Leadership and morality; learning the not so secret ingredient of effective 'followership'
In management and organisation leadership is one of the fundamentally important topics.
The trouble with teaching leadership is that there agreement on what will produce guaranteed results; words such as effective and successful being typical.
What we do know is that there are many approaches (styles) and that that there are a multitude of outcomes ranging from brilliant (rare), good (more common) to acceptable (who wants to be average?) to the downright dreadful.
Management theory has frequently tended to be concerned with what is standard practice in the desire to produce models that apply in all situations. But as anyone who works in any organisation, regardless of size or context, there are things called people.
People are, of course, free-thinking and sentient beings who come with an array of emotions, desires and attitudes. This means that trying to lead people is always going to be difficult.
The challenge for any person wishing to become a successful leadership is what behaviour will engender motivated followers; the logical corollary?
Leadership is essential in all situations, most particularly in times of crisis. Therefore, given the current economic problems we are experiencing, I suggest, we are more in need of good leadership than ever.
Most especially we need leaders who really care and can demonstrate their commitment though their willingness to understand the processes that people at every level must achieve. Even more crucially, they should be aware of the long-term consequences of their decisions.
But perhaps the one part of the role of leadership that is absolutely essential is that leaders demonstrate the sort of organisational culture they believe is required for success is their behaviour.
After all, if leaders cannot show their own honesty and integrity then they should hardly be surprised if the organisation becomes either dysfunctional or immoral.
In reading articles in the business press in the last week or so concerning the on-going economic crisis, the importance of leadership is always apparent either explicitly or implied.
As is often the case, the cause of failure makes the most interesting reading. And in the case of Spain's savings banks (cajas), there is an absolutely clear demonstration of what happens when leadership is one that that was based on greed and cronyism coupled with political meddling.
It's worth noting that when our own in the UK banks were failing due to their exposure to the global financial crisis caused by the use of derivatives, because they had largely avoided being involved in what Warren Buffet once described as being 'weapons of financial mass destruction', Spain's banks were cited as being exemplars of virtue and rectitude.
Sadly, as the current news tells us, they were not perfect.
In banks such as Bankia, CatalunyaCaixa and Novagalicia senior managers engaged in leadership that created a culture of recklessness, in terms of lending to fund property development, and the appointment of those without appreciation of sensible banking involves.
The climate of political patronage resulted in a former supermarket checkout operator and a dance teacher being appointed to senior positions on the board of one bank.
As has been discovered by investigators, those appointed as the moral custodians of banks that were intended to protect their investors (often individuals with small amounts), were allowed to agree decisions that are, in retrospect, crazy.
Whilst it might be argued that the introduction of the Eurozone ensured a period of low interest rates that created a benign climate for property speculation, there appears to have been a period of madness.
The incredible programme of property speculation, in which hundreds of thousands of properties were built, sucked in lots of gullible investors who, similar to all other 'get rich quick schemes', though it could never end. Sadly it has and everyone, apart from those who benefitted early on, are left a lot poorer.
Naturally these managers paid themselves very handsomely for their time and had to put up with the hardship of all-expenses paid trips abroad.
Those who consider the acts of these managers of the cajas will undoubtedly search for simplistic explanations. They might, for example, believe that there is something inherent in Spanish culture that created an environment in which moral turpitude is tolerated.
But, as we know, immoral behaviour is not limited to Spanish cajas. What is sad is that the sort of behaviour that is now being uncovered existed elsewhere.
Indeed, if you read Fintan O'Toole's highly readable book, Ship of Fools: How Stupidity and Corruption Sank the Celtic, you are immediately struck by the remarkable similarities.
Like Spain, the Republic of Ireland has done very well from membership of the Economic Union. Prior to joining both were relatively poor countries and lacked the industrial heritage of this country or Germany. Spain does, of course, have good weather!
In both Spain and Ireland as European money rolled in, people became wealthier through the fact that their properties were worth more. It was in this basis that the property bonanza, fuelled by low-interest finance and over-zealous lending by banks commenced.
The fact that the price of some houses increased by 519% between 1994 and 2006 indicates that some became very rich. Developing real estate became a way to turn dirt into gold.
But as we know, no market can sustain that level of growth and whilst some spectacular gains have been made, there are many nursing crippling debt in terms of negative equity in property that has rapidly declined. It is such debt that has caused the Spanish and Irish banks to be left with a toxic mess that has effectively bankrupted both countries.
No wonder that one commentator from The New York Times suggested that because of its 'bent' bankers who worked in cahoots with corrupt politicians who smoothed the paths for equally corrupt developers, Ireland became "the Wild West of European finance". Indeed, as O'Toole asserts, Ireland's spectacular rise and fall makes " Icarus look boringly stable."
An interesting question is whether it is the lure of phenomenal gains in property that makes it so rife to the sordid deals that have caused the problems we now see across Europe and, let's not forget, the American "sub-prime" market.
It begs the question of how we can ensure that we never again allow ourselves to get into this situation again.
I would suggest that we need leaders whose approach and behaviour is demonstrably honest and who seek to inculcate morality in every aspect of the organisational culture.
If we don't, sometime in the future the same questions will be asked; regardless of the amount of regulation that is imposed and which, of course, is intended to use bureaucracy to create compliance.
As I happily acknowledge, greed, corruption and cronyism are not new (and not limited to any sector). There are, of course, those individuals whose leadership style and behaviour is exemplary.
Importantly such people usually have high levels of integrity; they appear to be driven by an entirely different 'value system'.
I think that it is significant that many military leaders are frequently cited as providing inspiration to those who operate in different contexts. Those in the military have to convince others to engage in action that may potentially result in them losing their lives.
That requires a special sort of leadership.
Additionally, we should remember that much early leadership and strategic theory has its origins in observation and experience of war.
Therefore, it is probably no surprise that in his book Management in 10 Words, published last week by Random House Business, former Tesco Sir Terry Leahy cites as one of his inspirations Field Marshal Viscount Slim. In his memoirs he recounts his experience in Burma during the second world war:
"Every one of the half million in the army - and it was many more later - had to be made to see where his task fitted into the whole, to realise what depended on it, and to feel pride and satisfaction in doing it well."
Leahy believes that his approach in running Tesco was pretty similar. Leahy admitted in an interview on radio four on Tuesday morning that his upbringing as a Catholic on a council estate in Liverpool meant that he was driven to give customers the best value. But in order to do this he required an effective organisation which, of course, relies on the people carrying out every process.
Whatever other criticisms that may be levelled at him, and ther are many who criticse his approach to retailing, Leahy is known for being scrupulously dedicated to the objective of customer value. In his book he is very honest about his own weaknesses.
Possessing honesty and integrity is, unsurprisingly, the not-so-magic ingredient of successful leadership. Let's face it, if as a leader you cannot demonstrate these qualities, how can you expect them from others.
Intriguingly, though, Leahy is probably not the most Charismatic leaders you can think of. It is worth mentioning this because research in the latest edition of The Harvard Business Review (June 2012), 'Learning Charisma', suggests how it is possible to learn how to develop Charisma.
As authors John Antonakis, Marika Fenly and Sue Liechti from the University of Lausanne explain, anyone trained in using what they call "charismatic leadership tactics" can become, as they state, 'more influential, trustworthy and leaderlike in the eyes of others.'
It is worth having a look at the article as it contains a wealth of interesting information and advice based on their research. In summary, they suggest that there are three tactics to be learnt:
• Connect, compare and contrast
• Encourage and distill
• Show integrity, authority and passion
In essence, what is stressed in the article is that the leader must be able to use metaphors and stories in such a way as to convince their followers (tactic one).
People need to be convinced by being able to make reference to situations that they can fully understand and appreciate; this will create the motivation to try something different or radical (tactic two).
Tactic three hardly needs any further explanation.
It is worth stressing that I am certainly not suggesting that military leaders make good politicians. Experience suggests that when they are taken out of the context in which they were trained, they may become as greedy, corrupt and as venal as any 'ordinary' politician.
Importantly, though, our current economic climate means that we desperately need the sort of leaders - both in politics and business - who can engender followership through their honesty and integrity.
It doesn't seem that much to expect!