Medium sized companies tend to suffer from leadership issues associated with their heritage. Specifically, mid-sized companies often suffer from over-reliance on their founders, who are usually still in positions of power.
The leadership issues we see in mid-size companies are also common in large companies and public organisations enjoying growth, where there is a heavy reliance on senior managers to maintain the pace and quality of that growth.
The list of leadership issues we observe besetting these organisations often include, but are not limited to:
- Over-reliance on the attitude, skills and knowledge of the founders/senior executives;
- Individual managers and staff do not have the competencies required to effectively execute their roles without direct supervision;
- Recruitment of staff is related to the competencies required to drive a historical version of the organisation, rather than a future one;
- The organisation’s strategy is not well understood/accepted by the rapidly changing staff. The strategy sits in the minds of the founders/senior executives and does not tie directly with the ever changing diversity of personal values, as new staff join. Thus, staff do not understand how their actions contribute to the strategy and are not motivated to deliver best value for their business;
- Many of the processes in place are immature and managed according to outcome, with a high use of lag indicators;
- The culture is one of centralised power, focused on financial goals with a generally low level of personal/individual leadership. Many of the effective communication and feedback processes are at risk of becoming routine by virtue of the casual approach taken to their execution, and;
- Change is executed in an adhoc manner.
Organisations with these issues should be thinking of a change management project to transform their business and remove the need for the Executive and Management teams to intervene and supervise at lower levels of the organisation, allowing them to manage the organisation. Transformation will free up resources for growth.
A good model for thinking about both the issues and the transformation required is the Leadership Pipeline (Conger & Fulmer, 2014).
In large organisations, people transition through a Leadership Pipeline as their responsibilities grow, which creates a need for a change in competency. The Leadership Pipeline involves a series of transitions that individuals make as they move up an organisation, managing progressively larger resources and taking on more responsibilities. These transitions are described as follows and in Figure 1:
- Transition One: individuals move from managing themselves to managing others
- Transition Two: individuals move from managing others to managing managers
- Transition Three: individuals move from managing mangers to managing a function
- Transition Four: individuals move from managing a function to managing a business
- Transition Five: individuals move from managing a business to managing the group
- Transition Six: individuals move from managing the group to managing the enterprise
Figure 1: Leadership Pipeline
In small and medium sized companies, the Executive team (who are often owners of the business) also need to transition through the Leadership Pipeline. This is summarised as follows:
- The owners establish the organisation and supervise some people;
- As the company grows, the leaders move to manage managers and functions without formal positions existing in the organisational structure;
- As the company grows further, the leaders continue to transition through the Leadership Pipeline and bring people along with them, making transitions behind them.
Each movement through the Leadership Pipeline requires a change in skills and knowledge, what aspects of time must be managed and the values central to their role.
For example, an individual operating in the Managing Self pipeline must have the technical or professional proficiency and the daily discipline to meet personal goals, and they value achieving results through personal efficiency. If this person transitions into Managing Others by taking on a front-line manager role, they will require planning skills, their time will involve completing annual planning and they value getting results through the work of others.
Growing organisations go through a critical phase which requires the Executive Team to transition from managing functions to managing the business and requires managers at all levels to demonstrate personal leadership and take responsibility for their own team’s performance.
Organisations wishing to transform their organisation to one which has a much higher degree of independent capability and decision making at lower levels in the organisation will most likely need to address the transformation as a high-visibility project.
In executing the project, they need to set a transformational goal which can be measured. Setting a vision for the project and some objectives is usually sufficient. They also need to design and implement an integrated performance management system.
For example, a project vision for such a business transformation for a make-believe company, Acme Pty Ltd, may be:
“Acme aims to transform into an organisation that:
- Achieves its strategic customer/client outcomes
- Achieves its desired financial outcomes
- Is made of up people who understand and accept the accountabilities and responsibilities of their role, and have the necessary competency to execute their role”.
To support the project vision, a set of project objectives is set. For example:
“To achieve this vision, Acme aims to be in a position, in three years, where:
- People are placed into roles with the requisite skills, or at least with a development plan to address known skill gaps
- Individuals have the skills, knowledge and behaviour to take responsibility for executing their role in support of the goal of the organisation
- Roles have appropriate KPIs that support the goal of the organisation
- Skills, knowledge and attitude gaps are identified and remedied
- People are able to effectively lead themselves and work in teams
- People in leadership positions are able to effectively lead their teams
- Succession is planned”
Integrated performance management system
The vision and objectives set the criteria and priorities for developing an integrated performance management system.
To execute the business transformation, it is important that all of the elements of an integrated performance management system are taken into consideration and prioritised, dependent on the vision and objectives of the organisation. An example is shown in Figure 2.
Figure 2: Example of an Integrated Performance Management System
Organisations going through a period of growth often find themselves with a growing list of leadership issues as well. But with clarity of vision and a sense of direction, you can transform your organisation and ensure that it has the right skills and capabilities in the right people, in the right areas, to guarantee future growth.
Conger, J. A., & Fulmer, R. M. (2014, 06 22). Developing Your Leadership Pipeline. Retrieved from Harvard Business Review: http://hbr.org/2003/12/developing-your-leadership-pipeline/ar/1