Transformational Leadership Should Lead Market Recovery

You are probably as fed up, and frustrated, as I am with corporations to whom you entrusted your hard earnt money, and who are not returning solid results, but instead trying to confuse you with beautifully scripted results and announcements that portray a positive future and a one time exceptional (usually poor) result. These promises for a bright future though, never seem to materialize with funds in your dividend account, except in the good times, do they?

How often are the questions asked: WHY are there ongoing one time exceptions? Who just one quarter ago did not expect what should have been expected? Why are there redundancy round after redundancy round in some large companies? Why were all those people employed in the first place? Can someone in a very senior position not plan more than three months ahead? Where is the holistic leadership, the sound planning, and the real understanding of what contribution the human resource is making, or could make? Does anyone senior in that organization touch, and really listen to the people who are in the trenches of commerce, or do they only consult their trusted circle?

In the preparation of a recent proposal, I learnt that an entire division had been laid off redundant due to lack of profitability. In that division there was a core of lower level managers who had the solution to a return to profitability for more than a year, but nobody in the Executive was prepared to take the time to listen. Their plan was so effective that a staff buyout has already seen a fast return to profit!

Any CEO can look good in boom markets, it is not hard when the market is growing rapidly and the customers cannot get enough of whatever it is you have. Some CEOs manage to retain their roles, whilst even in good times still bringing in very average results!

What differentiates the top leaders from the masses is the results they can consistently deliver, even in recessionary economies. The planning they undertake with a full understanding of exactly how their businesses operate, and what talent they have on board. The effective people management where the best are retained, and the weakest quickly identified and moved on. The inspiration and passion with which they infuse their organisation every single day. The sense of identity they encourage.

If you look at the history of companies with exceptional leadership, then you will see organizations that perform consistently well and have minimum redundancies. These organizations are unfortunately very rare, and are often privately held where the owners personal funds are directly impacted. He or she cannot just resign and walk away with their last bonuses, into a new life. These private entrepreneurs lives are inextricably interwoven with their companies, but sadly we rarely get the chance to invest in these leaders.

There are some examples in todays public company sector that stand out as beacons in a bleak economy, these companies have had minimal lay offs of employees and yet are still returning forecasted positive results, even in the so called global recession. They are just quietly going about doing what they are supposed to be doing, focusing on selling their goods and services and responsibly utilizing their funds for the growth, and long term future, of the organisation. They planned for recession, identified the impact early and adjusted or reorganized accordingly. They likely grew, without merger or acquisition, in the gloom. These companies have exceptional leaders, usually long term passionate and committed leaders, the Truly Great Leaders of todays’ corporate world.

Many, particularly large, corporations are hampered by serious issues that are overwhelming productivity that include, but are not limited to:
Blame cultures that allow people to spend far too much time on who did it, rather than how to fix it.

The amount of time key executives spend preparing large and complex presentations for internal use. The use of internal Powerpoint has become truly viral in many organizational cultures. It is eating productivity, and executive time, like a cancer.

Enormous amounts of business analysis and reporting that is actually read by noone, not acted upon and becomes just an adjunct necessary to support the powerpoint presentations.

Complete undervaluation, even to the edge of irresponsibility, towards the human resource. Ever more elaborate, automated systems are replacing true face to face evaluations and career planning for employees. This results in employee frustration, waste of talent and extra headcount. It also results in poor performance employees having the chance to stay longer with their umbilical cords firmly plugged in. In addition, often new people are hired when existing people could manage expanded roles, but no one knows their CV, or their talent, anymore!
Executive overload with both personal stress, and too many senior roles created, due to the amount of time spent on internally focused matters. This results in an inwardly looking organization with low customer satisfaction levels.

Transformational Leadership, if embraced fully, can increase productivity by as much as 50% in the lower level roles, and up to an additional 60% in senior executive contribution to the ROI. Under this type of leadership, every department in the organisation will view any function, or operation, from the position of the customer and/or the regulations. In other words if it doesn’t improve our fiscal responsibility or customer experience, why are we doing it? Positive growth in ROI comes primarily from customer satisfaction and a well run business, where the most expensive asset – humans – are fully utilized and productive.

Transformational Leadership must start at the top, the person charged with leading the organization. It is less effective if started any lower in the organization. If the CEO or COO still expect yesterdays values, when the executive management layer is embracing transformational leadership principles, then you have a damaging disconnect that will impact the productivity and frustration of the management team. Once embraced by the Leadership, it should be taught and rewarded down through the ranks to the lowest levels of management.

Transformational Leadership principles will ensure that every decision maker in the organisation knows exactly what to expect, and what is expected of them. There will be consistency in all matters. It will ensure that every person expected to act in the companys’ interest will really understand the business, and how it interacts from one part to another. Decisions will be taken holistically, and quickly, instead of agonized through analysis loops and still made without knowledge of the impact on another area of the business.

Mergers and Acquisitions will be better recommended and executed. Cultural synergy will have new and productive significance. Reporting will be more accurate and consistent, because unless there is a substantial disaster to which no one could expect to have been prepared, then the results should be relatively predictable!
A huge challenge facing CEOs today, is that they are often expected to fill the role of a talking head more than 50% of their time, yet still expected by Boards of Management to understand the machinations of their businesses. Then this same CEO reports a set of numbers presented to him or her, by a team of business analysts and yet really the CEO may not have the depth of understanding on the operational side of their businesses to be certain of the outcome.

A consequence of long running good times in the share market, is unrealistic expectations of shareholders for quarter on quarter results, resulting in many CEOs being unable or unwilling to consider the consequences of next year until it arrives.

In the 80’s, responsible organizations were supposed to have short and long term plans for their businesses, a long term plan being usually 3-7 years. Today, a long term plan rarely extends beyond the year except for development of product. This phenomenon is blamed on the internet age, but actually that is an excuse for poor reactive decision making at each quarter end.

There is more reason than ever that long term planning must also still be clearly evidenced in large organizations. In my experience no one gets anything they expect without a solid written plan! Let alone a large corporation with thousands of employees.

A transformational leader will present a consistent and deliverable plan that that will regain shareholder confidence by solid execution, and attract particularly institutional shareholders looking for longer term, sound investments with lower risk. Pension plans should not be gambled on decisions taken by stressed, underinformed CEOs acting reactively to try and deliver an ill advised forecast!

If you think this article is harsh, then you must have your funds invested with companies run by Truly Great Leaders already! Congratulations!

Most of us did not, and we are suffering today the consequences of poorly selected leadership in many public companies.

Now is the time for Transformational Leadership.

Continuing poor performance from those entrusted with enormous amounts of shareholder funds is no longer acceptable to investors, regardless of the economy, forecasts should be met and correctional activities that make full use of human resources should be applied where necessary.

Truly Great Leadership is just 12 simple holistic principles that if applied will transform an organizations results.

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