Authors point way for professionals
In a sense, 'we were putting leadership on trial', wrote Carol Stephenson, dean of Richard Ivey School of Business. 'Our aim was not to identify and assign blame. Rather, we examined leadership during this critical period in recent history to learn what we could and to use the learning to improve the practice of leadership today and the development of next-generation leaders.'
As the team of Ivey professors analysed the role that leadership played in the recent financial crisis, they kept one key question in mind: 'Would better leadership have made a difference?' The answer they came up with was an unequivocal 'yes'.
'Our thoughts and conclusions are published in a book entitled Leadership on Trial,' Stephenson wrote. 'This book is a public statement of principles - a manifesto that addresses what good leaders do, who they are and how they can be developed in organisations. The fact that there were really good leaders who steered their organisations clear of many of the excesses and poor practices that got others into trouble has tended to be ignored in the popular media. Their sound leadership is reflected in the principles of good leadership we present in the book.'
In their book, they used the events of 2007-09 to reflect on leadership of business organisations. They turned up some very interesting insights.
'It forced us to confront the gaps between what we know about good leadership and the state of practice,' Stephenson wrote. 'Our research supports the view that good leadership is about the competencies, character and commitment of leaders, and how these are reflected in decisions made and implemented in continually changing contexts.'
They started by hypothesising that good leadership would have made a difference in what happened. This included both the build-up to the crisis and the way that individuals and enterprises managed the outcomes.
'We concluded by presenting some basic principles of leadership and leadership development that address what good leaders do, the kinds of people they need to be, how they develop and how organisations can develop them,' Stephenson wrote. 'These principles form the basis for improving leadership practice today and for developing better leaders for tomorrow.'
One of the key lessons that the team learned by studying the crisis was that boards of directors should not allow CEOs to be the sole conduit of corporate information. Nor should CEOs be the only one to assess risks facing an organisation.
'Boards should improve their understanding of the strategic operational, reputational and financial risks in which the organisation is engaged,' Professor Jeffrey Gandz wrote. 'They should be able to verify the extent to which their organisations are exposed to those risks, and they should understand the strategies available for risk mitigation.'
Leaders should be strong advocates of anticipatory leadership and the prime enemies of complacent thinking.
'They must be more aware of the dangers of viewing their business environments solely through the lens of their current business models, realising that their current models - and what got them there - will not necessarily work in a new environment,' Professor Gerard Seijts wrote. 'They must integrate short-term shareholder returns with other stakeholder demands and societal expectations if their enterprise is to be sustainable.'
Professionals have practically limitless opportunities to add value to their organisations. But they need to fully exploit the development of leadership competencies, character and commitment.
'One starting point for these professionals is the development of leadership profiles that capture the key competencies, character and commitment the organisation wants to see in its leaders,' wrote Professor Mary Crossan. 'Such profiles can act as beacons. They can signal what it takes to be a successful leader. They can outline what various stakeholders should expect of leaders. They can also serve as visible commitments, and leaders must expect that they will be measured against these commitments.'