Recently in Leadership Category
Just in case there is any doubt I am referring to culture and its significance in failing organisations.
A great deal of attention last week was devoted to the problems that were identified in the Francis Inquiry into Stafford Hospital.
This inquiry was set after the scandal of maltreatment of patients and the fact that there was a higher-than-expected mortality rate at the hospital between 2005 and 2008.
It should probably come as no surprise that a 'whistle blower', Helene Donnelly, had raised concerns 100 times over six years on the basis of what she witnessed. In particular she believed that at Stafford Hospital there was a culture of neglect.
The Francis Inquiry heard evidence from over 160 witnesses and sat for 139 days and has recommended that there needs to be a "fundamental change" in the culture if the NHS to make sure that patients are the priority rather than efficiency and cost reduction.
Significantly the report also recommends that it becomes a criminal offence not to disclose information about substandard patient care or mistakes that may have occurred.
Additionally there believed to be a need for a code of conduct which will guide the conduct of senior managers and that the recruitment and training of nurses should place more emphasis on compassion and the needs of patients.
When your read this it reads from the manual of the bleeding obvious and to quote from that wonderful sage Oscar Wilde, who was talking about the death of Little Nell in The Old Curiosity Shop, you'd have to have a heart of stone not to laugh.
In no way would I wish to disagree with the findings of Francis' admirable investigation; quite the contrary.
A couple of clichés come to mind when writing this blog; be careful what you wish for and the paradox of unintended consequences.
With respect to the getting what you want, I am referring to the BBC which was, rightly, criticised for its bungling and, some would argue, lack of courage with respect to the Jimmy Savile story.
For those whose names have become embroiled with the allegations of paedophilia the argument that Newsnight was trying to make amends simply won't wash. The fact that George Entwistle, someone widely regarded as a good person has lost his job after only 54 days will be of little consolation.
Some are going so far as to say that the BBC has lost its way and questioning whether it has a future as a public service broadcaster.
For its detractors, those that claim the BBC is a nest of left-wing bleeding heart liberals the current crisis is a gift and, at the very least we can expect them to call for funding through fee to be reviewed.
Any talk of an existential crisis at the BBC is surely premature. It is a widely admired and respected 'brand' and, recent events notwithstanding, is trusted in its reporting acroos the globe.
What does seem to be needed, though, is a review of the structure of the BBC and that its stewardship through effective leadership is given serious consideration.
Additionally, the bureaucracy at the BBC would make even the most hard-hearted weep!
This is something that needs tackling because it sure didn't help in avoiding the current disaster; something that 'national treasure' David Dimbleby suggested on Radio Four this morning.
So that's the BBC fixed?
The last week couple of weeks have told us a great deal about the world of banking; particularly that Barclays was engaged in manipulating the so called 'Libor' rate to its advantage.
Banking, lest we forget, played its part in causing the current economic crisis. So, the fact that there are continued problems is worrying.
The word credit is based on the Latin credo which means to have belief or confidence. Traditionally it was in us that banks required confidence. Now it is the other way around.
Perhaps the key question we should be asking is why organisations, such as banks, in which we have invested so much trust in the past, seem to be so willing to engage in action that we find reprehensible?
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.
The recent brouhaha surrounding the bonus payment to Stephen Hester, the chief executive of RBS, raises many interesting questions; not the least of which is how much do you need to pay to secure the services of excellent leaders to run organisations both private and public?
That he hasn't actually taken his bonus should not detract us from asking how much employees - most especially at executive level - really need to be paid to achieve objectives?
In the case of Hester, the argument that was put forward to justify the almost £1million bonus was that this is what the previous government agreed with him in his contract after the departure of the infamous Fred 'the shred' Goodwin.
Given that the government was forced to save RBS by taking majority ownership following the global liquidity crisis of 2007 which, lest we forget, was caused by the hubris of 'spectacularly successful' business leaders like Goodwin, the objective was to ensure that stability returned as quickly as possible.
Hester took the job on the basis that he could do this in five years.
The argument that raged over Hester's bonus was whether in the current age of austerity it is right and proper to pay a bonus to a chief executive of what is effectively a state-owned bank, and who already receives a basic salary of £1.2million, for not achieving his target of achieving a return to success as was apparently promised on his appointment?
Sadly, it seems, the facts of what Hester has achieved (and not) have been lost in the 'wars of words' about what is acceptable within what David Cameron described recently as 'moral capitalism'.
There is no doubt that he has had some success. The bank is now profitable making pre-tax profits of £1.2billion for the first nine months of 2011 following losses of £3.6billion and £1.13billion in 2009 and 2010.
Hester's achievement in reducing RBS's balance sheet by £600billion must be balanced against the fact that its share prices is down by over 40% from a year ago.
We, the taxpayers who bailed RBS out when it could have gone bankrupt, now own 82% of an asset that is worth less than half of the £45.5billion injected to save it.
Hester's clear objective on his appointment was to ensure that RBS's equity value was such that it could be offered back to 'the market' at no loss within five years (and it was hoped a return on investment).
If RBS's share price is used to evaluate Hester's success, it is clear what the market thinks and hence the current controversy concerning his worth.
So how much do you need to pay to ensure success?
Ask any football fan and they will gripe about the greed of football players; particularly those who are regarded as 'world class'.
However, these fans recognise that there is a market for securing the services of the top players.
No-one who acknowledges the continued success of Barcelona Football Club can deny that its manager Josep 'Pep' Guardiola is one of the best. More importantly, it has some of the best players in the world such as the brilliant Lionel Messi.
People as good as Guardiola and Messi don't come cheap. Interestingly, at Barcelona FC the decisions about who to appoint and what pay is required to attract them is taken by the owners who, unlike most other football clubs, are the fans themselves.
Clearly consensus serves Barcelona well. But what does that tell us about running most other organisations which, to be fair, are a lot more complex than football?
Leadership is one of the most analysed and written about aspects of management. As the seminal writer Charles Handy argued in his book Understanding Organisations, the search for the secret of leadership is like the quest for the Holy Grail; an entirely honourable and understandable objective but ultimately fruitless.
Nonetheless, the search for what is really effective and successful leadership goes on regardless.
Offering simple answers about what effective leadership consists of is unhelpful and I am not intending to do so here.
However, in my own research into what creates successful (excellent) organisations, most particularly those regarded as 'world class', the issue of leadership is ever-present.
What is utterly obvious in analysing such organisations, and they exist in both the public and private sector, is that whilst the importance leadership is explicit, every person involved in every process is encouraged (and expected) to play their part. In effect, every person is a leader.
When Dr. Deming Dr. Juran, both of whom I have referred to in an earlier blog, travelled to Japan in the aftermath of its defeat by America, they emphasised the need for senior managers to be responsible for instituting leadership which ensured that improvement became the obsession of everyone.
Critically they both stressed to their audience that they should not follow the Western example of decisions being taken by managers in isolation to the workers who would carry them out.
Deming was especially adamant that the greatest responsibility of senior managers was to motivate by appreciating efforts of those working at operational level and that by working cooperatively the key objective was to understand the causes of problems (what he called 'variation').
Simply blaming people when things go wrong will not help. He advocated the use of simple statistical process control (SPC) to achieve improvement.
The fact that some of the very companies Deming advised in the early 1950s are still regarded as 'best in class' should tell its own story.
But whilst Deming believed that blame never motivates people, he was equally vociferous that linking performance to reward does no good either.
For him, performance-related pay was simply wrong. As he argued, given how little influence senior manager has upon the final results, what is the logic of linking their pay to outputs?
Rather, he advised, managers should, for whatever basic pay they are believed to be worth, take responsibility for developing a system of working (and a culture) in which every person seeks continuous improvement.
It is not hard to guess what the late Deming would have made of the debate surrounding Hester's bonus. He would probably have criticised those who agreed to this as fundamentally misunderstanding his philosophy.
Moreover, he would hardly have approved of a system of remuneration in which basic salaries of senior executives, such as Hester, are routinely paid more than 40 times as much as the median worker in the UK.
One of the joys of being involved in teaching and research into organisations and management is the ability to consider the application of concepts in practical situations.
The analysis of case studies can be especially illuminating and much can be gleaned from exploring the reasons why success or failure occurred.
As students discover, the corporate world is replete with examples of the latter.
The case of Kodak, which because of its market dominance until the 1990s was the one of the world's top five most valuable brands will probably become a classic case study in what can go wrong.
The recent financial disaster at UBS brought another UBS story back into the news. Back in January a detailed dress code guide for UBS staff was leaked to much hilarity.
There was also advice on how to apply body lotion and perfume, on not eating garlic and not to have tattoos.
This was held up as an example of an organisation obsessed by detail and interfering in its employees lives.
A Chief Executive once told me: "We have a sustainability programme in place, but getting all the employees engaged remains difficult. You have commitment at the top and middle levels of the company, but below that people don't care. The bricklayer does not think about waste and landfill when he works. He just wants to lay bricks and go home."
This comment confirms the untold truth that when it comes to sustainability, the only measure of success is behavioural change, not the number of glossy Sustainability / Corporate Social Responsibility (CSR) Reports published.
I feel the need to make a case to support PowerPoint as I think it has a bad press - even beyond it having been spawned by the universally used and equally unpopular Microsoft.
The main benefit I see is that PowerPoint forces you to arrange your thoughts in a logical sequence - although you can easily shift things round if you change your mind during the design process.
Most of all though, it makes us be BRIEF.
As an academic, I am surrounded by colleagues who are immersed in their subject. For many years, if you asked me to tell you in 5 minutes what my PhD was about, I couldn't tell you.
Now I can (at emergencies, fire commanders focus on four key factors when making their decisions...). PowerPoint is great at making you do this.
I saw reported in the Post last month that our intrepid restaurant critic was taken aback by the proactive way Carluccios responded to criticism (incidentally their restaurant in Stratford is one of my favourite places!) so I hereby offer one of our largest companies the same opportunity. It is in fulfilment of my brief to name names and my previous attempt to bring down the dreadful online shopping business La Redoute has either failed as they are still in business or perhaps I succeeded and they have made major changes? Either way, I wouldn't know because of course I don't shop there any more. So I am now going to direct my attention to a local supermarket in the hope of assisting the new(ish) CEO Philip Clarke understand where there might be a weakness in the juggernaut that is TESCO.