What Can We Learn From 2012? An End of Year Review.

Although 2012 saw a recovery for many countries around the world, it was only a modest recovery, with no real certainty for the next twelve months. What follows is a review of some of the stories from 2012.

Competition in mobile technology intensified. Apple maintained its worldwide dominance. But the use of Google's Android software on competing smartphones and tablets spread faster than Apple's market share. Forty-four percent of U.S. adults own smartphones, up from about 35 percent a year ago. Tablet ownership doubled in 2012. Taking on Apple's iPad, Microsoft unleashed its Surface tablet and began selling Windows 8, a tablet-friendly operating system. Amazon and Barnes & Noble rushed out high-definition-screen tablets. Each priced its premium model less than the entry-level iPad. Apple struck back with the iPad Mini. Struggling to compete, once-formidable Nokia and BlackBerry-maker Research In Motion floundered.

NASA's R2 Robonaut became the first helper droid to be used on board the International Space Station for science experiments and general repairs and maintenance; and China sends its first female astronaut in to space .

In the most overhyped and overpriced IPO in history, Facebook goes public and almost immediately wipes out $40 billion of investor capital. Did it kill the IPO market? Burst the dot-com 2.0 bubble? Shatter investor confidence? Undermine Morgan Stanley’s stellar reputation? Destroy Mark Zuckerberg’s credibility? Damage the Facebook brand? Nope. Apparently, nobody can live without Facebook. 

A gathering of sustainability leaders hosted by Sir Richard Branson and Jamie Oliver was warned that big businesses will be swept aside by emerging social enterprises unless they start changing their business models and contribute more to society. Where Chris West, the director of the Shell Foundation, said it was vital that the sustainability efforts of companies were directed at supporting change in the developing world. He criticised those businesses that were still hooked on charitable donations rather than leveraging their core skills to tackle poverty. Branson and Oliver warned that progress towards more sustainable businesses was being hampered by a lack of political leadership.

A historic event took place just before Easter, when the first ever United Nations conference on happiness took place with more than 600 delegates including leaders and representatives from nations around the world (it’s true). This was the first major step forward in a process which began last summer, when the resolution ‘Happiness: towards a holistic approach to development’ was unanimously adopted by the UN General Assembly. Taking the lead was Bhutan, the tiny Himalayan kingdom which famously measures its success in terms of "Gross National Happiness" (GNH).

Scientists discovered the smallest vertebrate so far, a frog living in the rainforests of New Guinea.  The Paedophryne amanuensis measures in at 7.7 millimeters long, the size of a housefly.

3-D printing, where in the United States, an artificial liver made of sugar was printed in 3D for blood vessels to grow into.  An artificial jaw was also printed in 3D and successfully transplanted. 3D printing will continue to grow in usage and popularity in the coming year.  Home 3D printers will soon drop below the $2,000 mark.  Brian Barrett, the managing editor of the blog Gizmodo, explains, “Instead of printing ink onto paper, it takes these little spools of plastic, [usually], and you can feed it instructions and it will use that to form basically any shape that you want, whether it's a utensil or a replica of the White House," he said. "You can go on the Internet, find a design, download it, send it to your 3D printer, and in the course of either several minutes or several hours, depending on how large your order is, it will construct this thing. What's fascinating about it is the limits are only as far as the imagination goes."

After the 2012 London Olympic games Michael Phelps becomes the greatest most decorated athlete of all time; with a total of 71 medals in major international competition. Winning 57 Gold’s, 11 Silvers and 3 Bronze spanning the Olympics, The Worlds and the Pan Pacific Championships. And also in 2012 Mo Farah won the 10,000m and 5,000m Gold at the London 2012 Olympics - the first Brit to win Gold in these events.

Sadly and surprisingly Britain had one of the highest mortality rates in Europe for under-14’s because gaps in provision are denying children access to care. A report published by the NHS Confederation, recommends that the Government tackles the lack of policy co-ordination between departments, particularly health and education and other national bodies. Transition points, such as moving from child to adult services or primary to secondary care can result in service users ‘dropping off the radar’ of support agencies.

Mark Bridge of The Times highlighted the worst ‘scrooges’ of 2012, where Barclays Bank topped the Times list. The banking giant made headlines in June when it was fined £59.5 million for its part in the Libor-fixing affair, but was also the most complained about organisation to the Financial Services Ombudsman for the first six months of 2012.

Second on the Times worst business awards for 2012 was Vodafone,  where they report how this service provider actually makes profits from phone thefts; but by far its worst atrocity of the year related to the tragic death of Julian Litchfield’s son, who was killed in a walking accident in the summer, yet his phone was never found. When Julian phoned Vodafone to explain the circumstances he was told by several members of staff that he would have to pay the rest of his son’s mobile contract until it expired in January 2013 (Bridge, M; The Times, 29.12.12, p.55 & p.58).

The worst leader award however has to go to Mark Taylor, Dean of Warwick Business School, who has to be the worst leader I’ve ever met in the last 30 years – imho his colonial, autocratic style has no place in a business world that not only embraces, but cries out for, transformational leadership.

Director James Cameron accomplished the first solo dive down to the Mariana Trench, the deepest point on Earth, 11 kilometers below the Pacific Ocean. On the other end of the spectrum, Felix Baumgartner accomplished the highest skydive ever, by jumping from literally the edge of space, 24-miles high.  Though he did not break the free fall record at 4 minutes and 20 seconds, he was the first to break the sound barrier without a jet or space shuttle.  Oh, and by the way, he landed on his feet.

We have a lot to do in the next twelve months and need strong professional leaders to set the right course. We mustn’t forget that it wasn’t that long ago that people were convinced the world was flat and we have to be careful that we don’t fall into the same trap with respect to job creation and business growth. There seems to be a very casual approach by many first world countries to the plight of their own citizens, as salaries and wages are frozen, yet basic costs increase at rates above the consumer price index and this needs to change in 2013.

Finally let’s not forget those who left us in 2012 for a better place, names that included:

22^nd December: Job W. Price, 42, American naval officer, commanding officer of SEAL Team 4, suspected suicide.

14^th December: The twenty children and six teachers who were killed at Sandy Hook School in Newtown, Connecticut.

26^th November: Joseph Murray, 93, American doctor and Nobel laureate (1990), who performed the first kidney transplantation, from hemorrhagic stroke

22^nd November: Bryce Courtenay, 79, South African-born Australian novelist (The Power of One), from stomach cancer.

14^th November: Koro Kepa, c. 93, New Zealand soldier, last surviving Ngāi Tūhoe member of the 28th Maori Battalion.

18^th October: Sylvia Kristel, 60, Dutch actress (Emmanuelle), model, and singer, from throat and liver cancer.

14^th October: Marc Swayze, 99, American comic book artist (Captain Marvel).

9^th October: Paddy Roy Bates, 91, British pirate radio broadcaster, founder of the Principality of Sealand, from Alzheimer's disease.

27^th September: Herbert Lom, 95, Czech-born British actor (The Pink Panther, Spartacus, Gambit, The Ladykillers).

22nd September: Irving Adler, 99, American author, mathematician, and scientist.

25^th August: Neil Armstrong, 82, American astronaut, first person to walk on the Moon, from complications from coronary artery bypass surgery.

6^th August: Marvin Hamlisch, 68, American composer (The Way We Were, A Chorus Line) and arranger (The Sting), EGOT winner.

23^rd July: Sally Ride, 61, American physicist and astronaut, first American woman in space, from pancreatic cancer

4^th July: Eric Sykes, 89, British comedy writer (The Goon Show) and actor.

23^rd June: Frank Chee Willeto, 87, American Navajo code talker in World War II, Congressional Silver Medal recipient, Vice President of the Navajo Nation (1998–1999).

7^th June: F. Herbert Bormann, 90, American ecologist, who discovered acid rain.

21^st May: Otis Clark, 109, American evangelist, oldest known survivor of the 1921 Tulsa race riot, and butler (Clark Gable, Charlie Chaplin, Joan Crawford), from natural causes.

2^nd April: Ben Huan, 105, Chinese Buddhist master, honorary president of the Buddhist Association of China.

25^th March: Lex, 12, American Marine service dog, awarded honorary Purple Heart, from cancer.

4^th February: Florence Green, 110, British supercentenarian, last surviving veteran of World War I.

1^st February: Angelo Dundee, 90, American boxing trainer (Muhammad Ali).

14^th January: Arfa Karim, 16, Pakistani student, world's youngest Microsoft Certified Professional (2004–2008), from idiopathic epilepsy seizures.

12^th January: Natalee Holloway, 18 (in 2005), American student, missing since 2005; declared legally dead on this date.

Is It Okay for Executives and Directors to Show Their Emotions?

In my humble opinion the responsibilities of executives and directors extend way beyond their organisations and boardrooms to their communities as well. Where they should use their ‘wisdom’ to support their communities; bridge the gap between academia and business; stand up for issues others can’t fight for and be role models for others, both young and old. We need our executives and directors to show empathy and understanding at work; to be ‘in-tune’ with their employees and their environment - but is it okay for them to show raw emotions as well.

 

I have to confess that I watched an episode of undercover boss the other day and witnessed a CEO actually cry in front of his staff when he realised how dedicated his employees were to his organisation and how so many were suffering financially during the recession. The staff seemed deeply moved by his openness and you could see them resonate with his feelings towards them, seemingly bringing them closer together as human beings.

 

But is there a limitation on events that someone at that level can openly show their raw emotions for? This week I’ve been faced with the newspaper headlines that have touched me so deeply. We had twenty-six innocent children and teachers massacred in a school shooting in Newtown, Connecticut in the US. Part of the article describes how “the children were instructed to cover their eyes as they were led to safety and to a staging area in a nearby fire station, where their waiting parents could collect them. But for some parents it was a wait without end.”

 

It tells how Brendan Murray, aged 9, said he was in the gym with his class when they heard ‘lots of banging’. He said the teachers put the students in a nearby cupboard where they stayed huddled together for about fifteen minutes before police officers told them to leave the building. And there are emerging stories of the selfless sacrifice of the young teacher, Victoria Soto, who hid her children and faced the shooter, telling him the children were elsewhere, sacrificing her own life to save the lives of the children under her care, which even as I write this, brings a lump to my throat and tears to my eyes.

 

Then another story about Mary Bowers, aged 28 who was hit by a lorry driver while cycling. The lorry driver was acquitted of dangerous driving by a jury, even though he admitted to have been speaking on his mobile phone when the incident happened. His punishment was a fine (and not a big fine at that) whereas young Mary is minimally conscious more than a year after the incident and according to her family will require 24-hour care for the rest of her life.

 

And then this week we’ve also had the story of Jacintha Saldanha, a dedicated nurse who was found dead after putting through a prank call from an Australian radio station at the King Edward VII Hospital in London, where the Duchess of Cambridge was being treated. It’s been reported that she left three suicide notes, including one criticising hospital management – though senior management claim they responded with support and understanding, telling her that no blame was attached to her.

 

There are a few common themes for me with these stories, firstly there is never a right time for them to happen, but to happen days before the Christmas and festive holidays must just add to the unimaginable pain that those involved have to carry.

 

Second I have absolutely no connection with any of these events, and don’t know the people involved even remotely – yet I feel so much sadness and pain for them.

 

People look at business owners and executives to set an example, to be role models and to use their knowledge and wisdom to set the standards that will make this world a better place and I just wonder if were doing anything close to enough.

 

In some countries if you don’t have the money, then those with basic mental health issues can’t get the attention they need – and if you add this to a nation with liberal gun laws you are more than likely to ensure things progress to a fatal level for some. Every time there’s a massacre of innocent people, then, just for a moment we all stop and wonder what we could do differently – without actually changing anything.

 

What have we done as ‘leaders’ that makes people think it is okay to speak on a mobile phone while driving in the first place? What have we done to stop encouraging presenters to think it is okay to make prank calls with absolutely no concern about the people being ‘pranked’ as long as it improves the ratings?

 

Is it only about money? It seems to be – yet I would suggest that with the right care and attention to the ‘detail’ all these events and God knows how many others could have been prevented.

 

My thoughts and prayers go out to all those who have suffered this year and pray that the leaders of this world, from all walks of life, business, politics and religion, can stop bickering about the ‘small’ issues and step up and make this world a truly better place.

Have You Implemented CSR Projects in the Recession?

With 2012 coming to an end and the impact of the recession still being felt around the world how committed has your organisation been to Corporate Social Responsibility. Many organisations are now showing steady increases in profits and wealth, so why are so many charities and people around the world suffering.

Jamie Doward mentions in the Observer today that “the UK's flat-lining economy is having a devastating effect on charities, according to research that suggests that two out of five face closure, with many set to disappear as early as next year unless things improve.

A poll commissioned by the Charities Aid Foundation confirms that public spending cutbacks and falling donations are conspiring to devastating effect. The foundation warns that as many as one in six charities believe they may close in the coming year, while nearly half say they are being forced to dip into reserves. One in three says they fear being forced to cut services.” (The Observer, 9^th December 2012)

This is supported by the Charities Commission which is forecasting a 33% reduction in funding by 2014.

What’s even more concerning is that most of the reports about charity closures and the lack of donations seem to put the ‘responsibility’ firmly at the door of the public, rather than corporation’s; where it’s the corporations that have signed up to be socially responsible – though often have very little to show for it, other than flowery words of commitment.

So why is this happening and how does this line-up with the recent upsurge in ‘Corporate Social Responsibility’ and the impact this ‘recent’ business philosophy is supposed to have on core business values. Visit the websites of most organisations these days, regardless of where they are situated around the world and you’re more than likely to find that section that tells you how committed they are to corporate social responsibility and their local community. Few though are specific about what they do and often a quick glance at their annual reports show little sign of corporate social responsibility in practice.

The recession has hit first world countries that seem to be completely at sea in dealing with the amount of people suddenly finding themselves below the poverty line – seemingly trying to brush the extent of the suffering in their countries under the carpet. For example, in 2010 the US Census Bureau identified record levels of 46.2 million people living in poverty in the US of which 5.8 million were in California and this increased to 48.5 million in 2011 – where to give some perspective to the numbers, the total population of the UK is 63 million.

Some may argue that first world countries don’t really understand the concept of poverty when they still have access to running water, electricity, sanitation and health care; which are sadly lacking in their third world counterparts.   

Jamie Doward highlights how “along with the National Council for Voluntary Organisations, Caf has launched a campaign, Back Britain's Charities, that calls on the government, businesses and the public to get behind the nation's charitable organisations. It wants the government to modernise and promote gift aid and payroll giving so that donations go further. It is also calling on businesses to support charities either through donations or practical means.”

As John Low, Caf's chief executive says “charities of all sizes play an essential role in our society, providing social care and education as well as helping some of the most vulnerable people in our communities, we all need to act now to support Britain's charities so they can continue their vital work."

Of course charity isn’t just about poverty, but about supporting vulnerable people who need care and attention, from the old and frail; the disabled; orphaned and homeless children; and all forms of abuse and neglect; to name a few, where the state and private sector need to do a lot, lot more.

Finally this isn’t just Britain’s problem, but a global problem that needs serious attention from those that can make a real difference. Profitable organisations around the globe need to show more commitment to their Corporate Social Responsibility charters – taking their well written value statements off their web pages and bringing them to life in the real world and making a real contribution to the community that supports them.

How Secure is Your Organisations Future?

It was Jim Collins who said “every institution is vulnerable, no matter how great. No matter how much you’ve achieved, no matter how far you’ve gone, no matter how much power you’ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do,” (p.8).

There is a danger that as organisations ‘work’ their way out of the recession, that they may start to relax and take their eye off the ball. It’s not unrealistic as 2012 has been a tough year for many organisations and employees have had to work hard to keep their company’s afloat. It’s at times like these that people at all levels, can relax a bit, feeling the hard work has been done, that the ‘storm’ is over and that the company looks well set for the future.

Jim Collins reminds us, from empirical research that a company can indeed look like the picture of health on the outside yet already be in decline – and that’s what makes the process of decline so terrifying; it can sneak up on you, and then – seemingly all of a sudden – you’re in big trouble.

In tough times it’s very possible, in fact likely, that key benchmarks and drivers will change, where organisations are looking at survival (short-term) compared to the ‘perceived luxury’ of sustainable growth and continuous improvement (long-term). The concept is fine as long as you constantly reassess the variables you are benchmarking yourself against, and make the transition to a longer term view at the right time. If you simply stay in ‘survival’ mode you are much more likely to miss longer term opportunities, which may have already been picked up by your competition, leading to a real false sense of security in your present business environment. This will mean that you are not aware or prepared to compete in the forthcoming market space, which is currently being influenced by competitors and, possibly, new entrants (organisations that diversified in the recession).

Jim Collins believed that if there was one rule, above all others, to use as a warning sign of potential decline, “it would be a declining proportion of the seats filled with the right people. Twenty-four hours a day, 365 days a year, you should be able to answer the following questions: What are the key seats in your organisation? What percentage of those seats can you say with confidence are filled with the right people? What are your plans for increasing that percentage? What are your backup plans in the event that a right person leaves a key seat?” (p.57).

Making sure that your organisation isn’t taking ‘strategic’ shortcuts to stay afloat is vital. This means that your approach to strategic review, development and implementation is pivotal in identifying and optimising future opportunities. Even in a recession opportunities are out there for the taking and you’ll only spot them if you are taking a detailed longer term strategic view – since it’s the depth and integrity of the inputs that truly define the outputs.

Jim Collins believed that “great leaders understood that rebuilding greatness requires a series of intelligent, well executed actions that add up one on top of another. Some decisions are bigger than others, but even the biggest decisions account for only a small fraction of the total outcome that makes a great company. Most ‘overnight success’ stories are about twenty years in the making,” (p.94).

Businesses and markets are evolving all the time, and moving through a global recession is no different. This December some organisations will be patting themselves on the back, acknowledging how well they have done to outrun the effects of the recession. But be wary and don’t lose sight of the longer term view, assessing competitor developments in your market space and reassuring yourself that you are well placed to take the lead in 2013.

For those organisations that are still struggling, Jim Collins warns us to be careful, “when we find ourselves in trouble, when we find ourselves on the cusp of falling, our survival instinct – and our fear – can evoke lurching, reactive behaviour absolutely contrary to survival. The very moment when we need to take calm, deliberate action, we run the risk of doing the exact opposite and bringing about the very outcomes we most fear,” (p.96).

References

Collins, J. (2009). How the Mighty Fall and Why Some Companies Never Give In.  Random House Business Books:London

Do You Hire Talent that Challenges Your Thinking?

What kind of people do you like to have around you? Do you have enough confidence in your ability and knowledge to have people around you that will challenge your thinking, look at things from a different perspective, and help you develop the most comprehensive and effective strategies for the future of your organisation, department or team.

 

Or would you prefer people around you who will do as they are told, just focus on their job and be good, solid followers? Since you know your job, business and industry best - that’s why you’re in the job in the first place.

 

It seems in a tight economy, when you’d think executives and managers would be looking for the best talent to help them challenge their thinking and maximise the sustainable growth of their business, that organisations are in fact preferring to play it safe and are recruiting and developing ‘talent’ that will ‘toe the line’, get on with their job and do as they are told, making them feel better about themselves in these difficult economic times.

 

Let’s face it part of the problem with corporate boards over the last fifty odd years, is that the CEO and Chairperson often don’t want people on the board who will actually challenge their thinking, but people who will look good on their letterhead and who can bring some good business, publicity and/or finance there way, but who otherwise will simply rubber stamp their strategic and executive decisions, without asking too many questions.

 

There’s no doubt that this short sighted, self-preserving way of thinking is one of the main contributors that has stopped boards diversifying and being more demographically representative.

 

When Jim Collins wrote about having the right people on the bus, the wrong people off the bus and the right people in the right seats – he’s left it up to the reader to define their definition of ‘right’ – which appears to be slightly dangerous in today’s business world.

 

If organisations want to optimise their growth, the right people on the bus will be people who besides other things, will challenge the organisations thinking; people who will be innovative and look for ways to improve their performance and that of the organisation. This doesn’t mean they are arrogant or rude people who’ll burst into the CEO’s office, telling them that they’re an idiot and ‘this is the way’ things need to change or be done.

 

Far from it, as these are professional individuals, people who are ‘talented’, which is why you recruited them in the first place and why you should want to hear what they think. In the right organisational environment, with the right culture, they are skilled and confident enough to give their opinion about a subject they know something about, but talented enough to listen to other opinions and agree on the ‘leaders’ preferred way forward after a transparent debate.

 

It was Albert Einstein who said, “I have no special talent. I am only passionately curious” and that’s what organisations need – humble but talented people who are passionate and curious, talent that through their curiosity will question and challenge the way things are done – not in a nasty self-centred way, but in a positive way that will enhance the organisations performance.  

 

In a fascinating article in the Harvard Business Review in May, 2010, Jean Martin and Conrad Schmidt highlight how, “our recent research on leadership transitions demonstrates that nearly 40% of internal job moves made by people identified by their companies as 'high potentials' end in failure. Moreover, disengagement within this cohort of employees has been remarkably high since the start of the recession: In a September 2009 survey by the Corporate Executive Board, one in three emerging stars reported feeling disengaged from his or her company.”

 

If you don’t employ talented people who you want to challenge the status quo in your organisation, don’t be surprised when your bubble bursts. You might be successful now, but it won’t last, as your competitors with the right organisational approach and culture focused towards embracing talent will grow faster and more effectively in your market place. You will probably have forgotten about this article by then, blaming the bank for lack of financial support or your sales team for lack of progress – but unfortunately it will be due to your lack of effective leadership and your unwillingness to be challenged for the right reasons – that of the growth of your business.

 

Finally I’m reminded of the words of the American basketball coach, John Wooden who said; “Talent is God given. Be humble. Fame is man-given. Be grateful. Conceit is self-given. Be careful.”

 

References

 

Martin, J. and Schmidt, C. (2010). How to Keep Your Top Talent. Harvard Business Review. [On-line: http://hbr.org/2010/05/how-to-keep-your-top-talent/ar/1: accessed 25.11.12]

 

Is Ethical Behaviour a Prerequisite of Effective Leadership?

From as far back as 1975 and beyond researchers like Steve Yussen and Victor Levy have been telling us that “for social learning of ethical behaviour to take place, role models must be credible in terms of moral behaviour. By treating others fairly, honestly, and considerately, leaders become worthy of emulation by others. Otherwise, followers might ignore a leader whose behaviour is inconsistent with his/her ethical pronouncements or who fails to interact with followers in a caring, nurturing style.”

 

This implies that followers are seeking ethical leadership in the first place and can tell the difference between the two. Some might argue that today’s role models, who start to shape our ethical landscape from a young age aren’t teaching the right behaviours in the first place and hence aren’t teaching people to actually know the difference between right and wrong. In fact it’s highly possible that perceptions of ‘true’ ethical behaviours are becoming blurred as unethical behaviour seems to get the headlines on a virtually continuous basis, to the extent that this could start to give the impression that this is normal and acceptable behaviour.

 

For example, an employee who speaks up against wrongdoings in his or her organisation isn’t embraced by their community and thanked, but are branded as ‘whistle blowers’ and are often put on trial more than the unethical organisation and their leadership. This can give the impression that speaking out against ‘unethical behaviour’ isn’t okay.

 

Michael Brown and Marie Mitchell, in a 2010 article in the Business Ethics Quarterly highlight how qualitative research over the last decade has revealed that ethical leaders are best described along two related dimensions: moral person and moral manager.

 

Where Brown and Mitchell state that “the moral person dimension refers to the qualities of the ethical leader as a person. Strong moral persons are honest and trustworthy. They demonstrate a concern for other people and are also seen as approachable. Employees can come to these individuals with problems and concerns, knowing that they will be heard. Moral persons have a reputation for being fair and principled. Lastly, moral persons are seen as consistently moral in both their personal and professional lives,” (p.584).

 

And “the moral manager dimension refers to how the leader uses the tools of the position of leadership to promote ethical conduct at work. Strong moral managers see themselves as role models in the workplace. They make ethics salient by modelling ethical conduct to their employees. Moral managers set and communicate ethical standards and use rewards and punishments to ensure those standards are followed. In sum, leaders who are moral managers “walk the talk” and “talk the walk,” patterning their behaviour and organizational processes to meet moral standards,” (p.584).

 

So the question still remains today, ‘how do we develop the ethical leaders of the future?’ and at the moment it seems this responsibility is being left in the hands of the current organisational leadership and corporate boards. Where not surprisingly ethical leaders will tend to attract and develop other ethical leaders; but of course poorly developed and unethical leaders are also developing a potential future group of unethical leaders.

 

As mentioned in the article by Michael Brown and Marie Mitchell, “how does (un)ethical leadership develop over time? Although research points to the importance of personality (Walumbwa & Schaubroeck, 2009), how does upbringing, education, and work experience shape the ethicality of leaders? Can ethical leadership be developed and if so, how? Can unethical leaders be trained to be ethical and if so, how? Indeed, scholars suggest both are a possibility. Specifically, Mitchell and Palmer (2010) argue that sustained ethical behaviour and confidence to engage in ethical behaviour can be strengthened, similar to a “muscle” in the body. Based on self-regulation theory and research (e.g., Baumeister, Gailliot, DeWall, & Oaten, 2006; Muraven & Baumeister, 2000), they contend ethical exercise can strengthen leaders’ moral core, which then can ensure behaviour holds integrity to moral values, (p.603).

 

We need to find dedicated people who are passionate about the future of business to urgently answer these questions if we are serious about developing effective, ethical leaders for the future

 

Maybe a first step I for Nations to identify their outstanding, ethically driven leaders across all industry sectors, from large corporates to sme’s, and allow them to become much more visible in schools and universities; and more visible in all forms of media; making ethics something that is ‘attractive’ and highlighting standards our future leaders want to embrace.  

 

References

Brown, M., and Mitchell, M. (2010).  Ethical and Unethical Leadership: Exploring New Avenues for Future Research. Business Ethics Quarterly, Volume 20, Issue 4, p.583-616.

 

Yussen, S. R., and Levy Jr., V. M. (1975). Effects of warm and neutral models on the attention of observational learners. Journal of Experimental Child Psychology, 20: p.66–72.

How Long Should a New CEO Have to ‘Settle In’ to their Job?

After 55 days in the job George Entwistle, the boss of the BBC, resigned from his job last night (10^th November) – though some commentators suggest he was pushed out. But is it fair for a newly appointed CEO to fall on his sword after only 55 days?

Clearly huge mistakes have taken place under his short watch leading to the media, especially from the Rupert Murdoch stable, jumping on to these mind boggling blunders with blood curdling lustre. But who should be held accountable when a CEO is just getting to grips with their new role?

Where are the operational managers and editors who are responsible for the actual mistakes and why aren’t they holding up their hands and taking responsibility for their errors. Also where are the Chairman  and the rest of the ‘board’ who should have been supporting their newly appointed CEO in this initial period.

George Entwistle made the following statement about his resignation saying “when appointed to the role with 23 years’ experience as a producer and leader at the BBC, I was confident the trustees had chosen the best candidate for the post, and the right person to tackle the challenges and opportunities ahead. However the wholly exceptional events of the past few weeks have led me to conclude that the BBC should appoint a new leader” (Sunday Times,  11-11-12, p.4).

It seems to me that the person who could be expected to know least about the situation – unless someone went directly to him with concerns or facts, has taken the fall for the mistakes of others. Is this part of the ‘danger package’ that comes with taking on a new CEO role? If it is,  then one can expect CEO’s to take a completely different approach to their first 100 days in the future and become complete detail merchants – not wanting to trust their executives to do the jobs they are paid to do. And if they do take this approach, what will this do the culture and motivation of the organisation (let alone the top team) as rumours of this new ‘style’ sweep through the organisation and how will this affect the new CEO’s hope of building a positive culture going forward.

In an article by Ken Favaro, Per-Ola Karlsson, Jon Katzenbach and Gary Neilson of Booz and Company they mention that 80% of CEOs today are appointed from within the ranks of their companies. Where this trend has held steady over the last 11 years in the top 2,500 companies by market cap.

There are so many questions around, how long should a CEO have to settle in to a new role; how long should a board give them before they can be held fully accountable for the ‘running’ of their organisation and fired (or accept their resignation) for blatant mistakes made by their executives? Also should boards consider different ‘settling in periods’ for external and internal appointments.

But maybe these are the wrong questions? If one believes in the 100 day concept for CEO’s getting to grips with their new role and the organisation – maybe it’s the Chairman and the other executives who should be stepping up to the mark and assuming the responsibilities that they are actually already paid to do – and then taking the responsibility for failings during this period. It certainly shows the power the executive team have to make a new CEO’s job complete hell during their settling in period – but begs the question what kind of people would take such a ruthless, selfish approach to business and the ‘welcoming’ of a new CEO?

Maybe part of the good news in this sorry tragedy is that it is reported that government insiders believe that at least six senior BBC executives are likely to lose their jobs over the McAlpine story and the fallout from the Savile affair, acknowledging that “these people have serious questions to answer.”

The chairman and board must support a new CEO during their first 100 days and beyond – especially as they hired the person in the first place and begs the question, what kind of board hires someone to fail?

References

Favaro,K.,  Karlsson, P-O., Katzenbach, J.,  and Neilson, G. (2010). Lessons from the Trenches for New CEO’s.  Separating Myths from Game Changers. Booz and Company.

Should All Organisations Make their Employees Shareholders?

Shareholders invest in an organisations future, some for the short and others for the long term – but don’t employees also ‘invest’ in an organisation? They invest their time, talent and most importantly their future; though admittedly get paid for that commitment. Common sense would seem to suggest that if employees were also shareholders, there might be a greater commitment to ‘the future’ – something that should benefit the employees and the shareholders.

Nick Clegg, UK Deputy Prime Minister, said on 4th July 2012 that "more employees should be in the driving seat and own a share of the comapny they work for." This was after a new report by government adviser Graeme Nuttall found the main barriers to increasing employee owned companies were a lack of awareness, lack of resources and concerns about how complex it was to set up this kind of business. Businesses like the John Lewis Partnership, which is owned by its workers and distributes its profits between them, are seen by Nick Clegg as a key way to improve productivity and unlock economic growth.

Maybe more organisations should consider employee ownership?

There are numerous employee owned organisations in the UK and US, including companies like; Alliance Holdings (13,300 employees); Brookshire Brothers (6,000 employees); John Lewis Partnership (81,000 employees); Parsons (11,500 employees); Savant Limited (40 employees); Tullis Russell Group(800 employees); WinCo Foods (14,000 employees), for example.

David Brodwin recently wrote that “the words ‘employee-owned business’ once evoked an image of small shops with lofty ideals but sloppy business practices. But today, employee-owned businesses like the John Lewis Partnership deliver impressive results, raising the bar for the rest. They show greater resilience in a recession. They earn loyalty from customers and suppliers. They move nimbly in tough markets. Insights from today's leading employee-owned businesses can be applied broadly, pointing the way toward a more robust and sustainable economy.”

Marjorie Kelly writes in her book “that the John Lewis Partnership is part of a paradigm shift from ‘extractive ownership’ to ‘generative ownership.’ - where extractive ownership puts short-term financial gain above all else and generative ownership returns economies to their original purpose, which is to advance human well-being.” Marjorie highlights how the John Lewis Partnership certainly fits the generative model; where its stated purpose is the ‘happiness’ of its staff, which results from worthwhile and satisfying employment in a successful business.

There are three basic models of employee ownership:

1. All the shares are held permanently by the trustees of an employee benefit trust, as in the case of the John Lewis Partnership.

2. All the shares are owned by the employees individually.

3. A combination of the two.

In practice "the 100 per cent EBT shareholding is a popular option," says Graeme Nuttall, head of equity incentives at Field Fisher Waterhouse. "The structure is easier to administer and there is no need to keep buying and selling shares as and when staff join or leave the company."

So is it time for a radical change in business ownership with a significant shift towards employee owned organisations and might such a move help organisations minimise short-term risk and global fluctuations; as well as give greater support to long-term sustainable growth.

If, as is often stated, employees are the life-blood of an organisation, then surely it’s time to genuinely recognise that and ‘reward’ them accordingly – where reward isn’t just basic financial reward, but the ability to proactively contribute to the day-to-day organisational trade-offs between short and long term decisions; as well as risks and rewards.

There are dedicated centres that promote employee ownership; in the US you have the National Centre for Employee Ownership and in the UK the Employee Ownership Association.

When shareholders pressurise organisations to achieve short-term profits that aren’t in the interests of the other stakeholders, (especially the employees), pressures that can hinder sustainable future growth; you have to ask if the basic shareholder model isn’t partially responsible for the global economic mess the world has found itself in. Maybe it’s time for a more employee-centric approach to organisational ownership where the stewardship resides with those who ultimately decide the future of an organisation – the employee.

References:

Brodwin, D. (2012). Why we need more employee-owned business. Economic Intelligence. [On-line].

Coleman, A. (2007). There’s no place like own. Director Magazine. [On-line].

Kelly, M. Owning Our Future: The Emerging Ownership Revolution.

Leadership: Who’s Walking the Talk?

It seems that not a day goes by when someone isn’t starting a discussion about leadership in the academic press or on social networks like LinkedIn. It’s a hot topic of conversation as the world still struggles to find its way out of the global financial crisis caused by poor leadership and the apparent lack of effective corporate (and political) governance.

It seems that most people know what an effective leader should look like and how they should behave, even going to the micro detail of differing styles to ‘match’ differing corporate needs and business environments.

The academic research and theories seem to sit well with most people looking for direction and ideas to improve this vital link in corporate performance and sustainable growth, and many discuss differing styles like transformational and transactional leadership from a position of practical experience and individual passion.

Yet with all this good rhetoric who is actually walking the talk?

In the first twelve years of the 21^st Century organisations with supposedly ‘great’ leadership have been found to be ‘rotten’ on the inside. In the famous example of Enron, it’s worth remembering that in January 2001 it had about 30,000 employees and was the 7^th largest company in the US by revenue, where it was cited as a role model by analysts, reporters, consultants, and by business schools where this successful case was mandatory reading at Harvard‘s MBA and, somewhat amusingly, it’s CFO Andrew Fastow had received an award as the most creative CFO by CFO magazine. And we mustn’t forget that McKinsey, considered the most renowned consultancy in high level strategic advice, provided continuous services to Enron for 18 years, receiving about $10million per year.

Then there’s Parmalat, with 36,000 employees working in 30 countries who in 2003, ‘kindly’ reported that some assets on their balance sheet simply did not exist, leading to the biggest European corporate fraud in history (amounting to 1% of Italy’s GDP). Yet just a month before its collapse a Citigroup analyst changed the status on their shares from ‘hold’ to ‘buy’, citing “stable results and growth prospects for the next two years.”  When in fact in 2002, the company had inflated its revenue by 1.5 billion Euro’s and its Ebitda by 600 million Euros by means of fictitious sales. Leading to the new management of Parmalat (during May to December 2004) suing Citigroup, Bank of America and the auditing firms Grant Thornton and Deloitte & Touche, seeking to recover $14.3 billion in damages.

Further corporate scandals in these few years since the start of the 21^st Century include Agrenco (Brazil), AIG (US), Allfirst (US), Bear Sterns (US), Fannie Mae/Freddie Mac (US), LIBOR (Global), Sadia/Aracruz (Brazil), Satyam (India), Siemens (Germany), Societe Generale (France), Stanford Bank (US), Swissair (Switzerland), Tyco (Switzerland/US), Worldcom (US) and not forgetting Bernie Madoff and his billion dollar Ponzi scam.

In some instances individuals have argued that some CEO’s were put under pressure by their Boards and/or Shareholders to act in the manner they did – but these actions, however instigated, are simply not the actions of effective and professional leaders – and could be an indication of how power and greed corrupt leadership in business.

Some people are always quick to point out that ‘corporate scandals’ are nothing new and have been going on since time began – but in making these statements they forget that in today’s world we supposedly have access to ‘excellent’ processes and procedures that should minimise corporate scandals, so that if they occur they should be identified and dealt with almost immediately.

In the 21^st Century organisations have access to excellent research and programmes in leadership development; succession planning methodologies; high level ‘profiling’ techniques; advanced recruitment systems and procedures; ‘advanced’ boards with corporate governance procedures; professional auditing and consulting bodies; as well as institutes with moral and ethical codes of conduct, etc.

With the business world needing strong, effective and visible leadership to drive the business growth of the future, and with so many passionate advocates of ‘great’ leadership giving profound guidance and advice – I just wonder who out there is actively ‘walking the talk’ and why we don’t hear of that many ‘great’ leaders in today’s corporate world?