Tipping Point of Leadership Effectiveness

India shining was really the theme in industry for the last few years. As the Indian economy grew and scaled new summits of achievement, bringing with it prosperity and wealth creation opportunities, it fueled our exuberance. It promised a future with years of growth and prosperity. We were, after all an economy which had not realized its full potential or as pundits put it – with huge value waiting to be unlocked. This gave fillip to industry in a manner unseen before and with it came the demand for leaders at every level to perform on a stage that was bigger and full of more promise than anything we had experienced before. This environment then, became the springboard and context in which many of our leaders were nurtured and exalted.
So is India living up to its promise?
In this note we will examine India’s leadership journey – to what extent is our success – or otherwise – dependent on the nature and skill of our business leaders? We will also explore the strengths and the particular competencies that underpin India’s phenomenal growth potential – the competencies that its best business leaders have used to deliver excellent business results.

Effective leadership is one of the most elusive keys to organizational success. While a number of organizations have successfully cracked the code by leveraging inspiring leadership into outstanding performance, many continue to struggle.

Adding to the challenge is the changing nature of leadership. Today’s flatter, faster, more flexible organizations, facing intense competition in a global market, require more dynamic leadership.

Moreover the last year and half have brought with it a unique set of challenges. It’s clear that all companies need strong leadership to survive the tough times ahead. The current climate is creating new challenges around which leaders will need to make quick, bold and sometimes painful decisions. These will save, preserve or build their company’s future competitiveness. Most leaders simply don’t know how to rise to this challenge because they have not led through a recession before. When times are tough, leaders need to lead quite differently and balance conflicting agendas. It is not an easy task engaging staff while simultaneously driving through tough changes.

This figure shows the most common situations which leaders in India face today and a comparison with their Western counterpart. Indian CEOs were focused on getting permission from the government and launching something new; while Western CEOs were more focused on strategic talent management efforts like coaching, deployment and recruiting.
Recession often means a refocus of strategy, route to market or how you make money – this means new role demands, new challenges for leaders and readjustments in how you manage and deploy talent.
What does this mean for Leaders ?
Whatever the circumstances, the essentials of good leadership remain the same, but it is likely that in a recession there will be a switch in emphasis; with certain tasks acquiring a higher priority.
Most businesses will need leaders who can:
  • Understand what’s happening in the market and translate that into what it means the business
  • Pragmatically refocus the strategy
  • Find value by rethinking how they make money and manage cash flow
  • Identify meaningful cost savings, implement those changes and execute flawlessly
  • Stay focused, create confidence and engage those around them.
The best leaders see every downturn as an opportunity to strengthen their organizations. Firms that panic lose key talent accelerating the loss of organizational know-how and intellectual capital. Organizations in a downturn need leaders that are ready for the upturn, aligning their teams with strategy and positioning them for success on the upward cycle.

Worryingly, Hay Group research reveals that today’s leadership talent appears to be merely average at creating the conditions for success. In our 2009 review of 1,249 leaders from high profile organizations operating in the Indian market, we found that over 60% of leaders weren’t engaging those they lead and in-fact were effectively demotivating them and only 18% were creating an environment that encourages high performance.

So, what’s going wrong? What makes the difference between a leader who creates a de-motivating climate and a leader who creates a high performance one?

Our research shows that it’s mainly down to Leadership Styles backed by over 30 years of research we have identified the six leadership styles that have the biggest impact on team climate – Directive, Visionary, Affiliative, Participative, Pacesetting and Coaching. We also know that the more of these leadership styles a leader has under his belt, the better climate they tend to create within their team. This is also clearly demonstrated in our most recent analysis with Indian leaders.
Ask any group of leaders the question “What makes a leader effective? ” and you will hear a whole range of answers from “setting strategy”; “they motivate employees”; “they create a vision”; “they build a culture”.  Still effective leadership eludes many people and organizations and this is because very little quantitative research has demonstrated which precise leadership behaviors yield positive results. However research conducted by Hay Group over the past 40 years has removed much of the mystery out of effective leadership. The research, based on extensive surveys on feedback by subordinates on observed behaviors, reveals that there are six different leadership styles.

These styles taken individually seem to have a direct, unique and demonstrable impact on employee motivation and in turn on its financial performance by up-to 30%.

And perhaps, more importantly, the research indicates that leaders with the best results do not rely on one leadership style, they use most of them in a given week – seamlessly and in different measure – depending on the business situation. This said, the three Leadership Styles that have the strongest propensity to drive long term growth are the

Visionary, Participative and Coaching Styles. In recent years we have also seen leaders use the Affiliative Style effectively to create impact In the adjoining figure we have shared with you the Leadership styles demonstrated by Indian Leaders. The biggest differences in Leadership Style demonstration by Leaders who create a High Performing Climate and those that create a De Motivating Climate are these three long term styles. Further within these styles – it’s the Visionary Style that really is the Tipping Point when it comes to differentiating Leadership Effectiveness or Impact. The ability of a leader to understand, appreciate and share with his team the Big Picture and align them to a common goal is key to creating leadership impact.

What enables a leader to demonstrate these styles in appropriate situations? Some leaders have a natural propensity to demonstrate a combination of styles and for others it is a consciously learned and practiced art.

It is the leader’s innate Personal Characteristics that enable them to build, wield and demonstrate a repertoire of styles effectively . One of the key elements that constitute Personal Characteristic is Competencies.

As Indian companies become more active on the global stage, it is timely to look at some key success factors for Indian leadership. What does it take to deliver sterling performance year after year? What are the key competencies of Indian leaders ?

Research conducted jointly by Hay Group and Bharat Petroleum, which has recently been published as the book ‘The Indian CEO: A Portrait of Excellence’, addresses this last question . The study shows that the best Indian leaders execute effectively in very challenging situations by using a particular set of competencies that clearly work in the Indian business environment. Whilst not exclusive to Indian business leaders these skills are the core strengths of Indian leadership.

The best Indian CEOs have competencies in four general areas:

  1. Socially responsible business excellence
  2. Energizing the team
  3. Managing the environment
  4. Inner strength.

However Indian leaders do show a striking, single-minded focus on growth, not just in relation to their own company but to the Indian economy as a whole. Their willingness to take risks is founded on their concern for the development of their country. Furthermore, India’s CEOs demonstrate extraordinary energy and persistence in overcoming the challenges they face. This is an area of strength frequently displayed by the Indian CEO. It manifests itself in business acumen and the ability to make hard decisions about strategy, execution and resource allocation. It is the founding skill for Indian CEOs and contains three specific competencies:

  1. Adaptive thinking: strategic insight into the business and adapting innovative methods and technology to the Indian market
  2. Entrepreneurial drive: unleashing the entrepreneurial spirit to find new growth
  3. Excellence in execution: ability to bridge the gap between the blueprint and the results.

Outstanding Indian CEOs excel in analytic and strategic thinking.

In the era of rapid growth, Indian CEOs have been focusing so much on managing external issues that they have overlooked the importance of building internal organizational strengths for future sustainability and continued success. Whilst a core group of Indian leaders has been exceptionally successful, the study suggests that as organizations become more complex and the competitive landscape more threatening, Indian leaders will need to balance their formidable intellectual and entrepreneurial skills with the ability to accomplish results through others.

Attributed to Mitali Bose – Managing Consultant & Building Effective Organisations (BEO) Practice Leader, Hay Group India

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