We know that former head of Barclays bank, Bob Diamond, was leading the financial institution during the period in which the well-documented Libor rates or interest rates for inter-bank borrowing, were being manipulated.
It has now come to light that Diamond had absolutely no idea it was going on. Surely, if he was at the head of the business, should he not have known about it?
This is a prime example of how someone is leading a company with their vision, but failing to manage the organisation at the same time. For us it brings to the fore a common but very real challenge in executive development: how can individuals strike a balance between strong leadership and strong management as they move up from manager to leader?
Management is a set of processes designed to keep a complicated system of people and technology running smoothly, according to John Kotter, a professor at Harvard Business School. He then goes on to define leadership as a set of processes that create organisations in the first place or adapt them to significantly changing circumstances. The distinction between the two terms highlights that in his view they are two separate entities.
A leader and a manager each have their own set of functional characteristics and activities:
A good manager does things right and knows their business
A good leader does the right things and knows their business, but the leader must know it better and in a different and more diverse ways. They must be able to take the fundamental facts and know the underlying forces that dictate the past and present trends within their business, to help them compile a visionary path into the future. It should be noted that leadership is therefore based on values – which is another area for discussion regarding Barclays.
In an increasingly complex and volatile business environment, corporate leaders need a blend of skill sets that derive from both roles in order to find success. Kotter tellingly notes in his book Leading Change (1996) that strong leadership with weak management is no better, and is sometimes actually worse, than the reverse.
In the talent measurement company, SHL, model of corporate leadership four key areas are defined which each encompass both leadership and management competencies:
Developing the vision-the core responsibility of leadership, the vision defines the path of where the organisation is going. This vision hasn’t been devised lightly it has come about because there was a need through thorough management analysis
Sharing goals-once the vision has been devised and outlined, the next step is for the persuasive communication to the rest of the organisation as well as requiring planning and organisational skills so the message is clearly understood
Gaining support – a leader requires followers and needs to motivate as well as manage the change process
Delivering results – consolidating gains and keeping the change process moving until all the requirements are met with management checks and balances in place
For corporate leadership there are thus both leadership and equally importantly management competencies. The ex-Barclays chief has had his leadership and management styles thrown into the spotlight this week. The result? A corporate embarrassment that will no doubt have reverberations across the global banking system.
It has never been more important to merge management and leadership skills, and while Barclays may well have paid the ultimate penalty for ignoring this need plenty of other businesses will see it as a wake-up call.
Colin Graves Director at executive coaching company, Iridium Consulting.
