Inspired Leadership

INSPIRED LEADERSHIP "Insights into people who Inspire exceptional performance “

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CONTENTS

PAGE

1. Introduction

3

2. Overview of Key Conclusions

7

•

What is it that singles out truly inspirational leadership from the rest?

•

What practical examples are there to help leaders inspire exceptional performance?

•

How leaders can listen and keep in touch

•

How leaders demonstrate trust in employees

•

How leaders show thanks and appreciation

3. Quantitative E-Survey

14

4. Qualitative Results

25

5. What Happens Next?

34

Appendix 1: Outline Project Plan

35

Appendix 2: Mapping The Three Perspectives

37

Note: The DTI acknowledges the help and assistance that the Chartered Management Institute have given in carrying out this research.

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Introduction The Inspiration Gap It is now accepted that for the UK to maintain its competitiveness there is a growing need for companies to adopt strategies that will enable a greater level of innovation and the provision of higher value goods and services. Consequently we have seen significant changes in what is required of good leaders over recent years. Indeed, those organisations whose leaders do not respond to these required new ways of working will undoubtedly face serious problems in an ever more uncertain future. As recently summarised in the DTI 2003 Innovation Review1, the literature clearly shows that high performance, innovative organisations require: “Inspirational leadership, stronger management skills, a highly-trained and motivated workforce, a flexible labour market that promotes diversity and fair treatment, and workplaces that recognise environmental issues and the need for greater resource productivity”. However, this combination of attributes that result in successful workplaces is all too rarely in evidence. In particular, the work of the Council for Excellence in Management and Leadership (CEML) reveal significant shortages in leadership skills that relate to: •

Creating a sense of vision in a fast changing environment

•

Motivating people and leading them through change

•

Being innovative in products and services and ways of working

A major survey of nearly two thousand managers by the Chartered Management Institute and Demos, in 2001, which built upon the work of the Council for Excellence in Management and Leadership, revealed a significant inspirational gap in the leadership across UK organisations. The single most important factor most people would like to see in their leaders (highlighted by 55 per cent of the sample), was “inspiration” However only 11 per cent actually saw this “ability to inspire” in their leaders. With the top two attributes actually observed being “knowledge” and “ambition”. Addressing the Gap This “Inspired Leadership” research project has been developed to explore how to start closing this critical leadership “inspiration gap” to achieve

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Competing in the global economy: the innovation challenge, December 2003 3

optimum employee engagement and the resulting high levels of innovation and performance. Throughout 2002 to 2003, three complementary workstreams were undertaken, designed to contribute to the development of an “Inspirational Leaders Index”. •

A comprehensive literature review of successful leadership, and personal interviews with 38 top leaders nominated by their peers as having achieved exceptional results.

•

Two separate studies among followers from the management population.

•

An e-survey with 568 respondents followed by telephone interviews with 100 managers to explore in more detail some of the key issues raised by the quantitative research.

The Index will enable chief executives and directors to identify and assess their key leadership behaviours and values that have a significant impact on inspiring “followers” in their organisations. The organisational viewpoint This work builds on several DTI “business learning from business” best practice programmes2 – and is being supported by a number of lead partners (including CBI, Work Foundation, IoD, Investors in People (UK), British Quality Foundation, the Chartered Management Institute, the Strategic Planning Society, Learning Skills Council, SMMT, DfES, SSDA, Civil Service College, SEEDA, NWDA, SBS, SBC, ACEVO and Cabinet Office). The work is providing a number of powerful pointers as to what makes for inspirational leadership. From the work and survey outlined above and the development of best practice case studies, the following six essential elements of “inspirational leadership” were highlighted. They: • • • • • •

Genuinely care about their people Involve everybody Show lots of appreciation Ensure work is fun Show real trust Listen a lot

In order to discover how these elements can be better realised in practice, a comprehensive research project was designed to look in more detail at the qualities of inspirational leaders. This idea was to explore whether there is a clear pattern in the way exceptional leaders behave, act, and inspire.

2

These programmes include Partnerships with People, Living Innovation, and the “100 Best Companies to Work For”. 4

The approach chosen for this phase of the research was to examine the values of those leaders who had been successful in creating exceptional results in their organisations and also the perspective of “followers” who were best placed to describe how such leaders motivate and inspire them on a day-to-day basis. In carrying this work out, the following assumptions were made: • • •

Effective leadership is a pre-requisite for successful change and innovation Many organisations do not recognise the cost of failing to address a leadership deficit Leadership is about what leaders do in relation to others, as well as who they are as individuals

The view from the Leaders A series of in-depth qualitative interviews with leaders who had been selected by peers as having achieved exceptional results, revealed common themes in terms of their most prevalent leadership characteristics: • • • • • • • • • • • • •

Strong communication – storytelling and listening Passion for learning and intense curiosity Focus on developing people Having fun and very energised Strong self-belief, coupled with humanity and humility Committed to giving something back and to making a significant difference Clarity of vision and ability to share it with their people Dogged determination and often “ relentless” Very strong focus on priorities Not afraid to show some vulnerability Regular use of reflective periods Almost universal dislike of jargon Passion for and pride in what they do

The view from the followers Not surprisingly, many of the leadership qualities desired by the ‘followers surveyed also reflect the views of both exceptional leaders and the findings from best practice case studies: • • • • • •

Genuine shared vision Real confidence and trust in their teams Respect for employees and customers Commitment to developing people Clear standards of ethics and integrity Willingness to take risks

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Appendix 2 (see Page 37) contains a matrix of the agreement across the three perspectives. It also provides an indicative measure of the gap between desired leadership qualities and those experienced in reality. Search for inspiration Given that there is now such a shared understanding and agreement of the basic tenets of inspirational leadership, why is there the need for further research? Headline findings from the followers’ survey clearly demonstrate that the majority of organisations are still not providing a culture that is engaging the hearts and minds of their employees: •

“Leaders are genuinely in touch with how people are feeling” (62 per cent disagree)

•

“We work hard but senior management makes sure we have fun (54 per cent disagree)

•

“There is a good buzz and feeling of energy (50 per cent disagree).

The latest research This report is based on the results of three interlinked pieces of research: •

A comprehensive literature review of successful leadership, and personal interviews with 38 top leaders who were nominated by their peers as having achieved exceptional results. The interviews looked at what are the specific personal drivers and characteristics of inspirational leaders.

•

Two separate studies among followers from the management population (carried out during October to December 2003 by the Chartered Management Institute).

•

An e-survey with 568 respondents was followed by telephone interviews with 100 managers to explore in more detail some of the key issues raised by the quantitative research. (See Sections 3 and 4 of this report for more information)

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Overview of key conclusions For the past 30 years there has been increasing amounts of data to suggest that leadership has a lot more to do with inspiration and vision, rather than straightforward technical competence. Leadership is now recognised as a transferable skill, it can be developed by continued learning and development throughout a person’s career. By contrast, the Great Man theories of leadership and cults of personality are now seen as largely irrelevant in a fast-moving and much less hierarchical world (see Pedler, Burgoyne and Boydell, 2004). This latest DTI research report based on a new study carried out in 2003 among 568 followers at different management levels working in a wide variety of UK organisations, confirms that today’s workforce is more diverse, informed and sophisticated than ever before. Ultimately people are still looking for something different and better in organisational leadership. The research found that managers demand visionary leaders who win not only results, but also the trust and respect of their teams. It is the relationships between people that result in actions. Followers will respond to leaders who let them know what they do is important and that it makes a difference. Clearly most organisations are not the stable, predictable structures of the past. Keeping followers motivated and committed in an era of unrelenting change, means that leaders must be able to create organisational cultures that foster not only performance, but also a sense of pride and fun. Because cultures evolve over many years and are usually deep-rooted, they can be difficult to change. Some commentators have observed that it is easier to change behaviour by changing processes and systems in an organisation than it is to change peoples’ attitudes. While goals change in the course of a person’s life, values tend to remain constant and help determine an employee’s attitudes to their employer. The 2003 research suggests that over half of managers are working for organisations which have apparently not yet fully evolved to meet the needs of today’s high performing workplaces. Too many experience excessive bureaucracy and command and control behaviours, which have a tendency to inhibit, rather than improve, individual and organisational performance. Bureaucratic and authoritarian command and control structures are still too prevalent in UK organisations.

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What is it that singles out truly inspirational leadership from the rest? Key findings from the followers’ perspective: Managers confirm that individuals and teams who are inspired and enthused will operate at a different level from the competition. In this context the study reinforces the important influence of organisational culture on performance and results. 61 per cent of those working in a participative environment (compared with 40 per cent from command and control cultures) were much more likely to rate their organisation’s financial performance as better than others in their sector. Around one-third of followers admit that they have never worked for, or been motivated by, an exceptional leader in their lives. Outside of the work context, many appreciated the inspirational role played by sporting coaches and teachers or professors. Over 60 per cent of followers report that their leaders are out of touch with how people are feeling. This remoteness and distance has a negative impact on morale and motivation levels. Giving people space and responsibility, and recognising and believing in their abilities, remain the most effective and powerful ways to motivate followers - participative rather than command and control cultures tend to encourage these behaviours. Followers believe that their leaders are kept awake at night worrying about performance targets, achieving bonuses and competitive pressures rather than people issues. Although many organisations claim that people are their greatest asset, when it comes to measuring performance, 80 per cent of organisations measure in financial terms. Employers also need to consider other less tangible criteria such as employee satisfaction levels and innovation/creativity. Only one in seven organisations takes employee satisfaction into account in this respect. This finding is probably linked with the finding that followers do not, on the whole, see their leaders creating a feeling of energy, fun and excitement in the organisation – 93 per cent identified this a key leadership attribute, yet only 32 per cent are actually experiencing this closer to home. Some organisations are better than others in generating a good buzz and fun in the workplace - smaller firms with fewer than 20 employees for example tend to be more successful in this respect. It is concerning that only a third of leaders are currently creating a feeling of energy in the organisation. Perhaps this is linked with the finding that

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managers are weary of working for poor communicators - only 43 per cent could agree that their leaders listen more than they talk. Table1: Results from telephone interviews with followers - leadership behaviours desired v experienced (see Section 3) Base: 100 Create a feeling of energy, fun and excitement in the organisation Be good communicators and listen more than they talk Encourage creativity and innovation Present an open and honest face to their people Show genuine appreciation of contribution and efforts

Gap

Want leaders in general to % 93

Saw demonstrated in own organisation % 32

-61

96

43

-56

98 98

56 62

-42 -36

98

76

-22

•

The smallest experience gap shown in the table above – that related to showing appreciation (-22) is still concerning however, as it indicates a sizeable minority of followers feel that their efforts are mostly unrecognised.

•

It is not surprising to discover that around three quarters of followers want leaders to create and demonstrate vision, trust and respect, as these are common and recurrent themes across the literature and other research studies.

Table 2: Results from e-survey with followers - leadership behaviours desired v experienced (see Section 2) Base: 568

Genuine shared vision Real confidence and trust in their teams Respect for employees, colleagues and customers Commitment to helping people in organisation develop and grow

Saw Demonstrated in Own organisation %

Gap

Want Leaders in general to have % 79 77

38 37

-41 -40

73

42

-31

66

43

-23

9

Clear standards of ethics and integrity Willingness to take acceptable risks Customer-focussed strategy that drives performance Skill in forming alliances and partnerships Dogged determination to deliver objectives

59 44 42

49 38 47

-10 -5 +5

30

42

+12

24

46

+22

There remains a key concern however in the finding that there is such a sizeable “experience gap” whereby around 60 per cent of followers do not currently see vision, trust and respect being demonstrated in their own organisations. What practical examples are there to help leaders inspire exceptional performance? The quantitative e-survey asked respondents to describe how they had been motivated and inspired by exceptional leaders in the past. Some key themes and patterns emerged which were then explored further at the telephone interview stage. The 100 followers were asked to describe in their own words how leaders in their organisation… • • •

Listen and keep in touch (talk) Show trust in their people (trust) Show thanks and appreciation (thank)

1. How leaders listen and keep in touch Base: 88 respondents Team/staff meetings/briefings Come and talk/chat to staff/one to one sessions Feedback from meetings/feedback sessions Written information/newsletters Open door policy Appraisal /review system It is interesting that only 19 per cent of respondents experience an open door policy in the organisation. More formal processes and procedures seem to apply in more than half of respondent organisations.

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% 57 40 39 33 19 10

Listed below are some of the more positive examples that managers have experienced: • • • • • • • • • • •

Toolbox talks – listen to those on the shopfloor Listening lunches – where the Chief Executive has a monthly lunch with staff at all levels Management by walking about, just asking questions and listening Fortnightly department meetings Monthly one-to-one with line manager Quarterly have-your-say questionnaire 3-monthly employee meeting bringing people together from 7 different locations Newsletters every month Open chat room via email Moderated chat room on website where anyone can post a question Daily news release on the intranet to keep us informed of what’s going on

How not to do it…. •

They didn’t do much listening but transmitted a lot of information down a management tree (Manufacturing)

•

Recently our Chief Executives attended some meetings with all staff to hear about problems and issues – 10 months later nothing has changed, its been a waste of time (Public administration)

•

They listen only when they have to, when the issue is forced (Health/social work)

•

They communicate via the Intranet rather than verbally and in person/they sit in their little goldfish bowls typing emails (IT/telecoms)

2.

How leaders demonstrate trust in employees Base: 87 respondents Staff left to own devices/degree of autonomy Encouraging staff to come up with ideas/to develop Flexibility/working from home Responsibility for sign-off Representing organisation at external meetings/seminars etc

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% 71 23 16 8 6

Although this shows quite promising results in the degree of autonomy that is apparently enjoyed by these followers, some managers suggested that this was actually due more to a lack of understanding or interest on their leader’s part: “In my case I’m given very wide-ranging autonomy. This is motivated primarily by the leadership’s lack of understanding of my function.” Practical examples of how leaders can demonstrate their trust are given below: • • • • • • • •

Invoice approval and signoff Company credit card Represent organisation externally at seminars, public speaking, replace boss at strategic meetings Job description defines limits but high degree of autonomy/freedom No-blame culture Right-first-time culture It comes through strongly in promotion, we believe in their potential but people are still unproven in the scale of the jobs they are going into. You have to allow the decision making process as low as possible onto the shopfloor and trust employees enough to try and take those decisions for themselves.

How not to do it..

• • •

3.

We operate in a culture of mistrust. Frequently officers of the Council are undermined by elected members who are backed up by senior managers (Public administration) They don’t tend to divulge, so they keep everybody at arms length (Manufacturing) We invented trust. We trust all our employees depending on their security clearance (Defence/emergency services) How leaders show thanks and appreciation

Base: 89 respondents Personal thank you to individuals Public acknowledgement e.g. notice board, intranet, newsletter, meeting Team event/outings Financial reward e.g. cash gift, bonus Non-financial reward e.g. chocolates, flowers, wine Additional holiday/time off in lieu

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% 61 49 44 40 17 7

Promotion Events/outings to include families of staff Long service awards

6 3 3

Followers seem to appreciate the personal rather than the process-driven approach. Much of the importance attached to a gesture of appreciation is attached to the timeliness/direct relationship to the event. Thanks and appreciation should apply to situations where praise is warranted, but not given every single time a person does something right. Other comments/examples included: • • • • • •

Rewards such as salary have a short-term beneficial effect. Constant verbal appreciation and an appreciative attitude from your manager build a culture of appreciation, which has a longer-term effect. Internal departmental or employee awards for excellence Scratch card for achieving targets in finance department All expenses trip to Barcelona for achieving sales targets Store Manager of the Year is given a car When a project was completed successfully we would arrange for the whole team from bottom upwards to the project manager to go for a pint.

How not to do it. • •

They tend to take us out for a Christmas lunch and assume that’s all it needs (Public administration) My line manager shows appreciation with sweets or choc ices but management higher than that don’t get involved in that kind of activity (Public administration)

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3. QUANTITATIVE E-SURVEY BACKGROUND

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The Chartered Management Institute, in partnership with the DTI, designed and carried out a survey by e-mail of followers at different management levels during October 2003, to which 568 individuals responded.

•

It was designed to meet the following key objectives: -

To validate the preliminary findings from the qualitative interviews with inspirational leaders carried out earlier in 2003

-

To explore with followers the qualities that leaders need to inspire them to deliver improved performance/extraordinary results

-

To provide a robust data series that will enable the development of a draft Index for development with a wider partner group.

•

The survey was emailed to 5,000 followers including members of the Chartered Management Institute and CBI contacts, during October 2003. The response rate of 11 per cent is above average for business-to-business email surveys.

•

The e-survey was complemented by 100 semi-structured telephone interviews designed to probe respondents’ understanding and experience of inspirational behaviour and attributes. This was sub-contracted to an independent external market research agency NOP and interviews were completed by mid-December 2003.

THE SAMPLE •

The managerial level of the 568 respondents is as follows: Management level Chief Executive Director Senior manager Middle manager Junior manager

% 8 16 36 29 11

Over three-quarters of individuals (76 per cent) are below Board level and were thus able to provide a comprehensive upward perspective on the leadership styles in their organisations. Age Under 25 25-29 30-34 35-44

% 8 21 22 17

14

45-54 Over 55

19 13

Respondents were almost equally divided between the under-35 and over-35 age groups. Gender Male Female

% 80 20

This division is broadly representative of the UK management population. Region London South East North West South West Yorks/Humberside West Midlands Scotland East Midlands East Anglia Wales N.Ireland

% 15 15 13 8 8 7 7 7 5 4 2

Three in ten respondents work in London and the South East, reflecting both its economic dominance and the membership pattern of the Institute. Sector Public administration Manufacturing Business services Education Construction/engineering IT/telecoms Health/social work Financial services Defence/emergency services Charity/not for profit Transport/distribution Leisure/hotels Retail/wholesale Other

% 16 14 11 10 9 7 6 5 4 3 3 2 1 9

The sectoral breakdown broadly reflects the national picture, albeit with an underrepresentation in the leisure and retail industry. Number of employees 0-19 20-49

% 14 12

15

50-99 100-249 250-499 500-999 1000-4999 Over 5000

16 18 12 8 12 8

All sizes of employer are represented including SMEs and micro-businesses, which permits useful comparisons. % 13 12 14 22 10 29

Turnover Below £1m £1m-£5m £6m-£10m £11m-£50m £51m-£100m Over £100m

There is also a reasonable representation of the different financial turnover bands. 1. LEADERSHIP CULTURES

Respondents were asked how far they agreed (on a four-point scale) with a series of 12 statements describing various organisational scenarios. Table 1 Agreement with various statements about leadership culture Base: 568 I believe leaders in my organisation are genuinely in touch with how people are feeling We work hard but senior management also makes sure we have fun There is a good buzz and feeling of energy in my organisation

Strongly agree % 5

Agree

Disagree % 46

Strongly Disagree % 16

Total Agree % 36

Total Disagree % 62

% 31

12

33

42

12

45

54

10

38

40

10

48

50

16

I get annoyed when I hear negative comments about the top team Everyone in this organisation is looking to do things better One of the good things about this organisation is the way we are helped to develop personally My boss ensures objectives are stretching but not to the point of overload I am normally thanked by my boss when I have done a good job Leaders in my organisation are approachable/ have real open door policy I am confident my boss listens to my views I am actively encouraged to come up with ideas/be creative My boss trusts me to make my own day-to-day decisions

11

41

42

4

52

46

12

44

38

5

56

43

13

44

33

9

57

42

11

47

32

7

58

39

22

48

23

4

70

27

26

48

20

5

74

25

38

44

13

4

82

17

56

34

8

1

90

9

61

33

5

0

94

5

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KEY FINDINGS

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It is worrying to note that only just over a third of respondents - 36 per cent - agreed that their leaders are genuinely in touch with how people are feeling. Furthermore less than half of respondents (48 per cent) agree that there is a good buzz in the organisation, and that they have fun even while working hard (45 per cent).

•

These are unwelcome results, especially since the pressures of change in an era of higher employee expectations demand that leaders find new ways of generating shared commitment. Improving the quality of leaders’ relationships with the rest of the organisation will make an important contribution to exceptional performance.

Corporate versus individual perspectives Table 1 shows some differences in the responses between statements worded in the first person describing specific individual behaviours/outcomes e.g. I am confident my boss listens to my views, and those relating to organisational behaviour over which there was no perceived personal control e.g. We work hard, but senior management makes sure we also have fun.” Respondents seemed more likely to report negatively on the latter, more “abstract” aspects of organisational culture, and to apportion blame at more senior levels. In contrast a more positive picture was painted when answering those statements in the first person, especially concerning levels of autonomy or decision-making. These two issues are particularly linked with managers’ image of themselves in the workplace, and so an element of overclaiming/ providing a socially acceptable response is not unexpected in research design terms. Differences by management level In looking more closely at the three statements in Table 1 with the lowest agreement scores, further analysis by level reveals something of a division at the Boardroom door as shown in Tables 2a-2c. Table 2a Agreement with statement: I believe leaders in my organisation are genuinely in touch with how people are feeling Base: 568 Strongly agree Agree Disagree Strongly disagree

All % 5 31 46 16

Director % 12 36 41 8

Senior % 4 36 47 13

Middle % 2 19 54 23

Junior % 2 22 49 27

Middle and junior managers are particularly dissatisfied with the remoteness of the top team, in that around three-quarters disagreed with the statement that leaders are genuinely in touch. Typical comments in terms of their leaders’ performance included:

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“Need to ensure that communication is more efficient and take time to talk to people in the organisation and at the chalk face.” “Make top management more visible to rest of the workforce. Too much of ivory towers!” “Get out there and walk about more.” Table 2b also shows that directors and senior managers have a different perspective on how things really are within an organisation. Table 2b Agreement with statement: We work hard but senior management makes sure we also have fun Base: 568 Strongly agree Agree Disagree Strongly disagree

All % 12 33 42 12

Director % 26 35 25 9

Senior % 6 32 54 8

Middle % 7 30 46 17

Junior % 10 29 37 24

Only 39 per cent of junior managers agree that they have fun at work compared with 45 per cent overall, and 62 per cent of directors. This suggests a real divide between organisation leaders and those lower in the hierarchy, although followers were willing to offer some practical solutions: “ Monthly team lunches at the local Indian restaurant.” “ Made sure we all celebrated when we had a good win.” “ Always around when anyone had to work out of normal hours even if just to make the tea.” “By celebrating achievements.” “My boss was colourful, controversial and arrogant. Right or wrong he challenged peoples’ ways of doing things.” Table 2c suggests that energy levels in UK companies could be increased, which would possibly have an impact on fun levels as well.

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Table 2c Agreement with statement: There is a good buzz and feeling of energy in my organisation Base: 568 Strongly agree Agree

All % 10 38

Director % 25 41

Senior % 9 44

Middle % 3 29

Junior % 3 32

Disagree Strongly disagree

40 10

28 4

41 6

54 14

39 24

Almost two-thirds (63 per cent) of junior managers report that their leaders are not creating buzz and energy in the organisation, compared with 47 per cent of senior managers. This is a significant difference. There was also a size effect in that employees working in organisations with under 20 people were considerably more likely to agree that there was a good buzz and feeling of energy present (71 per cent versus 48 per cent overall). It is likely that the flexibility and relative intimacy of small organisations creates the right conditions to produce the buzz that managers are looking for. 2. LEADERSHIP ATTRIBUTES AND BEHAVIOURS

The survey was designed to indicate the size of the “experience gap” between desired leadership behaviours and the reality as demonstrated within respondents’ organisations. Table 3 Desired leadership attributes Base: 568

Leaders in general %

Genuine shared vision Real confidence and trust in their teams Respect for employees, colleagues and customers Commitment to helping people in organisation develop and grow Clear standards of ethics and integrity Willingness to take acceptable risks Customer-focussed strategy that drives performance Skill in forming alliances and partnerships

Demonstrated in Own organisation %

Gap

79 77

38 37

-41 -40

73

42

-31

66

43

-23

59

49

-10

44

38

-5

42

47

+5

30

42

+12

20

Dogged determination to deliver 24 objectives

46

+22

KEY FINDINGS

•

The three most frequently identified leadership attributes are vision (79 per cent), trust (77 per cent) and respect (73 per cent), yet less than four in ten followers see these behaviours demonstrated within their own company. It was those at middle and junior management level who were less likely to report a shared vision and to feel they were trusted.

•

Clearly leaders in the majority of UK organisations continue to struggle with the twin challenges of developing and communicating a shared vision, and with relaxing control to allow their teams to deliver. Instead they are much more likely to report success at a practical operational level i.e. focus on customers, partnership working and from solidly and steadily pursuing organisational objectives.

•

This is not to devalue the contribution made to results and performance by these strategies, but there is clearly work still to be done at a more fundamental level in order to capture hearts and minds. The survey reinforces the need for values-based leadership, with an increased focus on people rather than systems and processes.

Previous Institute research among followers (Leadership: the challenge for all, 2001 and Leading change in the public sector: making the difference, 2003) has identified the critical importance of visionary leadership, and respondents to this survey proved no exception as the following comments illustrate: “ He has a focus on the long term – he thinks in decades, not in budget cycles.” “ Guides but does not dictate the company direction.” “ Quiet air of confidence, I felt he knew where we were going and was determined to get there.” “ He was open from day one as to what he wanted to achieve.” “ Compelling stories about future possibilities.” The single highest attribute that followers see demonstrated in their own organisations (reported by 49 per cent) are Clear standards of ethics and integrity. It is not entirely clear however whether this involves new approaches post-Enron, or existing organisational processes and procedures. Nevertheless this attribute recorded the smallest “gap” between what leaders in general should do and what is being done by leaders in organisations.

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3.

MEASURING RESULTS

The overwhelming majority of organisations measure success in financial terms (80 per cent) and while this is not surprising, it is chastening to note how little notice is taken either of employee satisfaction levels (13 per cent) or innovation and creativity (10 per cent). Table 4

Performance indicators in UK organisations

Top three measures used Financial performance Productivity and efficiency Corporate reputation and image Quality standards Market share and growth Customer loyalty Employee satisfaction levels Innovation and creativity

•

% 80 45 40 40 37 19 13 10

Public administration employers were however more likely to include employee satisfaction levels (22 per cent against 13 per cent overall) as one of their performance measures.

4.

OTHER ISSUES

This section is based on the replies to three open-ended questions as outlined below. 4.1 Thinking about the leader who has motivated you most in your working describe how they did this.

life, please

Two-thirds of followers report having been motivated in their working lives by an exceptional leader, while just under one-third (31 per cent) admit that they never have been. This is an indictment on the quality of leadership experienced in UK organisations and confirms that there is room for improvement. Outside of the work situation, respondents were most likely to have been motivated in a sporting context (34 per cent) or as part of the education process e.g. primary school teacher (25 per cent) or at university/college (25 per cent). An initial analysis of the replies revealed that in the work situation that the key ways to motivate people were: -

Giving them space and responsibility Recognition and appreciation Believing in their abilities

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Several managers explained how they had been motivated in terms of space and responsibility: “Let me move forward at own pace and in own direction, but positive advice given when asked for.” “Allowed to take responsibility for both positives and negatives.” “Allowed me to make the decisions and said he would trust me no matter what the result.” Comments about being appreciated included: “Recognised my dedication and hard work.” “Always appreciative of subordinates and peers’ contributions and efforts.” “By giving me the credit for the things I did well to others in the organisation.” Finally managers described how they were motivated by a leader’s belief in them: “I was allowed to develop naturally and to make mistakes.” “Freedom to do things my way, with the knowledge that I was supported.” “In public he fully supported every member of his team and only dealt with disagreements in private.” 4.2 •

What keeps leaders awake at night? Somewhat cynically perhaps, around one in ten respondents to this open-ended question felt that their leaders did not lose any sleep over organisational problems.

“I am convinced the leader of my organisation stops thinking about work the moment he leaves the office at 5pm.” Others believed that the ability to switch off is an important leadership ability: “ I believe our leaders are well enough balanced NOT to lie awake at night.” Performance targets and competitive pressures were the most commonly reported worries as illustrated by these typical comments: “ Fear of failure to deliver performance, reliability, quality and safety.”

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“ How can we maintain a successful organisation to keep the City happy and fend off a potential takeover?” “Trying to decide what to do next i.e. how to grow the business.” “ Maintaining staff motivation and finding what will give us the edge over our competitors.” 4.3

If you were Chief Executive, what one thing would you change to achieve exceptional results?

Initial analysis showed that the one thing to be changed to achieve exceptional results in the opinion of many is the internal communications process. This finding is not unexpected and serves to underline its crucial importance. Leaders need to: -

Listen Encourage an open forum for ideas Promote upward communication

Managers commented on this key aspect of leadership by suggesting what good communications involves: “ Tried to give everyone an idea of the bigger picture.” “ Regular team meetings and one to ones. Everyone knew what was expected of them.” “ Explained why things were being thought about or changed.” “ The individual who solved a problem was always given credit publicly.” “ Honesty even when the news is bad.” “ The fact that never resorted to management-speak or jargon.”

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4. QUALITATIVE RESULTS BACKGROUND

•

This report contains an analysis of the results from 100 semi-structured telephone interviews carried out by an independent external market research agency NOP.

•

Fieldwork took place between 17 November and 8 December 2003, among individuals who had responded to the earlier e-survey carried out in October 2003, and had agreed to take part in the subsequent follow-up.

•

The questionnaire was designed to probe followers’ views and experiences of inspired leadership, including tangible examples of being thanked, trusted and listened to. Interviews contained a mixture of closed (precoded) and open-ended questions.

KEY FINDINGS

•

Half of respondents reported that their organisation had an explicit budget for leadership development and training, while five per cent did not know. Although based on very small sub-samples, explicit budgets were more likely in the public administration and health/social sectors.

•

Fifty per cent of followers were aware of specific leader networks in the UK, of which the Chartered Management Institute was the most frequently mentioned (55 per cent). This is not entirely surprising in view of the composition of the sample. The Institute of Directors was mentioned by 20 per cent and the CIPD by six per cent.

•

Less than half of managers (44 per cent) described the prevailing organisational climate as participative i.e. a shared approach, with high levels of employee involvement in decision-making.

•

Bureaucratic structures (31 per cent) and authoritarian command and control styles (25 per cent) are together still perceived as prevalent in over half of UK organisations.

•

This finding is no doubt closely linked with the finding that followers do not, on the whole, see their leaders creating a feeling of energy, fun and excitement in the organisation – 93 per cent identified this as a key leadership attribute, yet only 32 per cent are actually experiencing this closer to home.

•

Neither do their leaders demonstrate the attribute of being good communicators and who listen to others more than they talk themselves –

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•

96 per cent of followers identified this as a key attribute, while only 43 per cent report that this is being demonstrated in their organisation.

•

Less than half of managers (48 per cent) agreed that most people in their organisation would be able to describe its vision if required. In contrast 59 per cent of those working in participative cultures agreed that most people could do so, compared with only 32 per cent of those in bureaucratic organisations.

•

The three main employee satisfaction measures used are resignations/staff turnover (69 per cent), sickness rates (63 per cent) and absence rates (62 per cent). Only nine per cent of organisations do not measure satisfaction levels.

THE SAMPLE

•

The sectoral breakdown of the 100 respondents is as follows: Sector Public administration Business services Manufacturing Education Construction/engineering Health/social work Financial services Defence/emergency services IT/telecoms Transport/distribution Charity/voluntary Leisure/hotels/restaurants

% 22 16 15 11 11 5 4 4 4 3 3 2

As in the first e-survey, the sectoral breakdown broadly reflects the national picture. Gender Male Female

% 86 14

This picture is broadly representative of the UK management population. Employment status Work full-time Work part-time Work on interim basis Work on fixed-term contract Self-employed

% 91 1 1 1 6

The majority of respondents are employed on full-time permanent contracts.

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Length of employment 0-2 years 3-5 6-10 More than 10 years

% 25 25 15 35

Over a third of respondents have worked for their current employer for over 10 years. Less than half of followers (44 per cent) report that they work in organisations with a shared approach to decision making and where they are encouraged to participate. The majority (56 per cent) describe a more rigid and authoritarian approach. Organisational culture Bureaucratic e.g. rigid, process driven Command and control e.g. authoritarian Participative e.g. high employee involvement in decision-making

% 31 25 44

Bureaucratic cultures are much more prevalent within the public administration sector, while employees working in business services were more likely to describe the culture as participative. Manufacturing concerns tend to adopt more of a command and control approach, perhaps reflecting the need to meet defined production and quality schedules. Base: 100 respondents Business services Public administration Manufacturing Construction/ engineering Education Health/social work Charity/ Voluntary

All

Bureaucratic 19 42

Command & control % 16 12

% 23 22

Participative % 30 14

15 11

10 10

28 12

11 11

11 5 3

10 3 -

8 4 4

14 7 5

LEADERSHIP ATTRIBUTES AND BEHAVIOURS

The telephone interviews sought to identify further the size of the “experience gap” between desired leadership behaviours and the reality as demonstrated within respondents’ organisations.

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Table 5

Desired leadership attributes

Base: 100

Leaders in general 93

-61

96

43

-56

98

56

-42

98

62

-36

98

76

-22

% Create a feeling of energy, fun and excitement in the organisation Good communicators and listen more than they talk Encourage creativity and innovation Present an open and honest face to their people Show genuine appreciation of contribution and efforts

Gap

Demonstrated in own organisation % 32

•

It is concerning to see followers confirming the pattern highlighted in the quantitative survey in terms of lack of organisational energy and buzz (only 32 per cent of managers experienced this).

•

This lack of energy is probably compounded by poor communications – indeed only 43 per cent of managers could agree that their leaders were good communicators who listen more than they talk. As one respondent commented: “They didn’t do much listening, but they transmitted a lot of information.”

•

Unsurprisingly perhaps, participative cultures encourage these behaviours – 89 per cent of respondents from that type of environment agreed that leaders genuinely appreciated peoples’ hard work, compared with 56 per cent of those working in a command and control environment.

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EXAMPLES OF LEADERSHIP BEHAVIOURS Respondents were asked to describe in their own words specific and tangible examples of how leaders in their organisation show their thanks and appreciation • Listen and keep in touch • Show trust in their people An analysis of the common themes is given below, and a full listing of the managers’ verbatim responses is also available. Table 6

How leaders show thanks and appreciation

Base: 89 respondents Personal thank you to individuals Public acknowledgement e.g. notice board, intranet, newsletter, meeting Team event/outings Financial reward e.g. cash gift, bonus Non-financial reward e.g. chocolates, flowers, wine Additional holiday/time off in lieu Promotion Events/outings to include families of staff Long service awards Company car

% 61 49 44 40 17 7 6 3 3 2

Followers seem to appreciate the personal rather than the process-driven approach. Much of the importance attached to a gesture of appreciation is attached to the timeliness/direct relationship to the event. Often line managers provided a contribution of effort on a “personal” basis as it was too hard to fit within the bureaucratic process: “ He will out of his own pocket do some of the things you have mentioned.” “Our line manager shows appreciation in with sweets or choc-ices: management higher than that don't get involved in that kind of activity”. Table 7

How leaders listen and keep in touch

Base: 88 respondents Team/staff meetings/briefings Come and talk/chat to staff/one to one sessions

% 57 40

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Feedback from meetings/feedback sessions Written information/newsletters Open door policy Appraisal /review system Investors in People

39 33 19 10 3

It is interesting that only 19 per cent of respondents experience an open door policy in the organisation. More formal processes and procedures seem to apply in more than half of respondent organisations. Table 8 How leaders demonstrate trust in employees Base: 87 respondents Staff left to own devices/degree of autonomy Encouraging staff to come up with ideas/to develop Flexibility/working from home Responsibility for sign-off Representing organisation at external meetings/seminars etc

% 71 23 16 8 6

Although Table 8 shows quite promising results in the degree of autonomy that is apparently enjoyed by these followers, some managers suggested that this was actually due more to a lack of understanding or interest on their leader’s part: “In my case I’m given very wide-ranging autonomy. This is motivated primarily by the leadership’s lack of understanding of my function.” The results do show something of a paradox however. Despite the high levels of autonomy reported by these managers, it is notable that only one in six were apparently trusted enough to work away from the traditional office setup i.e. at home, out of sight of the boss. This is surprising in view of the technological advances that enable remote working, but which have not been accompanied by corresponding advances in attitude and behaviours. 3.

MEASUREMENT AND BENCHMARKING

While the quantitative survey showed that only 13 per cent of organisations took employee satisfaction into account when measuring performance, it was nevertheless felt important to explore this issue further among followers in the qualitative survey. Results are shown below. Although many employers (58 per cent) undertake

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employee surveys which can give an ongoing indication of overall satisfaction levels, it is noticeable that many (69 per cent) seem to take notice only when remedial measures would be too late i.e. when staff have already resigned. Table 9a

Measures of employee satisfaction used in UK organisations

Base: 100 respondents Resignations/staff turnover Sickness rates Absence levels Attitude surveys Productivity/output Focus groups 360-degree feedback Industrial action/strike/go-slow None of these

% 69 63 62 58 43 38 37 17 9

Employee attitude surveys, with feedback of the results used to trigger action at all levels of the organisation, can increase levels of employee involvement. Well-designed suggestion schemes can have similar benefits. However both depend critically on employees seeing a positive response to their views and ideas: in the absence of a positive and wellcommunicated response, the outcome is merely increased cynicism. Nine per cent of respondents report that their employer does not measure employee satisfaction - this rose to 16 per cent in those organisations that were described as having a command and control culture. Table 9b Comparisons of organisational performance Base:100 Resignations/staff turnover Sickness rates Absence levels Attitude surveys Productivity/output Focus groups 360 degree feedback Industrial action Informal contact Appraisals/regular meetings None of these

Bureaucratic % 61

Command control % 64

& Participative

48 52 61 29 26 39 23 10 10

72 60 56 44 36 12 8 4 8

68 70 57 52 48 50 18 25 14

10

16

5

% 77

Managers were then asked about their organisation’s performance over the past year compared with others in their sector, rated on a five-point scale.

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Table 10

Organisational performance compared with others in sector

Base:100 respondents

Quality of products/services/ programmes Customer/client satisfaction Ability to attract highcalibre employees Financial performance New product development

Very much worse % 4

Much worse

About the same

Much better

Very much better

% 7

% 28

% 48

% 13

6

8

30

40

16

7

14

37

25

17

11 7

14 21

23 30

31 40

21 16

While these responses may be partly based on perceptions rather than actual data, respondents are most positive about corporate performance in terms of product and service quality. They also consider that their customer/client satisfaction levels are higher than those of the competition. Quantitative findings revealed that 80 per cent of organisations measure success in financial terms. Further analysis of the second stage results indicates that organisational culture has an influence on financial performance/turnover. Table 11

Influence of organisational culture on financial performance/ turnover

Base: 100 Very much better Better Neither Worse Very much worse

Bureaucratic % 13 35 26 19 6

Command & control % 20 20 28 8 24

Participative % 27 34 18 14 7

Employees working in a participative environment were much more likely than those working in a command and control culture to describe their organisation’s financial performance as better than others in their sector (61 per cent against 40 per cent). Leaders who wish their organisation to be an employer of choice need to be aware of the contribution of culture to an organisation’s success at attracting high-calibre employees. Table 12 shows that only 25 per cent of bureaucratic

32

organisations seem to be effective at recruiting high-calibre individuals, compared with 61 per cent of participative companies. Table 12

Influence of organisational culture on ability to attract high calibre employees

Base: 100 Very much better Better Neither Worse Very much worse

Bureaucratic % 6 19 55 13 6

Command & control % 12 16 32 28 12

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Participative % 27 34 27 7 5

5. What Happens Next? The project outline is shown in Appendix 1. The next stage of this work will be to validate the work completed to date with HR Directors and others and to look at the factors applying in leadership selection by headhunters and other selection agencies and a sample of nonexecutive directors. The collective research findings will then be used to develop the inspirational leadership index Further Information If you are interested in becoming involved in this project (for example in helping to develop an Inspired Leadership Index) or simply wish to know more about it, please contact: John Baker, Management, Leadership and Skills Unit, Department of Trade and Industry, Bay 349, 151 Buckingham Palace Road, London SW1W, 9SS.

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Appendix 1 Outline Project Plan

Inspired Leadership Program m e CEM L research by CM I and Dem os

Background Research: • W inning • Partnerships w ith people • Living Innovation • 100 Best Com panies

Fer r ar a Co n fer en ce Lead er sh ip & In n o v atio n N etw o r k 2000

CM I Leaders and Follow ers Research, analysis from the 2004 100 Best Com panies to W ork For data

Stakeholder Review and presentations

M LSU /W EU Head-hunters research

Inspired Leaders Index (draft) Interim findings published

In sp ir ed Lead er s N etw o r k – p r o files an d sy n th esis 2002

-A BBP b r o ch u r e - fir st r esear ch r ep o r t

2003

35

M ay 2004

Dec 2004

Inspired Leadership Program m e

City & Venture Capitalist Research

Inspired Leaders Index (second draft)

Launch Stakeholder Review and presentations

Inspired Leaders Index

Inspired Leaders Index (first draft) Analysis from the 2005 100 Best Com panies to W ork For data

Dec 2004

M arch 2005

36

Research on Leadership and M anagem ent Developm ent Tools

M apping Leadership N etw orks

June 2005

APPENDIX 2: MAPPING THE THREE PERSPECTIVES ON INSPIRATIONAL LEADERSHIP DTI “BUSINESS LEARNING FROM BUSINESS”

Inspirational leaders ensure work is fun

Inspirational leaders listen a lot

Inspirational leaders genuinely care about their people

VIEW FROM THE TOP

VIEW FROM THE FOLLOWERS

GAPS

Leaders who have achieved extraordinary results characterise themselves as:

Followers were looking for the following attributes in their leaders:

The reality check from the followers perspective difference between desired quality and leadership experienced in their organisation:

“Passionate and enthusiastic”

Creates a feeling of energy, fun and excitement in an organisation

-61% gap

-56% gap

“Hungry for learning”

Good communicators who listen to others more than they talk themselves

“Giving a priority to building and developing teams of inspired leaders”

Commitment to helping people develop and grow

51 per cent do not have budgets for leadership development and training

“I want this place to be a place where people are thrilled to come to work – a wow company. People come to work with a smile and love that real sense of being there.” “Powerful listeners”

“Biggest concern is letting my people down”

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DTI “BUSINESS LEARNING FROM BUSINESS”

Inspirational leaders and their people are deeply committed

VIEW FROM THE TOP

VIEW FROM THE FOLLOWERS

GAPS

Leaders who have achieved extraordinary results characterise themselves as:

Followers were looking for the following attributes in their leaders:

The reality check from the followers perspective difference between desire quality and leadership experienced in their organisation:

“Need for a clear vision, it is about creating what is not”

A genuine shared vision of where the organisation is going

-41% gap

Present an open, honest and human face to their people

-36% gap

Show genuine appreciate of individual / team contribution and efforts

-22% gap

“Passionate about a cause”

Inspirational leaders involve everybody

“Desire to improve the quality of life not just profitability” “Belief in making it work for everybody as an experience” “Dogged determination to take people with them”

Inspirational leaders show lots of appreciation

No direct references from leaders

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