Leadership’s new world order

The Hay Group’s latest Best Companies for Leadership Survey reveals global trend to abandon the traditional hierarchical organisational leadership model. According to the Hay study, leadership in the 21st century is about “leading at all [management] levels and not restricting it to title”.
And this global trend is, according to Kevin Gaunt, chief executive of NZIM Northern, “changing the role of both management and leadership”.
This is the international consultancy’s sixth such annual survey. The study ranks the world’s best companies for leadership and examines how they develop their current and future leaders. The top 20 list is dominated by American corporations and General Electric is number one. But all top 20 companies reported that everyone at every level of their organisation can develop and practise the capabilities needed to lead others. Less than 70 percent of all other companies in the survey adopted the same approach.
And 90 percent of the top 20 said their people were expected to lead regardless of whether they had formal position of authority. This in turn compared with just 59 percent of other companies.
The best leadership companies are, it seems, at the forefront of significant and worldwide shift away from traditional, hierarchical models. According to Hay Group’s director of leadership and talent Gill Hopkins, that means as organisations become flatter, “the best leaders know they must check their egos at the door and become increasingly sensitive to diversity, generational and geographical issues”.
The leadership and management world is, says Gaunt, changing rapidly because of the dramatic impact of ongoing developments in information management and communications technology. “Organisations are moving from the traditional hierarchical model to more flexible open structures,” he adds. “People can, for example, now work in snapshots of time no matter whether they are actually at work or not.”
Gaunt says organisations have historically needed not just day-to-day management, but also long-term leadership. “We are all, hopefully, motivated and innovative but, without good leadership the organisation can end up in spin as everyone tries to do their own thing. Leadership has always been important, but given the structural changes now taking place in organisations, it is becoming even more important.”
Gaunt thinks leadership is needed throughout the organisation now, and not just at the top, because flexible networked organisations are more complex than traditional hierarchical ones and must operate more “organically”. Leaders operating at all organisational levels are necessary to “recognise the need for change and help connect people to the vision”.
“The need to operate effectively and efficiently is vital to any organisation and is increasing almost exponentially as organisations constantly evolve to meet the rapidly changing demands of the future,” says Gaunt.
Recognising opportunities and the need for action happens more quickly with leaders operating at all levels of an enterprise, he says. “By not having to wait for the traditional top-down command, local leader can create and communicate mini visions that enable people to act.”
Hay’s global study found that all top 20 companies encouraged “local leaders” to participate in decisions made at organisational headquarters compared to 72 percent of all other companies. “The shift in organisational culture away from top-down leadership extends beyond employees at head office,” said Hopkins. “And 95 percent of top 20 companies report that ideas coming from subsidiary leaders are just as likely to be implemented as those from head office, compared with 76 percent of all other companies.”
The latest study also shows that the best leadership companies are moving quickly to improve their efficiency and competitive positioning by both flattening their business structures and diversifying their workforces. They are also adapting development tools and reward structures to “equip managers with the changing global leadership skills” the new business environment demands, according to Hopkins. “And they are incentivising leaders to use their capabilities effectively.”
Gaunt believes the core elements of good leadership needed today are:
• The creation and communication of vision of where the organisation is headed and which individuals can both align themselves with and support.
• An ability to draw the various views and ideas generated by the organisation together and to then focus on what is needed and work collaboratively to agree on the decisions to be made.
• strong self awareness without ego-driven decision-making.
• An ability to see the wood for the trees. • Being able to work in an ambiguous environment and understand the key issue.
• Building effective and long-standing relationships.
• Having high personal and group expectations.
Gaunt notes that leadership has always been important for organisations. “But the changes happening in society and the business world are impacting and altering the way organisations work. This puts increasing emphasis on the need for different type of leadership – one that is more self-aware and involving.”
The leadership shift is no doubt consequence of dramatic technological changes but it is, according to Hay Group analysts, also response to the dramatically changed economic and business environment. Major global companies are changing their leadership strategies and structures to position themselves for the future.
The study shows that leading companies are now structured more like global neural networks. They operate as flattened matrix, where information and authority move in all directions through the organisation and around the world. The best companies are changing fastest. These companies are, Hay suggests, employing the following practices:
Driving collaboration. Companies become more efficient by encouraging collaboration and cross-functional leadership and innovation, and flattening structures to eliminate redundant resources in separate silos.
Gaining value from diversity. The strongest companies are seeking greater cultural diversity in the leaders and workforces, and mining innovations from all corners of their businesses.
Building sustainable workforces. Attracting and retaining the best talent requires more than one unvarying career path for all employees, and adopts an approach to business that incorporates social and environmental values as well as financial returns.
Over the six years Hay Group has conducted the study, the level of commitment to leadership development has “steadily” increased. The best companies for leadership have “refocused their development efforts to help leaders adapt their competencies and meet the challenges of changing structures and strategies more quickly and completely than others”.
The best companies have, according to the study, “made leadership development priority at the highest levels of their organisation. As result of this high degree of attention, the best companies all consider their leadership programmes to be effective in supporting business goals.” M