Effective leadership today is dependent upon a new covenant between leader and led which guarantees not only acceptable levels of security and prosperity for employees but also a sense of tangible contribution to decision making. In this article we justify the changed details of the covenant which optimises energy, engagement and active participation, utilising long term successful organisations as examples.

Release the handbrake for sustained performance

As we progress further into the twenty first century business organisations eagerly adapt to take maximum advantage of the perceived benefits which accrue in efficiency from dramatic advances in technology, systems and processes.

Regrettably, they are less willing to adapt intra-organisational relationships, which similarly reflect changes in the overall context within which organisations operate. Whilst they wish to benefit from the enhanced intellectual capabilities of a more confident and better educated workforce they are most resistant to adapt the covenant or “deal” which prevailed during the era of mass production, when the primary purpose of the workforce was to “do” rather than today’s requirement to “think” and “do”

The result for the business organisation is akin to driving with the brakes on; little chance of optimal performance, no matter the investment in technology and systems because the critical “asset” is not pro-actively engaged.

Recognise the new covenant

Martin Wolf, associate editor and chief economics commentator at the Financial Times, whilst commenting at the societal level, admirably reflects the breakdown of even the prevailing implicit covenant.

“An implicit deal exists between the elite and the people: the former obtain the privileges and perquisites of power and property; the latter, in return, obtain security and, in modern times, a measure of prosperity. If elites fail, they risk being replaced.”

Whereas, in order to ensure motivation, employers were offered a measure of security and financial reward in the days of mass production, today the confident and educated expect commensurate financial reward, but also the ability to contribute to and engage in the management and decision-making process, particularly in policies and strategies which impact upon their wellbeing and aspirations.

The key to effective leadership today lies in acknowledging the primary and pivotal role of the people dynamic in sustained performance.

In the absence of a sense of belonging, knowledge employees will not optimise their contribution and commitment to the objectives of the organisation.The effect is a continuous cost efficiency spiral to sustain short-term performance. This ultimately destroys the covenant which ensures optimal performance and organisational survival.

Recognise the new network relationship

Efforts by organisations to address this issue have to date been half-hearted and piecemeal, primarily due to the perceived implications for authority, power and reward within the organisation. Also due to the implicit impact on the perceived hierarchical structure, when in practice contributions and decisions are increasingly based upon a heterarchical or network relationship between organisational actors at multiple levels.

Shock and awe is history

Not so long ago I worked in an organisation which consistently received plaudits from analysts but persisted in operating a dominant logic which reflected a “mass production” leadership logic:-

• They hired and fired management and leadership indiscriminately.
• Senior executives and shareholders were paid substantial payments in bonuses, share allocations and dividends, whilst staff bonuses were tightly controlled.
• Product specifications and offerings lacked transparency
• Senior leadership exhibited a willingness to undertake unethical strategies and practices in order to meet short-term targets, compelling junior leadership to become complicit to retain their positions.

The effect was to generate a fearful, transient, dog-eat-dog, working-for-the-money-only culture. The result was low morale, a lack of teamwork, cohesion, dedication and loyalty, high staff turnover and difficulty recruiting high calibre staff and leaders.

Effective leadership means a primary focus on behaviour and motivation

The organisation churned out good annual profits by sweating the assets and casting aside those who became shell-shocked, disillusioned and exhausted. Internally the organisation was a husk, good muscles but weak heart and lungs.

Such an organisational mindset is doomed in the twenty first century business context, despite the rearguard action of organisational leadership.

An alternative leadership logic

There is now an alternative logic, increasingly acknowledged as viable. This translates into an alternative process of operational decision making and issue resolution, one which engenders greater engagement, empowerment and pro-active contribution by the workforce and thereby enhances performance and survivability – less sweat, more success.

This “big picture”, people-focussed approach to effective leadership is concisely reflected in a quote by Sir Charlie Mayfield, Chairman of the John Lewis Partnership.

“We need to reconnect how we work with the rest of our lives. We cannot divorce the big challenges of our time – rising income inequality, a growing imbalance of wealth between generations and socioeconomic groups, the threat of climate change – from how we run our economy —— that rethinking starts with the values of an organisation and those who work within it. Interestingly, putting emphasis on values is also a recipe for commercial success. Companies that focus most on maximising profit are often not the most profitable. That’s especially true over time.”

Differentiate between priorities and table stakes

Due to the complexity of the modern organisation, there is a danger that we confuse the table stakes with the primary driver of sustained performance and organisational survival. When organisational leaders wake up in the morning they must therefore recite five times “people = performance”.

Effective leadership means a primary focus on behaviour and motivation, on mobilising the energy, enthusiasm, engagement  and contribution of people. This is relationally-intelligent leadership; all the rest is management.

Convert to relationally intelligent leadership

Relationally intelligent leadership logic is encapsulated in a brief quote by Sir Ove Arup, founder of Arup Group Limited, design, engineering consultants, with 10,000 employees and offices in 31 countries, which was involved in such projects as the Pompidou Centre, Paris, Dongtan Ecocity, Shanghai and the European Central Bank, Frankfurt, when he says that responsible, relationally intelligent leadership….

“….leads to the creation of an organisation which is human and friendly in spite of being large and efficient. Where every person is treated not as a link in a chain of command, not only as a wheel in a bureaucratic machine, but as a human being —- who is treated not as a means but as an end.”

This mindset is also reflected in a down-to-earth manner in a quote by Hugh Facey, the inventor and manufacturer of the Gripple wire connecting widget, a practical, hands-on company owner and leader in his late sixties, with limited scholarly credentials, from industrial Huddersfield in W Yorkshire, England.

“What’s the business for? It’s not to make money. I started wi’ nowt and I’m goin’ to go out wi’ nowt. ———————————-Capital is a tool of labour, not the other way around. ————–I don’t care about profit, it doesn’t bother me at all. I could make more if I ran the company for the short term, but that’s not what matters. It’s how you run the business — get that right and the bottom line comes out right too.”

Get with the programme!

Sounds easy. Just change the dominant perspectives and priorities of leadership. Avoiding or dancing around this foundational change in leadership logic is now recognised by an increasing number as futile and dangerous to organisational survival. Maximise the sense of common purpose and benefit through optimal energy, participation, contribution, empowerment and sense of belonging and ownership.

The important part of relationally intelligent leadership is “relationally”.

The key to effective leadership today lies in acknowledging the primary and pivotal role of the people dynamic in sustained performance. In the absence of its willing acceptance and pro-active application the chances of sustained performance and organisational survival will continue to be sub-optimal, no matter the uptake of earth shattering technology, systems and performance matrices.