The Game has changed. Leadership is widely known to be a significant factor in determining a company’s overall performance yet it is a challenge that has not been properly addressed by many Australian companies.
If a company has good leadership, market analysts tend to award a ‘leadership premium’ of up to 15.7% of company share price. Conversely, the share price is discounted by up to 19.8% if there are signs of ineffective leadership.
Deloitte conducted a survey and found that 86% of HR and business leaders cited leadership as one of their most important challenges. Furthermore, 50% said their leadership development programs are ineffective or don’t provide lasting benefits.
Leadership is about getting entire teams of employees passionate about working together. Leaders have strong communication skills and are well-versed in problem-solving so when they encounter adversity, they must be able to collaborate with their team members and find solutions together.
‘For most leaders, the greatest challenge is not understanding the practice of leadership. It is practising their understanding of leadership.’ — Marshall Goldsmith, author or editor of 35 business books.
Leadership is developed over time through detail-oriented learning and consistent follow-up. Development consists of real-time feedback on the job rather than reliance on leadership theory. Daniel Kahneman, a Nobel Prize winner and author, agrees and says that ‘true intuitive expertise is learned from prolonged experience with good feedback on mistakes’. Typically, organisations only invest 5% of their time in training follow-up, even though follow-up can change mindsets, embed skill sets and integrate new mental maps that forge lasting habits.
There are three steps to develop leaders on the job:
1. Identify the problem
Deciding which leadership behaviours to develop requires awareness of the behaviours and their impacts on results and the relationship. Awareness precedes and directs change, and creates motivation.
2. Understand the cause
Determining the intention behind the behaviour is critical. Trying to change behaviours without addressing the underlying motivational drivers is like painting a car red and expecting it to go faster—changing the colour does not change the engine.
3. Design an action
Once goals are clear, determine a new pathway for improved performance.
Take Home Message:
Leadership development must change, and leaders must be adaptable, responsive, and continue to develop their skills. If a leader is well-equipped to develop leadership capabilities within their team, they will create a ripple effect that will lift the organisation’s results.