Are we serious about leadership?

by 10 Nov 2007

Are we serious about leadership?

There have been umpteen surveys about the importance of good leadership and its impact on business performance, productivity levels and organisational culture. There is also a lot of lip service paid to the importance of good leadership. Many executive teams and boards are happy to make various proclamations about the importance of leadership and its value, however, when it comes to putting money where their collective mouth is, the response is sometimes very different.

I recently met with the HR director for a large company and we were talking about this issue. This HR director met with the company’s executive team to talk about business issues and how the executive team should be rewarded for their performance. At the meeting, a number of the executives were talking about the importance of leadership and how they espoused this in their day-to-day work.

When the HR director suggested that measures around leadership style be built into their salary package, a few executives became uncomfortable and were less than keen on the idea. Fortunately the CEO was happy to walk the leadership talk and a revolution was averted.

This example raises an important point. If we have all this hard evidence about the importance of leadership and the difference it can make, why do we still tolerate bad leaders? In terms of the day-to-day running of companies, the executive team is largely responsible for most decisions. But are boards remiss in their duties to adequately oversee executive teams and their leadership capabilities? Do boards really appreciate the impact this can have on a company?

Most boards are pretty busy with compliance and related issues, but this does not excuse boards from their duties to exercise a guiding hand from the most senior levels of a company. At the other end, shareholders are increasingly active and want to see demonstrable results of good leadership, otherwise they are reluctant to approve of executive pay rises.

The more transparency we have around leadership, remuneration and company results, the better. But it begins at the top. If boards aren’t interested in this idea, then where does accountability for leadership start?

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