Archive for the ‘Corporate Governance’ Category

Personal Factors in Leadership Success

September 26, 2011

When coaching leaders in the importance of

  • Engaging others in what they are trying to accomplish
  • Seeking the input of those who express contrary opinions
  • Earnestly understanding opposing points of view
  • Appreciating a different approach to problem solving

my words often fall on deaf ears.  Frequently, successful people believe their continued success depends upon rigid adherence to what they perceive has caused their achievements so far.  If command and control has been their ticket to success so far, they may have a difficult time understanding that changes in circumstance may render that style of leadership useless.

This is when I pull out a study done by Leadership Performance Systems, Inc. www.leadership-systems.com, The Relationship of Personal Qualities to Leadership Success.  While the study was done in 2003, the literature is only more emphatic today that building relationships with others is the key to leadership success.  The study synthesizes the data from over 800 articles on factors that contribute to leadership success or failure.

For many leaders, presenting them with clear and convincing data is the first step to changing their minds.  The chart below illustrates the results of this survey.  An example of the information contained in this study: the juxtaposition of how little “Technical Expertise” contributes to leadership success or failure, versus the significant the impact of “Relationship Building”.

The Relationship of Personal Qualities to Leadership Success

(Ranked by Derailment)

Percent Related

Percent Related

Behavior Cluster

to Success

to Derailment

Relationship Building
Caring, showing interest, fairness and trustworthy, understanding, displays empathy and vulnerability, seeks feedback

23.8%

45.3%

Self-Management
Career ambition, courage, adaptability, perseverance, self-awareness, time management, perspective taking, discernment, attention-focus, acts on feedback

16.7%

26.3%

Cognitive Complexity
Managing ambiguity and paradox, creativity, managing diversity and system complexity, seeks to understand unintended consequences

23.8%

10.5%

Technical Expertise
Functional skills, specific business acumen

5.9%

10.5%

Communication
Supportive, informing, confronting skills, presentations, writing clarity, demonstrates no pre-judgment, collaborative inquiry

16.4%

5.2%

Decisiveness
Action orientation, command skills, organizing, prioritizing, results orientation

13.4%

2.2%

Meta Competencies:

Flexibility – Ability to evaluate and adjust response.

Learning – Ability to learn from experience.

The Study:

In a study of 937 published research articles, an analysis is reported that indicates the percentage (%) of articles on topics related to success and failure in organizations.
Articles published in every major journal or bulletin since 1985 are included in the analysis.
Studies selected are listed in social sciences indexes related to leadership and management behavior.

Articles on Success Factors: n=683      Articles on Failure Factors: n=254

© 2003 Leadership Performance Systems, Inc. www.leadership-systems.com

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Corporate Governance: A Word of Caution About “Affiliated” Directors

November 12, 2009

There has been a dramatic increase in the attention given to corporate governance issues subsequent to the spectacular failures of board oversight at such companies as Enron and Global Crossing.  The most noteworthy response to these acts of corporate fraud was the passing of the Sarbanes-Oxley Act in 2002.  While the bill only applies to publicly traded companies, privately held businesses quickly realized that this was the new de facto standard for them.

Specifically, the term independence has taken on increased significance.  Directors who are independent of the day-to-day operation of a firm are deemed better able to represent the interests of shareholders than “inside” directors.

Unfortunately, as the need for qualified independent directors has risen, the risk of personal liability for directors has grown, causing many qualified individuals to think twice before accepting board positions.  Additionally, otherwise qualified, independent, directors must undertake considerable education to fully understand the scope of their oversight and policy making responsibilities in an industry that they may be unfamiliar with.

When CEOs and current board members seek the expertise needed for their boards, they quickly realize that they have such experts right under their noses in the form of the firm’s attorney, CPA, financial advisor, etc. What an elegant solution to their need for informed, non-employee, directors!  Or is it?

Board members who are also professional advisors fall into a category know as affiliated directors.  They may not receive a W-2, like an employee, but they do receive a 1099.  Many board deliberations have direct or indirect impact on the use of professional advisors, thus how independent can these advisors be as board members?

Affiliation takes other forms.  Directors need to be independent of themselves, not just the company.  Golf buddies and old friends on a board are loath to break the “code of congeniality,” the killer of challenging discourse.  Directors with close ties to a specific group of shareholders are likely to be conflicted.  Directors cannot “represent” a particular constituency, they must act on behalf of all shareholders.

CEOs and current board members must have the courage to look for director candidates who have proven talents, principal among which should be the ability to both collaborate and disagree within the decision making process.  Add a lawyer or CPA to your board?  Sure, but not your lawyer or CPA.

As you consider director candidates who would be deemed affiliated, my advice is, “Don’t do that!”  Directors should provide a competitive advantage to the organization.  Make that goal a reality by creating a board of truly independent thinkers.  I leave you with a quote by William Bowen, author of The Board Book: “We don’t learn much when we are surrounded by the likes of ourselves.”