Below is a transcribed excerpt of the 30-minute interview. To download the audio in full, click here.
NASTASSIA ARENDSE: Welcome to the Moneyweb webinar with CEB, now Gartner. Today, we are talking predictive leadership. Research has come out saying that nearly half of leaders, some 46%, who are moving into new roles fail to meet their business objectives in the first 18 months of their tenure and, of course, this can have a ripple effect in terms of the leader’s underperformance – it can create risk and costs for an entire business. This does impact a lot of the objectives that a business may have in place. But to talk about predictive leadership and how exactly, like anything else, you can predict leadership performance, I’m joined in studio by Brandon Pleaner, managing consultant at CEB, now Gartner. Brandon, thank you so much for your time.
BRANDON PLEANER: Good morning and thank you very much for yours.
NASTASSIA ARENDSE: Perhaps you can comment on what kinds of challenges leaders are dealing with in the current environment, where things are constantly changing and where they are required to adapt and be agile?
BRANDON PLEANER: Well, I think you hit the nail on the head. A starting point is pressure around leaders having to be successful in every single instance. It’s [also] about appreciating and understanding that the global world is changing and as a consequence, you need to free up the mindset of your leaders so that they are able to adapt to change. A big part of predictive leadership is about changing the mindset of your leadership team, together with the organisation as a whole.
But if we look at some of the common changes that are happening at the moment, we know in the first instance that leaders are spending less time with their teams, for example, and that’s a consequence of geographical expansions that we’re seeing in organisations. Merger and acquisition activity has increased by some 40% since 2003, so we’re seeing leaders and organisations having broader spans of control.
We are, however, seeing a shift towards social leadership where members within organisations and teams take as much guidance and direction from their colleagues as they do from their leaders. This means that as a leader, I need to have a different view on the role that I fulfil within an organisation and appreciate that I have a very particular role to play.
That’s the biggest shift we’re seeing – a move away from the generic leader who’s capable of playing across the various fields in the organisation to leaders who are much more focused around either a particular role or more often the requirements of a particular context that the organisation finds itself in.
NASTASSIA ARENDSE: Apparently when it comes to introducing network leadership, there’s a simple formula, where individual task performance is looked at plus network performance, which equals enterprise contribution and that eventually leads to what we call an enterprise leader, take me through that.
BRANDON PLEANER: What the research is showing and what we’re finding is that eight out of ten leaders are incredibly successful within their own business unit. So the idea that leadership as a whole is not succeeding is not accurate, as indicated. Leaders are [often] very successful within a narrow domain and typically within their own business units. So that success within the business unit is what we speak to around individual leadership, which has two components: the one side is the extent to which I, as a leader, am able to achieve my individual objectives, my own individual goals and the like, and that’s one of the biggest steps and shifts that is required in order to move an organisation towards enterprise leadership. [There’s been] a change in how we recognise and how we reward enterprise leadership because historically KPIs in organisations were geared towards measuring individual performance, as opposed to that enterprise performance. So that’s the first component of individual leadership, the extent to which I am able to achieve my own individual tasks and the assignments set for me.
The second component is then the extent to which I am able to lead my direct team in the achievement of their individual tasks, so it’s around the collective task and assignment but only to the extent that it speaks to my individual team as opposed to a business as a whole. The individual leadership component is the space that leaders have and continue to be very successful in; we typically see returns of 5% to 7% in business unit revenue in instances where that leader is successful. It’s when we start then overlaying the second component, which you spoke about, around network leadership, that we see the additional increase in the business unit revenue that is realised, taking it closer to 12%.
There are two components as well, the first is the extent to which the leader now plays a role in improving the performance not only of their own individual business unit but the extent to which their activities also improve the performance of business units outside of their direct span of control and by doing so increase their own performance, as well as the performance of individual leaders who they interact with. The second is then the team component, so you could almost draw it as a quadrant model; you have on the one dimension the individual leadership component and on the second continuum, the team component as well and it builds out these various quadrants. The second is the team network performance and that’s the extent to which I lead my team to be networked into the remainder of the organisation to the extent that their success is enhanced through their interactions with others, as well as the extent to which they leverage and other teams leverage their expertise as well.
It’s a challenge, which I’m sure we’ll get to in a moment, and a threat to a leader in that network leadership demands a higher degree of transparency within the organisation as a whole but especially with me as an individual leader because I have to make my contribution more known to the organisation and in so doing simultaneously or so place myself at risk in the sense that my shortcomings equally need to be known to the organisation so that others leaders who can fill that gap are aware of that and are able to step into that role.
Identifying competencies and behaviours of enterprise leaders
NASTASSIA ARENDSE: Is it easy to be able to assess leaders, it’s easy to be able to assess performance on an individual task performance but when you add that too network performance, are we able to assess leaders on that or are we still getting to that point where eventually we’ll be able to do that?
BRANDON PLEANER: It’s definitely a process of evolution at the moment, where we are more accurate and capable at the moment is we’re better at identifying those competencies and those behaviours that underpin enterprise leadership to the extent that if I’m looking to place a leader in my organisation I have access to increased objective tools and methodologies to be able to identify the extent to which a leader is more likely to be an enterprise leader.
The challenge we face at the moment does lie in how do I then put in place KPIs which equally measure enterprise leadership and, as mentioned earlier, organisations historically. It’s quite interesting if you look at the typical KPIs of most leaders, in 97% of instances, a leader will have a network KPI within their basket of KPIs but it’s typically only a single KPI, as opposed to the bulk of what they’re doing. What then happens is I default to the space that I know and especially, as you mentioned earlier, when changes happen in the world of work, as soon as that pressure arises our natural instinct as a leader is to retreat into what we know and what we do well, and what I know and what I do well is to manage within my own individual business unit. So I am then going to pursue those very KPIs that are going to allow me to be successful in the space that I know and as long as there’s a financial component, not solely, but when there’s a financial component linked I’m going to invest energy there rather than necessarily assisting my colleagues in reaching their targets, there’s nothing in return for myself.
So we’re starting to see changes occurring in KPIs that introduce more network and more enterprise leadership-type KPIs being driven by, and it’s quite interesting, if you look at the manufacturing and production sector for years we’ve had team-based KPIs, it’s how do we elevate that to the level of leadership as well.
NASTASSIA ARENDSE: What are some of the outcomes that one can get out of enterprise leadership?
BRANDON PLEANER: I think beyond the 12% increase in business unit revenue organisations are achieving through enterprise leadership, we are also seeing the benefits [of enterprise leadership] in four key areas.
The first is that we are seeing enterprise leaders typically lead more innovative teams. To put it differently, enterprise leaders tend to lead teams who are more innovative and in that instance, up to 57% of enterprise leaders’ teams do demonstrate higher levels of innovation and creativity. The second is in the space of adaptability, we definitely see enterprise leaders’ teams being more adaptable and this is critical, given the state of global commercial activities at the moment, so in that instance again about 87% of enterprise leaders’ teams tend to demonstrate higher levels of adaptability.
The final two areas where we see the advantages of enterprise leadership and these are the four key ones (there are many others), is around employee engagement, so there’s that spillover effect. In your introduction one of the things you alluded to was that there’s that ripple effect into organisations because of the changes that are going on in organisations and leaders not being successful, the age-old adage applies again that those individuals don’t often leave an organisation but they may leave a leader who they can’t stand.
So with enterprise leaders we are definitely seeing an improvement in the increase of their engagement in their respective teams and if we look at a one-year change, in other words teams where there is an enterprise leader versus teams where there is not, in those teams there is an improvement in engagement of up to 35% in some instances. Then the final area is if we think about the business scorecard, the balanced scorecard, is in the space of the customer, is that organisations that have a higher number of enterprise leaders tend to also see greater levels of customer satisfaction in the customers’ engagement. So if we think about the balanced scorecard as a methodology to measure and if we go back to the KPIs, effectively we are starting to see benefits across the entire balanced scorecard. On the financial side, we’re seeing the revenue improvement, on the customer side we’re seeing improvement in customer [satisfaction], in the internal staff member we’re seeing that around engagement and then it’s also the final space around improvement in productivity and processes or processes around internal learning and internal processes. So it really does touch all four quadrants of the balanced scorecard.
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Brought to you by CEB, now Gartner.