Look into the soul of any great leader and you will find a good leader. But, if only that were the case. Some leaders, those who crave and bathe in the spotlight, are in fact not so great. Others, who are highly effective (and modest) and possess the five key characteristics this author describes, are good leaders first and foremost. Which is what, in the end, makes them great.
The extraordinarily successful book From Good to Greati focused attention on the kind of leadership that was required to achieve enduring high performance. While it has been one of the best-selling management books of all time, it tends to focus on the effectiveness dimension of leadership to the virtual exclusion of other important dimensions. In my view, you cannot have truly great leadership without considering the broader challenges that face organizational leaders today. Great leadership must be good leadership too.
The word “good” is an interesting word in the English language because of the many meanings that it has. No more so is this true than when it is used in conjunction with the words “leader” or “leadership.” Good leadership can, indeed refer to effective leadership – getting followers to pursue and attain goals. But it can also refer to the purpose or goals that leaders pursue and whether those are deemed fitting by the societies within which they operate; it can refer to the ethics of leaders – doing the right things in the right ways. It can also refer to the ways in which leaders make followers feel good and, indeed, the way they feel about themselves as leaders.
Good as effective
It goes without saying that good business leaders must be highly effective in getting people to follow them in pursuit of selected goals. Highly effective leaders:
- Recognize and analyze the driving forces in the political, economic, societal and technological environments in which they operate and understand the impact of these forces on their current strategies;
- Develop winning strategies based on sound competitive analysis, understanding buyer-behaviors, building core competencies and selecting the right domains in which to compete that will satisfy the expectations of their shareholders and other stakeholders;
- Execute those strategies brilliantly by involving people in their formulation and implementation;
- Evaluate the execution and results systematically, making strategic adjustments as indicated;
- Beyond this, they continually build for the future by increasing the capabilities of their organizations, divisions, departments, teams and themselves.
Really effective leaders drive for results now while simultaneously building for the future. It is simply not acceptable to view these as trade-offs, as perhaps used to be done by coaches of perpetually losing sports teams. The performance bar is continually being raised and to be three, four, six percent or more than last year is baked into the expectations that we have of leaders of organizations today.ii
Much has been written about effective leadership. Suffice it to say that we expect our leaders to: work with their followers to develop a compelling future vision; enlist the support of others – inside and outside their organizations – in achieving this vision; energize, enable, and encourage high performance; empower people to act within an agreed-upon vision; and to be exemplars of the values of the organizations they lead. To do this requires both competencies and character. Competencies determine what leaders are able to do; character determines what they will do, how they will exercise those competencies under various circumstances. Good leaders, especially those who endure, are seldom one-dimensional, simple individuals. They are often complex, contradictory and multi-faceted, especially in how they respond to different situations: confident and humble, assertive and patient, analytical and intuitive, deliberate and decisive, principled and pragmatic, among others.
When the character Gordon Gecko uttered his famous phrase “Greed is good” in the movie Wall Street, he reflected the view that managers, by single-mindedly pursuing the interests of shareholders, are fulfilling the true purpose of the business entity. The late Milton Friedman, the Nobel prize winner and high-priest of free-market economics, held that this approach by business produces the most good for the most people since other institutions – government agencies, trade unions, consumer protection associations, etc. – will curb the excesses of business and that the maximum aggregate benefits come from the tension between these forces. Leaders of businesses must then pursue shareholder interests exclusively and should be compensated for so doing. They should eschew the role of social arbiters attempting to balance competing interests, a role with which they are neither charged nor competent to perform. This is not an immoral or amoral argument on the part of Friedman. Indeed, it holds to the precept that the moral action is the one that brings the most good to the most people. Attempts to demonize Friedman for this argument are misguided.
Such a philosophy does not negate the importance of other stakeholders in the business enterprise. Indeed, customers, suppliers, employees, governments – national, regional and local – and the broader societies within which these businesses operate are also very important. Businesses benefit suppliers but also depend on excellent service and quality from those suppliers; they pay wages to employees but depend on their engagement and commitment; they provide value to customers but also benefit from the dependence of customers on them; they provide employment to members of communities but also depend on getting planning permission from a local government when they want to put up a new building, and they pay taxes to governments but also seek subsidies and other protections. But it subordinates their importance to the fundamental primacy of shareholders. They are to be considered only to the extent that they may be instrumental in creating a return to shareholders.
The alternate perspective is that shareholders are but one group of stakeholders in the business enterprise and that there are other stakeholders such as customers, suppliers, employees, community groups, pensioners, etc. to whom the business enterprise has obligations.
These obligations stem from the reciprocal social and moral obligations between the parties. Businesses owe senior employees job security and a rising standard of living because employees who have worked for the organization for many years have been committed and involved in the business; they should not pollute or degrade their environments because they are responsible moral actors in the societies within which they operate; they should not outsource work to countries with poor labor or environmental standards because to do so is morally wrong for employees in those countries since it perpetuates those poor standards while damaging the livelihoods of those on the countries from which products were outsourced; they should not deplete natural resources because it will make the societies in which they operate unable to sustain economic and social life for generations to come.
Leaders of businesses, as viewed from this perspective, must seek a fitting balance between the interests of various stakeholders both when they coincide and when they differ, constantly seeking “win-win” or compromise resolutions when conflict occurs between stakeholders’ interests. If this balance or integration sub-optimizes profit and reduces shareholder value, good business leaders should take the high road of “balance of interests.” As leaders, business people cannot avoid the requirement to seek this balance even ‘though – – as the protagonists of shareholder primacy point out – they may be ill equipped to do so. They can seek advice, sift arguments, reflect and consider different interests and endeavor to find creative solutions that either satisfy all parties’ demands or compromise between them, sub-optimizing shareholder value in favor of some broader, societal contribution.
This debate is ongoing. Sometimes it is trivialized by those who seek to make the case that striving for good purpose is axiomatic with shareholder value creation, and that in the long-run business does well by doing good. This negates the reality that by consolidating plants, profits are increased and communities are destroyed; by pursuing minimally legal environmental compliance, costs are minimized; that by selling legal products that may be harmful, profits are generated for years or even decades. Recent hard-edged research indicates that the financial returns to corporate social responsibility are dubious but, despite this, there are increasing demands on business leaders to expand their horizons to embrace this ethic.
The excesses of business and business leaders have been a pervasive if not dominant theme in the popular business literature in the last decade, leading not only to new legislation but to a widespread revulsion with the ways in which some managers have been proven to have ripped off shareholders, customers, employees, creditors, and other stakeholders. Unlike the broader issue of corporate social responsibility, this does not address the fundamental purpose of business but, rather, the ways in which business people act. It recognizes that many decisions made by managers and executives benefit some people at the expense of others. Whenever someone may be hurt by an action of management, there is an ethical decision involved.
Business ethicists recognize three distinct forms of unethical behavior.iii The first of these are actions that are clearly not within the scope of the role. Chief Financial Officers should not fiddle the books, senior executives should not pad their expense accounts or charge personal expenses to the corporation, corporate directors should not trade stock based on inside information; companies should not conspire to rig bids; defense contractors should not charge unrelated expenses to cost-plus government contracts; and so on. In many cases we have laws and regulations that expressly prohibit these behaviors and, in most cases, breaking laws or evading regulations is prima facie unethical.
The second type of unethical action is one that serves the purpose of the role but pushes beyond the types of behavior that society would consider morally right. So, we expect marketers to emphasize the benefits of their products but they should not lie about the performance of their products or conceal dangers that might be associated with their use; human resource managers should not mislead people about terms and conditions of employment to induce them to accept a job; salespeople should not spread false rumors about the financial health of their competitors in order to deter customers from doing business with them; financial advisors should not tailor their advice to meet their rewards to the detriment of their clients. Clearly, different societies have different tolerance levels for these behaviors and what is considered ethical in one society might be considered beyond the pale in another.
The third type of unethical action is one that describes something that should be done but which is not done – an act of omission rather than commission. These non-actions that many people consider unethical include a failure to recognize the talent that exists in minority groups, failure to give people regular performance reviews and candid feedback that would help them improve, failure to point out to people that their choice of products and services may not be in their best long-term interests, and failure to review a client’s financial portfolio to ensure that it is appropriately balanced for their investment objectives. This type of unethical action is often fiercely debated since it clashes with other philosophies such as “buyer-beware”, or “you get what you negotiate” that appear to put the onus on the customer, employee, or other party. Unlike the more black-and-white non-role acts, this type of unethical behavior is also more subject to gradations, with some people expecting minimal compliance and others expecting standards of excellence.
When businesses meet or exceed the expectations of the societies within which they operate, they will be free to operate. When they cease to meet those expectations they will be regulated, controlled and, perhaps, even be put out of business.
The issue of what “society” condones and what is right is not trivial. At the extreme, the anti-Semitic laws of National Socialist Germany were both popular and passed by parliament as, indeed, were the anti-apartheid laws of South Africa. Petty bribery – and some that is not so petty – is commonplace in some societies yet frowned upon in others. Some societies protect intellectual property rights whereas others either have no protection or, if a law does exist, may not bother to police it. The extent to which something is criminal or not, widely or narrowly accepted, or considered a civil tort may vary widely from place to place.
Quite often, people make an assumption that “if it’s widely done, it must be Okay!” With this assumption, there would have been very little if any progress made over the years to deal with the blatant discrimination against racial minorities, gender-based discrimination, or indeed ANY act of discrimination by a powerful group imposed on a less powerful one. Even if something is widely practiced, people may not think that it is right. For example, while corruption is widespread in business in many parts of the world, it may be expressly forbidden by both legal and moral authorities but, because the powerful can escape the sanctions associated with the disapproval, they may perpetuate the practice
It’s a leap from thinking about “good” as effective, purposive and ethical, to thinking about the importance of making people feel good or feeling good about your leadership. Yet it is a critical leap. The sociologist, Amitai Etzioni, proposed that people comply with leadership if they are forced to do so, if they are paid to do so or if they are moved by ideas and ideals so that they want to do so.iv When people are forced to follow, they feel alienated; when they are paid to follow, their followership can be bought by others or will cease when the money stops flowing. When they buy into ideas or ideals and when they realize them through effective leadership then the positive feelings generate their own energy and momentum and wanting to be led is more likely to result in extraordinary and sustained support for those shared goals. The leaders of slave or mercenary armies were never as durable as those whose armies were fired up by ideals and values.
The great leader described by Jim Collins is one who through “level-5” leadership embraces fierce determination and humility that leads to involvement and commitment by his or her followers.v They develop a sense of self-efficacy, of value, of worth. They want to be led by such leaders, not because they are sheep but because they understand that they can achieve their goals through those leaders. And they are prepared to exercise leadership themselves within the umbrella of the organizational leader who makes them feel good about themselves.
None of this is intended to suggest that the good leader should always adjust to the surface wants and desires of those who are to be led. Indeed, panderers generally make poor leaders since they end up promising too much to too many and cannot deliver the goods.
A cynical perspective on leadership suggests that leaders find out which way the parade is heading and scramble to the front of it, or that leaders take people where they really want to go anyway. Some have proposed, judgmentally or paternalistically, that leaders take people not to where they want to go but, rather, to where they really need to be. Perhaps it is more accurate to suggest that great leaders satisfy people’s deep needs rather than their surface wants, even if they may not immediately realize their needs.
The ability of leaders to understand their potential followers’ needs has been associated with great religious, military, political and, yes, even business leaders. Sometimes this has resulted in great good and sometimes in great evil. Sadly, not all effective leaders who tap into their followers needs and motivate them to action do so with good purpose in mind. Genocides, persecutions, and the unrelenting pursuit of corporate greed through fraud, misrepresentation, or even callous indifference of the impact of their actions on others have left their scars.
However, the good leader never ignores how his or her followers feel about their leadership. They know that short-term pain must be followed by long-term gain, that efforts must lead to rewards, that sacrifices will be made but not forever. And they nurture their followers through these tough times. They draw on wellsprings of optimism when things are not going well, without losing their grip on reality.
Leadership is also hard work, especially when times are tough, when things are not working they way they were planned and people are beginning to question the credibility of leadership. Often the only thing that leaders have to draw on at those times is their own self-confidence, their sense that they are doing the right things for their people. The borderline between self-confidence and arrogance, between steadfastness and hubris may be very narrow and the leader treads it all the time. If they are to cope with the stresses and strains of leadership, it is essential that they feel good about what they are doing to make it worth the effort.
The “Good” leader
There will always be debates about what constitutes good or great leadership in a business context, and each generation will yield its crop of candidates. Creation of shareholder value will always be high among the criteria considered, as indeed it should be. But as societal values embrace broader concerns, as we judge not only what these leaders appear to have achieved but also how they have done it, as we assess leaders not just in terms of their achievements but on their contributions to the societies within which they operate, I suspect that the emphasis will shift toward the goodness of leadership as described in this article as a necessary condition for leadership greatness.
There is an argument to be made that, given a long enough time frame, “Goodness” as I mean it and “Greatness” as suggested by Jim Collins converge into one and the same thing. That may turn out to be the case but there is too much press given to leaders who have yet to achieve either. Perhaps it is we – the public, who look to our business leaders to drive the prosperity of this and future generations – who need to be more restrained in granting this ultimate accolade and granting someone the title a “good leader.”
i Collins, J. C. (2001). Good to great : why some companies make the leap – and others don’t. New York, NY, HarperBusiness.
ii Gandz, J. (2005). “The Leadership Role.” Ivey Business Journal 66(1): 5.
iii Bird, F. B. and J. Gandz (1991). Good management : business ethics in action. Scarborough, Ont., Prentice-Hall Canada.
iv Etzioni, A. (1961). A comparative analysis of complex organizations; on power, involvement, and their correlates. [New York], Free Press of Glencoe.
v Collins, J. (2001). “Level 5 leadership: The triumph of humility and fierce resolve.” Harvard Business Review 79(1): 66-76.