learning organization series, Bersin & Associates, September 2012, www. bersin.com/library or www.bersin.com/hilo.

5. Reid Hoffman, Ben Casnocha, and Chris Yeh, “Tours of duty: The new employer- employee compact,” Harvard Business Review, June 2013, http://hbr.org/2013/06/ tours-of-duty-the-new-employer-employee- compact, accessed on January 27, 2014.

6. Josh Bersin, High-impact talent management: Trends, best practices and industry solutions, Bersin & Associates, May 2007, www.bersin. com/library or www.bersin.com/hitm.

7. David Mallon, High-impact learning culture: The 40 best practices for creat- ing an empowered enterprise, Bersin & Associates, June 2010, www.bersin. com/ library or www.bersin.com/hilc.

8. David Mallon, “Dare2Share: BT’s experience with learning 2.0,” Bersin & Associates, webi- nar, April 15, 2009, www.bersin.com/library.

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Performance management is broken Replace “rank and yank” with coaching and development

TRADITIONAL performance management —the annual process of rating employees’ performance and ranking them against their colleagues—is widely considered to be broken.

These “forced curve” evaluations became popular under the influence of the GE model during Jack Welch’s tenure, but they were origi- nally conceived around the turn of that cen- tury—the turn of the 19th to the 20th century, that is. At that time, employees were viewed strictly as “workers” whose performance could be accurately measured by output: the num- ber of railroad ties installed, hours worked, or other numeric measures.

Today, more than 70 percent of all employ- ees work in service or knowledge-related jobs. Their performance is driven by their skills, attitude, customer empathy—and by their abil- ity to innovate and drive change by working through teams. These skills must be built over time, and successful performance management must be focused on constantly developing these capabilities rather than ranking them at a moment in time.

In addition, today’s business climate and business priorities seldom follow the annual evaluation cycle. Goals shift, strategies evolve, and employees often switch between multiple projects under various team leaders. Given this dynamic, it is hardly surprising that our research shows that organizations where employees review their personal goals quar- terly—or even more often—were nearly four times more likely to score at the top of Bersin by Deloitte’s Total Performance Index.1

Many of today’s employers understand that it is time to reassess their performance management systems. Fully 70 percent of our survey respondents stated that they are either “currently evaluating” or have recently “reviewed and updated” their performance management systems (figure 1).

In a world where employee retention and workforce capability are significant indicators of business success, the performance manage- ment process should focus on continuous coaching and development, rather than com- petitive evaluation. Managers who provide reg- ular feedback and opportunities to improve are

• Today’s widespread ranking- and ratings-based performance management is damaging employee engagement, alienating high performers, and costing managers valuable time.

• Only 8 percent of companies report that their performance management process drives high levels of value, while 58 percent said it is not an effective use of time.

• Leading organizations are scrapping the annual evaluation cycle and replacing it with ongoing feedback and coaching designed to promote continuous employee development.

Performance management is broken

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far more likely to field high-performing teams than those who retain once-a-year rankings.

Why grading on the curve consistently fails

Perhaps the fundamental aspect of tradi- tional performance management is grading by the curve or forced ranking of employees. This process, widely known as “rank and yank,” has been found in many companies to demoralize

employees, create animosity, and spur good people to look elsewhere for work.

At Microsoft, which recently abandoned the practice, the ranking process resulted in “capricious rankings, power struggles among managers, and unhealthy competition among colleagues.”2

The distribution of employee performance more often follows the “long tail” rather than the traditional “bell curve,” especially at talent-intensive companies that thrive on expertise and innovation. In other words, some

Graphic: Deloitte University Press | DUPress.com

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Graphic: Deloitte University Press | DUPress.com

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Figure 2. HR executives’ assessment of performance management

HR executives’ assessment of performance management capability levels ExcellentAdequate Weak

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LESSONS FROM THE FRONT LINES

A continual and collaborative approach to performance development

Prior to radically reforming its performance management system, managers at multinational software company Adobe spent over 80,000 hours per year on traditional performance evaluations—a process one manager described as “soul-crushing.”8

Adobe, a company of 11,000 employees, 54 percent of whom work in North America, tried for five years to modify the traditional performance management system before abandoning it as inconsistent with Adobe’s strong culture of teamwork and collaboration.

Today, Adobe has a far simpler, but far more effective, system.

Either an employee or a manager may request a “check-in” every three months. Before the actual meeting occurs, a group of employees provides feedback on the employee’s performance.

The results form the basis of a conversation about performance improvement, rather than a zero-sum dispute about compensation or ranking. The goal is to make coaching and developing a continuous, collaborative process between managers and employees—a far more motivating outcome.

Importantly, Adobe’s new system focuses on both ends of the performance curve—keeping high performers happy and offering practical advice for lower performers looking to improve. Group performance is also evaluated, leading to a more rational determination of group compensation.

The results have been profound: Since rolling out the new approach worldwide, Adobe experienced a 30 percent reduction in voluntary turnover in a highly competitive talent environment.

employees are hyperachievers, while many oth- ers work at the middle level of performance. In industries such as software, a top performer can often outperform a mid-level performer by as much as tenfold.

In these companies, the performance management system should treat high per- formers very well, while encouraging mid-level employees to improve through coaching and development. A forced bell curve diminishes the value of the top performers and pushes many mid-level performers into the bottom. In the process, it inadequately rewards top performers and fails to motivate middle-of- the-road employees.

Many corporate executives acknowledge that their current performance systems are not working (figure 2). More than half of executives surveyed believe their current performance process does not drive employee engagement and high performance (58 per- cent) and is not an effective use of anyone’s time (58 percent). Just under half say their per- formance processes are “weak” in improving

development (48 percent) and driving business value (48 percent).

A new role for managers

Shifting away from annual performance evaluations toward a process of continuous coaching and improvement requires a new role for managers.

The days when managers could lead from a position of command and control are over. In today’s high-performing teams, employees must take ownership of their performance and act on their own to improve their capa- bilities. Managers become coaches, rather than evaluators.

Decoupling compensation from evaluations

A critical feature of the new “coaching and development” model of performance man- agement is separating feedback provided to employees from compensation decisions.

Performance management is broken

47

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Graphic: Deloitte University Press | DUPress.com

Figure 3. Readiness vs. urgency: Who is leading, who is lagging?

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Neuroscience research shows that con- versations about compensation provoke an almost primordial “fight or flight” reaction among employees, which obviously inhibits the coaching process.3 Rather than directly linking ratings and salary increases or bonuses, compensation decisions should be based on

the critical nature of an employee’s skills, the cost of replacing them, their value to custom- ers, and the external labor market.

While employees need to be held account- able for the results they produce, most people perform best when they are given tools to succeed and coaching to improve performance.

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Companies like Juniper Networks,4 New York Life,5 Motorola Solutions,6 Kelly Services,7 and others have all reengineered their pro- cess, eliminated ratings, and found sub- stantial improvements in engagement and

performance as a result. Companies in other countries like Brazil, Germany, the United Kingdom, and Japan are eager to follow their lead, and recognize that they are far from ready (figure 3).

Where companies can start

A SUCCESSFUL shift to leading-edge performance management—replacing annual ranking and yanking with continuous feedback, coaching, and development—begins with a frank determination of whether rigid performance evaluation systems are advancing a company’s business priorities. If not, as many organizations increasingly recognize, it is time to take action. Potential starting points include:

• Get senior leaders involved—and keep them involved: Hold a senior executive- level conversation about the strategy and philosophy for employee performance in the company. What does the organization hope to achieve as a result of performance management activities? What system will best reinforce the organization’s talent management strategy?

• Use performance management to build skills: Switch from rigid performance reviews to flexible performance conversa- tions aimed at providing employees at all levels with practical steps they can take and the skills necessary to reach the next level of achievement within the organization.

• Teach managers to give better feedback: Boost the skills of managers to enable them to have productive yet less formal conver- sations about performance that will drive

improvement rather than drive employees to look outside the organization.

• Simplify the process: Separate the perfor- mance coaching and evaluation process from determinations of compensation. Reduce the number of forms and make them very simple and easy to use. Ignore the advanced features in performance management software.

• De-link performance scores and compen- sation: Consider revising compensation structures to include broader consider- ations, such as how the outside talent market would compensate an employee or how difficult the employee would be to replace. Analyze the extent to which the organization can take a broader approach to total rewards by offering growth opportuni- ties to employees who have outperformed their peers.

• Coach everyone: Search for opportunities for employees in the “broad middle” of the performance distribution to see themselves as valued contributors to organizational success, rather than merely looking up to the perceived superstars. Hold everyone accountable, but give everyone coaching, development planning, and training to improve.

Performance management is broken

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BOTTOM LINE Today’s workers expect to be held accountable for results—but they also expect coaching, development, and regular feedback. Look carefully at the performance management process to see if it truly drives performance today or is merely an artifact of the past. In many cases, a shift from “evaluation” to “development and performance improvement” will drive appreciable results.

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Stacia Garr, vice president, Talent Management research Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Stacia Garr leads Bersin by Deloitte’s talent management research practice. Her areas of expertise include talent strategy, workforce planning, performance management, and leadership development. Previously, she worked for the Corporate Executive Board and also served as an adjunct history professor at Northern Virginia Community College. Garr holds a master’s degree from the London School of Economics and bachelor’s degrees from Randolph-Macon Woman’s College.

Andy Liakopoulos, Talent Strategies leader, Deloitte US Deloitte Consulting LLP [email protected]

Andy Liakopoulos has more than 20 years of experience in areas including talent management (talent strategy, acquisition, performance management, succession management, leadership development, and employee engagement and retention), organization strategy, change management, human resource transformation, and learning development. His consulting engagements include a variety of projects such as workforce transformation, M&A, process outsourcing/ offshoring, organization restructuring, and corporate culture transformation.

Contributor Terry Patterson

Authors

Lisa Barry, global Talent, Performance, and Rewards leader Deloitte Touche Tohmatsu [email protected]

Lisa Barry is the Talent leader for Global Consulting, and is also the global leader for Talent, Performance, and Rewards. She is considered to be one of the most impactful leaders in the human capital field, championing the need for businesses to reinvent relevance and create a powerful people-centered strategy to propel a company’s growth trajectory. A true citizen of the globe, Barry has lived and worked in the United Kingdom, Europe, the United States, South East Asia, New Zealand, and Russia.

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Endnotes

1. This information is based on current research by Bersin by Deloitte on the topic of goal-setting and revising, the report for which is due to be published in 2014. The Total Performance Index is determined by an organization’s score on 12 variables that cover employee engagement, employee productiv- ity, customer satisfaction, cost structure as compared with competitors, market leadership position and profitability, hiring the best people, developing great leaders, developing employees, retaining top perform- ers, planning for future talent needs, and having the right people in the right jobs.

2. Shira Ovide and Rachel Feintzeig, “Microsoft abandons ‘stack ranking’ of employees: Software giant will end controversial practice of forcing managers to designate stars, under- performers,” Wall Street Journal, November 12, 2013, http://online.wsj.com/news/articles/ SB10001424052702303460004579193951987 616572?mod=WSJ_hps_MIDDLENexttoW- hatsNewsFifth, accessed on January 27, 2014.

3. David Rock, “Managing with the brain in mind,” Oxford Leadership Journal 1, no. 1 (December 2009), http://isites.harvard.edu/fs/ docs/icb.topic1331850.files/Social%20Dynam- ics/Managing%20with%20the%20Brain%20 in%20Mind.pdf, accessed on January 27, 2014.

4. Stacia Sherman Garr, How Juniper moved beyond performance scores to align per- formance management to organizational values: Part 4 of the Abolishing Performance Scores webinar series, Bersin by Deloitte, December 5, 2013, www.bersin.com/library.

5. Stacia Sherman Garr, How New York Life focuses employees on performance, not just compensation: Part 3 of the Abolishing Perfor- mance Scores webinar series, Bersin by Deloitte, November 12, 2013, www.bersin.com/library.

6. John Pletz, “The end of ‘valued performers’ at Motorola,” Crain’s Chicago Business, No- vember 2, 2013, http://www.chicagobusiness. com/article/20131102/ISSUE01/311029980 ?template=mobile&X-IgnoreUserAgent=1, accessed on January 27, 2014.

7. Stacia Sherman Garr, Abandoning performance scores: Kelly Services shares soul-searching that guided its performance management evolution, Bersin & Associates, March 2012, www.bersin.com/library.

8. Stacia Sherman Garr, Reengineering for agility: How Adobe eliminated performance appraisals, Bersin by Deloitte, Septem- ber 2013, www.bersin.com/library.

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The quest for workforce capability Create a global skills supply chain

ORGANIZATIONS around the world are experiencing disruptive change in the demand for critical skills. Not only are specialized skills increasingly scarce, but they are also unevenly distributed across the global economy.

As a result, companies are often looking in the wrong places when it comes to building workforce capabilities—and coming up short. In fact, according to our global survey, execu- tives rank building workforce capability as one of the top three challenges facing their organi- zation over the next 18 months.

This trend helps explain the “talent para- dox” that has emerged in recent years: High unemployment rates point to a surplus of labor, yet companies report great difficulty finding and keeping the skills most important for their growth.

The global competition for skills is even tougher in fast-growing new business areas. The supply of skills in software engineering, mobile computing, big data analytics, life sciences, advanced manufacturing, and new energy technologies is struggling to keep up

with demand. Engineers, life scientists, statisti- cians, geophysicists, and others with technical skills are in short supply.

At the same time, these skills are in demand over a broader range of industries. Auto manu- facturers now compete with Silicon Valley for software talent; retailers battle manufacturers for IT skills; and large pharmaceutical compa- nies recruit against fast-growing startups for life scientists.

Moreover, the capabilities gap is actu- ally far broader than a lack of engineers and scientists. In addition to the need for technical skills, companies are also facing shortages in first-line supervisors throughout sales, cus- tomer service, manufacturing, finance, and other business functions. Retailers, hospitality companies, software firms, and all manner of service providers need people who understand how to sell, communicate, serve customers, and solve problems.

The expected shortage of 38 to 40 million college-educated workers by 2020 further fuels this challenge.1

• Corporations now compete globally for increasingly scarce technical and professional skills.

• While 75 percent of survey respondents rate workforce capability as an “urgent” or “important” challenge, only 15 percent believe they are ready to address it.

• Companies that succeed in building a global “supply chain” for skills will be positioned for success in innovation and performance.

The quest for workforce capability

55

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Deep capabilities drive performance—and take years to build

One of the ways to assess a company’s competitiveness is to understand its talent and workforce capabilities.2 Companies that

can attract, retain, and develop deep, special- ized technical skills are generally well posi- tioned to outperform their peers—in nearly every industry.

Apple and Samsung succeed by attracting leading skills in engineering, innovation, and marketing. Amazon drives performance by

Graphic: Deloitte University Press | DUPress.com

Figure 1. Urgency vs. readiness: Who is leading, who is lagging?

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Global Human Capital Trends 2014: Engaging the 21st-century workforce

56

constantly building its capabilities to lever- age technology, the user experience, and data. Google has become a market leader by turning itself into a destination employer for talented people with scarce innovation, technology, and business model skills.

As the environment in which businesses operate becomes more complex, skills evolve and become obsolete more rapidly.

Our global Human Capital Trends 2014 survey suggests that respondents clearly under- stand this challenge, with 75 percent rating workforce capabilities as “urgent” or “impor- tant.” However, only 15 percent believe their companies are “ready” to address the chal- lenge. This gap is particularly wide in many major economies, including Japan, Brazil, the United Kingdom, South Africa, and the United States (figure 1).

Why the capability gap? First, many organizations are looking in

the wrong place, believing they can fill their capability gaps by “hiring the right person” in their current markets. Yet this traditional approach is increasingly a zero-sum game with as many losers as winners. Even if companies can identify the right people, they must then attract them, compete with others to hire them, and train them further once they are on the job. The reported backlog of skills gaps appears to suggest the old way is no longer working.

Second, it takes many years to develop deep skills within the workforce. One major oil company explained that, because of its long- standing investment in proprietary processes and technologies, a new engineer requires five to seven years on the job to become fully autonomous and productive.3

Third, many companies have not built development programs that create capabili- ties in a continuous way. Traditional learning

and development programs, which typically sprinkle training across the organization, are simply not dynamic enough. Robust capabili- ties are not built through episodic training, but through continuous education, experi- ence, exposure, and the right environment.4 Companies have the opportunity to build more integrated development strategies that include formal and informal training, expertise shar- ing, apprenticeship, management support of learning, and ongoing performance support and coaching.

Succession planning: Beyond the C-suite

Given the competitive challenges of finding talent in the marketplace, coupled with the long lead times needed to build deep skills, succession management should expand well beyond the C-suite.

Traditionally, succession planning has concentrated on identifying high-potential leaders and developing them for senior roles in the organization. Rather than just focusing on these managerial positions, this process should be expanded to include other key roles as well—including key technical specialists, people in critical customer-facing roles, and expert operations and project managers. Oil companies, utilities, and manufacturers, for example, now regularly develop succession plans across a range of technical professions.

Creating a global skills supply chain

Given the scarcity of skills and the high level of demand, the annual training and devel- opment planning cycle is being replaced with a “supply chain” approach to developing work- force capabilities. This involves a systematic,

Traditional learning and development programs, which typically sprinkle training across the organization, are simply not dynamic enough.

The quest for workforce capability

57

continuous process rather than a “once and done” annual event.

Under a supply chain approach, compa- nies examine their capabilities at all levels and project gaps into the coming years. Once these gaps are visible, companies can focus on which

skills they will need and where they might need them.

As figure 2 shows, executives in our global survey generally believe their companies are doing an adequate job of identifying skills gaps and understanding where skilled workers are located. However, they are struggling to access

Number of respondents

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Graphic: Deloitte University Press | DUPress.com

% of total number of responses

HR executives’ assessment of performance management capability levels ExcellentAdequate Weak

LESSONS FROM THE FRONT LINES

German apprenticeship model champions early workforce training

The German apprenticeship model has become a standard for workforce training programs. Seen as a driver of Germany’s impressive export growth, the apprenticeship model relies on a close working relationship between secondary schools and local businesses and factories. Now, some elements of that model are expanding abroad, including to the United States,5 as German companies such as Siemens and Volkswagen seek to ensure a strong school-to-workplace link in US regions where they have built factories.

Oil and gas industry takes charge of workforce development

The rapid evolution of the oil and gas industry creates a constant pressure to develop new workforce capabilities and skills. As mentioned above, one industry executive told us that training an already-experienced petroleum engineer to its company’s specific standards takes five to seven years—nearly the equivalent of earning a second doctorate.

In order to address a chronic shortage of skills, the oil and gas industry has pioneered efforts to extend workforce training back into the classroom. Starting in secondary school—and even at the elementary school level— companies are dedicating resources to spur broader interest in math and science.

The idea is to build a broader potential talent pool of people with the scientific background and technical skills the industry requires for future growth.6 Some companies are targeting these programs at local markets where oil and gas is extracted in order to develop talent locally, rather than relying on expatriates to fill capability needs.

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those skills, particularly when it comes to mov- ing talent to the work and redesigning work to access skills in new places.

To overcome this challenge, organiza- tions can search internally and externally for capabilities by exploring new approaches for

accessing talent, building continuous learning programs, and turning leaders into “capability development champions” with a responsibility for producing deeper levels of talent on their own teams.

Where companies can start

BUSINESSES react in a variety of ways when building their supply chain for talent. Here are a few starting points:

• Understand skills gaps today and into the future: Begin by identifying key talent segments, then project needs and expected supply into the future. Factor in company growth, retirement, and attrition.

• Bring the work to the skills: Conduct a broader global scan of technical and specialist skills around the world and in your own country. Investigate new skill pools, such as part-time or retired work- ers. Explore relationships with colleges and schools to build a deeper pipeline and help educational institutions prepare workers for the business’s evolving requirements.

• Extend the global supply chain: Study the extended supply chain: Identify where key skills are located, where they are going, and

where and how to source or locate work to tap into talent hubs. Develop new talent centers in emerging markets. Partner with local colleges, institutes, or global uni- versities to build a pipeline of candidates. Consider “acqui-hire” strategies that enable companies to acquire talent by purchasing specialized firms.

• Extend the time horizon: Recognize how long it will take to fully develop key skill sets—the “time to proficiency”—and model the education, experience, and exposure necessary to build these capabilities.

• Foster continuous skill development: Build an environment and a culture of continuous learning. Encourage everyone in the organization to become a talent manager and their own “chief skills officer.” Measure leaders and employees by their ability to produce rather than merely to “consume” skills and talent.7

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BOTTOM LINE Given the complexities and continuous disruptions in the global economy, it is no surprise that building global workforce capability emerged as one of the top three challenges in our global survey. The issue is skills: finding them, accessing them, developing them, and bringing the work to them.

Companies that develop a deep understanding of their capability gaps can then build a global skills supply chain to address critical needs. This supply chain can be filled by tapping into new skills pools in new locations, creating innovative new ways of working that provide access to a broader range of talent, and developing skills throughout the workforce—from the youngest recruits to the most experienced employees.

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Contributors Udo Bohdal-Spiegelhoff, Bill Pelster

Authors

Jen Stempel Deloitte Consulting LLP [email protected]

Jen Stempel is a leader in the US Human Capital Learning Solutions practice. Her learning experience includes strategy development, governance, process improvement, vendor optimization, and curriculum rationalization, as well as the design and development of learning programs. Stempel leads large-scale assessment and transformation projects to rationalize and optimize the learning function. Her focus is on the transformation of learning operations to support and advance business goals.

Bernard van der Vyver, global Learning Solutions leader Deloitte Consulting BV [email protected]

Bernard van der Vyver is a leading advisor on human capital matters, focusing on learning and development. By merging his background in technology and its effective use with the development of people, he brings a unique strength to the HR domain. As global Learning Solutions leader, he aspires to grow and strengthen the global learning community by leveraging knowledge and expertise to deliver learning solutions that bring unique value to clients.

Josh Bersin, principal and founder, Bersin by Deloitte Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Josh Bersin founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and is a popular blogger. He has spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

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Endnotes

1. Richard Dobbs, Anu Madgavkar, Dominic Barton, Eric Labaye, James Manyija, Charles Roxburgh, Susan Lund, and Sid- darth Madhav, The world at work: Jobs, pay and skills for 3.5 billion people, June 2012, http://www.mckinsey.com/insights/ employment_and_growth/the_world_at_work.

2. David Mallon, Janet Clarey and Mark Vickers, The high-impact learning or- ganization maturity model®, Bersin & Associates, August 2012, www.bersin. com/library or www.bersin.com/hilo.

3. Deloitte client conversations with a variety of oil and gas, pharmaceuti- cal, and manufacturing executives.

4. Ibid.

5. Vanessa Furhmans, “Germany’s New Export: Job Training,” Wall Street Journal, June 14, 2012, http://online.wsj.com/news/articles/SB10 001424052702303665904577452521454725242.

6. American Petroleum Institute, “Local commu- nity and career development programs,” http:// www.api.org/environment-health-and-safety/ environmental-performance/public-private- partnerships/educational-partnerships/ local-community, accessed January 27, 2014.

7. Organizations with strong management that focuses on learning outperform their peers by two to three times in customer service, innovation, and financial results. David Mal- lon, High-impact learning culture: The 40 best practices for creating an empowered enterprise, Bersin & Associates, June 2010, www.bersin. com/library or www.bersin.com/hilc.

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Attract and engage

Talent acquisition revisited Deploy new approaches for the new battlefield

TODAY, talent, especially people with the most desired and in-demand skills, is scarce. Employees with high-demand skills have choices, and a company’s employment brand is easy to ascertain without even step- ping into the office. At the same time, the Internet has revolutionized the way people learn about companies and apply for jobs.

In many ways, acquiring and accessing tal- ent is among a company’s most critical goals.

Without critical talent and skills, companies cannot grow their businesses. Yet in today’s new environment, the old ways of recruiting, acquiring, and accessing talent are no longer effective. Companies that fail to adapt will likely be on the losing end when it comes to attracting the people they need.

Executives appear to be aware of the chal- lenge, with 58 percent saying they are “cur- rently revamping” (31 percent) or “considering

• Companies looking to recruit and acquire talent must now compete on a new battlefield—a battlefield shaped by new global talent networks and social media and defined by employment brands and changing views of careers.

• Sixty percent of respondents to our global survey have updated or are currently updating and revamping their talent sourcing strategy, and another 27 percent are considering changes.

• Faced with a scarcity of key skills and rapidly evolving talent demands, companies that fail to adapt will likely be on the losing end when it comes to attracting and accessing the people and skills they need.

Graphic: Deloitte University Press | DUPress.com

Updated in past 18 months

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Figure 1. Most companies reviewing or changing sourcing and recruiting

Number of respondents

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Talent acquisition revisited

65

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changes” (27 percent) to their talent sourcing and recruiting strategies (figure 1).

Nonetheless, few HR and corporate lead- ers report that their companies are currently capable of adapting to today’s new talent acquisition realities. Executives in Brazil, the United Kingdom, Japan, South Africa, and Canada are acutely aware of the urgent need to change strategies, but are especially behind

other countries in terms of putting capabilities in place (figure 2).

To be successful in this new environment, companies should constantly attract new talent and “re-recruit” the talent that is already in place. The traditional “staffing” team is being replaced by a strategic “talent acquisition” function, focusing on building an employ- ment brand, sourcing people in new places

Graphic: Deloitte University Press | DUPress.com

Figure 2. Readiness vs. urgency: Who is leading, who is lagging?

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Spain

Ireland

Kenya

Portugal

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

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using social media tools, creating opportuni- ties for internal candidates, and leveraging the huge network of referral relationships within the company.

Talent acquisition is also being expanded as companies look for new ways to access and engage people, including through joint ventures, contracting, freelancers, and open source talent.1 These approaches are pushing the boundaries of talent acquisition to include new models of employment and new types of relationships for accessing skills and ideas.

High-performing companies build unique and powerful ways to source and access top employees. One innovative tactic is the use of social networks to build talent “communi- ties” supported by full-time employees, retired workers, independent contractors, and every- one in between. AT&T’s talent community, for example, attracts potential team members by providing a forum to talk about mobile com- puting and telecommunications in a fun and exciting way.

Many companies are also leveraging LinkedIn, Facebook, Twitter, Glassdoor,

Google, and other social networks to build a compelling employment brand, find talent, and market their companies to passive job candi- dates. They aggressively deploy referral mar- keting programs and send their key executives to universities and other critical sources of new talent around the world.

Slightly more than six in ten executives (62 percent) participating in our global survey report that they rely on social tools for sourc- ing and advertising positions. Organizations also report that they are beginning to utilize analytics for recruitment and staffing, though a majority (54 percent) say they are still “weak” in this area (figure 3).

The transition from recruiting to marketing

As the battlefield for scarce talent continues to shift, talent acquisition is becoming more like marketing every day.

Candidate relationship tools market a company through stories and products aimed at drawing in new prospects and cultivating

Graphic: Deloitte University Press | DUPress.com

% of total number of responses

Number of respondents

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682

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Building strong and localized employment brand

Ensuring recruiters are highly trained

Using social tools for sourcing and advertising positions

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around the world

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8%

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Figure 3: Mixed levels of talent acquisition capabilities

HR executives’ assessment of talent acquisition capability levels ExcellentAdequate Weak

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them from the point of initial interest through their decision to apply for a job and join the company. Companies like Ford and Delphi, for example, produce blogs to attract car fans, engineers, and manufacturing workers who may want a career in the auto industry.

Talent acquisition leaders use a variety of other marketing techniques to source talent— and are increasingly partnering directly with corporate marketing in their outreach efforts. They visit and advertise at colleges and educa- tional institutions, buy targeted ads on social media sites (LinkedIn, Facebook, Google, Yahoo) to attract employees from old and new competitors, and strategically target veterans, minorities, and other groups.

Just as marketing produces sales, candi- date marketing produces hires. Recruitment

marketing also reduces staffing costs, attracts higher-quality candidates, and improves internal employee retention. It also helps build a network of part-time workers and ultimately makes the job of the recruiter and hiring man- ager far easier.

On the employee side, social networks have made the employer brand fully available to the public. If recruiting is difficult, it is not just HR’s problem; it is the executive team’s prob- lem as well.

Employers of choice treat their employment brand like their consumer brand. They ana- lyze it, understand it, cultivate it, and carefully manage it. And they localize it for each major market where they do business.

LESSONS FROM THE FRONT LINES

Auto manufacturer uses talent communities to source skills

As General Motors sought to ramp up the production of its flagship electric vehicle, the Volt, the company faced a significant talent challenge—a shortage of engineers and scientists with a background in electronics.

Drawing talent from Silicon Valley and other technology centers to Detroit proved difficult initially. GM’s answer was to enhance its recruiting process by building talent communities, drawing more and more people with the required skills into its network.

To help build these communities, GM enlisted engineers and technical staff to write about their jobs, highlighting the exciting work; the rewarding, socially important job opportunities at the company; the high quality of life and relatively low cost of living in Detroit’s suburban neighborhoods; and the many cultural attractions and professional sports teams in the city.

Starting gradually, the company built a growing talent network, amplifying it through social media. New facts and insights about the company were shared among wider circles of talent, creating a positive ripple effect and a more robust talent network. This approach helped GM attract the talent needed to meet deadlines, hiring requirements, and project demands.

Company ambassadors provide a creative solution to talent needs

Red Hat was the first open source software company to reach $1 billion in annual revenues. With plans to hire an additional 600 to 800 employees this fiscal year, Red Hat is on an aggressive search for new talent. A key component of its sourcing strategy is its employee referral program.

The employee referral program, called Red Hat Ambassadors, is a tiered reward system where eligible employees can receive cash bonuses and Red Hat-branded memorabilia for every new hire they attract. Red Hatters who refer five employees to the company receive the title of “Ultimate Ambassador.” These employees earn two generous cash bonuses as well as Red Hat-branded memorabilia and a slot on the company’s Red Hat Ambassador advisory board. Additionally, referrals that come from Ultimate Ambassadors get priority treatment by the company’s talent acquisition team. The program has resonated with employees, and today, more than half of all new Red Hat hires come in through employee referrals.2

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Where companies can start

BEFORE the explosion of social media and mobile computing—nearly 45 percent of job candidates now apply for jobs on mobile devices3—companies simply posted openings on the “careers page” on their website. This is no longer nearly enough. Creative companies are discovering new ways to access talent. Starting points include:

• Treat recruiting like marketing: Partner with corporate marketing to build an inte- grated branding and communications strat- egy that attracts candidates and employees, not just customers.

• Innovate—who and where: Extend the targets for strategic recruiting. Who are you looking for? Are there new talent pools? Ones you can develop? Perhaps talent you can access (such as freelancers) but not hire? Also consider where you are looking: Search globally as well as across industries and functions.

• Go beyond Facebook—way beyond: Nearly every company uses social networks to post job openings. Innovative companies also leverage social media to build broader,

more robust talent communities—networks of people interested in the company’s prod- ucts or the company itself who might turn into high-quality recruits.

• Use big data to deepen talent networks: Organizations can now leverage big data tools from vendors such as LinkedIn, Facebook, Entelo, Gild, TalentBin, Work4, Identified, and others to identify and source quality candidates around the world.4

Leverage new scientific assessments and big data tools to locate and assess high-quality candidates who fit the style and type of workers needed.5 Apply talent analytics to identify the company’s top sources of talent, understand effective interviewing tech- niques, and determine “goodness of fit” to improve the quality and efficiency of hiring.

• Maintain an active and deep candidate bench: Use candidate relationship manage- ment to cultivate prospects and keep people engaged throughout their careers, turning them from passive to active candidates.

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BOTTOM LINE Talent acquisition and access has changed in fundamental ways due to shifts in global talent markets, skills shortages, new ways of working, and the growing importance of social media and employment brand. To compete for talent in 2014, HR teams must move to more marketing- oriented, innovative, social media-savvy, and global approaches to talent acquisition. This demands innovation on the front end of recruiting, coupled with the need to “re-recruit” employees, managers, and leaders every day.

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Contributors Stuart Agtsteribbe, Christina Brodzik, Peter MacLean

Authors

Udo Bohdal-Spiegelhoff, Human Capital leader, Deloitte Germany Deloitte Germany [email protected]

Udo Bohdal-Spiegelhoff is recognized in the market as a thought leader in change management, strategy execution, leadership and organizational development, large-scale facilitation, and HR advisory capabilities. He has led many complex global transformations such as large-scale reorganizations, HR and people strategy implementations, and post-merger integrations for clients in a variety of industries.

Kim Lamoureux, vice president, Leadership and Succession research Bersin by Deloitte, Deloitte Consulting LLP [email protected]

With more than 200 works published, Kim Lamoureux is a recognized thought leader and a frequent speaker on leadership. She has more than 20 years of experience in talent management. As the leader of Bersin by Deloitte’s Leadership Development practice, Lamoureux helps clients to solve their most complex challenges, including leadership strategy, leadership and executive development, high potential identification, leadership assessment, career management, succession management, and talent mobility.

Lisa Barry, global Talent, Performance, and Rewards leader Deloitte Touche Tohmatsu [email protected]

Lisa Barry is the Talent leader for Global Consulting, and is also the global leader for Talent, Performance, and Rewards. She is considered to be one of the most impactful leaders in the human capital field, championing the need for businesses to reinvent relevance and create a powerful people-centered strategy to propel a company’s growth trajectory. A true citizen of the globe, Barry has lived and worked in the United Kingdom, Europe, the United States, South East Asia, New Zealand, and Russia.

Robin Erickson, vice president, Talent Acquisition research Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Robin Erickson leads Bersin by Deloitte’s Talent Acquisition function, where she researches best practices, develops frameworks and tools, conducts industry surveys, and writes reports. Drawing on over 20 years in human capital consulting and her academic research, Erickson is a frequent speaker and writer on talent management issues, including talent acquisition, retention, and employee engagement.

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Endnotes

1. Deloitte, The open talent economy, Human capital trends 2013: Leading indicators, Deloitte, April 2013, http://www.deloitte.com/view/ en_US/us/Services/consulting/human-capita l/268bfb80ddbcd310VgnVCM2000003356f7 0aRCRD.htm, accessed on January 27, 2014.

2. Robin Erickson, Using data-driven alternative sourcing solutions to find high-tech talent: How Red Hat’s talent acquisition team lever- ages new high-tech tools to identify highly skilled global candidates, Bersin by Deloitte, January 2014, www.bersin.com/library.

3. Bersin by Deloitte client interviews.

4. LinkedIn, Facebook, Entelo, Gild, TalentBin, Work4, and Identified are examples of vendors who offer big data sourcing tools to tap into workforce skills and find people through advanced queries, advertisements, and reports.

5. Josh Bersin, The science of fit: Using psychol- ogy to replicate high performance, Bersin & Associates, May 2011, www.bersin.com/library.

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Beyond retention Build passion and purpose

IN recent years, large employers have learned the logic of improving employee retention. They know that as jobs in most sectors become increasingly knowledge-intensive, the cost of replacing capable workers is high. Human resources functions have focused tightly on attrition rates and worked to discover effective managerial interventions to limit turnover. Indeed, in an era of growing enthusiasm for workforce analytics, the very ease of objectively measuring retention has helped to make it a focal point.

Beyond the fact that retention metrics are a lagging indicator, though, the ques- tion is whether “retention” is the right place to focus. As some HR leaders are now real- izing, focusing so intently on retention can lead to additional investments in some tools and initiatives that aren’t proving very valu- able—while neglecting others that may be much more so. Part of the problem with today’s thinking about retention is that it seems to reflect a military-style model, with its assumption that people decide to “re-up” periodically—but infrequently and on a fairly predictable schedule.

Today’s reality is that people continually make choices, consciously or not, as to how

committed they are to their work and the enterprise. Their levels of engagement and motivation are subject to constant fluctuation in response to micro signals—small indications of whether the company is committed to their growth, whether it really believes in serving a higher purpose, what kinds of behavior are rewarded, how much can be learned from working there, and more.

In knowledge-based businesses, people should increasingly be enticed to “re-up” every day—and HR leaders are in a position to reframe the retention and engagement chal- lenge and lead the ongoing “reenlistment” process. The best of them already know this and are finding ways to continually monitor, encourage, and respond to people’s enthusiasm for their work.

The challenge of multiple generations in the workforce

Attracting and retaining Millennials is a vexing challenge. The younger employees who comprise the Millennial generation make up 34 percent of the global workforce and will swell to 75 percent by 2025.2 They also come to the job with a very different set of

• Companies around the world agree that employee engagement is vital. Our global survey showed that executives rate “retention and engagement” their No. 2 priority.

• A focus solely on retention, however, may be misplaced. Companies should shift from strategies to “hold people here” to “attracting and engaging people” through measures that build commitment, align employee goals and experience with corporate purpose, and provide engaging work and a culture of development and growth.

• Employees make the decision of whether to “re-up” every day when it comes to motivation and productivity. Millennials in particular are looking for work that inspires passion and allows them to fulfill their professional, personal, and social goals.1

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aspirations than their Generation X and Baby Boomer colleagues.

About 70 percent of Millennials want to launch their own businesses at some point in their careers. Only 20 percent want to work in companies with more than 10,000 employees. With corporate hierarchies flattened, nearly half (45 percent) are already in leadership roles, while their Baby Boomer and Generation X peers were likely to serve in less senior posi- tions at this age.3

Just as with earlier generations, Millennial attitudes toward work are driven by their cultural and educational experiences growing up. They are comfortable with technology and have been raised with the tools of transparency, hardly remembering a time when instant mes- saging, Twitter, Google, and Facebook were not a part of their lives. They value and thrive on innovation, with more than three-quarters (78 percent) stating that they are strongly influ- enced by how innovative a company is when considering employers.4 Millennials also want to work for organizations that provide flexibil- ity and that are purpose-driven, tackling broad societal challenges such as resource scarcity, climate change, and income equality.5

The influence of Millennials is already pushing companies to redefine leadership development programs and redesign the work environment. Sixty-six percent of the respon- dents in our global survey reported that they have “weak” capabilities when it comes to providing focused leadership programs for Millennials. Further, 58 percent of executives reported “weak” capabilities in “providing pro- grams for younger, older, and multi-generation

workforces,” underscoring that Millennials are not the only challenge.

Increased longevity and health, and the aftermath of the Great Recession, are encour- aging greater numbers of older people to remain longer in the workforce. By 2025, the number of workers aged 55–64 is forecast to rise by 89 percent, while for those aged 65 and above the percentage is even higher.6

And Boomers, too, are subscribing to younger attitudes toward work, with 70 percent citing career-life fit as a top priority. This Boomer trend may be a silver lining, given concerns by HR and business line leaders about the looming brain drain.7 Employers across both private and public sectors express worry that a significant proportion (anecdotally, 40 percent is the most consistently stated percentage) of their workforce is eligible to retire over the next five years, taking with them the relation- ships, skills, expertise, and knowledge of the informal networks and systems that make their organizations work.

What’s (really) behind this retention-to-reenlistment trend?

Despite the unfortunate reality of high unemployment rates across many economies, most corporate employers would agree that there is still a talent paradox. In California, a global center for the technology industry, unemployment hovers around 9 percent—yet there are 840,000 jobs available.8 The highly educated knowledge workers employers require are in short supply. In light of this talent scarcity, companies have awakened to

“CFO asks CEO: “What happens if we invest in developing our people and they leave?” CEO: “What happens if we don’t, and they stay?”” — Source: “Peter Baeklund resourceful leadership,” http://www.peterbaeklund.com/.

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% of total number of responses

Number of respondents

967

942

965

Aligning our employees; personal goals with corporate purpose

Integrating social, community, and corporate programs

Helping employees balance personal and professional life/work demands 10%

14%

12%

50%

47%

50%

40%

38%

38%

Figure 1. Companies struggle to instill passion and purpose

Graphic: Deloitte University Press | DUPress.com

HR executives’ assessment of retention and engagement capability levels ExcellentAdequate Weak

the fact that “unwanted attrition” is extremely costly and have begun the search for the keys to retention.

By their own admission, most executives have a long way to go. In our global Human Capital Trends survey, they tended to rate themselves as either “weak” or just “adequate” in several key retention capabilities. More than a third (38 percent) report they are “weak” at integrating social, community, and corporate programs, the same number as those who say they are “weak” at aligning employee and corporate goals. Four in ten (40 percent) state their organization is “weak” in helping employ- ees balance their personal and professional lives (figure 1).

People today don’t choose whether to “re- up” their employment contract once every few years, or only when a life event unfolds. In the emerging open talent economy,9 employ- ees—particularly those with highly relevant and contemporary skills—make that decision every day. Any workplace that lags in inspiring passion and purpose will suffer by losing key employees—and at an increasing rate as the global economy picks up momentum.

Metrics for business and HR For the rapidly professionalizing field of

human resources, retention is a particularly tempting goal because, unlike so many aspects of human experience, it is objectively measure- able. Performance metrics within businesses can include retention numbers and trends that are as valid as any financial results. And now with the advent of human capital analyt- ics, other measureable phenomena, such as compensation histories, performance ratings, and participation in training programs, can be correlated with retention trends. Most HR departments also use engagement surveys to better understand what factors people value most in a workplace and what might motivate them to leave. Statistical analysis can show how changes in these factors of engagement translate into higher or lower retention—and therefore guide thoughtful interventions. The challenge is to link retention and engagement insights to business results—for example, by finding a way to lower turnover in traditional high-churn but mission-critical teams, such as technical sales. This clearly requires more than an annual engagement survey.

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Figure 2. Urgency vs. readiness: Who is leading, who is lagging?

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Increasing flexibility One of the earliest and broadest changes

resulting from the quest for higher retention has been the corporate embrace of “flexibil- ity.” There is no question that flexibility has emerged as a matter of utmost importance to many workers—both women and men.

In a recent survey, professionals were asked what organizations could do to meet their career needs. Among generational bands from Boomers to Millennials, a top response was “provide flexible working conditions and better work-life integration.”10 Their voices add to a rising chorus, signaling important shifts in

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the cultural dynamics of the workforce. One out of every five employees, for example, now cares for an elderly parent.11 Women, who tend to report a preference for more free time over more money, now make up nearly 60 percent of the US workforce.12 Men’s attitudes about long hours seem to have changed as well: 80 percent say they would like to work fewer hours.13

The power of purpose While increasingly important, a flex-

ible work environment alone is not enough to ensure engagement. The 21st-century employee, at whatever level in the organiza- tion, is looking for more than the right bal- ance between hours and pay. People now look for “good work” in the sense that authors and educators including Howard Gardner, Mihaly Csikszentmihalyi, and Bill Damon use the term—meaning work that benefits the broader society.

In other words, engagement isn’t only about doing work on acceptable terms. It’s the work itself.

A growing body of literature aimed at business practitioners reflects this change of

heart. Conscious Capitalism, for example, by Whole Foods founder John Mackey and Raj Sisodia, makes a strong call for engaging in commerce only in ways that leave the world better off.14 Sisodia’s earlier book Firms of Endearment (with Jagdish Sheth and David Wolfem) offers compelling evidence that more socially responsible and valuable companies outperform their peers in terms of engagement and retention, customer service, and long- term profitability. The book’s subtitle sums it up: How World-Class Companies Profit from Passion and Purpose.15 Today’s most talented people want to join organizations whose work engages their interests and deserves their pas- sion. Companies endure when they manage to endear.

Executives around the world agree that making work matter drives employee engage- ment and retention. Yet only respondents based in the Netherlands, Switzerland, Spain, and Belgium report that their organization’s readiness to address retention—by redefining engagement to align with personal, corporate, and social purposes—is close to matching their sense of urgency in this area (figure 2).

HOW A TAX SERVICE PROVIDER SEES RETURNS ON FLEXIBILITY From its 1991 founding to the mid-2000s, tax service provider Ryan LLC enjoyed a continual history of revenue and headcount growth, as well as high client satisfaction scores. The culture at Ryan was historically hard-driving, and until 2008, obsessed with tabulating and rewarding long hours logged at the office.

Despite its generous compensation packages, the firm was developing a reputation as a highly skilled sweatshop, making it difficult to recruit new talent. Turnover rates were rising while employee satisfaction scores fell. To combat these issues, Ryan developed a flexible work environment program, dubbed myRyan, that eliminated its metric of hours logged, replacing it with a set of financial targets and performance measurements. Employees can now work where, when, and how they want, as long as they hit their benchmarks. Flexible work does not mean “work in a vacuum,” however. Teams establish work blueprints, creating guidelines for how they will work together.

Since implementing myRyan, the company has restored high customer and employee satisfaction scores, reduced turnover, and lowered the associated costs of hiring and training new employees. These improvements have helped make it once again a desirable place to work. By one internal estimate, 85 percent of new hires join the company at least partly because of the myRyan program. Ryan’s revenue has doubled since the program’s debut.

— Brenda Kowske, The flexible workplace delivers results: How Ryan, LLC transformed its workplace culture to increase earnings and retain its highly skilled employees, Bersin by Deloitte, August 2013, www.bersin.com/library.

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LESSONS FROM THE FRONT LINES

Making flexibility pay off

In response to the need for flexibility, innovative companies have revamped schedules and invested in tools to open up possibilities for when, where, and how work gets done. Some organizations let employees take as much vacation as they want. Companies in high-demand industries routinely offer free food, onsite gyms and other wellness benefits, and even laundry services and ping-pong tables—all to relieve workers of personal stress because of the hours they put in at the office. (For an example of how flexible work arrangements pay off, see the sidebar on the previous page , “How a tax services provider sees returns on flexibility.”) In some firms, the “have it your way” ethos has extended to flexibility in surprising areas. Netflix famously allows employees to decide their own expense policies and select their preferred mix of salary and stock options.

A premium on personal development

People also value workplaces that contribute to their personal development as professionals. Young workers in particular—but Boomers, too—prefer working for companies that invest in developing their capabilities and keeping their skill sets relevant through constant learning and development opportunities:

Talented people seek out opportunities to grow, and they will flock to organizations that provide ample opportunities to do so. Retention also becomes a non-issue; if people are developing more rapidly than they could anywhere else, why would they leave? If companies are truly serious about attracting, retaining, and developing high-quality talent, they need to view themselves as growth platforms for talent where people can develop themselves faster than they could elsewhere. This, in turn, can create a self-reinforcing cycle as talent creates more opportunities for growth.16

Deloitte’s focused research on Millennials shows that this rising generation of business leaders has a relatively high desire to be entrepreneurial, to move into leadership roles, and to have the opportunity to innovate and create. Very few expect to work for any one company for a long time; they see work as a series of experiences that help them develop over time. Today’s most talented people of all ages want to work for employers that are committed to developing their skills and capabilities by providing continuous training as well as enriching “tours of duty”—to use a phrase being popularized by Reid Hoffman, founder of LinkedIn—that allow them to work on projects in different parts of the company.

The need for affirmation

People value being valued—and not only, or even primarily, in monetary terms. Companies are learning to reward and recognize employee achievement in more meaningful ways. While every employee would like to earn more money, research has shown that a more important driver of retention than above-average compensation is a “high-recognition culture.” Companies that have built a strong culture of “thank you” and “recognition” have a 31 percent lower turnover rate than their peers, driving higher productivity and tremendous savings in turnover costs.17

It’s a finding that Dan Pink, author of the best-selling Drive, would second. He asserts that high-performing employees want three things: autonomy, mastery, and purpose. Rigid goals and “pay for performance” plans, according to Pink, can in many situations actually lead to lower performance and less innovation. The company where people want to work allows employees to work independently, focus on their strengths, and align themselves with well-understood corporate goals.

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Where companies can start

BUILDING a work environment in which passion and purpose among employees can flourish is a noble though tricky busi- ness. Several new practices and priorities are emerging:

• Ask your employees what matters: Survey employees regularly—not just annually about how they experienced the organiza- tion over the past year, but frequently and “in the moment” through pulse surveys and roundtables—to find out what makes them passionate about work and what parts of the environment are irritating or too bureaucratic.

• Remember: It is the work: Make sure the organization is feeding employees’ needs for purpose and meaningful work. While there is a necessary focus on benefits, compen- sation, and workplace flexibility, research suggests that these are table stakes. A more important dimension for retention is the work itself.

• Make development part of the job, not a perk: Opportunities for challenge and development may be the most overlooked element of retention and engagement. Give every employee—not only high performers or leadership candidates—opportunities to build networks within the organization, along with skills and career development opportunities. Chances may be that the organization already is, so be sure these opportunities are couched so individuals see them as such and value them more.

• Study retention continuously: Keep your finger on the pulse of the organization— regularly, not just annually or periodically. Use exit surveys and manager interviews to understand what was missing. Provide open blogs and communication tools to help people talk openly about what they need— and what they particularly value.

• Build a proactive retention model to identify potential problems before they occur: Adopt talent analytics to uncover the hidden drivers of retention. Several of our clients have now built statistically validated retention models that help predict why and when an employee will leave. Design work environment solution sets around the find- ings to drive greater performance, passion, and retention stickiness.

• Collaborate with other top leaders: The CEO’s executive committee should play a role in developing and nurturing a compel- ling corporate mission, including determin- ing how to integrate social and community goals into the work and daily activities of the company.

• Challenge the performance manage- ment process: Is it timely enough? Does it provide actionable feedback? Is the focus disproportionately on areas for develop- ment, giving short shrift to strengths and contributions?

• Understand and improve diversity and inclusion: People want to work in an envi- ronment that respects them and customers are looking for companies that reflect their diversity and perspectives as well.

• Focus on your employment brand and talent experience: When competing for customers, companies relentlessly focus on differentiating their products, services, and customer experience. The same should be true for the talent experience—and, in today’s socially driven, transparent world, the line between the two is blurring. Challenge your business and HR leaders to structure work, jobs, and development so they are interwoven with what people do— and the company’s employment brand.

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BOTTOM LINE Companies already recognize that success depends on three things: keeping good people, keeping them engaged and productive, and understanding that these two aims are not one and the same. As Deloitte’s 2014 Human Capital Trends survey points out, the challenge of retention and engagement ranks in the top echelon. But framing the challenge according to the traditional binary view of retention vs. attrition is proving inadequate. The secret is designing a suite of systems (work, culture, flexibility, and social and community purpose) that supports a talent experience that makes it easy for individuals to continually reenlist for their tour of duty.

Already, today’s most successful employment brands align business and corporate objectives with the professional, personal, and social goals of their employees. They provide an environment where employees believe they are making a difference, not just clocking their time. To reach new heights in retention and engagement, world-class managers will focus on growing a talent brand that weaves together the critical elements of work itself, the desire for personal growth and development, the power of passion, and the intrinsic reward of serving society as part of a brand of which employees can be proud.

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Authors

Cathy Benko, vice chairman and managing principal Deloitte Consulting LLP [email protected]

Cathy Benko is internationally renowned for being among the first to design and implement a systemic response to the changing workforce. She holds dual roles as Deloitte Consulting LLP’s talent game-changer and the leader of Deloitte’s corporate citizenship agenda, driving the firm’s collective societal impact. Benko is a US patent-holder and the bestselling co-author of several books, including The Corporate Lattice (Harvard 2010) and Mass Career Customization (Harvard 2007).

Robin Erickson, vice president, Talent Acquisition research Deloitte Consulting LLP [email protected]

Robin Erickson leads Bersin by Deloitte’s Talent Acquisition function, where she researches best practices, develops frameworks and tools, conducts industry surveys, and writes reports. Drawing on over 20 years in human capital consulting and her academic research, Erickson is a frequent speaker and writer on talent management issues, including talent acquisition, retention, and employee engagement.

John Hagel Deloitte Consulting LLP [email protected]

John Hagel has nearly 30 years’ experience as a management consultant, author, speaker, and entrepreneur. He is the co-chairman of the Deloitte LLP Center for the Edge. He has served as senior vice president of strategy at Atari, Inc., and is the founder of two Silicon Valley startups. Hagel is the author of The Power of Pull, Net Gain, Net Worth, Out of the Box, and The Only Sustainable Edge. He holds a BA from Wesleyan University, a BPhil from Oxford University, and a JD and MBA from Harvard University.

Jungle Wong, Human Capital leader, Asia Pacific Deloitte Consulting (Shanghai) Co. Ltd, Beijing branch [email protected]

Jungle Wong is the practice leader of Deloitte Consulting’s Human Capital practice in China. Based in Beijing, he has extensive experience working with multinational enterprises located in China, as well as state-owned enterprises, on solving talent and HR issues. He is a frequent speaker at HR conferences, and is an assessor for the Chinese Business Leaders’ Awards as well as a regular writer for HR magazines in China.

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Endnotes

1. Deloitte, Big demands and high expectations: The Deloitte Millennial survey, January 2014, http://www2.deloitte.com/content/dam/ Deloitte/global/Documents/About-Deloitte/ gx-dttl-2014-millennial-survey-report.pdf.

2. Ibid.

3. Ibid.

4. Ibid.

5. Ibid.

6. University of Notre Dame, Working longer: A potential win-win proposition, December 2003.

7. Karen Bowman, Jason Flynn, Tom Ged- des, and Jeff Sumberg, The aging workforce: Finding the silver lining in the talent gap, Deloitte, March 2013, http://www2. deloitte.com/global/en/pages/human- capital/articles/aging-workforce.html.

8. California Economic Summit, “California bill requires state to attack skills gap,” July 12, 2013, http://www.caeconomy.org/ reporting/entry/california-bill-requires- state-to-attack-skills-gap.

9. Jeff Schwartz, Andy Liakopoulos, and Lisa Barry, The open talent economy: Beyond corporate borders to open talent ecosystems, July 24, 2013, http://dupress. com/articles/the-open-talent-economy/.

10. Barbara A. W. Eversole, Donald L. Ven- neberg, and Cindy L. Crowder, “Creating a flexible organizational culture to attract and retain talented workers across gen- erations,” Advances in Developing Human Resources 14 (November 2012): pp. 607- 625, doi:10.1177/1523422312455612.

11. Work/Life Pursuit, “Associations,” http:// www.workingparentcafe.com/community- groups/, accessed on February 27, 2014.

12. United States Department of Labor, The US population is becoming larger and more diverse, http://www.dol.gov/oasam/ programs/history/herman/reports/future- work/report/chapter1/main.htm#20.

13. Center for American Progress, Workplace flexibility: Allowing employees some leeway is good for business and the economy, http://www. americanprogress.org/wp-content/uploads/ issues/2012/08/pdf/flexibility_factsheet.pdf.

14. John Mackey and Rajendra S. Sisodia, Conscious Capitalism: Liberating the Heroic Spirit of Business (Boston: Harvard Business School Publishing Corporation, 2013).

15. Rajendra Sisodia, David B. Wolfe, and Jagdish N. Sheth, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose (Upper Saddle River: Wharton School Publishing, 2007).

16. John Hagel III, Talent development: A key to attracting and retaining highly skilled people in your industry, Deloitte University Press, December 20, 2012, http://dupress. com/articles/talent-development-a-key-to- attracting-and-retaining-highly-skilled-people- in-your-industry//, accessed February 2, 2014.

17. Bersin by Deloitte, Bersin & Associates unlocks the secrets of effective employee recognition, June 12, 2012, https://www. bersin.com/News/Content.aspx?id=15543.

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From diversity to inclusion Move from compliance to diversity as a business strategy

IN 2014, promoting diversity is an expected commitment; like workforce safety, it’s now a ticket to play. And while unwavering support is claimed, far fewer organizations can talk to the benefits of diversity beyond the attraction of talent and reputation. Why is that? Surely a focus on diversity is the way to uncover and optimize talent? Is it focus, effort, a failure to move diversity from the fringe to the center, or level of difficulty?

One clear factor, according to our global survey, is that only one company in five (20 percent) believes it is fully “ready” to address this issue. The gap between the urgency of this trend and companies’ readiness to address it is particularly wide in Japan, South Africa, and China (figure 1).

Why are so many companies falling short? One view is that many companies still treat diversity primarily as a matter of compliance— a regulatory box to be checked. Not enough organizations take the next essential steps of creating a work environment that promotes inclusion in all its variations. Taking a step back from individual organizations to a more

country-based analysis, we can see that most countries do not have a strong sense of readi- ness and most hover around a medium sense of urgency.

Using this lens, we see two major themes emerging that can help companies transition from simply meeting minimum regulatory requirements for diversity to building an inclu- sive workplace that inspires all employees to perform at their highest level:

1. Diversity of thinking as a business imperative

2. A focus on inclusion as well as diversity itself

Diversity of thinking as a business imperative

Organizations can start by broadening their understanding of diversity to focus not only on the visible aspects of diversity, such as race, gender, age, and physical ability, but also diversity of thinking. This means deriving

• Many organizations promote diversity while struggling to fully leverage the business benefits of a diverse workforce.

• Nearly one-third of respondents to the Human Capital Trends global survey say they are unprepared in this area, while only 20 percent claim to be fully “ready.”

• In a recent study, 61 percent of employees report they are “covering” on some personal dimension (appearance, affiliation, advocacy, association)1 to assimilate in their organization.2

• Leading companies are working to build not just a diverse workforce, but inclusive workplaces, enabling them to transform diversity programs from a compliance obligation to a business strategy.

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value from people’s different perspectives on problems and different ways to address solu- tions. It’s a complex world, it’s a global world, and maximal participation is required from every workplace participant from the bottom to the top. Thinking of diversity in this way

helps organizations to see value and to be con- scious of the risk associated with homogeneity, especially in senior decision makers. And this means that diversity is no longer a “program” to be managed—it is a business imperative.

Graphic: Deloitte University Press | DUPress.com

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

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Uncovering talent: A new model of inclusion3

An importance advance in thinking about inclusion is the recent work on “uncover- ing talent” from Kenji Yoshino, at NYU Law School, and Christie Smith, the head of Deloitte University’s Leadership Center for Inclusion. Their research suggests that current inclusion initiatives often implement formal inclusion (that is, “participation”) without recognizing how that inclusion is predicated on assimilation. In response to pressures to assimilate, individuals downplay their differ- ences. This behavior is referred to as “covering” and can include how individuals behave along four dimensions:

• Appearance: Individuals may blend into the mainstream through their self- presentation, including grooming, attire, and mannerisms.

• Affiliation: Individuals may avoid behav- iors widely associated with their identity, culture, or group.

• Advocacy: Individuals may avoid engaging in advocacy on behalf of their group.

• Association: Individuals may avoid associ- ating with individuals in their own group.4

Yoshino and Smith’s research reports that covering behaviors are widespread, costly to individuals and their organizations, and often misaligned with values of inclusion. Organizations should be interested in cover- ing not because they are “playing defense” against lawsuits, but because they are “playing offense” to create a more inclusive culture over and above legal compliance. Most Fortune 500 companies are seeking to create that kind of culture.

Linking diversity of thinking and inclusion

Bringing these two themes together—diver- sity of thinking and inclusion—we suggest that organizations consider the importance of diversity when it comes to meeting specific business objectives:

• Accessing top talent: Companies should recruit top people from a globally diverse workforce. The importance of leadership pipelines, the No. 1 priority in our global trends survey, underscores the importance of broadening leadership pipelines and accelerating the development of diverse leaders. Given the transparency of the employment “brand” today, in order to attract the best people, organizations must create a diverse workplace. When can- didates research a prospective employer online, interact as customers, or interview with the company, they have to feel as if they would “fit” into the work environment.

• Driving performance and innovation: A significant body of research shows that diverse teams are more innovative and per- form at higher levels.5 Companies that build diversity and inclusion into their teams reap the benefits of new ideas, more debate and, ultimately, better business decisions.

• Retaining key employees: One reason people leave organizations is that they feel they no longer “belong.” Or perhaps they feel they will “belong” and thrive in another organization that appreciates their unique value. A company that fails to create a diverse and inclusive workplace risks alien- ating or excluding key employees, who are then more likely to disengage or eventually leave the organization.

• Understanding customers: There’s a thin line between customers and employees, with current and former employees pur- chasing their companies’ products and

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services, acting as advocates, and sensing customer needs. How better to understand and respond to diverse customer needs than by tapping into diverse employees? From where we sit, this is one of the most significant gaps in the diversity story, with the breadth of ideas and experiences from a more diverse front line falling by the wayside as decisions are made by more distant, homogenous teams that sometimes fail to fully include diverse perspectives. In a broad range of industries—including retail, hospitality, food service, oil and gas, insurance, and even banking—a diverse workforce creates opportunities to appeal to a more diverse customer base.6

Diversity is the measure: Inclusion is the mechanism

What this all adds up to is that high- performing organizations recognize that the aim of diversity is not just meeting compliance

targets, but tapping into the diverse perspec- tives and approaches each individual employee brings to the workplace. Moving beyond diversity to focus on inclusion as well requires companies to examine how fully the organi- zation embraces new ideas, accommodates different styles of thinking (such as whether a person is an introvert or an extrovert), creates a more flexible work environment, enables people to connect and collaborate, and encour- ages different types of leaders.

While nearly one-quarter of executives (23 percent) believe their companies have done an “excellent” job creating a culture of inclusive- ness, and defining what it means (24 percent), the overwhelming majority rate their effort as “adequate” or “weak.” Clearly, there is much more to be done to turn the vision of diversity and inclusion into a daily reality (figure 2). Much more than a focus on programs, this effort needs to focus on cultural change: behav- iors, systems and symbols, and an explicit understanding of the extent and causes of “covering” in organizations.

Graphic: Deloitte University Press | DUPress.com

% of total number of responses

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Creating a culture of inclusiveness and respect for individuals

Clearly defining what diversity and inclusion means to our organization

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Figure 2. Challenges to creating an inclusive workplace

HR executives’ assessment of diversity and inclusion capability levels ExcellentAdequate Weak

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LESSONS FROM THE FRONT LINES

Adopting diversity and inclusion to solve a demographic mismatch

BHP Billiton’s marketing division was highly diverse in terms of gender and ethnicity in non-executive positions, but there was a demographic mismatch between the global talent pool and the company’s senior team.9

Mike Henry, the president of health, safety, environment, and community, marketing, and technology, observed this misalignment. He concluded that the only reasonable explanation was an unconscious bias within the organization and a tendency to do things as they had always been done—particularly the fact that leading talent was primarily sourced from BHP Billiton’s traditional hiring bases in Australia, the United Kingdom, North America, South Africa, and the Netherlands.

Following the closure of BHP Billiton’s marketing office in The Hague—a traditional hub for recruiting and developing marketing executives—Henry decided to take action to prevent narrowing the leadership pipeline even further.

With strong support from the CEO, Henry began seeking out broad-based leadership engagement and took steps to understand BHP’s unconscious biases. He led by example, taking the Harvard Implicit Association Test and sharing the results with his team. He aimed to prove his commitment to diversity and inclusion and show that he could only mitigate his own unconscious biases by being aware of them first.

Next, Henry had BHP Billiton’s marketing organization conduct an inclusive leadership program for its top 150 leaders, which included measuring perceptions on diversity and inclusion. The program involved interactive workshops, storytelling, videos, self-paced activities, homework, coaching, and reading, all designed to help leaders shift their mindsets and behaviors. And it broadened the conversation from one about diversity to one about diversity and inclusion, from demographics to diversity of thinking, and from compliance to business imperative. To help take this from a program to a sustained focus of attention, Henry appointed a full-time diversity and inclusion manager to implement change. During a time of downsizing, this was a potent symbol of the value he placed on diversity and inclusion.

These steps yielded several notable results. Nine months after the first leadership intervention, 88–94 percent of leaders reported that they understood what they needed to do, that they had changed their behaviors, and that they knew they were accountable for change. Critically, 72–76 percent of staff agreed that their leaders were behaving differently—that is, more respectfully and inclusively—and that their teams were now more collaborative. In 2013, the program was expanded to include all leaders and all staff, which was a huge investment of time and energy. Mindsets have shifted, and while employee statistics have been slow to change, the 2013 results of BHP Billiton’s marketing organization’s annual “inclusion index” diagnostic reveal that representation of women and talent from outside the companies’ traditional hiring bases has increased at leadership levels—a trend that has continued year on year since the first diagnostic was run in 2011.

Research by Deloitte Australia shows that high-performing organizations are character- ized by their commitment to diversity and a culture of inclusion. In the areas of cus- tomer service, innovation, safety, and more, the message from employees is the same: Organizations that support diversity and that also make employees feel included are much more likely to meet business goals than those organizations that focus on diversity and inclu- sion in isolation (or focus on neither).7 The question is, how do you get there?

One essential component of building a strategy of inclusion is recognizing the biases in the way each of us receives and processes information and the historical biases in our systems of work.8 Addressing these process- ing biases is critical because leaders—as they themselves feel high levels of inclusion—often do not understand levels of alienation in an organization. Given the critical importance of retention in our survey, inclusion becomes a key strategy for success.

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Where companies can start

MANY organizations have not put enough effort into understanding what makes people feel included. Do employees feel they are known and valued as individuals? Are they well-connected to other people in the orga- nization? Are they given a voice in decision making? Is there an understanding of the types and extent of covering in the organization (appearance, affiliation, advocacy, association)? In addition to examining these fundamen- tal questions, companies looking to build a more inclusive workplace should consider the following steps:10

• Create inclusion labs to help educate leaders about unconscious bias and covering behaviors: Encourage leaders to honor other people’s opinions and promote constructive debate. Understand covering biases and behaviors and approaches to changing them. Leadership drives inclu- sion; the process should start at the top.

• Embed diversity and inclusion in leader- ship pipelines and programs: Include the diversity and inclusion initiative in leader- ship development programs, new manager

programs, and talent acquisition programs. Give particular focus to supporting diver- sity of thinking—for instance, by select- ing people from diverse backgrounds for leadership development.

• Conduct a gap analysis of talent systems and processes: How is the principle of merit-based decision making transparently embedded into systems, from recruit- ment, remuneration, and training to career development opportunities and succes- sion? Review the outputs of these deci- sions in terms of equity, such as via a pay equity audit.

• Develop a diversity and inclusion score- card and measure business impact: Hold leaders and managers accountable and identify outliers in the diversity and inclusion initiative.

• Install governance and resource the effort appropriately: Create a council with representatives from different parts of the business that is properly resourced to be a change agent.

BOTTOM LINE Diversity is not a program or a marketing campaign to recruit staff. Thinking of diversity in this way relegates it to its compliance-driven origins. A diverse workforce is a company’s lifeblood, and diverse perspectives and approaches are the only means of solving complex and challenging business issues. Deriving the value of diversity means uncovering all talent, and that means creating a workplace characterized by inclusion. Our research shows that most organizations are not there yet, but change is in the wind, and market leaders are starting to move from compliance to inclusion as a business strategy.

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•

•

Contributors Stacia Garr, Jackie Scales

Authors

Juliet Bourke Deloitte Consulting Pte Ltd [email protected]

Juliet Bourke leads the Australian Diversity and Inclusion practice and co-leads the Australian Leadership practice. She has over 20 years’ experience in human capital and is an internationally recognized author and speaker on the workplace, cultural change, leadership, and diversity. Bourke is a member of the Australian firm’s diversity council and sits on the Australian School of Business’s HR advisory board.

Christie Smith Deloitte Consulting LLP [email protected]

Christie Smith has spent the last 24 years consulting, focusing on aligning business strategy with organizational structure, talent, leadership development, and global workforce planning. She recently drove the formation of Deloitte’s collaboration with the California Institute for Quantitative Biosciences (QB3) to spur bioscience innovation and convert that innovation into a catalyst for jobs, companies, and better health. Smith is one of Diversity Journal’s 2013 “Women to Watch.”

Nicky Wakefield, Human Capital leader, Deloitte Southeast Asia Deloitte Touche Tohmatsu [email protected]

Nicky Wakefield is an experienced leader and advisor working primarily on large- scale, complex transformation programs. She started her career in consulting in 1995 after completing her MBA in organizational strategy and change. Educated as an economist, Wakefield transitioned to human capital after beginning a diploma in psychotherapy and developing a real passion for human performance. She has lived and worked in Australia, the United States, Singapore, Brunei, Zimbabwe, England, and the Netherlands.

Heather Stockton, Human Capital leader, Deloitte Canada Deloitte Canada [email protected]

Heather Stockton is global Human Capital leader for the financial services industry. She is a member of the board in Deloitte Canada and chair of the talent and succession committee. Through her work in developing and executing strategic plans, Stockton has become an advisor to executives who are undertaking business transformation, merger integration, and changing their operating model. She has extensive experience in talent strategy and leadership development for leaders and boards.

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Endnotes

1. Kenji Yoshino and Christie Smith, Uncover- ing talent: A new model of inclusion, Deloitte Development LLC, December 6, 2013, http:// www.deloitte.com/assets/Dcom-UnitedStates/ Local%20Assets/Documents/us_LLC_De- loitte_UncoveringTalent_121713.pdf.

2. Ibid.

3. Ibid.

4. Kenji Yoshino, Covering: The Hidden Assault on Our Civil Rights (United States: Random House, 2007).

5. Scott Page, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, Princeton, NJ: Princeton University Press, 2007).

6. Alison Paul, Thom McElroy, and Tonie Leath- erberry, “Diversity as an engine of innovation: retail and consumer goods companies find competitive advantage in diversity,” Deloitte Review 8, January 1, 2011, http://dupress.com/ articles/diversity-as-an-engine-of-innovation/.

7. Deloitte Australia and Victorian Equal Oppor- tunity and Human Rights Commission, Waiter, is that inclusion in my soup? A new recipe to

improve business performance, November 2012, http://www.deloitte.com/assets/Dcom-Austra- lia/Local%20Assets/Documents/Services/Con- sulting/Deloitte_Diversity_Inclusion_Report_ V4_Nov_2012.pdf, accessed January 23, 2014.

8. Juliet Bourke, Bernadette Dillon, Stephanie Quappe, and Linda Human, Inclusive leader- ship: Will a hug do?, March 2012, http:// www.deloitte.com/assets/Dcom-Australia/ Local%20Assets/Documents/Services/ Consulting/Human%20Capital/Deloitte_In- clusive_Leadership__March%202012%20 v2.0.pdf, accessed January 23, 2014.

9. Deloitte Australia, “Interview with Mike Henry (Group Executive & Chief Marketing Officer, BHP Billiton): Reflections on investing in leaders to accelerate diversity and inclusion outcomes,” May 2013, https://www.deloitte. com/view/en_AU/au/services/consulting/ human-capital/DiversityandInclusion/ fc1eb8b30902e310VgnVCM3000003456f70aR- CRD.htm, accessed January 23, 2014.

10. Bourke, Dillon, Quappe, and Human, Inclusive leadership: Will a hug do?

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The overwhelmed employee Simplify the work environment

AN explosion of information is over-whelming workers, while smartphones, tablets, and other devices keep employees tethered to their jobs 24/7/365. The Atlantic recently termed this trend “hyper-employ- ment,” noting that even the unemployed can suffer from it.1

Studies show that people check their mobile devices up to 150 times every day.2 Yet despite employees being always on and constantly con- nected, most companies have not figured out how to make information easy to find. In fact, nearly three-quarters (72 percent) of employ- ees have told us they still cannot find the information they need within their company’s information systems.3

This constant and frenetic level of activ- ity also costs money, perhaps $10 million a year for mid-size companies.4 According to one study, 57 percent of interruptions at work resulted from either social media tools or switching among disparate stand- alone applications.5

The true downside of this information overload is harder to measure. With every- one hyper-connected, the reality may be that

employees have few opportunities to get away from their devices and spend time thinking and solving problems. And the problem is getting worse. The sun never sets on a global company, so someone is always working, awaiting a response to an email or phone call. The weekend as a time away from work is also becoming a thing of the past.

More than half of the respondents to our Human Capital Trends survey believe that their organizations are not doing a good job helping workers address information overload and today’s demanding work environment. Nearly six in ten respondents (57 percent) say their organizations are “weak” when it comes to helping leaders manage difficult schedules and helping employees manage information flow (figure 1).

According to our global survey, executives around the world are sounding the alarm, with respondents in most countries recognizing the urgent need to address this challenge. But, with the exception of Spain and Kenya, executives in few countries report their capabilities are equal to the sense of urgency (figure 2).

• Information overload and the always-connected 24/7 work environment are overwhelming workers, undermining productivity and contributing to low employee engagement.

• Sixty-five percent of executives in our survey rated the “overwhelmed employee” an “urgent” or “important” trend, while 44 percent said that they are “not ready” to deal with it.

• HR has an opportunity to lead efforts to manage the pervasive communications practices that overwhelm employees, simplify the work environment, create more flexible work standards, and teach managers and workers how to prioritize efforts.

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Creating more time to think and produce

How serious is the problem? Julian Birkenshaw and Jordan Cohen studies the pro- ductivity of knowledge workers and found that people waste as much as 41 percent of their time on things that offer little personal satisfac- tion and do not help them get work done.6

One reason employees are so busy is they may be afraid to delegate tasks, while more and more employees, particularly men, view “being busy” as a badge of honor. In fact, new research shows that 29 percent of men with children work more than 50 hours per week—a “worka- holic” lifestyle that increases with income and seniority.7

Many have suggested that, as organizational leaders and as individuals, we need to learn new skills to manage time. While Yahoo’s CEO Marissa Mayer made headlines when she asked employees to stop working at home, what she was really saying was that “we want to know what you’re working on so we can make sure you prioritize well.”8

The value of smaller, agile teams Organizations are beginning to acknowl-

edge their share of responsibility for the

problem of the overwhelmed employee and take steps to help solve it.

Historically, managing time and informa- tion was viewed as an employee’s personal concern. If employees were overwhelmed, the thinking went, they were expected to fix it themselves—by taking a course in time management, for instance. Now, some employ- ers are treating overload as a shared problem requiring a company response. In short, the overwhelmed employee is being viewed as a business and productivity challenge, as well as a personal one.

One strategy companies are following to help employees become more productive with their time is creating smaller, more agile teams.

The software industry, which is widely known for experimenting with innovative management practices, has been revolution- ized by the “agile” model.9 Under this system, teams are broken up into small groups that regularly hold short, face-to-face meetings. Each day, these teams have daily “scrums” and “stand up meetings.” These events last no lon- ger than 15 minutes, forcing people to rapidly discuss issues, resolve problems, and get back to work.

This practice is backed up by research from Richard Hackman, a former professor at Harvard University and Yale University, which

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Active employee management of their own development and careers

Helping employees manage information and schedules

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Figure 1. An underwhelming response to today’s overloaded employee

Graphic: Deloitte University Press | DUPress.com

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found that small teams outperform big ones.10 Hackman also demonstrated that teams where members know each other well communicate more quickly, with far fewer words and emails.

To make meetings shorter and more efficient, Jeff Bezos, CEO of Amazon, hit

on a novel approach he calls the “two pizza” rule. Every meeting at Amazon should be small enough to feed everyone with two piz- zas—limiting attendance to around five to seven employees.

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Graphic: Deloitte University Press | DUPress.com

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Capability gap grid

The overwhelmed employee

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Simplifying HR practices and employee systems

It’s likely that many organizations will look to their HR leaders to help figure out how to address worker overload. Some HR organiza- tions are already stepping up to the challenge.

Best Buy, for example, adjusted its “flexible working” policies to encourage employees to take time off and recharge. Adobe eliminated steps in its performance appraisal process, helping managers and employees save several weeks each year.

Simplifying business and HR systems and making them easier to use can also make employees more productive. People no longer want more features in their enterprise software; they want “one click” or “one swipe” transac- tions. We call this the “consumerization” of corporate systems—which really amounts to valuing the time of a company’s employees as much as it respects the time of its customers.

In our most recent research on HR sys- tems adoption, ease of use and user interface integration were rated as the most important factors in driving user adoption.11

This finding raises many important ques- tions: How many steps does it take at your company to appraise an employee? To fill in an expense report? To register for a corporate course? How easy is it to find information, people, and resources in your company? If the HR and IT departments are not working

together to make things easier, they are taking away valuable employee time.

Outsourcing or insourcing non-core tasks

Companies are also looking at ways to out- source or insource repetitive, non-core tasks to free up employee time and energy.

Pfizer developed a program called PfizerWorks that allows employees to off-load technical and administrative non-core tasks, such as statistical analysis, writing, and pub- lishing. Scientists claim it saves months of time per year, allowing them to dedicate more time to strategic work and their scientific skills.12

Changing work expectations Does everyone need to be online all day

and night? Some executives now deliberately avoid sending emails at night or on weekends, sending a signal to the team that it is OK to disconnect and unwind.

Professional services organizations are increasingly asking teams to travel less and offering the option to work at home, enabling them to save time and energy on commuting and travel.

More and more companies are experiment- ing with “email free” times and the use of collaborative web tools that slow down massive email distribution and focus communications directly to the smaller working team.

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Where companies can start

THE point of these and similar efforts is not merely to save employees’ time, reduce stress, and foster employee engagement, important as those aims are. Rather, it is also to free up unproductive time to permit more- engaged employees to focus deeply on business imperatives. Here are a few starting points:

• Lead through example: Change is often most powerful when it comes from the top. Leaders should have—and should grant themselves—permission to take these steps, setting an example to help their employees deal with being overwhelmed.

• Get input: Assess employees’ current workloads and what issues trouble them most. Rather than ask high-level engage- ment questions, survey them on their most “frustrating” work practices or systems.

• Simplify HR and talent programs: Reduce the number of steps and make it possible to complete an entire process in a few minutes.

• Simplify information and HR systems: Consolidate HR and employee sys- tems in favor of what we call a “learning

architecture”—one integrated place to find information, people, and content.

• Publicize and celebrate flexible work policies: Employees need to understand that it is OK to work at home, take time off during the day, and miss meetings. Clear policies help make it possible for people to disengage from less important tasks when they are busy with other projects or personal needs.

• Make meetings productive: Post guid- ing principles in every meeting location to encourage effective meetings. Help people reduce the size of meetings, number of emails, and frequency of communication. Schedule meetings for 20 or 50 minutes rather than 30 or 60. “Stand up” meetings are a powerful way to keep people from wasting time.

• Delegate decision making: Is it clear who makes decisions in your workgroup? Can people make their own decisions without involving many others or asking others for help? Push decisions down, and people’s lives become easier.

LESSONS FROM THE FRONT LINES

Saving employee time by promoting effective communication

A global health care company initiated a major program to address the issues of information overload, meeting ineffectiveness, and unnecessary travel. The project produced four recommendations:

• Enforceable guidelines on sending emails, holding meetings, and traveling—and educating staff in these areas. Meetings were limited to 30 minutes, while the use of “cc” and “reply all” in emails was curtailed.

• Empowering leaders to replace some travel by making greater use of virtual technology—including Live Meeting, WebEx, Skype, and MS Lync—and improving the overall virtual technology experience in the company.

• Dedicating half a day per week to focus on company’s leadership initiatives, with an emphasis on connecting with customers.

• Promoting accountability in decision making in these areas by working with HR.

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BOTTOM LINE Companies need to recognize that the overwhelmed, hyper-connected employee is a business concern. As employees become more connected and messages and information proliferate, it is increasingly important for employers to develop standards, principles, and technologies that simplify work. The opportunity for business and HR leaders is to find ways to make information easier to find, simplify processes and systems, keep teams small, and make sure leaders provide focus. The result will likely be improved employee satisfaction, teamwork, and productivity.

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Authors

Tom Hodson, managing principal, Leadership Center for Clients Deloitte Consulting LLP [email protected]

Tom Hodson collaborates with clients on leader and team effectiveness, strategic change, and innovation. He also leads Professional and Leader Development for the Consulting practice, where he has implemented innovative programs including the development of web-based and mobile technology platforms to drive behavioral change, personal development, and recognition.

Jeff Schwartz, global Human Capital leader, Marketing, Eminence, and Brand Deloitte Consulting India Pvt Ltd [email protected]

Jeff Schwartz is the practice leader for the Human Capital practice in US India, based in New Delhi, and the global leader for Human Capital Marketing, Eminence, and Brand. A senior advisor to global companies, his recent research focuses on talent in global and emerging markets. He is a frequent speaker and writer on issues at the nexus of talent, human resources, and global business challenges.

Ardie van Berkel, Human Capital leader, Deloitte EMEA Deloitte Consulting BV [email protected]

Ardie van Berkel is the Human Capital leader for the Netherlands and is also a member of Deloitte’s supervisory board in the Netherlands. She is an active market-facing client partner who consults on merger integrations, organizational design, HR strategies, and change management to support major transformation programs, primarily in the public sector.

Contributor Lisa Barry

Ian Winstrom Otten, HR Transformation practice leader, Deloitte Japan Deloitte Tohmatsu Consulting Co. Ltd [email protected]

Ian Winstrom Otten focuses on helping global clients improve the quality of HR service delivery by driving projects that define the right underlying HR model to establish a cost-effective mix of service centers, processes, and technology. He also helps clients deploy these solutions globally, with constant attention on change adoption throughout. He has been working in the human capital area since 1996 and has led large global projects to implement SAP, PeopleSoft, and Workday.

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Endnotes

1. Ian Bogost, “Hyperemployment, or the ex- hausting work of the technology user,” Atlantic, November 8, 2013, http://www.theatlantic.com/ technology/archive/2013/11/hyperemploy- ment-or-the-exhausting-work-of-the-technol- ogy-user/281149/, accessed January 23, 2014.

2. Victoria Woollaston, “How often do you check your phone? The average person does it 110 times a DAY (and up to every 6 seconds in the evening),” Mail Online, October 8, 2013, http://www.dailymail. co.uk/sciencetech/article-2449632/How- check-phone-The-average-person-does- 110-times-DAY-6-seconds-evening.html.

3. David Mallon, Janet Clarey, and Mark Vickers, The high-impact learning organization series, Bersin & Associates, September 2012, www. bersin.com/library or www.bersin.com/hilo.

4. Assuming an average salary of $30 per hour, for businesses with 1,000 employees, the cost of an hour per day of interrup- tions exceeds $10 million per year.

5. I can’t get my work done! How collaboration & social tools drain productivity, Harmon.ie, 2011, http://www.uclarity.se/ wp-content/uploads/Distraction_Survey_Re- sults_US.pdf, accessed January 23, 2014.

6. Julian Birkinshaw and Jordan Cohen, “Make time for the work that matters,” Harvard Business Review, September 2013, http://hbr. org/2013/09/make-time-for-the-work-that- matters/ar/1, accessed January 23, 2014.

7. Joan C. Williams, “Why men work so many hours,” Harvard Business Review Blog Network, May 29, 2013, http://blogs.hbr. org/2013/05/why-men-work-so-many- hours/, accessed January 23, 2014.

8. Julianne Pepitone, “Marissa Mayer: Yahoos can no longer work from home,” CNNMoney, February 25, 2013, http://money.cnn. com/2013/02/25/technology/yahoo-work- from-home/, accessed January 23, 2014.

9. “Manifesto for agile software de- velopment,” http://agilemanifesto. org/, accessed January 23, 2014.

10. J. Richard Hackman, “Six common mispercep- tions about teamwork,” Harvard Business Review Blog Network, June 7, 2011, http:// blogs.hbr.org/2011/06/six-common-misper- ceptions-abou/, accessed January 23, 2014.

11. Josh Bersin, “The Move from Systems of Record to Systems of Engagement,” Forbes, August, 16, 2012, http://www.forbes.com/ sites/joshbersin/2012/08/16/the-move- from-systems-of-record-to-systems-of- engagement/ accessed January 23, 2014.

12. Jean McGregor, “Outsourcing tasks instead of jobs,” Bloomberg Businessweek, March 11, 2009, http://www.businessweek.com/ stories/2009-03-11/outsourcing-tasks- instead-of-jobs, accessed January 23, 2014.

13. Deloitte internal analysis based on client interviews.

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Transform and reinvent

The reskilled HR team Transform HR professionals into skilled business consultants

CEOS now see human capital strategies as one of their top priorities for growth.1 In order to meet their business goals, senior

executives today are holding HR departments accountable for developing creative new ways to acquire talent, build employee skills, develop leaders, engage employees at all levels, and retain critical workers.

This challenge comes at a time when shifting demographics, rapid technologi- cal advances, increasing globalization, and the rise of new work arrangements are forc- ing companies to reengineer many of their people strategies. Many businesses have also told us that they are seeing a “disruption” of the CHRO role in their organizations and are refocusing HR as a “business contribution” function—a role that demands deeper skills in data and analytics as well as MBA-level business capabilities.

The critical question is whether HR teams have the skills they need to rise to the chal- lenge. According to our global survey, more than one-third of respondents report that

their HR and talent programs are just “get- ting by” or even “underperforming.” Twice as many respondents say that their HR and talent programs are “underperforming” (10 percent) as consider them “excellent” (5 percent) (figure 1).

When asking about organizations’ readi- ness to respond to the 12 global trends, our global survey revealed significant differences between business executives and HR leaders. For the five most urgent and important trends we identified, business executives at large companies (10,000+ employees) believe that their companies are less ready to address these issues than HR leaders report (figure 2):

• Leadership (the most urgent trend according to our survey): 40 percent of business leaders reported that their com- pany is “not ready,” compared to 28 percent of HR leaders

• Reskilling HR: 48 percent of business respondents reported that HR is “not ready,” compared to 36 percent of HR respondents

• Less than 8 percent of HR leaders have confidence that their teams have the skills needed to meet the challenge of today’s global environment and consistently deliver innovative programs that drive business impact.

• Business leaders agree: 42 percent of business leaders believe their HR teams are underperforming or just getting by, compared to the 27 percent who rate HR as excellent or good when assessing HR and talent programs.

• To become an effective business partner, HR teams need to develop deeper business acumen, build analytical skills to underwrite their leadership, learn to operate as performance advisors, and develop an understanding of the needs of the 21st-century workforce.

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• Global HR and talent management: 45 percent of business executives reported that the company is “not ready,” compared to 29 percent of HR executives

• Retention and engagement: 38 percent of business executives reported that their

company is “not ready,” compared to 27 percent of HR executives

• Talent and HR analytics: 57 percent of business respondents reported that their company is “not ready,” compared to 41 percent of HR respondents

Graphic: Deloitte University Press | DUPress.com

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Figure 1. Rating HR performance

“How would you assess your HR and talent program capabilities?”

Graphic: Deloitte University Press | DUPress.com

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Figure 2. Business leaders and HR executives’ take on their readiness level for the five most “urgent” and “important” trends (companies with 10,000+ employees)

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Differences in perceived readiness exist, not just between HR and non-HR respondents, but among global regions as well. Executives in Japan, Germany, the United Kingdom, and China all recognize the importance of reskill- ing HR, but doubt their companies’ ability to respond (figure 3).

Ramping up HR skills What is behind this perceived lack of HR

skills? The problem is relatively easy to under- stand at one level, yet elusive at another.

More than 70 percent of all HR profession- als enter the field without a specific degree or certification in business or human resources.2

Graphic: Deloitte University Press | DUPress.com

Figure 3. Urgency vs. readiness: Who is leading, who is lagging?

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

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Given that many organizations do not invest in developing either the HR or the business skills of their HR teams, it is no surprise that they are falling behind.3 This lack of skills severely limits HR’s ability to impact business strategy and advance business goals. For example, a 2013 study found that only 14 percent of com- panies reported that their HR teams have the capabilities to utilize talent analytics—a critical function as HR becomes more data-intensive.4

This year’s global survey supports this find- ing. Forty-three percent of respondents stated that their companies are “weak” when it comes to providing HR with appropriate training and experiences; 47 percent rate their companies “weak” on preparing HR to deliver programs aligned with business needs; and 50 percent rate their companies “weak” when it comes to providing innovative solutions and programs (figure 4).

Companies need to challenge themselves to develop programs and professional expecta- tions to transform HR employees into skilled business consultants. What skills does HR need to more effectively meet the demands of today’s businesses? The specific list will vary across companies, but all share the need to develop skills in three primary areas:

1. HR and talent skills

2. Business, industry, and global skills

3. Management, leadership, and program implementation skills

HR and talent skills

• Technical HR skills. Specialists should have deep skills in training, recruiting, sourcing, organizational design, employee relations, labor relations, compensation strategies, benefits, and many other areas. These technical skills should be refreshed every year as new vendors, technologies, and strategies emerge.

• Labor market and workforce knowledge. HR teams should have a deep understand- ing of the labor markets and workforces where their companies operate. What cul- tural, demographic, and local labor market trends affect a company’s ability to hire, retain, and engage people? How do high- performing leaders in Japan, for example, compare with high-performing leaders in China or Brazil? What will attract engineers in San Jose vs. Munich vs. Bangalore?

Graphic: Deloitte University Press | DUPress.com

% of total number of responses

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Figure 4: HR teams report they are poorly prepared to integrate HR and business strategy

HR executives’ assessment of HR capability levels ExcellentAdequate Weak

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LESSONS FROM THE FRONT LINES

Prioritizing skill development to raise retention and performance

A fast-growing global health care company realized five years ago that it lacked leadership capabilities, talent mobility, and managerial practices, resulting in high turnover and low levels of service.5 The CEO recruited a new CHRO to upgrade the skills of the HR team from top to bottom. Specific reforms included:

• Asking the HR team to evaluate its own performance and assessing why some areas were rated poorly

• Developing a senior peer-to-peer certification for senior HR business partners

• Establishing technical centers of excellence in talent acquisition, performance management, talent mobility, compensation and rewards, retention and engagement, and analytics

• Recruiting MBAs into the HR department

• Creating an internal research and tools group within HR focused on research and methodology development

• Pushing the team to develop small consulting groups that brought HR practices together to work on business- unit-specific programs

Today, this company is a leader in innovative HR practices and has become an employer of choice in its markets. Five years of investment in HR skills and capability have paid off in higher employee retention, better engagement, and stronger performance.

• Managing a service operation. HR teams must understand how to manage to service levels, design service-centric systems and solutions, measure quality of service, and implement self-service technology.

• Technology and analytics. It is impos- sible to run or manage HR without a deep understanding of multiple technologies— from payroll systems to social sharing tools. Cloud, mobile, and social technologies are critical areas where HR professionals should develop leading skills. As big data becomes a pervasive resource and tool, HR professionals should also develop skills and comfort with data, statistics, and analytics. This area may be one of the largest gaps for HR teams as they reskill for the future.

Business, industry, and global skills

• Business and industry acumen. HR professionals should develop a deep

understanding of business and industry trends: how the company makes money, what drives long-term competitive advan- tage, what skills are needed to maintain and drive improved profits, what new products are underway, how customers perceive value, and how to drive innovation. The challenge for HR professionals is to help the business create value through their under- standing of talent, such as by identifying new sources of talent in new markets.

• Global insights. Most businesses, large and small, operate globally when it comes to customers, supply chains, and talent mar- kets. HR professionals must be innovative in accessing talent in global geographies, determining what is required to be effective in local talent markets, and understanding how to integrate HR programs across coun- tries and regions to provide “one source of truth” for HR and talent data and insights.

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Management, leadership, and program implementation skills

• Management and leadership. HR profes- sionals must understand how people lead, how to coach leaders, and how to lead their own teams. They should have the confi- dence and the leadership experience to interact with senior business professionals in a meaningful way.

• Project and change management skills. It is easier to design a “picture-perfect”

program than to get managers and employ- ees to adopt it. Focusing on the realities of change and achieving practical results should be in the crosshairs of every HR manager.

• Continuous development and knowl- edge sharing. Just as IT, finance, sales, and customer service invest heavily in training and certifications, HR should develop an “HR for HR” team that certifies, develops, and continuously improves the skills of the entire HR function.

Where companies can start

THE CHRO should play the role of “chief change officer,” championing the HR team’s expansion from providing HR services to business consulting.

Fifty-nine percent of respondents in a recent global report rated “increased change management” their top concern for improving their business transformation efforts.6 Business leaders are waiting for HR leaders and profes- sionals to reskill and up their game.

Critical starting points include:

• Invest in HR professional development: Our benchmarks show that high-impact HR teams spend between $1,200 and $2,500 annually per HR professional on training, development, research, and tools, compared to an average of $500 across all organizations.7

• Elevate and deepen the business partner role: Our research shows that the future of HR consists of highly trained expert

business partners coupled with networks of deep specialists, supported by service centers for transactional work.

• Focus on emerging business-critical skills: Business leaders rated analytics, workforce planning, and leadership as the most important HR skills, reinforcing that reskilling HR is not about “doubling down” on traditional HR skills but about expand- ing into delivering insights on analytics, business, and globalization.

• Establish a professional development team: An “HR for HR” team can apply the same level of skills assessment, development planning, and career development to HR as HR does to the rest of the organization.

• Conduct self-assessments: Define roles clearly and then honestly benchmark roles, structure, and skill levels. How proficient is

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BOTTOM LINE The global economy is poised for a growth cycle. A limiting factor will be the increasing scarcity of talent, which will only intensify the need for HR to ably lead the organization forward. HR teams that rise to the challenge will see their internal effectiveness, external market value, and overall stature climb.

Reskilling HR was rated the third most urgent and important trend in our 2014 global survey, with 77 percent of respondents ranking it as “urgent” or “important.” Businesses report that their HR teams are “not ready” or up to the job in critical areas including leadership, retention, global, and analytics. To achieve better business results, companies will need to reskill and invest in their HR and talent capabilities. Focusing on emerging HR skills, such as analytics and deep business and global skills, is a place to start.

the HR team compared to other companies? Where it is strong and where is it weak? Be honest with this assessment.

• Diversify HR to meet business goals: Consider HR to be an internal consulting organization and bring the strongest HR leaders together to take action where busi- ness needs demand it. At the same time, HR can be strengthened with an infusion of professionals with strong business back- grounds—as long as they master the critical HR skills necessary for their tasks.

• Break down silos within HR: Connect specialists with each other and with HR

centers of excellence, encourage deep skill building and knowledge sharing, and create communities of practice. Encourage centers of excellence to work together on major ini- tiatives like turnover, workforce planning, engagement, and leadership development.

• Change the measurement of HR busi- ness partners: Rather than measuring HR business partners by “client satisfaction,” use talent metrics (quality of hire, leader- ship progression, retention) so that HR feels responsible for outcomes, not just adminis- trative services.

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Contributors Robin Lissak, Jennifer Steinmann

Authors

Udo Bohdal-Spiegelhoff, Human Capital leader, Deloitte Germany Deloitte Germany [email protected]

Udo Bohdal-Spiegelhoff is recognized in the market as a thought leader in change management, strategy execution, leadership and organizational development, large-scale facilitation, and HR advisory capabilities. He has led many complex global transformations such as large-scale reorganizations, HR and people strategy implementations, and post-merger integrations for clients in a variety of industries.

Jason Geller, Human Capital leader, Deloitte US Deloitte Consulting LLP [email protected]

Jason Geller is the National Managing Director for Deloitte Consulting LLP’s Human Capital practice in the United States and a member of the Deloitte India board. He is responsible for overall strategy, financial performance and operations, talent recruitment and development, and delivery of services. Geller has served as a US Deloitte Consulting board member, the global and US leader for HR Transformation, and the US Human Capital chief strategy officer. He advises organizations on their HR and talent transformations.

Cathy Benko, vice chairman and managing principal Deloitte Consulting LLP [email protected]

Cathy Benko is internationally renowned for being among the first to design and implement a systemic response to the changing workforce. She holds dual roles as Deloitte Consulting LLP’s talent game-changer and the leader of Deloitte’s corporate citizenship agenda, driving the firm’s collective societal impact. Benko is a US patent-holder and the bestselling co-author of several books, including The Corporate Lattice (Harvard 2010) and Mass Career Customization (Harvard 2007).

Hugo Walkinshaw, executive director Deloitte Consulting Pte Ltd [email protected]

Hugo Walkinshaw leads the Human Capital practice and the manufacturing industry sector in Southeast Asia, and is the Asia Pacific HR Transformation practice leader. He is primarily focused on delivering large-scale HR Transformation programs, working with both captive and outsourced service delivery models. With over 20 years of experience, Walkinshaw has provided assistance to clients in Japan, China, Hong Kong, Taiwan, the Philippines, Indonesia, Malaysia, Thailand, and Singapore, as well as in the United States and Europe.

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Endnotes

1. Cathy Benko, Trish Gorman, and Alexa Rose Steinberg, “Disrupting the CHRO: Following in the CFO’s footsteps,” Deloitte Review 14, January 17, 2014, http:// dupress.com/articles/dr14-disrupting- the-chro/, accessed January 23, 2014.

2. Karen O’Leonard, HR factbook 2011®: Benchmarks and trends in HR spending, staffing, and resource allocations, Bersin & Associates, June 2011. This information is based on current research by Bersin by Deloitte on the topic of high-impact HR, the report for which is due to be published in 2014.

3. Josh Bersin, The career factbook for HR and learning professionals, Bersin & Associates, June 2009, www.bersin.com/library.

4. Josh Bersin, Karen O’Leonard, and Wendy Wang-Audia, High-impact talent analytics: Building a world-class HR measurement and analytics function, Bersin by Deloitte, October 2013, www.bersin.com/library.

5. This information is based on current research by Bersin by Deloitte on the topic of high- impact HR, the series of reports for which are due to be published throughout 2014.

6. 2013 Global Shared Services survey results, Deloitte, February 2013, http://www.deloitte. com/view/en_US/us/Services/additional- services/Service-Delivery-Transformation/ 656989ae16dfc310VgnVCM3000003456f7 0aRCRD.htm, accessed February 2, 2014.

7. Bersin, The career factbook for HR and learning professionals.

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Talent analytics in practice Go from talking to delivering on big data

AT a time when big data is becoming a mainstream strategy in many business functions, HR is playing catch-up. Right now, 86 percent of companies report no analytics capability in the HR function, compared to 81 percent of companies that utilize analytics in finance, 77 percent in operations, 58 percent in sales, and 56 percent in marketing.1

The good news is that 57 percent of HR teams increased their investment in measure- ment and analytics in 2013.2 Companies that are ahead of the game in this area are doubling their improvements in recruiting, tripling their leadership development capabilities, and enjoying 30 percent higher stock prices than their peers.3

Today’s focus on HR analytics is not new. Companies have been trying to understand workforce data since the early 1900s. The evolving discipline of talent analytics, how- ever, combines workforce data with business data to help companies make better business decisions about people. Critical questions— such as whom to hire, how to manage people, and what drives performance, retention, and

customers—can now be understood statisti- cally and answered with data, not just opinion or experience.

Despite understanding the importance of HR analytics, respondents to our survey are largely unprepared to meet this challenge. Companies in major industrialized nations, such as Japan, Germany, and the United Kingdom report that they are especially behind the curve (figure 1).

The key leap from talk to action Despite the powerful improvements analyt-

ics can deliver, most companies have yet to convert these capabilities into action. While 14 percent of companies now have some form of analytics capabilities, more than 60 percent are still stuck with a disorganized set of HR systems and no clear way to make meaningful data-driven decisions.4

This may be one reason why at least nine in ten respondents in our survey rate their companies as “weak” or just “adequate” when judging their current talent and HR analyt- ics capabilities. Organizations rate themselves

• HR is evolving into a data-driven function, with the focus shifting from simply reporting data to enabling the business to make informed talent decisions, predict employee performance, and conduct advanced workforce planning.

• While 78 percent of large companies (with 10,000 or more employees) rated HR and talent analytics as “urgent” or “important,” enough to place analytics among the top three most urgent trends, 45 percent of the same companies rated themselves “not ready” when assessing their readiness in HR analytics—among the lowest readiness rankings for any of the 12 global trends. Only 7 percent of large companies rated their organizations as having “strong” HR data analytics capabilities today.

• Companies that successfully leverage analytics and big data will be positioned to outperform their peers in executing their talent strategies.

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• • • •

•• V. • • \ .\• .

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poorly when using HR data to predict work- force performance and improvement, with more than two-thirds (67 percent) calling this capability “weak” (figure 2).

Aware of their weaknesses, nearly half (48 percent) of global respondents are actively developing or planning to move ahead with talent and HR analytics capabilities (figure 3).

In 2014, the focus on big data in business will challenge HR leaders to build a talent ana- lytics team, bring together multi-disciplinary skills, and develop a long-range plan to “datafy” HR.5

A transition of this magnitude cannot happen overnight, but more than 60 percent

Graphic: Deloitte University Press | DUPress.com

Spain

Kenya

Argentina

Mexico

Chile

South Africa

Ireland

Brazil

United Kingdom Netherlands

China United States

Poland

Switzerland

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Canada

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Luxembourg

Australia

Belgium

Portugal All others

Uruguay

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Figure 1. Urgency vs. readiness: Who is leading, who is lagging?

Japan

Germany

United Kingdom

Brazil

Canada

Netherlands

United States

Argentina

Mexico

South Africa

India

China

Spain

Australia

Switzerland

All others

Belgium

Kenya

Chile

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Capability gap grid

Talent and HR analytics

Capability Gap Index (readiness – urgency)

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•

•

•

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

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of companies are putting plans in place now.6 Examples of high-value solutions include:

• Understanding the characteristics of high- performing salespeople to better select and attract leading candidates

• Identifying work-related factors that cor- relate to fraud and accidents, enabling

managers to dramatically reduce loss by focusing on well-known patterns

• Setting up an internal platform for veteran employees to find new positions within a firm by matching skills with jobs

• Creating analytics models that understand and predict turnover so managers can more

Graphic: Deloitte University Press | DUPress.com

% of total number of responses

Number of respondents

509

512

514

512

Utilizing HR and talent operational reporting and scorecards

Conducting multi-year workforce planning

Correlating HR data to business performance

Using HR data to predict workforce performance and improvement 7%

8%

7%

8%

26%

30%

31%

40%

67%

62%

62%

52%

Figure 2. A big challenge with big data

HR executives’ assessment of talent and HR analytics capability levels ExcellentAdequate Weak

Graphic: Deloitte University Press | DUPress.com

Strong

Under active development

Limited

Planning how to proceed

Not considering at this time

Not applicable 3%

6%

15%

35%

33%

8% 134

560

595

262

105

47

Figure 3: Nearly half of the companies surveyed are moving forward

Talent and HR analytics: State of HR analytics capabilities

Number of respondents

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rapidly change work conditions or behavior to keep top people from leaving

• Understanding the impact of pay increases in detail to make more scien- tific decisions about where to invest to maximize performance

Successful talent analytics programs require focused investment, dedicated cross-functional teams, and strong partnerships between HR, IT, and business operations. HR should take a leadership role by embracing this positive

disruption—an opportunity to bring together different parts of the business to solve prob- lems and drive business results.

A key insight provided by talent analytics is the ability to link business goals directly to talent strategies. Rather than focusing on HR spending and measuring HR metrics alone, talent analytics today has the power to ana- lyze the contribution people make to business outcomes across the board—from sales and customer service to accident reduction and quality improvement.

LESSONS FROM THE FRONT LINES

Using analytics to understand turnover and raise retention

A global pharmaceutical company facing an extremely competitive talent market in China understood it had to reduce workforce turnover to meet its growth targets. It embarked on a predictive analytics effort to improve retention, particularly among its sales force.

Using data from the previous three years, the company developed and implemented a model to provide predictive insights on critical sales roles for the company and pivot points that influenced retention. The model enabled prediction down to the level of the individual employee, identifying which variables were strong predictors of retention and turnover, and informing the development of focused retention strategies. For example, despite an intensely competitive talent market, compensation was not the primary driver of turnover.

Using this highly data-driven model to improve the targeting and effectiveness of its retention strategy, the company has been able to use the analysis to take targeted action to improve retention. The company was able to focus its investments on the retention initiatives that offer the highest value and impact.

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Where companies can start

FOR many companies, the transition from data reporting to data analytics is a leap into the unknown. HR teams question if they have the skills and understanding to put this function together. Industrial and organiza- tional psychologists, statisticians, and data analysts may all be needed to help HR build this new capability.

Potential starting points include:

• Look for skilled analysts to lead the team: Having a skilled analyst on your team isn’t the same as having a skilled analyst lead the team. That said, depending on the maturity of the organization, a skilled salesperson may be better equipped at leading the team, given the amount of convincing the organi- zations (both HR and business) will likely require on the topic.

• Add a couple of outlier profiles to the analytics team, such as econometricians, demographers, computer/applied scien- tists, and business intelligence specialists. They usually bring in a different view to the challenges at hand while being hands-on with numerical analyses, fact-finding, and generating insights from data.

• Create a community of practice where intrinsically interested professionals can share experiences and best practices. They will become your best ambassadors, and establishing a community of prac- tice ties in to the overall action of raising visibility for fact-based decision making through analytics.

• Equip analysts with HR technology, perfor- mance consulting, visualization, and project management skills. Build a close relation- ship between HR and IT; HR organizations working in predictive analytics often have an IT specialist on the HR staff.

• Identify specific business challenges to be addressed: Use data to meet visible busi- ness challenges by working with business units to agree on deliverables, reports, and expectations. Don’t just try to analyze data; start by focusing on business problems.

• Build capabilities by experimenting: Choose a business problem, bring people from different functions together, consider which types of data might help solve that problem, and find the techniques that might help the team analyze the data and devise solutions.

• Make analytics user-friendly for the entire organization through the use of tools such as dashboards in order to provide maxi- mum value to business units.

• Do not let the perfect be the enemy of the good: Recognize that without quality data, analytics projects will likely fail; at the same time, insisting on 100 percent data qual- ity means a project will likely never begin. Data quality remains a challenge for all functions in analytics; it is valuable to lever- age the data that does exist to start improv- ing people-related decisions today.

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BOTTOM LINE Over a decade ago, author Michael Lewis’s book Moneyball7 told the story of how people decisions in professional sports could be dramatically improved by using numbers and analysis, rather than on the basis of subjective opinion alone—a conclusion that has been widely accepted in business. In the 2014 Global Human Capital Trends survey, companies indicated that they understood the importance of building their HR and talent analytics capabilities, but also revealed significant gaps in their current readiness and capabilities. It can take three to five years to build a strong talent analytics function and the same length of time, or longer, to develop a mindset and culture in which people make decisions based on data and not just instinct. It is important to start laying the groundwork. In 2014, companies should take action to build HR and talent analytics capabilities, to seek out and conduct pilot projects focused on critical business and talent problems, and to invest in developing the analytics capabilities to drive the HR function going forward. Recognizing HR’s reputation as a profession and function that shies away from numbers and data, it is critical to move from talk to action.

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Authors

John Houston, global Workforce Analytics leader Deloitte Consulting LLP [email protected]

John Houston is the global leader of Workforce Analytics, which provides services that combine deep knowledge in human capital strategy and program implementations with advanced business intelligence capabilities to help organizations gain visibility into data to support their efforts to make informed and timely business decisions.

Boy Kester, Organization Strategy and Analytics leader, Deloitte Netherlands Deloitte Consulting BV [email protected]

Boy Kester leads the Dutch Organization Strategy and Analytics practice and is part of the global Workforce Analytics leadership team. He supports his clients by configuring and developing winning organizations that understand where to play and how to win, and has consulted on market entry strategies. He specializes in the identification, quantification, and development of critical organizational capabilities, as well as in performance management. Kester works primarily for high-tech, manufacturing, and life sciences conglomerates.

Contributors Rishi Agarwal, Carl Bennet, Russ Clarke, Ben Fish, Bart Moen, Karen O’Leonard, Van Zorbas

Josh Bersin, principal and founder, Bersin by Deloitte Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Josh Bersin founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and is a popular blogger. He has spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

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Endnotes

1. Josh Bersin, Karen O’Leonard, and Wendy Wang-Audia, High-impact talent analytics: Building a world-class HR measurement and analytics function, Bersin by Deloitte, October 2013, www.bersin.com/library.

2. Ibid.

3. Ibid.

4. Ibid.

5. Josh Bersin, “The datafication of human resources,” Forbes, July 19, 2013, http://www. forbes.com/sites/joshbersin/2013/07/19/ the-datafication-of-human-resources/, accessed January 23, 2014.

6. Josh Bersin, Karen O’Leonard, and Wendy Wang-Audia, High-impact talent analytics.

7. Michael Lewis, Moneyball: The Art of Winning an Unfair Game, (New York: W.W. Norton & Company, 2004).

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Race to the cloud Integrate talent, HR, and business technologies

THE HR technology marketplace is one of the fastest-growing areas of business. The market for integrated talent management sys- tems will reach nearly $5 billion in 2014, and the market for human resources management systems (HRMS) is now over $12 billion.1

Why the dynamic growth? Today, perhaps for the first time in nearly

20 years, cloud computing has brought ven- dors together around a common set of tech- nologies, making solutions more integrated, easier to use, and easier to deploy than ever. Organizations can select and implement a wide range of HRMS and talent management tools in record time, eliminating the need to build an enormous IT team to install, configure, and customize software.

Interestingly, however, given the size of the HR technology market, less than half of our global survey respondents said that they were in the process of updating their HR and talent systems, and over 56 percent of respondents reported they have no definitive plans or no plans in this area (figure 1).

Companies that update their HR and talent systems are using technology to change the organization, rather than making technology

the change in itself. Research suggests there are four key factors that determine success—or failure—for companies moving to cloud-based HR technology platforms: integration, ease of use, industrial strength, and implementation and support.2

Shifting from legacy silos to a single integrated system

The average large company has seven HR systems of record.3 These systems typically do not communicate well, if at all—a problem that has been frustrating HR and business leaders for years.

A 2012 global survey found that two-thirds of companies are willing to sacrifice technical features for a single-vendor or highly inte- grated solution.4 Today, implementing inte- grated HR systems is increasingly within reach.

Most of the major ERP providers (Oracle, SAP, Workday, ADP, Infor, and NetSuite) are building highly integrated end-to-end HR, payroll, and talent management platforms. In 2014, these technology companies will likely focus heavily on incorporating analyt- ics platforms, mobile interfaces, and better recruiting systems.

• Companies are rapidly moving away from legacy systems to implement a new breed of highly integrated, cloud-based talent and HR systems.

• Two-thirds of our global survey respondents say that HR technologies are “urgent” or “important,” yet 56 percent report that their companies are either not considering updating their systems or have no definitive plans to do so.

• Companies that adopt cloud-based talent solutions ahead of their peers may gain an advantage in driving employee satisfaction, engagement, capability development, and performance—and generating data for the emerging wave of talent analytics.

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Companies across the world recognize the importance of implementing these kinds of systems, but almost all are unprepared to do so. With the exception of companies in just a few countries—for example, Switzerland—most are far behind in the race to replace legacy HR technologies with integrated cloud-based solutions (figure 2).

Mobility drives ease of use and impact

The ultimate suc- cess of HR software is directly dependent on its adoption by users. Embracing mobile access is an essential feature of any easy-to-use technology plat- form. Organizations tell us that upwards of 40 percent of job applications now come via mobile devices.5 Employees want mobile access for time and expense reporting, employee directory, knowledge sharing, and other HR applications.

Unfortunately, many employers are cur- rently unable to provide such tools. A solid

majority (60 percent) of global survey respon- dents acknowledge that their organizations have not implemented HR technology that is “up to date, easy to use, and mobile-accessible” (figure 3).

HR applications benefit by having a mobile strategy, both to promote ease of use and increase business impact. Today’s HR software is not only a system of record; it is a “system of engage- ment.”6 Employees and managers use these systems for everyday

support, including collaboration, learning, goal setting, and expertise sharing. When companies roll these systems out, they are creating a new way of working for most of the organization.

Providing industrial-strength implementation and support

HR technology is complex and offers thou- sands of features and applications.

Graphic: Deloitte University Press | DUPress.com

Yes, complete

In process

Planning it in the next two years

Considering, but no definitive plans

Not considering 28%

28%

14%

22%

8%

474

485

232

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140

Number of respondents

Figure 1: Limited investment in HR and talent systems

“What are your plans to replace current HR technology with new integrated cloud-based systems?”

Today’s HR software is not only a system of record; it is a “system

of engagement.”

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While the cloud has made system installa- tion easier, companies still need a support team behind them. Vendors, for example, can now upgrade systems automatically every three to six months, rather than waiting for corporate IT departments to plan updates. Companies need a process to manage this change, along with processes for data quality and error

handling. Moreover, it is increasingly impor- tant to avoid costly customization.

Data-driven decision making HR systems now have “embedded analyt-

ics”—dashboards that instantly show rankings, ratings, and graphical views of people-related data in two-dimensional form. Therefore, an

The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

Graphic: Deloitte University Press | DUPress.com

Figure 2. Readiness vs. urgency: Who is leading, who is lagging?

10

20

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Spain

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Netherlands

China

United States

Poland

Switzerland

India

Canada

Germany

Japan

Luxembourg

Australia

Belgium

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Chile

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Belgium

Luxembourg

United States

Netherlands

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Capability gap grid

HR technology

Capability Gap Index (readiness – urgency)

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% of total number of responses

Number of respondents

583

Graphic: Deloitte University Press | DUPress.com

HR executives’ assessment of HR technology capability ExcellentAdequate Weak

Implementing HR technology that is up to date, easy to use, and

mobile-accessible 9%31%60%

Figure 3. HR technology deployment not keeping up

important step in any new systems project is to define data standards and establish a data dictionary.7 When these standards are estab- lished early, the results can be groundbreaking, providing companies with data to inform and drive decision making.

In addition to considering data issues during system implementation, companies should also train HR business partners and

line managers to use the new data made avail- able to them. Companies should build simpler dashboards and graphical tools that make data easy to use and actionable. Line managers, for example, do not need to be trained analysts or statisticians, but they need to understand how to access data that can help them make better business decisions.

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LESSONS FROM THE FRONT LINES

Using the cloud to simplify data management

Seeking to replace redundant manual processes and manage its global workforce more efficiently, cosmetics and beauty products leader Elizabeth Arden decided to move its HR technology to the cloud. In 2011, the company selected long-time partner Oracle to deploy the Oracle Fusion HCM cloud-based solution.

The rollout was planned in phases. Since the company’s non-US businesses were expected to grow faster than US operations and had significantly fewer capabilities to manage their workforce, Elizabeth Arden planned a phased deployment. Phase 1 of the program focused on its largest and most complex non-US markets—the United Kingdom and Switzerland. Phase 2 continued the program’s global rollout to the remaining European and Asian countries. Phase 3 will focus on the United States.

The scope of the project was quite broad. It included implementing a global set of “good practice” HR processes and creating a single global source for employee data. Workforce reporting and analytics tools were also built into the system.

The solution streamlines core human capital and talent management functions such as performance, compensation, and employee objectives and goals. HR can now easily extract information and upload it to existing payroll systems, while an automated annual compensation process allows for more consistent and equitable compensation practices, at both the global and the local level. Employees can now enter and access their personal information easily, and managers enjoy faster, more consistent data management processes.8

Users describe the new system, MyHRDoor, as “employee-friendly” and “ready to use” while also providing more robust reporting and analytics capabilities for management. The end result is less paperwork, much simpler business processes, and more reporting at the user’s fingertips. As a result of this move to the cloud, Elizabeth Arden has significantly improved its workforce reporting and analytics capabilities, enabling the company to dramatically raise its ability to manage a variety of HR responsibilities critical for today’s global businesses—from increasing global mobility to more effective performance management and succession planning.

Equally important, the solution can constantly evolve to meet the company’s changing needs. New Oracle upgrades can be uploaded easily every few months, delivering greater functionality with every new release. The process of applying upgrades to cloud solutions is significantly less time-consuming than for traditional ERP technology, and is a critical differentiator for cloud solutions.

For Elizabeth Arden, the ease of use, greater functionality, and sharply heightened analytics capability mean that its cloud-based solution reaches beyond technology and process improvement to serve as a catalyst for broader organizational and cultural change.

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Where companies can start

IF cloud-based talent solutions are so power-ful, what is holding some companies back from adopting them? Mainly, it’s coming to the realization that cloud solutions are now mature enough to make a real difference—and mustering the activation energy to get started. Potential starting points include:

• Be prepared to sprint, but start with a plan: Take advantage of the shorter time frames needed to implement cloud- based HR and talent technologies. Develop a game plan in which process improvement and data and analytics are priorities that guide the selection and implementation process.

• Align with critical and emerging busi- ness goals and metrics: Ensure that HR has a strong understanding of the organi- zation’s emerging and core business issues and key metrics and performance indica- tors to determine what HR-related data will be most useful in aligning and driving business performance.

• Assign a joint HR/business/IT leader- ship team: Create a team to promote active cooperation and interaction among HR specialists, as well as between business and HR, to ensure effective integration strate- gies, security, mobile access standards, and vendor selection.

• Refresh the HR service delivery model: Use the opportunity provided by the imple- mentation of new technology to rethink how HR serves users, how it will support self-service technology, and how local busi- ness partners will leverage the system.

• Promote broad adoption: Bring together all stakeholders early to encourage wide- spread adoption of the system once it is rolled out. Make the system easy to use for both HR managers and employees.

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BOTTOM LINE The race to the cloud presents an opportunity for HR transformation. A new cloud-based platform allows companies to consolidate legacy systems and dramatically improve decision making. These systems also help redefine the role of HR, set up a more scalable service delivery model, and improve the effectiveness of HR business partners. Today’s integrated HR platforms are not just systems of record, but “systems of engagement.” When adopted widely, these platforms enable dramatic improvements in productivity, capability development, collaboration, and data-driven decision making.

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Authors

Andrew Hill Deloitte Touche Tohmatsu [email protected]

Andrew Hill has been with Deloitte for 15 years and currently leads the HR Transformation team in Australia. Hill consults to many of Australia’s leading organizations on projects that include HR strategy, HR service delivery strategy, business case preparation, shared services, service centers, HR technology, HR intranet design, HR outsourcing, and retained HR organization design. Hill is currently leading several initiatives planning cloud-based HR services and productivity improvement.

John Malikowski, global Workday leader Deloitte Consulting LLP [email protected]

John Malikowski has more than 20 years of experience in HR consulting. He focuses on global HR strategy and transformation, defining and developing global HR service delivery and processes, HR transformation, and global HRMS Implementations. He has a proven track record of success with large-scale HR and IT consulting across the manufacturing, retail, transportation, insurance, life sciences, financial services, entertainment, and public sector industries.

Erica Volini, national service line leader, HR Transformation Deloitte Consulting LLP [email protected]

As the US HR Transformation practice leader, Erica Volini works with organizations to determine how best to deliver HR services that enable global growth and drive enhanced profitability. Volini has led global HR Transformation projects involving Workday, SAP, SuccessFactors, PeopleSoft, and Oracle. She also serves on Deloitte’s board advisory council and is the leader for the Service Delivery Transformation practice, which focuses on transformation across HR, finance, IT, and procurement.

Contributors Jeff Altman, Michael Stephan

Brett Walsh, global Human Capital leader Deloitte Touche Tohmatsu Limited [email protected]

Brett Walsh consults at a senior level on HR strategies, merger integration, organization design, and major transformation programs, including the provision of back-office shared services and outsourcing, with particular expertise in HR and change management. He has an MBA from Warwick University and is a fellow of the Institute of Business Consultants. His international consulting experience includes working with clients in the United States, the Netherlands, Germany, Italy, Switzerland, and France.

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Endnotes

1. Katherine Jones, Wendy Wang-Audia, and David Mallon, Talent management systems 2013: Market analysis, trends, and solution provider profiles, Bersin & As- sociates, November 2012, www.bersin. com/library or www.bersin.com/tms.

2. This information is based on our cur- rent research on the topic of HCM implementation, the report for which is due to be published in April 2014.

3. Jones, Wang-Audia, and Mallon, Tal- ent management systems 2013.

4. Ibid.

5. Katherine Jones, Buyer’s guide to talent acquisition management and onboard- ing solutions 2013, Bersin by Deloitte, July 2013, www.bersin.com/library.

6. Josh Bersin, “The move from systems of record to systems of engagement,” Forbes, August 16, 2012, http://www.forbes.com/ sites/joshbersin/2012/08/16/the-move- from-systems-of-record-to-systems-of- engagement/, accessed on January 27, 2014.

7. A “data dictionary” (or “metadata repository”) is the information about the data (such as its meaning, relationships to other data, origin, usage, and format) contained in a data model or database. A data dictionary can be consulted to understand where a data item fits in the structure, what values it may contain, and what the data item means in real-world terms.

8. Deloitte, Implementing Oracle Fusion at Elizabeth Arden, April 2013, http://www. deloitte.com/view/en_GB/uk/services/consult ing/6f90e2b9e699b310VgnVCM2000003356f 70aRCRD.htm, accessed on January 27, 2014.

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The global and local HR function Balance scale and agility

GLOBAL businesses should have a global HR function. At the same time, in order to compete successfully in diverse markets, companies should recruit, train, and manage people locally—reflecting local culture, local labor markets, and the needs of diverse local business units.

Creating global standards, platforms, and service centers addresses only part of the challenge. Leading companies are developing HR operating models that are flexible enough to allow for local implementation and agile enough to adapt to local markets and business needs. The ultimate goal: to combine scale and agility to optimize talent management in every market where the company does business.

The global side of the equation For many organizations, one of the key

drivers of a globally integrated HR strategy is the need for talent mobility within the company. Leading companies often move talent from region to region to address key talent gaps.

Consider a business unit in California with a strong need for engineering skills. The company may have a team in Moscow with precisely the right skills that has just finished a similar project. Unless the company’s talent practices are globally integrated, this match between business need and existing skills may never take place.

Companies operating on a global basis often offer high-potential employees global developmental assignments as one of their “tours of duty.” They also face the need to move specialists to global assignments rap- idly. Globally integrated HR is critical to this process, but many companies do not have the systems in place to accomplish these increas- ingly common HR responsibilities.

In fact, when HR readiness was compared among more than 20 talent practices, the implementation of global mobility and career programs was among the lowest rated—more than 40 percent lower than the average for all other HR practices. More than two out of three executives (70 percent) rate their

• Business and talent strategies should be global in scale and local in implementation. Effective programs recruit, train, and develop people locally.

• Global HR and talent management is the second most urgent and important trend for large companies around the world (those with 10,000 or more employees), according to our global survey.

• Companies face the challenge of developing an integrated global HR and talent operating model that allows for customizable local implementation, enabling them to capitalize on rapid business growth in emerging economies, tap into local skills, and optimize local talent strategies.

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company’s ability to deliver on this need as “weak” (figure 1).

Adapting global HR to local talent marketplaces

While businesses today operate in a per- vasively global environment when it comes to customers, talent, and supply chains, each local labor market has vastly different dynam- ics. To balance strong global HR strategies and platforms, companies should build flexibility and agility into HR so it can be customized for local markets.

The talent markets in Asia, for example, are far different from those in Western Europe and North America. Critical skills are in short sup- ply; top candidates change jobs every nine to twelve months; salaries are increasing nearly 10 percent annually. To adapt to these conditions, talent strategies should focus on recruiting, rapid talent mobility, onboarding, and acceler- ated leadership development.

Of course, these variances are not limited to Asia. Localized challenges drive demand for local talent solutions in every region where a company does business. Labor regulations, compensation expectations, workplace cul- ture, and many other factors vary significantly among regions. While global consistency and

standards drive efficiency and scale, local flex- ibility powers growth and employee engage- ment. To achieve both, companies should move toward a new HR operating model.

When asked how well their companies are adapting HR and talent programs to local needs, executives were roughly split between “weak” and “adequate,” while less than 10 per- cent rated themselves as “excellent” (figure 1).

Moving from globally rationalized to globally optimized

For the past decade, many companies have been implementing a shared services model for HR to reduce global costs and improve service delivery. In most large companies, this “ratio- nalized” model delivers tremendous benefits. It saves money, increases service to managers and employees, and provides global scale.

But for companies trying to recruit and optimize their teams in disparate markets, this shared services model is neither robust enough nor flexible enough to address the widely dif- fering challenges that come from operating in dozens of individual markets.

How can companies aggressively recruit and build leaders in fast-growing Asian markets? How should organizations reskill

% of total number of responses

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Figure 1. Building a new global HR operating model

Graphic: Deloitte University Press | DUPress.com

HR executives’ assessment of global HR capability levels ExcellentAdequate Weak

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and retain employees in Western Europe or the United States? What is the most effective strategy for developing talent in India? These and many other issues demand a balance of global standards that can be customized to fit local needs.

Addressing issues like these requires a shift from global rationalization to global

optimization. Yet our survey found that many companies are struggling to adapt, particularly organizations in Brazil, Japan, and the United Kingdom (figure 2).

To make progress in this area, companies should focus on implementing an integrated HR operating model that centralizes critical

Graphic: Deloitte University Press | DUPress.com

Figure 2. Readiness vs. urgency: Who is leading, who is lagging?

25

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The Human Capital Capability Gap Index The Deloitte Human Capital Capability Gap Index is a research-based index that shows HR’s relative capability gap in addressing a given talent or HR-related problem. It is computed by taking an organization’s self-rated “readiness” and subtracting its “urgency,” normalized to a 0–100 scale. For example, if an organization feels that an issue is 100 percent urgent and it also rates itself 100 percent capable and ready to address the issue, the capability gap would be zero. These gaps, which are almost always negative, can be compared against each other.

The capability gap grid By plotting the gaps on a grid (with readiness on the vertical and urgency on the horizontal), we can see how capability gaps vary among different countries and industries.

• Capability gaps at the lower right part of the grid are those of high urgency and low readiness (areas that warrant major increases in investment).

• Capability gaps at the upper right part of the grid are highly urgent, but companies feel more able to perform in these areas (they warrant investment but are lower priority than those at the bottom right).

• Capability gaps on the left side of the grid are areas of lesser importance, and those lower in the grid are areas of less readiness.

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LESSONS FROM THE FRONT LINES

Driving business change through HR integration

In 2010, a large financial services company began a business transformation that included significant investments to modernize the firm’s service infrastructure. This included the modernization of human resources policies, programs, and infrastructure to support new compensation and talent management programs, the development of global centers of excellence, regional shared services, and the implementation of global HR platforms—all aligned to support a globally integrated operating model with the flexibility to adapt to local needs.

This task was made more complex by the organization’s history of acquisitions and decentralized operations. As a result, HR had operations in over 90 counties and more than 200 HR and payroll systems. This decentralized operating structure made it difficult to meet the growing need for global HR data and processes for managing talent, performance, and compensation. The result was duplication of effort, high costs, HR service quality problems, and inadequate data for both HR and business-unit managers.

To lead the transformation of HR, the organization hired leaders and staff from the outside with experience doing similar projects for other large global companies. The program was ambitious. During the initial phase, an intense, thorough review of all HR systems confirmed the presence of a wide variety of unintegrated technological solutions and an unusually high-touch, local HR service delivery model—even by the standards of its industry. Based on this review, the company developed a design for a standard global HR operating platform supported by regional shared service centers.

A senior team of project managers focused on both global and local priorities—including designing new HR processes at both levels, building regional HR shared services centers, implementing global HR systems, and redesigning the operating model with a global emphasis. Larger countries participate fully in the new “targeted operating model,” which includes shared services. Smaller countries use an “express” version supported by a more locally delivered Workday solution.

With this global model in place, the initial phase of implementation focused on compliance, access to global HR data, platform rationalization, and associated cost reduction.

The company decided to launch its new model in Asia because its US operations already had shared services in place and a relatively standard, though old, operating platform. A new shared services center in Asia was followed by deployments in other regions, including a region comprising the Middle East, Africa, and Eastern Europe, and then a further rollout in Latin America.

In tandem with its global emphasis, the model also accounted for the critical importance of the local layer. The initial design phase included workshops on regional and, in several cases, country-specific requirements. Proposals for regional or local adaptations were referred back to the global HR organization for a thorough vetting process.

Simultaneously, a second aspect of the project’s global-local dynamic emerged as a key driver of success. In response to the perception that the effort was a US-driven global program, the project team shifted considerable responsibility and authority to regional HR transformation teams, while at the same time setting ground rules to retain the integrity of the new operating model. Making this change improved decision-making speed while also improving the perception and reality that regional and local HR teams were involved in the transformation.

The results have been impressive. To date, the transformation has consolidated over 70 legacy systems, reduced HR administrative work by 30 percent, improved compliance, and allowed HR services to more fully support the global alignment of the company’s businesses.

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core areas and empowers local HR teams to customize programs for local needs.

A high-impact global HR operating model

Our global survey shows that 81 percent of large organizations (10,000 employees or more) report that implementing an HR global operating model is “urgent” or “impor- tant” today. This urgent need aligns with our research into ways to create a high-impact HR operating model that combines global

integration with local optimization. Key fea- tures of this model include:

• Implementing a global technology plat- form that provides common HR standards, frameworks, and tools

• Empowering local teams to innovate and to customize corporate programs

• Defining HR success not simply in terms of cost-cutting, but by HR’s ability to drive business performance and growth

Where companies can start

A GLOBALLY integrated, locally custom-ized talent and HR strategy demands a combination of centralized, global standards and services coupled with distributed, highly trained experts. Our research suggests a clear set of starting points:

• Leverage global technology: Implement a common global technology platform to support the global HR organization and offer easy-to-use self-service capabilities to managers and employees.

• Rationalize core global services: Establish a core set of services for HR administra- tion and talent communities of expertise. Encourage communities of expertise to learn from local business partners to deter- mine leading practices in the field.

• Encourage country initiatives within global processes: Once global processes, roles, and expectations are created, expand the team to include communities of expertise and let local HR leaders create,

customize, and deliver local programs. They can leverage the corporate infrastructure and standards to optimize talent strate- gies and HR programs in each business and geography, driving impact at the country level.

• Create deep specialists: Reduce the need for HR generalists and move them into the role of HR specialists, focused on recruit- ing, organizational development, employee relations, and compensation. These spe- cialists can be located in or assigned to the business, but they should operate as a “network of expertise,” sharing skills with each other.

• Build HR “skill masters”: Invest in train- ing, certifying, and developing the HR team to ensure that each member knows how to use all tools and data and feels connected to the larger community of leading practices and new ideas in the marketplace. Deep expertise belongs in HR no less than in other functions.

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BOTTOM LINE Global integration and local optimization are twin goals attainable through global technology platforms and proper role and process definition. Global consistency and standards ensure efficiency and scale; local flexibility drives agility, growth, and employee engagement. Both are necessary to develop an HR organization that is globally “fit for purpose.”

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Contributors Lisa Barry, Walt Sokoll, Ardie van Berkel, Jungle Wong

Authors

Henri Vahdat, Human Capital leader, Deloitte Brazil Deloitte Consultores [email protected]

Henri Vahdat leads Deloitte’s Human Capital consulting practice in Brazil. With more than 19 years of experience in the management consulting industry, he advises public and private organizations on innovative ideas for managing their talent and successfully conducting complex business transformation programs. He is also an executive director of IBGC (the Brazilian Institute for Corporate Governance), where he is responsible for strategy, HR, and IT affairs.

Hugo Walkinshaw, executive director Deloitte Consulting Pte Ltd [email protected]

Hugo Walkinshaw leads the Human Capital practice and the manufacturing industry sector in Southeast Asia, and is the Asia Pacific HR Transformation practice leader. He is primarily focused on delivering large-scale HR Transformation programs, working with both captive and outsourced service delivery models. With over 20 years of experience, Walkinshaw has provided assistance to clients in Japan, China, Hong Kong, Taiwan, the Philippines, Indonesia, Malaysia, Thailand, and Singapore, as well as in the United States and Europe.

Michael Stephan, global HR Transformation leader Deloitte Consulting LLP [email protected]

Michael Stephan develops and integrates HR service delivery models across the operations and technology spectrum, with a targeted focus on optimizing the delivery of HR services around the world. His global consulting experience includes HR strategy, HR operating model design and implementation, HR business process outsourcing, global technology deployment, and enterprise transition management.

Brett Walsh, global Human Capital leader Deloitte Touche Tohmatsu Limited [email protected]

Brett Walsh consults at a senior level on HR strategies, merger integration, organiza- tion design, and major transformation programs, including the provision of back- office shared services and outsourcing, with particular expertise in HR and change management. He has an MBA from Warwick University and is a fellow of the Institute of Business Consultants. His international consulting experience includes working with clients in the United States, the Netherlands, Germany, Italy, Switzerland, and France.

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Endnotes

1. This information is based on current research by Bersin by Deloitte on the topic of high- impact HR, the series of reports for which are due to be published throughout 2014.

2. Lisa Barry, Jungle Wong, and Jeff Schwartz, Fu- elling the Asian growth engine: Talent strategies, challenges, and trends, Deloitte and the Human Capital Leadership Institute, December 2012, http://www2.deloitte.com/global/en/pages/ human-capital/articles/fuelling-asian-growth- engine.html, accessed on January 27, 2014.

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Editors Jeff Schwartz Global Human Capital leader, Marketing, Eminence, and Brand Deloitte Consulting India Pvt Ltd [email protected]

Jeff Schwartz is the practice leader for the Human Capital practice in US India, based in New Delhi, and the global leader for Human Capital Marketing, Eminence, and Brand. A senior advisor to global companies, his recent research focuses on talent in global and emerging markets. He is a frequent speaker and writer on issues at the nexus of talent, human resources, and global business challenges.

Bill Pelster Leader, Integrated Talent Management Deloitte Consulting LLP [email protected]

Bill Pelster is a Deloitte Consulting LLP principal with over 20 years of industry and consulting experience. In his current role, he is responsible for leading the Integrated Talent Management practice, which focuses on issues and trends in the workplace. In his previous role as Deloitte’s chief learning officer, Pelster was responsible for the total development experience of Deloitte professionals, including learning, leadership, high potentials, and career/life fit. Additionally, he was one of the key architects of Deloitte University.

Josh Bersin Principal and founder, Bersin by Deloitte Bersin by Deloitte, Deloitte Consulting LLP [email protected]

Josh Bersin founded Bersin & Associates in 2001 to provide research and advisory services focused on corporate learning. He is a frequent speaker at industry events and is a popular blogger. He has spent 25 years in product development, product management, marketing, and sales of e-learning and other enterprise technologies. His education includes a BS in engineering from Cornell, an MS in engineering from Stanford, and an MBA from the Haas School of Business at the University of California, Berkeley.

Editors

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Acknowledgements

Global Human Capital Trends 2014 partner advisory panel Lisa Barry, Cathy Benko, David Foley, John Hagel, Daniel Helfrich, Tom Hodson, Simon Holland, Michael Stephan, Heather Stockton, Ardie van Berkel, Brett Walsh, Jungle Wong

Research team Research lead: Manu Birendra Singh Rawat

Survey deployment lead: Shrawini Vijay

Survey analysis lead: Hemdeep Singh

Researchers: Jaydev Adhikari, Megha Agrawal, Razina Bakhshi, Richa Bigghe, Anima Dabas, Jay Dipta, Lahar Garg, Kaustav Ghosh, Ankita Jain, Mankiran Kaur, Ekta Khandelwal, Saurabh Kumar, Annu Pandey, Zarmina Parvez, Vaishnavi Rangarajan, Karuna Sadh, Tapas Tiwari

Special thanks

• Julie May for driving the efforts of the editorial team, over 50 authors and contributors, and dozens of country sponsors who championed the survey outreach. Your vision for the report, boundless energy, and relentless attention to detail helped us attain a new level of global thought leadership.

• Jen Stempel, Gregory Vert, and Elizabeth Lisowski for leading the PMO from concept to publication, and especially for spearheading the development of the new Human Capital Trends Dashboard. Your drive to push the boundaries has helped us create a fabulous new tool with which to explore this rich dataset.

• Junko Kaji, Matthew Lennert, Jon Warshawsky, Emily Koteff-Moreano, and the incredible Deloitte University Press team for their editorial rigor, sharpness, and design skills. You pushed us to refine our thinking, sweat the details, and produce an even greater report.

• Becky Eckerman for leading our marketing program from day one and coordinating countless teams to help us develop an integrated global multimedia campaign.

Finally, our thanks to Brett Walsh, the global leader of our Human Capital practice, and Jason Geller, the United States practice leader, for their sponsorship, leadership, support, and counsel during every step in this journey, which began almost a year ago.

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Global Human Capital leaders

Brett Walsh Global Human Capital leader Deloitte Touche Tohmatsu Limited [email protected]

Lisa Barry Global Talent, Performance, and Rewards leader Deloitte Touche Tohmatsu [email protected]

David Foley Global Actuarial & Advanced Analytics leader Deloitte Consulting LLP [email protected]

Simon Holland Global Strategic Change & Organization Transformation leader Deloitte MCS Limited [email protected]

Nichola Holt Global Employment Services leader Deloitte Tax LLP [email protected]

Jeff Schwartz Global Human Capital leader, Marketing, Eminence, and Brand Deloitte Consulting India Pvt Ltd [email protected]

Michael Stephan Global HR Transformation leader Deloitte Consulting LLP [email protected]

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Americas & Chile Jaime Valenzuela Deloitte Audit y Consult. [email protected]

United States Jason Geller Deloitte Consulting LLP [email protected]

Canada Heather Stockton Deloitte Canada [email protected]

Mexico Jorge Castilla Deloitte Consulting Mexico [email protected]

Uruguay, LATCO Veronica Melian Deloitte SC [email protected]

Argentina Claudio Fiorillo Deloitte & Co. S.A. [email protected]

Brazil Henri Vahdat Deloitte Consultores [email protected]

Colombia Jesus Salcedo Deloitte Ases. y Consulto [email protected]

Costa Rica Federico Chavarría Deloitte & Touche S.A. [email protected]

Ecuador Roberto Estrada Andeanecuador Consultores [email protected]

Panama Domingo Latorraca Deloitte Consultores [email protected]

Peru Johnnie Jose Tirado Deloitte & Touche SRL [email protected]

Venezuela Maira Freites Lara Marambio & Asociados [email protected]

Human Capital country leaders Americas

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Asia Pacific & China Jungle Wong Deloitte Consulting (Shanghai) Co. Ltd, Beijing Branch [email protected]

Australia David Brown Deloitte Touche Tohmatsu [email protected]

India P. Thiruvengadam Deloitte India [email protected]

Japan Kenji Hamada Deloitte Tohmatsu Consulting Co., Ltd [email protected]

Korea Kihoon (Alex) Jo Deloitte Consulting [email protected]

Won Seok Hur Deloitte Consulting [email protected]

New Zealand Hamish Wilson Deloitte [email protected]

Southeast Asia Hugo Walkinshaw Deloitte Consulting Pte Ltd [email protected]

Asia Pacific

EMEA & the Netherlands Ardie Van Berkel Deloitte Consulting BV [email protected]

United Kingdom Feargus Mitchell DTRAB Ltd [email protected]

David Parry Deloitte MCS Limited [email protected]

Austria Christian Havranek Deloitte Austria [email protected]

Belgium Yves Van Durme Deloitte Consulting [email protected]

Central Europe Evzen Kordenko Deloitte Advisory s.r.o. [email protected]

CIS Christopher Armitage CJSC Deloitte & Touche CIS [email protected]

Cyprus George Pantelides Deloitte Ltd [email protected]

Europe, Middle East, and Africa

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Denmark Kim Domdal Deloitte Denmark [email protected]

Finland Anne Grönberg Deloitte Oy [email protected]

France David Yana Deloitte Conseil [email protected]

Philippe Burger Deloitte Conseil [email protected]

Germany Udo Bohdal-Spiegelhoff Deloitte Germany [email protected]

Ireland Cormac Hughes Deloitte & Touche [email protected]

Italy Lorenzo Manganini Deloitte Consulting SRL [email protected]

Kenya Kimani Njoroge Deloitte Consulting Ltd [email protected]

Luxembourg Filip Gilbert Deloitte Tax & Consulting [email protected]

Middle East Ghassan Turqieh Deloitte & Touche (M.E.) [email protected]

Norway Bjorn Helge Gunderson Deloitte AS [email protected]

Poland Magdalenda Jonczak Deloitte Business Consulting S.A. [email protected]

Portugal Joao Vaz Deloitte Consultores, S.A. [email protected]

South Africa Werner Nieuwoudt Deloitte Consulting Pty [email protected]

Spain Enrique de la Villa Deloitte Advisory, S.L. [email protected]

Switzerland Sarah Kane Deloitte Consulting Switzerland [email protected]

Turkey Ayse Epikman Deloitte Turkey [email protected]

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