Thursday, December 22, 2011

Those you promote are also role models

Another story from "What to Ask the Person in the Mirror," by Robert Steven Kaplan. This story demonstrates that leader role modeling extends beyond what she does down to the people she picks as lieutenants.
The CEO of a Professional Services firm was in the midst of attempting a strategic repositioning of his company. His objective was to expand the services his company provided and move into new advisory businesses that were adjacent to the company's traditional business. I thought the strategy made a lot of sense and was consistent with the firm's distinctive competencies, and that there was a terrific market opportunity to provide these additional services to the firm's clients.

From my firsthand observations, I believed that this leader was an excellent role model. He not only articulated the central values and vision for the firm, but also was very scrupulous about leading from the front - that is, making sure that his behavior was consistent and exemplified the qualities that he wanted his leaders to exhibit in this firm: commitment to excellence, putting the client's interests first, coaching and mentoring top talent, and establishing an atmosphere of fairness.

Despite these built-in advantages, he was struggling to figure out how to execute the strategic repositioning that he had been advocating. He had personally chosen his senior lieutenants since he had become CEO two years earlier. He himself had always been a superb producer before becoming the firm's leader, and he naturally gravitated toward promoting other producers - that is, people like him - into key senior roles. In other words, when he made promotion decisions, he was willing to overlook shortcomings in his people's leadership skills, coaching skills, and moral compasses because he valued revenue generation far above these other attributes. Initially, this seemed to work; but over time, voluntary turnover among the top-performing quartile of professionals began to increase, and it became more difficult to move professionals between divisions.

I suggested that he ask his head of HR to interview a number of midlevel managers to learn more about the increased turnover. I also suggested that the HR head do exit interviews … to find out the reasons behind the departures. Finally, I suggested that he add some interviews with midlevel managers who hadn't left the company - yet. I agreed to meet with the head of HR first, to debrief what he learned, and then join him for a meeting with the CEO.

The HR head … heard that while the CEO espoused values of fairness and valuing the employee, the division heads he had put in place sent very different signals, indeed. No amount of speeches from the CEO or exemplary behavior on his part could make up for the behavior of his key subordinates. The constant refrain encountered by the HR head was that production is the be-all and end-all at this company. If that wasn't the case, why did the CEO fail to choose subordinates who exhibited the behaviors he was touting? Why did he always go for the producers?

The midlevel employees who had remained with the company were quite cynical about the new strategic initiatives and didn't want to sign up for them. While these new directions might make strategic sense for the company, they involved a substantial degree of risk. In particular, years would have to pass before production in the new businesses reaches the same level as in the existing businesses. And if production was the critical metric - as evidenced by all those promotion decisions - why should someone who was succeeding at an existing position decide to move, and thereby incur a risk? It also emerged that the division heads were actively discouraging key subordinates from moving into these new areas, because losing them might detract from production in their own divisions.

The CEO… was quite disturbed by this feedback. I encouraged him to first actively coach his key subordinates on what he expected of them. He should explicitly expand the criteria for compensation to include factors other than pure production. He should assure people who were transferring to the new areas that he would personally watch over their compensation and career progress. (pp 177-180)

Reprinted by permission of Harvard Business Review Press. Excerpted from "What To Ask The Person In The Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential," by Robert Steven Kaplan, Copyright (c) 2011 Robert Steven Kaplan; All Rights Reserved.

This leader changed his behavior to be a better role model. Yet he had promoted people like himself, with the same strengths and weaknesses, and when the organization needed to change, these subordinates were the impediment to doing so. Another reason that developing a diverse team is better - you can change more readily when needed.

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