Great Leaders Develop a Shared Vision

James Lucas states that, “we’ve got vision, but we just can’t see. That seems to be the situation in many companies. We can’t live without vision, although organisations do manage to extend their death throes for several years in a visionless state. And very often, we can’t live with vision either – at least not with the concepts that so often masquerade as a guide to the future. The vision statements of many organisations make their readers feel as if they are drowning in warm maple syrup” (1998, p.23).

The vision statement is often used more as a public relations statement than a ‘guiding light’ for the organisation. There is often a common theme amongst many organisations, large and small, that says our vision is to be the best at everything - we’re the best organisation that looks after our people and the community and our stakeholders; and our customers, and our suppliers, and the environment. There is no uniqueness, there is no ‘vision’ that the organisation can embrace and commit to. These are the statements that Lucas compares to ‘warm maple syrup’.

The leadership develops a vision with the organisation, (not in isolation behind boardroom doors). A company vision that creates a unique future state – a future state that all employees; can understand and relate to; get excited about and commit to; and see progress through their daily activities.

As James Kouzes and Barry Posner mention in their 2009 Harvard Business Review article, “the best way to lead people into the future is to connect with them deeply in the present. The only visions that take hold are shared visions – and you will create them only when you listen very, very carefully to others, appreciate their hopes, and attend to their needs. The best leaders are able to bring their people into the future because they engage in the oldest form of research: They observe the human condition” (p.21).

As Lucas points out “the fact is, every company does need a vision if it wants to go somewhere and be able to know when it has arrived. This need may seem less obvious in an autocratic organisation, where people do as they’re told and have very little idea of where the company is headed. But even the autocrat needs a blue print to follow while dictating the company into the future” (p.24).

Lucas highlights five reasons why organisations need a vision;

1) To guide us. A well constructed vision allows the organisation and its employees to prioritise activities and minimises the chances of conflicting agendas.

2) To remind us. The vision statement is there to remind the organisation where it is heading and why.

3) To inspire us. We are inspired by goals that we can relate to and that give purpose to our work - where we can measure our progress during the ‘journey’.

4) To control us. The vision statement not only gives purpose, but creates parameters to keep us on track (so that we don’t wander off the path).

5) To free us. “It’s hard to have a forward looking, high performance organisation when we don’t know who we are or what we want to become. The events of our past push us along with their inertia, to a chorus of ‘this is the way we’ve always done it’ in the past. A living vision pulls us loose from that mire and opens the door to a fresh future,” (Lucas, 1998, p.24).

The vision statement, if developed and communicated correctly, will create; a unique identity that the whole organisation are excited to be part of; a unique focus, on which the corporate strategy, goals and objectives can be built; and a company culture focused on ownership and not compliance

As Lucas concludes, “a vision statement will be worth more than the paper it’s printed on when it becomes a driving force and compels people to do something, change something, or become something. That means it must pass the ‘baloney test’ and get to the heart of the organisation, answering key questions about its competitive strengths. The statement also needs to be a ‘living’ document that incorporates the best of the organisation’s past into an ideal yet feasible view of the future. Only then will people do more that just buy into the image; they’ll actually own it” (p.25).

Maybe it’s time to get that vision statement down from the walls, blow the dust off and re-look at it again – in the process, turning your vision into your real, unique, statement of the future.

References

Kouzes, J.M. and Posner, B.Z. (2009). To Lead, Create a Shared Vision. Harvard Business Review, Vol. 87, Issue 1, p. 20-21.

Lucas, J.R. (1998). Anatomy of a vision statement. Management Review, Vol. 87, Issue 2, p. 22-26.

Should the CEO also be the Chairman? The Duality Debate

CEO duality exists when the CEO is simultaneously the chairman of the board and there are differing views on whether duality or independence is the correct method for strategic leadership. Chen, Kao, Tsao and Wu (2007) identified that “the examination of corporate governance can be divided into two aspects: the ownership structure and the leadership structure – for leadership structure, the main concerns are the board and CEO duality” (p.252).

Various surveys carried out between 1999 and 2005 show that in the United States between 60 and 80 percent of all major corporations have the same person act as both the CEO and chairman, whereas in British, Canadian, and Japanese companies only about 10 to 20 percent combine the role of CEO and chairman.

It’s worth spending a moment reviewing the various theories that exist, where agency theory is the most dominant theoretical framework in corporate governance research. The popularity of this theory is likely due to two factors. First, it is an extremely simple theory, in which large corporations are reduced to two participants – managers and shareholders – and the interests of both are assumed to be both clear and consistent; and, secondly, the notion of human beings as self-interested and generally unwilling to sacrifice personal interests for the interests of others.

Other predominant theories include; the stewardship theory which describes executives and directors as frequently having interests that are exactly the same as those of the shareholders, and where the directors are good stewards of the corporate assets; the organisational life cycle theory states that complexity is the key determinant in respect of governance requirements as the organisation moves through the life cycle; the resource dependence theory, assumes that corporate boards will reflect the environment of the organisation and that the corporate directors, who are external to the organisation, will be chosen to maximise the provision of important resources; the social network theory emphasises the importance of network formation on reputation, trust, reciprocity and mutual independence; and the neo-institutional theory asserts the importance of normative frameworks and rules in guiding, constraining and empowering behaviour, arguing that board composition will be determined largely by prevailing institutional norms in the organisations industry sector.

In respect of the various theories it is worth noting as Lynall, Golden and Hillman (2003) contend, “it is not a matter of choosing one theoretical perspective over another but, rather, of identifying under which conditions each is more applicable” (p.419).

The strongest advocates of the joint duality structure have been the CEO’s themselves who don’t favour a separation of the CEO and chairperson roles. Ruigrok, Peck and Keller (2006) state that, “such clear cut leadership removes any ambiguity of accountability and responsibility for firm processes and outcomes. The advantages of clear leadership might be the most valuable in situations where a company has to overcome a crisis, as this situation requires fast decisions and clear strategic orientation” (p.1208), though this is disputed by other academics and researchers.

For example, Kang and Zardkoohi (2005) noted that “if duality is adopted because a powerful CEO imposes it on a board, then governance decisions are likely to favour self-serving behaviours of top executives rather than maximising shareholder wealth” (p.795); and Daily (1995) stated that “the central concern with the dual leadership structure is the power which this structure grants the CEO. A primary function of the board, monitoring the CEO, is impeded when the chairperson also serves as the CEO” (p.1046).

Epstein and Roy (2004) highlight that “many corporations have tried to improve the independence of their boards through ensuring that the board leadership is independent. This can be done through either a separation of the role of the CEO and chairman or by the appointment of a lead director. In both cases, the goal is to provide a board leader that is independent of all day-to-day corporate activities and is solely devoted to providing oversight and fulfilling a fiduciary duty to the shareholders” (p.9).

Recent major studies by Booze Allen Hamilton and Khaled Elsayed found that “the impact of CEO duality on corporate performance varies with industry context and corporate performance, which provides partial support for agency theory and stewardship theory. Their findings highlight that there is no one optimal board leadership structure and that CEO duality will benefit some firms while separation will be more advantageous for others. The findings also provide support for the conclusion of Finkelstein and D’Aveni (1994) that, when corporate performance is low, the board of directors is more likely to prefer CEO duality as a means of improving corporate performance” (Elsayed, K, 2007, p.2010).

It’s worth noting that current research is looking in more detail at the different variables that impact and influence the CEO-Chairman relationship, including the composition of the Board itself.

References

Brownbill, N. (2008). Exploring the Relationship between Strategic Leadership and Corporate Governance; presented at the 7th International Conference on Studying Leadership, Auckland, December 2008.

Chen, A., Kao, L., Tsao, M., and Wu, C. (2007). Building a corporate governance index from the perspectives of ownership and leadership for firms in Taiwan. Corporate Governance, Vol.15, No.2, p.251-261.

Daily, C.M. (1995). The relationship between board composition and leadership structure and bankruptcy reorganisation outcomes. Journal of Management, Vol.21, No.6, p.1041-1056.

Elsayed, K. (2007). Does CEO Duality Really Affect Corporate Performance? Corporate Governance, Vol.15, No.6, p.1203-1214.


Epstein, M.J., and Roy, M-J. (2004). Improving the performance of corporate boards: Identifying and measuring the key drivers of success. Journal of General Management. Vol.29, No.3, p.1-23.

Kang, E. and Zardkoohi, A. (2005). Board leadership structure and firm performance. Corporate Governance, Vol.13, No.6, p.785-799.

Lynall, M.D., Golden, B.R., and Hillman, A.J. (2003). Board composition from adolescence to maturity: a multitheoretic view. Academy of management review, Vol.28, No.3, p.416-431.

Ruigrok, W., Peck, S.I., and Keller, H. (2006). Board characteristics and involvement in strategic decision making: Evidence from Swiss companies. Journal of Management Studies, 43:5, July, p.1201-1226.

Appraising the Performance Appraisal

Managed well, the performance appraisal can be a highly motivational event, reviewing performance and setting objectives for the period ahead, within a climate of mutual respect and active two-way communication – handled poorly it can be a very de-motivational event, sapping the energy and innovation out of the employee and negatively impacting the corporate culture and organisational performance. Unfortunately, even within the 21st century many highly effective human resource business principles still don’t get the attention they deserve and amongst them is the performance appraisal. Beatrice van der Heijden (2004), states that, “as performance evaluation systems are among the most important and applied human resource components of an organization, it is essential to investigate their qualities critically”, (p.493).

Organisations often forget that the performance appraisal links directly to; their corporate strategy and organisational performance; the development of the human resource at all levels within the organisation (including the link to succession planning); and has a direct impact on motivation and the corporate culture; and “it is important to differentiate between the application as a decision-making instrument and the application as a developmental tool. In the latter case the aim is to provide constructive feedback in a climate in which one's growth is fostered and there is room for improving one's weaknesses without immediate negative consequences”, (van der Hiejden, 2004, p.494).

A well developed appraisal system will always include a self-appraisal element, allowing employees to appraise themselves prior to the formal appraisal interview. This has been proved to be an extremely powerful approach to appraising performance and as Gary Roberts (2003) states “self-appraisals provide employees with the opportunity to systematically assess their performance. Studies indicate that self-appraisal increases employee participation and readiness for the appraisal interview, enhances overall satisfaction, increases perceived appraisal fairness and can reduce defensive behaviour if used for development purposes”, (p. 91).

Some basic guidelines for an effective performance appraisal include;

1) The performance appraisal should focus on agreed objectives for the period being assessed;

2) These objectives link to the strategic objectives of the organisation; and are defined through the employees accountabilities and key performance indicators;

3) Performance appraisals are most effective when there is a process of self-evaluation where; the employee appraises their own performance against their objectives; recommend the objectives to be appraised for the next assessment period; and identify what specific training and development they need to improve their performance for the period ahead;

4) Those conducting appraisals are ‘thoroughly’ trained in the appraisal system and appraisal skills (too many people are allowed to conduct appraisals without understanding the principles and skills required to conduct them fairly);

5) The appraisal system supports training and development; and the succession planning process;

6) Developed and implemented correctly the performance appraisal is a powerful tool for the development of the human resource, at all levels, and through linking performance, to objectives, to the corporate strategy, has a directly impact on the organisations future growth.

The performance appraisal is not a substitute for regular employee feedback and is a formal, well planned, periodic review; where there should be no surprises in respect of performance feedback. Issues around performance (from excellent to poor) must be recognised, managed and communicated to the person when it happens (and not months later).

So, it might be worth spending some time reviewing your current appraisal system and the skills of those involved; to identify areas where you can improve the process and in doing so improve the development and motivation of your human resource; and the performance and growth of your organisation.

References

Roberts, G. E. (2003). Employee Performance Appraisal System Participation: A Technique that Works. Public Personnel Management, Vol. 32, Issue 1, p.89-98.

van der Heijden, B. (2004). The value of subjectivity: problems and prospects for 360-degree appraisal systems. International Journal of Human Resource Management, Vol. 15, Issue 3, p.493-511

Linking Leadership to Social Responsibility

In many organisations it’s the implementation phase of business initiatives where things often go wrong and this is just as true with the implementation of corporate social responsibility (CSR). As Epstein, Buhovac and Yuthas (2010) state “the challenge lies in how to actually integrate sustainability into operational and capital investment decision making and implement it successfully in large, complex, for-profit organisations,” (p.41).

The World Business Council for Sustainable Development identified, after analysing several surveys and case studies, that those organisations which design and implement focused CSR programmes, “attract better talent and have employees that are more motivated, loyal and innovative.” This view has been supported by further research and in a detailed survey by Environics International in 2002, (that questioned 25,000 employees from 25 different countries) they found that eighty percent of employees “felt greater motivation and loyalty towards their jobs and companies, the more socially responsible their employers became,” (Glavas and Piderit, 2009, p.55).

In fact Epstein, Buhovac and Yuthas highlight that “leadership and organisational culture are the most critical determinants in successfully managing the various trade-offs that middle managers face when they try to manage and control, social, environmental and financial performance simultaneously,” (p.43).

To be able to effectively incorporate CSR into your organisation, you need to understand the key social responsibility issues that apply to your organisations products and services, as well as your community. Often these facts can be sadly lacking, where organisations either are too focused on their own financial growth that they have lost sight of the ‘world’ they operate in; or organisations make assumptions about social responsibility issues because they are ‘the flavour of the month’ rather than what is required on the ground.

Leaders need to ensure that CSR is an integral part of their strategy and that the appropriate structures, systems and procedures are developed and aligned to the CSR goals. Further the organisation needs to engage fully with all their employees so that they are aware and understand the impact of the CSR issues on the business and their community. This will ensure that the organisation commits to the CSR strategy from a basis of ownership rather than lethargic compliance. We must remember that CSR is about leadership, culture and education and if we don’t understand CSR and the impact it has on our business and community, then we cannot implement it effectively.

At the educational level, CSR has already started, with currently over 200 Management Schools signing up to the ‘Principles of Responsible Management Education’, backed by the UN and first developed in 2006.

In support of linking CSR with education, leadership and organisational development, UN Secretary-General Ban Ki-moon addressed the academic community at a global forum on 5th December 2008, and stated that ”as teachers, you can ensure that tomorrow’s leaders understand that the long-term growth of a business is tied to its environmental and social impact. As scholars, you can produce research that drives innovation and helps management to recognize the benefits of being a responsible business. And as thought leaders and advocates in your communities, you help advance awareness of broader challenges, opportunities and responsibilities, (Glavas and Piderit, 2009, p.67).

To conclude Epstein, Buhovac and Yuthas believe that “leadership, organisational culture and people may be among the most important drivers of effective sustainability decision making. CEO’s should communicate – and over communicate – the importance of sustainability and establish a culture of integrating sustainability into day-to-day management decisions,” (p.47).

References

Epstein, M., Buhovac, S.R., and Yuthas, K. (2010). Implementing Sustainability: The Role of Leadership and Organisational Culture. Strategic Finance, Vol. 91, Issue 10, p.41-47.

Glavas, A. and Piderit, S.K. (2009). How Does Doing Good Matter? Effects of Corporate Citizenship on Employees. Journal of Corporate Citizenship, Issue 36, p.51-70.