Sunday, October 21, 2012

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 21st 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 7th 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 21st 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 21st 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?

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