Wednesday, September 1, 2010

Economics: Leadership Not Rewarded

TORONTO, ONTARIO - Being on an interminable job search, I spend a fair amount of time at job web sites, and they offer an exhaustive amount of advice to job seekers. I ignore most of it, since it is either selling a service of dubious value or it's material I've seen dozens of times before. Every once in a rare while, I actually click on something that proves interesting. Such was this link from the Stanford LinkedIn group by Valerie Hausladen on the five unspoken rules all great leaders follow.

My first impression upon reading the essay was that I stacked up pretty well on the basis of these criteria. I might not be the one most likely to come up with a vision, but I think I've done a good job in the past of communicating "the right course" other people had originated and implementing the details to move it toward reality. I doubt anyone would question my propensity to dig in and lead by example, listen to feedback on things that weren't working, express understanding of people reporting to me, and take responsibility for issues rather than assigning blame. I can think of a fair number of former bosses and people I've worked with in my professional and non-professional life that exhibit the same qualities and would also quality as great leaders according to Hausladen's essay.

Yet, where are we now? Not one is actually running a significant organization, except arguably for a couple who started their own small businesses, one because he was fed up with the corporate world. A number of us are unemployed at present. The balance are actually in diminished positions compared with where they had been in the past, leading smaller operations than they used to or placed in a dead-end position by those above them.

There are a limited number of reasonable explanations for that. For example, Hausladen could be wrong about what constitutes great leadership, or my interpretation of the embodiment of those traits could be lacking. I doubt those kinds of possibilities, as what was accomplished when the people I identified were running things seems to compare favorably to what preceded or followed in terms of productivity and milestone accomplishments.

That leaves explanations along the lines of "the corporate world punishes great leadership." How is that possible, if we accept the premise that corporations act in their own best financial interest, which I do? Does great leadership not result in higher profits?

Hausladen cites charisma as one reason for a disconnect. Charismatic people, she argues, are often given leadership positions over competent people. I usually use less charitable language to describe people that over-market their own abilities, and this is clearly one reason for the phenomenon. However, if that were the only problem, the "invisible hand" of the market would eventually reveal their relatively lower leadership capabilities and successful businesses would jettison them.

There has to be another explanation, and I think it comes down to a culprit cited many times on this blog and elsewhere: the short-term thinking of the corporate world. Great leadership working toward a long-term vision doesn't necessarily produce more profits in a quarterly reporting period. In fact, in the shortest term, it might even spend more money on quality people and infrastructure to work toward the vision. That's not acceptable in the current corporate environment. The rewards come to people that squeeze the maximum possible return both in the current quarter and over the course of years.

Until that changes and great leadership is allowed the time to pay off in the form growing businesses producing more profits and better-functioning organizations creating lower employee turnover, the great leaders will continue to find themselves more often than not looking at a pink slip or a demotion, and the bean counters will get the promotions.

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