Former Australian federal treasurer Peter Costello, writing in The Sydney Morning Herald in May 2009, reflected: “To bring in an outsider to Telstra who had no understanding of the previous life of Telstra as a government monopoly, no appreciation of the sensitivity of the privatisation, no respect for the role of the regulator to promote competition, and no inclination to understand these things, was a big mistake.” Telstra’s share price dropped 38% in the four years of Trujillo’s stewardship.
The risk in a leader having the same group of confidantes is that they may not receive the right feedback, according to Tim Powell, managing director of human resources group, Hewitt Associates. “Constant, fearless feedback is essential for senior leaders. No one is so gifted that they can lead well without feedback,” he says. And no-holds-barred feedback is healthy, not only for the organisation but also for the CEO’s career, Powell notes, because it helps to pinpoint the areas where the leader may need further development.
Rosemary Howard, executive director of AGSM Executive programs, observes that the approach of many leaders is narrow. “There’s a tendency to favour a particular way of working. Without deliberate learning and development, people may not fully understand the subtleties and complexities of an environment and may not adapt to new situations.” And this is likely to happen when executives change country cultures, she says.
But Powell asserts there is more talk about CEOs who won’t change than there are people like that: “Some have style preferences that suit certain circumstances, but most are reasonably rounded and agile.” He believes that one of the reasons many Australian companies managed well through the recent economic downturn was because of the high quality of its leaders. “CEOs who were clear about their vision and strategy were winners over the last cycle,” suggests Powell.
However, Howard sees it differently. “People from other countries comment on how Australia doesn’t invest in the rigour of its leaders and how Australia is the place where ‘not good enough is considered good enough’,” she says.
CEOs and other leaders whose style is not suited to a new environment or market conditions are not beyond redemption. “They can learn to lead differently,” emphasises Bloch, whose organisation works with boards to help them have frank conversations with chief executives about the need to change leadership styles.
“Changing the leader’s style is an investment decision by the board and needs to be viewed that way. The first step is to identify what needs to be learned. The more senior the individual is, the more qualitative and extensive the discovery phase will need to be, starting with a review of the skills and experience they have and the personal and business decisions they’ve made, followed by qualitative 360-degree conversations with a wide range of people who can share real insight into the leader.”
Bloch’s research reveals five ‘levers for learning’. Leadership is learned through formal training (about 5%), on-the-job learning (more than 80%), coaching and mentoring (about 10%), unstructured learning, such as reading books (less than 1%), and through special projects and secondments (about 5%). Specific development needs and learning preferences determine which combination of these should be used to create a well-rounded leader.
Howard is quick to point out the mistake of people thinking they can learn everything “from the school of hard knocks”. Understanding the benchmark of “best practice leadership” is also crucial, she says.
And there’s certainly no one-size-fits-all change management leadership style, according to O’Donnell, who refers to a model developed by Doug Stace and Dexter Dunphy in their book Beyond the boundaries: leading and recreating the successful enterprise.
Leaders can choose to be coercive, directive, consultative or collaborative when managing change that might be fine-tuning, incremental, modular or across the whole organisation. “Managers need a repertoire of styles so they can choose the appropriate one for particular situations,” O’Donnell says. And while CEOs set the tone and style, leadership as a capability is ideally widely distributed across organisations.
Interventions, such as executive education, intense and rigorous management courses, mentoring and coaching are catalysts – but they only go so far to ensure lasting change will filter through an organisation, says O’Donnell. “My research indicates that a systems perspective is required,” she says.
“Along with leadership support, internally consistent human capital systems including recruitment, training and development, career planning, remuneration and knowledge management systems, as well as symbolic and practical changes, such as improving the physical environment, can all work together to help sustain organisational change. Human capital systems can be seen as a process of executing strategy in many organisations, particularly knowledge-based ones. These systems often outlast the tenure of many CEOs.”
