Julie Macken, The Australian Financial Review, 21 August 2001
When we convened panels in Melbourne and Sydney to choose our true leaders, the first problem was to define leadership. Julie Macken reports. Good leadership is hard to find. It always has been, which is why the hero/leader is such a celebrated figure throughout history and across cultures. While most people will acknowledge that a great leader is rare, that hasn't stopped the business and broader Australian community from having high expectations of those put in leadership positions.
This is despite the fact the challenges facing leaders in the corporate sector have never been greater. Globalisation has introduced greater competition, the low Australian dollar has made many companies potential takeover targets, and community demands require executives to deal with their board, shareholders and a diverse range of stakeholders.
The pressures are high: no-one sets out to sack workers, create environmental disasters or destroy profits through bad strategic plays. But it happens. Even without such cataclysmic outcomes, there are many pedestrian performances from those at the top, their power based on negotiating corporate politics as much as managerial competence. But is failure of leadership simply an individual issue? When our panels (see page 50 for a list of panelists) began discussing what it takes, they recognised that one of the inhibitors of good leadership is how we structure organisations.
The chief executive of ANZ, John McFarlane, saw a real problem in the lack of distributive leadership - that is, the flat structures that encourage leadership across corporations rather than concentrating decision-making. "The trouble with larger organisations is that you usually put boundaries around people and try to control them, overmanage them," McFarlane said. "That's what stifles creativity. I think there is a genuine crisis in large companies about having enough freedom inside their organisations so that people become creative and have enough space to make mistakes. There is a crisis in that you've got a few leaders, but you don't have enough leaders throughout the whole company."
Danny Samson, professor of management at the University of Melbourne, said distributive leadership changed the definition of leadership: "When most people think about leadership they are talking about what CEOs and people close to CEOs do. So the very definition of leadership is an interesting question." (See discussion box on page 41.)
While most panellists agreed distributive leadership was a good idea, Carol Schwartz, general manager of Sussan Property Group, suggested its practice rarely lived up to the ideal. "What happens is that you do have layers of leadership within organisations, but then a decision is made from the very top level which actually demoralises and destroys the confidence and decision-making leadership down the line," she said. "I think we have seen examples of that time and time again. If you're being stymied from the top, what's the point?"
When discussion moved to questions concerning corporate values, Nuno D'Aquino, deputy CEO of Foster's Group, suggested the media helped erode that values base. "Don't you think there's an awful lot of responsibility to allow for the atmosphere to do those kinds of things [build a values base]?" he asked. "It's very seldom that I see a financial commentator talking about the organisation's value base and all those issues, rather than just the specific share price. The more we get pushed to a quarterly result the harder this is."
CEOs didn't need to be involved with the battle for Seattle to know that consumers are now concerned with more than just value for money. They are demanding, and in some instances getting, corporations to address environmental, social and human rights issues as well as delivering solid returns for their shareholders.
Most executives agree these issues are important. However, unlike the simplicity of a financial bottom-line, the methodology of social and environmental audits is still being developed - and as John McFarlane said, if it's not counted it doesn't count. "If you want to make customers more important, then the customer experience and views have to be key," he said. "The only relevant information is that given by customers and so you have to survey your customers. If your customer score has gone up, that's good. If it's gone down, that's terrible.
"The same is true about the community. If the community is really important, then you have to say: 'Okay, we are actually going to measure it.' If you don't measure it and don't target it and don't have consequences, they won't treat it as important."
Sharan Burrow, president of the Australian Council of Trade Unions, was quick to point out the costs incurred by an increasing loss of loyalty: "I was looking at the bottom line of recruitment costs for some companies and, because of the lack of loyalty generated by the lack of concern on the part of the companies, the mobility of people is increasing at a time when you would think companies would want to be retaining talent. It would be cheaper to train people and give them a real commitment to the company than to watch them [leave] and try and recruit people from elsewhere." Loyalty, and how a good leader can gain it, was a recurring theme and a real challenge for workers 35 and younger. Viv Read, the director of consultancy Crosstech, noted a couple of issues identified by new research. "One is that Gen-Xers absolutely know it's pointless being loyal to a corporation because their experience is loyalty has got their mothers and fathers nowhere." Where there was loyalty, she said, it was more likely to be toward knowledge networks rather than employers.
There was no consensus on whether there was a unique style of Australian leadership, but everyone agreed that cynicism was common in Australian workers. Dexter Dunphy, from the University of Technology, Sydney, didn't see that in entirely negative terms. "They have a good bullshit detector," he said. "Australians don't respond well to the tall poppies with huge egos, and they don't respond to a lot of flattery about themselves. In other words, there are stronger tests on the leader in terms of integrity and walking the talk."
Cynicism may well spring from a desire to care. Many workers want to be involved in something bigger than their own or the company's bottom line. "If our leaders only provide us with more money then I don't think they pass the test of leadership, said Les Fallick of Gresham Private Equity. "People are looking to be inspired in a much broader and deeper way."