Corporate Leadership in India

“The leaders of India’s biggest and fastest growing companies take an internally focused, long-term view and put motivating and developing employees higher on the priority list than short-term shareholder interests.” This according to Peter Cappelli, Harbir Singh, Jitendra V. Singh and Michael Useem in “Leadership Lessons from India,” (HBR, March 2010). With statements from HCL (an IT company) such as “employee first, customers second” it really seems like successful Indian companies are focusing on their Human Resources. 

Here’s how successful corporate leadership is achieved in India along with further comments (“et alors”):

Corporate Leadership in India 

The authors state that the companies in India “typically attributed the success of their companies to employees’ positive attitudes, persistence, and sense of reciprocity, which the executives inspire in four specific ways:”

Creating a sense of mission

“Indian leaders have long been involved in societal issues, preemptively investing in community services and infrastructure… being encircled by throngs of destitute people, seeing that needs are stark and government intervention is inadequate”. Further, “the social missions of Indian companies are integral to their strategy and often the route to profits. Indian companies often interweave strategy and social mission.”

Engaging through transparency and accountability

“Indian leaders also build employee commitment by encouraging openness and reciprocity. They look after the interests of employees and their families, and implicitly (or sometimes explicitly) ask employees to look after the company’s interests in return. HCL’s ‘Employee first, customer second’ policy, supported by initiatives designed to make employees feel more personally responsible for the company’s offerings and give them a voice with upper management, does exactly this.”

Empowering through communication

“So that engagement will translate into action, Indian leaders go to considerable lengths to empower employees, although this challenges the traditional Indian deference to hierarchy. At HCL, for example, an online system allows employees to create quality-control ‘tickets,’ much like those on an assembly line. Further, “empowering employees by helping them find their own solutions, Jagdish Khattar, the former managing director of the automaker Maruti Udyog, echoes a sentiment common among Indian leaders: ‘Throw issues to them, let them examine and come back to you with solutions…’”

Investing in training

“Indian companies invest heavily in employee development—often more so than Western companies. This is partly to ensure that employees have the tools to do their best work, but it’s also designed to strengthen their commitment to the company.” For human resources development, ‘managing and developing talent’ was the focus of the majority of companies: “by and large, [Indian executives] see no trade-off between recruiting and development, and they expect their firms to pay attention to both.” 

Et alors?

The article goes on to consider if any of these ‘approaches’ of leading are transferable outside India and concludes that there are two (of the four) that can be applied anywhere: 1/ investing in training – even in a high turnover environment, where training might seem ‘risky’, it can actually help retention; and 2/ strengthening the social mission – not just the feel-good ‘make the world a better place’ but ‘real’ social missions that actively engage the staff and are in line with the business.

The other two approaches are referenced as particularly contextual. The organizational culture most likely to evolve in Indian corporations according to the national culture is a ‘family’ organization where one key senior ‘boss’ serves like the head of a family. This can be easily managed in a small organization, but for larger organizations, this ‘strength’ becomes challenging to capitalize on: hence the engaging through transparency and communication. India scores very high on Hofstede’s ‘power-distance’ index – in other words, there is a very strong sense of hierarchy. This can result in employees relinquishing responsibility ‘up’ the hierarchy so that only person taking decisions and being accountable is the boss! By empowering through communication, this ‘challenge’ is addressed.

Managing Multicultural Teams

“Today, success depends on the ability to navigate the wild variations in the ways people from different societies think, lead and get things done. By sidestepping common stereotypes and learning to decode the behaviour of other cultures […] we can avoid giving (and taking!) offense and better capitalize on the strengths of increased diversity.” This from Erin Meyer of INSEAD in her article in the May 2014 edition of the Harvard Business Review: “Navigating the Cultural Minefield.” Besides highlighting various cultural “scales” which can assist the decoding of other cultures, she also highlights four rules for managing across cultural differences which can help capitalize on the strengths of diversity.

Here’s how to manage multicultural teams along with further considerations:

Managing Multicultural Teams

Focusing on leading as one of the cultural scales (from “egalitarian” to “hierarchical”) the author prescribes four “rules” for managing across culture in a multicultural team:

1.       Don’t underestimate the challenge

As management styles “stem from habits developed over a lifetime” they can be hard to change: both yours and that of your team! Starting with yourself, you may need to “unlearn” your own style when moving to a new culture and/or managing a new multicultural team.

2.       Apply multiple perspectives

If you are leading a team of various different cultures, “it isn’t enough to recognize how your culture perceives each of the others.” In addition, you need to understand how each different culture perceives each other culture in the team!

3.       Find the positive in other approaches

This is the very essence of managing multicultural teams. If all you have is a negative view of other cultures, managing a multicultural team is going to be very difficult! Accentuate the positive to capitalize on the differences in the team.

4.       Continually adjust your position

Practice makes perfect. If you consider management as a one-to-one relationship with each team-member, then consider which management style might be the most effective in each instance, and keep adapting even if that means going back to “square one”.

Et alors

Unfortunately and all too often, some managers expect everyone else to adapt to their style and make no effort to accommodate their team! This is can be found in more “ethnocentric” cultures (where the group considers their culture to be the primary point of reference). Similarly, this article is focused on expatriate managers – managers who are already adapting by moving overseas and then having the challenge of managing a multicultural team; however one of the issues for multicultural companies is when the manager (usually at head office) is “local” and has a multicultural team (of expatriates). Whilst the team might be busy adapting, it is often the case that the manager makes little or no effort to do the same. When that is the case, it very unlikely that the team will be able to collectively capitalize on their cultural diversity – steps 2 to 4 will be impossible to achieve without step 1 from the manager! This highlights the point that multicultural awareness and training should not only be for managers going on assignment overseas but also for any manager in a multinational group who might be welcoming multicultural staff into the team!

Making Human Resources Decisions

When decision making concerns human resources, the stakes might be higher than other resource allocation decisions: simply put, there are people involved. An investment decision might involve a certain level of risk and if it goes “badly”, there are consequences, but people move on; however for human resources decisions (e.g. regarding performance improvement, potential development or career choices) then the risk might be considered higher because if it goes “badly”, the person involved will potentially have to carry the consequences for the rest of their lives. Considering this, Korte, in “Biases in Decision Making and Implications for Human Resources Development”, (in Advances in Developing Human Resources, Vol. 5, Nov. 2003, pp. 440-457) researched and concluded on how to optimise decision-making in such an HR context.

Here’s how to make effective HR decisions followed by further implications (“et alors”):

Making Human Resources Decisions

Decision making in the HR context is “a complex process rife with social and political agendas, individual biases and rapidly changing relationships… the decision-making process must include an explicit examination and challenge of the assumptions and biases underpinning the process and a prescription to mitigate the stifling effects of these orientations.” Korte accordingly recommends five optimising processes for decision making in HR:

Bias Analysis

Identify, assess and challenge the orientations and underlying assumptions of the decision-makers.

This is sub-optimal if the assumptions and orientations of the team are “glossed over.”

Information Gathering

Challenge the information gathering process to overcome biases from 1/ visibility, 2/ timing, 3/ limits of understanding, 4/expectations, 5/ comparisons and 6/experience. Do not settle on a definition of the problem or solution until as late as possible in the process.

This is sub-optimal if the sources of information are based on 1/ experience, 2/visible sources and 3/ preferred sources.

Information Processing

Challenge the information analysis process to overcome biases from 1/ inconsistency, 2/conservation, 3/miscalculation, 4/inertia, 5/overconfidence and 6/ anchoring. Explain reasons for processing information and justify the reasons based on the data.

This is sub-optimal if data is analysed 1/ with inconsistent use of criteria, 2/ to support preferences, 3/ with overconfidence on biased data.

Information Response

Enlist several non-aligned sources for reality checks of analysis, definitions and solutions. Attend to the perceptions, expectations and impulses of the stakeholders throughout the process.

This is sub-optimal if you unduly hope for the best and overestimate the degree of control or the ability to fix things later.

General Problem-solving

Consider that the problem can never be completely defined or completely resolved. Avoid the impulse to act early in the process (unless to just as a test of ideas and solutions).

This is sub-optimal if you just focus on a single definition of the problem and the solution or if you follow a linear, mechanistic problem-solving process.

Et alors

That is quite a lot of things to take into consideration all at once; however the points are worthy of consideration if only because the stakes are high when making HR decisions! One of the key messages is to overcome biases in the early stages of the decision-making process; however, these assumptions, orientations and biases might be cultural. Whilst people consider that they are making optimal decisions, in fact, there are underlying cultural references that are (usually) implicit in the assumptions being made by people in arriving at their decision. This might be expedient where the whole context is mono-cultural: “collective programming” or “shortcuts” might be the very definition of culture with the benefit of expediency; however what about in a multi-cultural context? Then there might be a challenge as all the parties in the process might not consider the process (or the solution) to be optimal as it would only be so in one culture or the other (but not both).

So is there an intercultural solution (for example for career management systems in a multicultural organisation)? Potentially not! I have concluded from my research into intercultural leadership that cross-cultural understanding and trans-cultural leadership are possible and feasible when the stakes are not too high and/or the situation is not “personal”. When however, there are individuals involved (such as in decisions relating to HR) and when the stakes are increased because they relate to important human conditions such as love, conflict, power or wealth, then each respective culture tends to revert-to-type. In such cases, cross-cultural understanding tends to evaporate! So overcoming biases etc. in a mono-culture is one thing; whereas it is quite another challenge to overcome biases etc. in a multicultural context when there are “human resources” at stake!

Leveraging Diversity

Put simply, diversity is a source of creativity. Without it organisations are going to struggle to innovate and adapt in an increasingly fast-paced and ever-changing world. So says Groysberg and Connolly in the article “Great Leaders Who Make the Mix Work”, HBR, Sept 2013. From interviewing the CEOs of global companies that had a reputation for “inclusiveness” they concluded that advancing diversity was a business imperative (staying competitive) and a moral imperative (value-driven). So how is diversity leveraged within an organisation? The answer lies in moving from “diversity” to “inclusivity”: diversity is about the mix of people; inclusiveness is about making that mix work. Here are the practices which have been the most effective at “harnessing” diversity:

Leveraging Diversity

Of the 24 companies that had most successfully leveraged diversity (measured by employment statistics, leadership attitudes and third-party recognition), the CEOs cited the following 8 practices as the most effective in leveraging diversity:

<1.       <Measure Diversity

What gets measured gets done. This is not just about diversity targets; this is about inclusion sentiment that can usually be measured through employee engagement surveys.

<2.       <Hold Managers Accountable

Not just about numbers, this is about actions. Each manager should be able to demonstrate that they have done something to leverage diversity (e.g. mentoring, training, sponsoring events).

<3.       <Support Flexible Work Arrangements

For both males and females, balancing personal and professional commitments was considered the biggest barrier to diversity. Flexible hours and working-from-home can help break this barrier.

<4.       <Recruit and Promote from Diverse Pools of Talent

Not just at the entry level; promote diversity from within otherwise senior diversity will never change. Extend quota systems to ensure a diverse pool of candidates to choose from for any post.

<5.       <Provide Leadership Education

Not just at senior levels, leaders should be developed at junior levels where there is generally more diversity. Diversity training should be for the “norm-group”; not just for the “diversity”.

<6.       <Sponsor Employee Resource Groups and Mentoring Programs

With a senior business sponsor, resource groups can provide structured professional development opportunities e.g. internal think-tanks and mentoring programs for affiliation groups.

<7.       <Offer Quality Role Models

Diversity at the top promotes diversity throughout the organisation. One thing is the “talk” but it needs to be seen to be “walked” at the very highest levels.

<8.       <Make the Chief Diversity Officer Position Count

A “CDO” position “institutionalizes the process and the intent.” Once formalized, it can be the anchor to develop metrics and subsequent follow-up (see point #1…).

Et alors?

Some leaders remain undecided about the merits of diversity. Ironically, this can be because the diversity is present in the organisation but it is not yet considered to be “delivering”. Leaders would be right to reflect on their own moral imperative for diversity and their particular business imperative relative to their project; however “diversity” cannot be relied on to “deliver” on its own – leaders cannot stand back and ask diversity to “prove” itself since this will set a new standard for measuring diversity i.e. do the “diverse” talent deliver as good as or better than the “majority” or “norm-group” talent? In such a case, not only is diversity not leveraged but this puts a barrier in place since to “prove” themselves, diverse talent would have to assimilate into the “norm-group” culture thereby losing all the benefits of diversity! Diversity should be included so that all talent can deliver to their maximum potential whilst remaining authentic (and not being measured by “norm-group” references). In short, if a leader is open to diversity, there is a chance that it will succeed; if however the leader is sceptical about diversity, the outcome is already known! In the context of the above 8 steps, it all starts with the leaders’ attitudes…

Leading across Cultures

In Singapore this week I attended a very interesting lecture by Prof. Yee of Nanyang Technologicial University regarding Cultural Intelligence. In essence, in order to lead across cultures it is not only “local” cultural knowledge which is required but “global” cultural intelligence. Comprised of “drive”, “motivation” and “action” (as well as “knowledge”), cultural intelligence is particularly pertinent for global leaders who may have to adapt to many different and varied cultures, by either location and/or by team composition. In this context, Prof. Yee further referenced an article from Rockstuchl et al, “Leader-Member Exchange (LMX) and Culture: a Meta-Analysis of Correlates of LMX across 23 Countries”, 2012, American Psychological Association.

Rockstuchl et al. performed a meta-analysis of the quality of leadership (low, medium or high) as per various LMX studies according to the national cultural values of where the study had been conducted. The results were further synthesized according to “horizontal-individualistic” cultures (low power-distance acceptance and individualistic, read “Western”) and “vertical-collectivist” cultures (high power-distance acceptance and collectivist, read “Asian”). In summary, the quality of the leadership has a higher impact in Western rather than Asian cultures regarding the followers’ sense of justice, leader trust, job satisfaction and turnover intention (being mainly attributed to collectivist tendencies in Asian cultures). Moreover, focusing on cultural intelligence, there were some further observations…

Here’s a summary of leadership quality assessment which was NOT different according to culture, followed by further implications (“et alors”):

Leading across Cultures

The research showed “three intriguing” findings which highlighted that “the way in which cultural values affect the leader-member relationship is very complex.” The findings were that the relationship between LMX and the following three items were NOT different in Western and Asian cultures:

1.       Task Performance

The results showed that members of both cultural configurations appear to require the necessary work-related information and resources afforded by higher quality leadership to perform well.

2.       Commitment

It appears that followers from both cultures perceive their leaders to be acting as agents of their organizations, thus commitment appears to be inspired by the quality of the leadership.

3.       Transformational Leadership

The conjecture is that because of their “appeal”, transformational rather than “transactional” leaders are more effective across cultures. Accordingly, leader-member relations are good in both cultures.

Et alors?

The central tenet of the LMX is that leaders do not treat each subordinate the same. This is the very essence of leadership both by and with diversity. Cultural intelligence is therefore very important even if it is to be aware that good quality leadership does NOT necessarily increase the sense of justice, leader trust, job satisfaction and turnover intention amongst all followers in collectivist cultures. This in itself is useful information for global leaders to know so that they can adapt accordingly! When it comes to task performance, building commitment and making transformations, the leadership has to be of good quality in all cultures. The challenges for the global leader are therefore twofold: having to be both a good leader and culturally intelligent!

Why Leaders Need to Think Slowly

One of the best-selling business books of 2012 was “Thinking, Fast and Slow” by Daniel Kahneman, the winner of the 2002 Nobel Memorial Prize in Economic Sciences.  The author asserts that there are two cognitive systems: “system 1” which does not take much effort and makes quick judgements based on familiar patterns; and “system 2” which takes more effort requiring intense focus and operates methodically. The first is fast and the latter is slow with both systems working continually but not necessarily fluidly: people prefer to make simple stories out of complex reality. Seeking causes in random events and giving too much weight to their experience, there are some “traps” for the unaware, particularly leaders.

Here’s a summary of the traps followed by further considerations (“et alors”).

Why Leaders Need to Think Slowly

When leading a team or making decisions, the prevalence of the “system 1” can cloud judgement in the following ways:

1.       Halo Effect

System 1 prefers links between discrete facts: if only one of the facts is available but it has been seen before associated with another fact, the link is made automatically. When a positive fact relates to a person, this can result in the “halo effect” and this can be a trap when it comes to talent selection.

2.       Anchoring

System 1 is responsible for unconsciously tying your thinking on a topic to information you have recently encountered (even if the two have nothing to do with each other). This can be a trap when it comes to (what is believed to be) “rational” decision-making.

3.       Hindsight Bias

System 1 simplifies the “narrative” such that success is ascribed to virtue and skill whereas failure is attributed to bad luck. By being overly optimistic and overvaluing your talents, the “hindsight bias” can be a trap when making investment decisions.

4.       False Expertise

System 1 promotes expertise in relatively simple environments; however where challenges vary, luck influences success and gaps exist between action and feedback, the trap is to rely on “expertise” which may give the wrong counsel (“quick answers to difficult questions”).

5.       Risk Bias

System 1 promotes “loss aversion” (rather than gain seeking) and individuals suffer from the “endowment effect” where ownership results in an overestimation of value. This can be a trap when it comes to divestment decisions.

System 2 promotes slow reflection and intense focus: the leaders can then help the organisation to “operate with more methodical rationality than can the separate individuals within it”. Achieving slower reflections can help leaders make better judgements and achieve a rationality that is otherwise only “fictional” when “system 1” is prevalent.

Et alors?

Most leaders will wonder when they will ever find time to think slowly! On the other hand, does any leader have the time to lead their company, department or team in the wrong direction due to having made a decision too quickly under the “influence” of “system 1”? In today’s instant-everything fast-paced environment it seems that this tension between careful reflection and getting things done is non-existent: getting things done always prevails! Whilst not slowing down permanently, most leaders might benefit from being able to at least recognise the “signs that you are in a cognitive minefield, slow down and ask for reinforcement from system 2”!

One definition of a group’s culture is the group’s collection of behavioural short-cuts. The group (be it a team, a company or a nation) has devised organisational and inter-personal “norms” that are essentially adhering to a collective “system 1”. So what happens when an outsider joins that group? Can all the members of that group be asked to convert to “system 2” to stop and reflect on the new member’s behaviours so as to welcome and possibly adapt? Whilst not everyone could, perhaps leaders should, especially when decisions relating to people might be clouded by a cultural “halo effect” bias. Diverse organisations need to be particularly aware and leaders should ensure that talent selection is performed in an objective and transparent manner!

Leading Diverse Teams

How do you lead diverse teams? This can be a very difficult question to answer and one which is often overlooked, or even ignored by the team leader. In fact, team member diversity itself might not derail the team in the pursuit of its objectives, especially if the level of diversity in the team is either very high or very low; however anything in-between can pose significant challenges for the leader. This is the central theory of an excellent article by Gratton et al, 2007, “Bridging Faultlines in Diverse Teams”, MIT Sloan Management Review, Vol 48, No. 4.

Their theory is that strong “faultlines” emerge in a team where there are a few fairly homogenous  subgroups that are able to identify themselves on either a surface level (such as gender, age, nationality) or on a “deeper” level (such as values, personality and knowledge). When there are distinct non-overlapping categories, “faultlines” can become very strong e.g. a team made up of women under 30 years old and men over 50. Faultlines emerge when the team gets to know each others’ similarities and differences and can ultimately inhibit the exchange of knowledge and impede the team’s creative and innovative capacity.

Here’s how to tackle faultlines and lead a diverse team, followed by further implications (“et alors?”):

Leading Diverse Teams

1.       Diagnose the probability of faultlines emerging

It is important to note that faultlines are not a natural result of diversity per se, but are found in situations of moderate diversity, when a team is neither very homogenous nor very heterogeneous in member attributes.

2.       Focus on Task Orientation when a team is newly formed

The natural inclination of leaders to overcome the risk of emerging faultlines is to focus on relationships; however this can exacerbate the problem in the early stages of the team formation. Focusing on the task in the early stages can overcome this.

3.       Later switch to Relationship Orientation

Whilst being task oriented in the early stages can increase team effectiveness, the “deeper” faultlines will eventually emerge. These can only be addressed by relationship orientation which is vital to ensure longer term team effectiveness.

Et alors?

The rhetorical question that the authors pose themselves is “how does a team leader know when to switch from task to relationship orientation”? They suggest that the switch will only be “successful at the point at which the team has sufficient shared experience to have developed a clear protocol for communication and coordination of activities and an established operational structure.” An interpretation of this might be at that point when the team: 1. clearly knows the expectations of the project; 2. have clearly defined roles and tasks; and 3. are communicating regularly in a constructive manner. The authors state that leaders need to be able to answer themselves the question as to when to make the switch based on their team’s needs and characteristics (i.e. it is case specific).

The interesting point for many multinational companies is that faultlines are mostly found where there is “moderate” diversity. It almost appears paradoxical that full diversity might be easier to manage than partial diversity; however if that is the case and given that some diversity is inevitable, then more diversity must be the only solution! Notwithstanding the team members, consider the situation if the majority of team leaders originate from a “fairly homogenous subgroup” having the same education, nationality, approximate age and gender! As the authors state, knowledge transfer can be greatly inhibited along with creativity and innovation. Diversity should therefore not only be considered on a team-by-team basis but on an organization basis including reference to the leaders themselves!

Power and Priorities

Being in Doha this week I was reminded of just how much patience and resilience the Westerner must have in order to advance business in the Gulf. The culture is such that everything takes place in the present and there is little opportunity to plan and organize in advance: the Westerner can try, but it may be to little avail when everything constantly changes at the “last minute”. There are various different analyses to explain the different cultural approaches to time: namely “monochronic” where tasks are approached “one by one” (which lends itself well to planning); and “polychronic” where the sense of time is fluid (which lends itself well to the concept of “multitasking”).

Here in the Gulf, a polychronic approach to time might be a good description of the cultural behavior but it does not seem to be a sufficient explanation of that cultural behavior. Searching for possible reasons Ied me to a book by Williams entitled “Don’t They Know it’s Friday: a cross cultural guide for business and life in the Gulf” (2010, 2^nd ed., Motivate Publishing). Therein the author proposes a number of theories as to why the approach to time (and timing) is distinct in the Gulf. A synthesis of these theories tends toward a sense of power and the associated priorities as the root cause of this behavior.

Here’s a summary followed by further implications (“et alors?”).

Power and Priorities

William’s study of Gulf cultural behavior regarding time can be synthesized as follows:  

Power: the Gulf societies are constructed in terms of power which fall into eight broad groups or classes: 1/ the ruler; 2/ the ruling family; 3/ an “inner circle” of close advisors; 4/ the “top” local families; 5/ nationals; 6/ Other Gulf nationals; 7/ “white collar” expatriates; 8/ laborer expatriates.

… and priorities: all Gulf Arabs are permanently on call to attend at once to the wishes and instructions of important Gulf people – if someone more powerful wants your attention, personal and professional obligations must be set aside: the “diary” is therefore almost irrelevant.

Power: with the strong sense of hierarchy, a “centralist” organization is standard and the power of decision making remains with a very limited number of individuals.

… and priorities: if everyone is only operating in the absolute present this means that a decision and/or an approval might only be obtained “at the last minute”.

Power: there is a strong concept of absolute duty that Gulf Arabs have to their families, their ruling families and religion.

… and priorities: only a few Gulf Arabs apologize for failing to attend meetings – usually they will simply fail to appear when expected because they have been drawn away by a duty.

Et alors?

There are a number of immediate practical considerations for the Gulf visitor to take into account, not least the need for patience! Planning is probably best achieved only at a high level with plenty of “leeway” for adapting to constant changes. The difficulty for the visitor is compounded by the fact that foreigners are expected to be on time, so the visitor cannot really fully adapt! It is also important to be seen to have made the effort even though (for example) a meeting might have had a low chance of taking place. Finally, the “investment” required in order to advance with business will not only take time but money – to conduct business in this manner costs relatively more than what Western organizations might be used to elsewhere.

Whilst this cultural behavior is significant and noticeable in the Gulf, might it be equally applicable elsewhere? Certainly in any culture where there is a strong sense of hierarchy, it might be difficult to keep to “monochronic” time management. Such an approach to time might only be possible in more egalitarian cultures! Whenever there is a centralized decision making process, decisions and approvals are going to take a while and a more “polychronic” approach to time might be beneficial. So even in cultures which do not have highly visible hierarchies, it might be wise for the visitor to nevertheless assess where the power lies and then anticipate a possible change in the host’s priorities accordingly…

High Potential Status Transparency

Most leadership development programs are targeted to the organisation’s “stars”. These are people who have not only been recognised as having high potential but have also demonstrated high performance. The latter is, by its nature, transparent – the high performance is seen and is recognised not only by the management but by the organisation at large. The high potential status is something else entirely. Surveys suggest that in Europe only 40-50% of organisations openly communicate this “status”; whereas in the USA at least 80% of organisations are transparent with this labelling (ref. HBR inter alia).

So why the difference in approach and what are the pros and cons of being transparent about the “high potential” label? This led me back to one of the most definitive books on the subject “High Potentials: the competitive edge in your company” by Timmerman and Sabbe, 2007, Hudson. The book looks at the ever-increasing need for organisations to implement a “development” culture as opposed to the ready-now, performance-driven “succession planning” culture which is prevalent in a lot of organisations. In that context they give a complete overview of the pros and cons of openly communicating the “high potential” label.

Here’s a summary followed by further implications (“et alors”).

High Potential Status Transparency

The pros of openly communicating the High Potential status are as follows:

·         Shared responsibility – development becomes the responsibility of all involved: not just HR, but also management and the individual.

·         Transparency – not only a “moral” contract with the individual, but for the entire organisation, transparency can boost motivation in terms of visible opportunities.

·         Fairness – when not a secret, a formal and open policy regarding the unequivocal status requirements enhances the feeling of fairness and objectiveness.

·         Quality assurance – if transparent, the status evaluations and assessments have to be thorough enough to withstand scrutiny which thereby ensures quality.

·         Visibility – not only will the individual feel they have to prove their status, but the wider context of leadership development also becomes more visible to all.

The cons of openly communicating the High Potential status are as follows:

·         Assumed permanence – often the individual assumes that the status is permanent which can cause difficulty when the temporary status is removed.

·         No vacant growth positions – not achieving advancement due to hierarchical constraints can lead to resentment and cynicism by the individual and by the entire organisation.

·         Label abuse – externally the individual might be head hunted by other organisations; internally the individual might use the status as a “crown prince”.

·         Pressure – in one sense, the extra pressure placed on the individual by this status can be challenging; in another sense it can also be demotivating when the “spotlight” is removed.

·         Implicit negative status for others – if some are “high potentials” does that mean that the majority is “low potential”?  Beyond this one status, further clear communication is required.

Et alors?

Timmerman and Sabbe actually change the question from “should the status be communicated” to simply ask “how should the status be communicated”? In the context of moving to a “development” culture, transparency is almost a “given”. A lot of the cons referenced above only occur when transitioning from a “succession planning” culture and become redundant once a “development” culture is achieved.  The correct way to communicate the status is to formally publish the required criteria (which can have the added benefit of “awakening dormant talent”); then to have formal assessments to identify high potentials; so as to finally communicate that the achieved status is temporary, that there are certain expectations and that it is not guarantee of promotion. The end result is a jointly agreed development plan which is followed-up and in line with the organisation’s strategy.

Companies that have a “succession planning” culture might be more reluctant to communicate high potential status. According to McCall, a succession planning culture is all about “results” which can be best achieved by having the right people in “key functions”.  In order to be assigned a “key function” the candidate has to be “ready now” in terms of competences. The emphasis is therefore usually on expertise and in such an environment, open “high potential” status can cause more cons than pros. The alternative “development” culture is where “high potential” is not just a status but a whole management ethos. Being all about “learning”, the focus is on “development assignments” (to achieve results in the long- rather than short-term). Who can learn the most from a particular assignment is given that assignment in order to develop. The emphasis is usually on leadership and in such an environment, open “high potential” status can be more positive than negative.

Besides corporate culture the evaluation of employees’ potential is also quite often clouded by national cultural references. This presents a particular set of challenges for any multinational company that might have an ethnocentric culture (usually referencing the national culture of its senior managers and/or the location of the head office). Three different European evaluation philosophies and career paths that are quite different are the “Anglo-Dutch”, the “Latin” and the “Germanic” – see previous article for more information. “Outsiders” vis-à-vis any particular model therefore might not “fit in” the system – especially when a national cultural references are also combined with the common “succession planning” corporate culture! It therefore might not be a surprise that there are less European than American organisations that currently disclose “high potential” status…

How Leaders Adapt to Followers

Having visited many different companies here in the San Francisco Bay Area this week, it seems that in any Californian corporate culture, there is one key component: collective leadership. Everyone in the company is leading and it appears that notwithstanding any varied characteristics of the different corporate cultures, collective leadership is always an absolute essential – the sine qua non of business on the US West coast. This phenomenon might go some way to explaining why this area is often at the forefront of business developments (e.g. Silicon Valley, clean energy, biotech etc.)  Constant adaptation, acceptance of uncertainty, a try-and-see mentality, risk taking and staff alignment and development are all characteristics of this pervasive and collective leadership.

How can this collective leadership work? If it is prevalent amongst so many different companies with so many different cultures, collective leadership cannot be a homogenous process – it has to adapt to the context and circumstance and indeed the leaders have to adapt to the followers. In particular, I was reminded of Hersey and Blanchard’s model of Situational Leadership theory (Hersey et al, “Management of Organisational Behaviour”, 2007, 9^th edition, Prentice Hall). This theory states that effective leadership is best achieved when the leaders adapt their style to the followers. For collective leadership to be so evident, some situational adaption must be taking place...

Here is a summary of Situational Leadership along with further implications (“et alors”).

How Leaders Adapt to Followers

According to Hersey and Blanchard, different situations demand different leadership styles which are in turn, appropriate for a certain type of follower. The four styles are as follows:

Directing

High task focus, low relationship focus – the leaders define the roles and tasks for the follower, and supervise them closely. Decisions are made by the leader and announced, so communication is largely one-way. This is appropriate for low competence, high commitment followers (making up in enthusiasm what they lack in skills).

Coaching

High task focus, high relationship focus – the leaders still define roles and tasks, but seek ideas and suggestions from the follower. Decisions remain the leader’s prerogative, but communication is much more two-way. This is appropriate for followers who have some competence but lack commitment (needing supervision because they are still relatively inexperienced; but also needing support and praise to build involvement).

Supporting

Low task focus, high relationship focus – the leaders pass day-to-day decisions, such as task allocation and processes, to the follower. The leader facilitates and takes part in decisions, but control is with the follower. This is appropriate for followers who have high competence but variable commitment (not needing much direction because of their skills; but needing support to increase either their confidence or motivation).

Delegating

Low task focus, low relationship focus – the leaders are still involved in decisions and problem-solving, but control is with the follower. The follower decides when and how the leader will be involved.   This is appropriate for followers who have high competence and high commitment (both able and willing to work on a project by themselves).

Et alors?

The key message is that effective leaders are versatile and can apply any leadership style at any given moment; however research suggests that only 3% of all managers are capable of applying any style in any given situation! This percentage might be somewhat better in California and indeed there might be a strong link with adaptability of leadership style and culture (either national or corporate). The link might be that with situational leadership, there are two leadership styles which are low relationship focus: for cultures which are high on individualism and masculinity and are essentially task rather than relationship driven, one might expect that there is therefore a tendency for “direction” and possibly “delegation” leadership styles rather than “support” or “coaching”. When there is also a strong power-distance in the culture, leadership might be further restricted to “direction” rather than “delegation”. In other words, the culture will restrict the ability of the leader to adapt to the follower.

In California, an analysis of the cultural dimensions might appear to initially support the lack of “relationship focus” as there is high individualism and high masculinity. Whilst the power-distance is low in the US, this would only open the door to “delegation” in addition to “direction” leadership style. What might explain the paradox of the high prevalence of “coaching” and “support” as leadership styles is the management focus on empathy and “Emotional Intelligence” (c.f. Goleman). There appears to be a general acceptance that to better achieve your objectives as a team, it is essential to understand the “emotions” of your staff, or otherwise put: the feelings of the team. So despite the individualism and masculinity, there is a drive to invest in the relationships. Accordingly the “support” and “coaching” leadership styles become possible which means that if not individually then at least collectively, the leadership is able to adapt according to the situation. This is perhaps how leaders could adapt to all followers despite the prevailing culture...

Leaders and Followers

The French presidential elections begin soon and a small article in this week’s Economist highlighted elitism in France: four of the presidential candidates are graduates of the Ecole National d’Administration (ENA) – a “grande école”. Furthermore, two of the leading candidates and one former candidate from the 2007 election are graduates of the same class of 1980. In addition, that year’s alumni include the head of the financial-markets regulator; the head of the Paris métro; the CEO of AXA (an insurance company); and “a clutch of mere ex-ministers and ambassadors.” ENA’s hold on the top jobs in France is, according to the Economist, “breathtaking”.

Notwithstanding politics, with such an “elite” system, there is always a danger that the leaders are developed “in a vacuum” without reference to what followers want or expect. A leader cannot lead without followers; but a strongly elitist system can often overlook the “role” of followers. This reminded me of an article by two INSEAD professors, Bartolomé and Laurent, “The Manager: Master and Servant of Power”, Harvard Business Review, 1986, Vol 11. In their article they highlight the difference in perspectives between what “superiors” have of their “subordinate” and vice versa, including when a difference in perspective can be had by the same person.

Here is a summary of their research along with further implications (“et alors”).

Leaders and Followers

The authors used comparable samples for both groups i.e. managers of similar ages being in similar hierarchical positions having both superiors and subordinates. One group was asked what they expected from their subordinates; the other what they expected from their superiors.

What managers expect from their subordinates

The percentage of managers who mentioned the following traits was as follows:

74%       Good Task Performance
60%       Loyalty and Obedience
53%       Honesty
31%       Initiative

In other words, the leaders expect their followers to principally perform well. Note however, that the “loyalty and obedience” can be at direct odds with the required “honesty” due to reticence on behalf of the subordinate.

What managers expect from their superiors

The percentage of managers who mentioned the following traits was as follows:

66%       Good Communication and Feedback
60%       Leadership
50%       Encouragement and Support
37%       Delegation and Autonomy

In other words the followers principally want to be led! Good communication, feedback, encouragement and support are all leadership “traits”. The followers are not necessarily looking to be instructed or told what to do; but rather to be given direction and guidance.

Et alors?

The principal message of the article is empathy: the leaders can expect certain things from their followers but they also have to be aware of what the followers expect from them. Without this empathy, leadership itself can be rendered less effective due to expectation mismatches. In particular, the authors cite the issue of constructive feedback. This is wanted by the followers but seldom given; and for the leaders who expect “honesty”, genuine feedback seldom flows “up” the hierarchy when there is not an effective leader-follower relationship. With the severing of this key information flow, new opportunities and possible innovations are often lost.

Regarding France, to cite Hofstede’s reference to the power distance index (the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally), “France is high on the index: it is a society in which inequalities are accepted. The power is highly centralized in France, as well as Paris [which] centralizes administrations, transports etc. In management, the attitude towards managers is more formal, the information flow is hierarchical. The way information is controlled is even associated with power, therefore unequally distributed.” If we combine this with Bartolomé and Laurent’s conclusions, new opportunities and possible innovations might be less abundant in France than in other cultures. Meanwhile, it would seem that the ENA has built an elite system which perfectly corresponds with contemporary French culture! The question therefore arises: whilst it might work today, is this elitism sustainable?

Skills for Global Leaders

Peter Drucker once said, “The most important thing in communication is hearing what isn’t said.” For this management “guru” who introduced the concept of the “knowledge worker” (1959, “The Landmarks of Tomorrow”, Harper & Bros.), communication was one of the most important skills for any leader or manager. Above all else, without being able to communicate effectively, neither leadership nor management can be fully achieved. “Hearing what is not said” can be even more challenging in a global context because the communication might be between different cultures which exhibit different ways of communicating. 

One of the earliest articles on intercultural leadership focused on this key skill of communication. Ruben, in “Handbook of Intercultural Skills”, Vol 1, 1983, Pergamon, identified key skills “being associated with effective transferring of knowledge in a multicultural environment”. Whilst relatively old, these key points have been cited as recently as 2007 by Moran et al, in their 7^th edition of “Managing Cultural Differences – Global Leadership Strategies for the 21^st Century”, Eslevier. They appear to be “common sense” but worth repeating because they are often overlooked.

Here’s a synthesis of key skills for global leaders and further implications (“et alors”).

Skills for Global Leaders

In order to effectively communicate knowledge in a multicultural environment, the global leader should exhibit the following skills:

·         Respect. The ability to express respect for others is very important. To do this, the leader must be acquainted with the cultural norms of the host or visitor.

·         Tolerating Ambiguity. The ability to react to new, different and unpredictable situations with little visible discomfort or irritation. Persistence and perseverance are also required.

·         Relating to People. Too much concern for the task and neglect of “people maintenance” can lead to failure in transferring knowledge.

·         Being Nonjudgmental. The ability to withhold judgment and remain objective until one has enough information. This requires empathy.

·         Personalising One’s Observations. An ability to accept the relative subjectivity of one’s own knowledge and perceptions, knowing that they are not necessarily universally applicable.

Et alors?

As Moran states, these skills are “often not demonstrated by multinational managers or supervisors of minority employees in one’s own culture”! This article was first published almost thirty years ago and one of the key points was acquaintance with cultural norms of the host or the visitor. In other words, when doing business, it is not just a case of “when in Rome, do as the Romans” but to extend the old adage further, “when the Romans visit, do as the Romans”! Yet thirty years on, even the most culturally-aware managers tend to put the onus of “respect” on the visitors rather than the host. To effectively transfer knowledge in a multicultural environment, all the cultures have to adapt when communicating. This does not mean that each visitor has to adapt to each host, rather that both host and visitor have to find a way to show respect and, amongst other things, perhaps “hear what is not said”.

According to Ruben’s proposed skill set, some cultures might find it “easier” than others to effectively communicate knowledge in a multicultural environment. Some cultures prefer to focus on the relationship rather than the task; some do not avoid uncertainty and can easily tolerate ambiguity; some are “reactive” with a tendency for high empathy; and some are “particularist” rather than “universal” in their approach to truth. The need for respect in a multicultural environment means that both host and visitor should make the effort whether it is easy or difficult to adapt; however motivation might be another question and here an imbalance might appear. By virtue of being a visitor, the visitor might be ready and willing to adapt; but the host might not always be so inclined especially when there is one “principal” host and many visitors. Despite the advice of the Handbook of Intercultural Skills, many international companies therefore remain today multinational but not multicultural.