Why is it that when executives get to the top, they become at-risk of making judgment calls that bring their reputations (individually, as well as the collective CEO brand) into question?
One would expect a clearer and more strategic view from the peak of the Mountain, yet for some reason there is always the risk of CEOs (and their Board members) succumbing to Vertigo.
Two examples this week here in London:
"TESCO was condemned yesterday for failing to pay the Living Wage to shop workers while turning failed executives into millionaires. Bosses at the firm, which posted a record annual loss of £ 6.4 billion last year, faced fierce criticism over the supermarket's decline at an annual meeting of its shareholders.
Amid falling sales, the company is at the centre of a Serious Fraud Office investigation into allegations that trading profits were artificially inflated by £ 326 million.
Tesco pushed out its chief executive last year amid claims he failed to respond to the threat posed by competitors. He was in charge when the firm overstated profits ... he left with a £ 1.2 million lump sum and a pension payout of £ 14 million . "Daily Mail, June 27, 2015.
"Former HBOS Chief in line for Windfall ...The man who presided over the failure of HBOS (a banking subsidiary of Lloyds Bank), at the height of the financial crisis, is poised to share in a multi-million pound windfall. This former CEO who led HBOS when it collapsed in 2008, is understood to be one of almost 50 executives and managers who stand to benefit from a merger that would value their share holding at around £ 100 million." The Sunday Telegraph, 28 June, 2015.
So here's the triple bottom line ...
Has the time has come when Boards (and Search firms) are required to provide objective evidence that the CEOs and senior leadership teams they appoint have the talent and ethics to lead organisations?
Leadership is a privilege that comes with a significant premium for responsibility. It follows that CEOs and their Executive Leadership Teams need to be objectively measured (by those they lead and serve) each six months in order to provide evidence that they are both commercially effective and their attitudes and behaviours are aligned with True North.
Here follows the ISL Strategic Leader Competency Framework that we use to measure performance:
1. Strategic Thinker - can identify unintended consequences
2. Role Model - creates a culture of empowerment
3. Change Champion - takes others in new directions
4. Business Savvy - holistic understanding of the business
5. Team Builder - builds and integrates teams that achieve goals
6. Influencer - reputation and networks that secure their tribe's needs
7. Motivator - putting the 'tiger' in others' tanks
8. Emotional Intelligence - understanding and valuing diversity
9. Emotional resilience - fit to lead
These are the 9 elements of the ISL Strategic Leader Competency Framework that underpin the ISL online 360 tool.
In addition, CEOs and their senior team also need to be assessed objectively using measures of Staff Engagement and Customer Engagement. With this in mind, ISL has developed a suite of profilers, each one has the imbedded antecedents (drivers) of the next, based on the premise that:
Leadership creates engaged staff, who in turn engage customers, that drive up revenue, financial sustainability, and stakeholder satisfaction.
This ISL High Performance Framework, and the associated Personal Dashboard, Team Dynamic & Team Performance Profiler, and the recently developed Enterprise Performance Diagnostics touch screen app (see attached), are the basis of what we will be using on the forthcoming ISL | MBA General Mangement Programme to develop the CEOs of the future - people who have the know-how, analytics, and diagnostic tools to lead and manage successfully for the benefit of all stakeholders (staff, customers, suppliers and investors).
Corporate PR and "Best Places to Work' competitions will no longer cut the mustard in the new 'sustainability & corporate responsibility' paradigm.
We posit that: Innovative, customer centric, high performance organisations that are led by corporate athlete teams who are objectively measured and regularly monitored, will become the new global expectation.
ISL new Staff Engagement Framework
TAKE THE LEAD ON MANAGING RISK
Last week I attended a "Compliance Summit', in Singapore. The participants included Heads of Compliance executives from Multinational Corporations from across Asia and further afield including the USA, as well as Risk Diagnostics experts from major consulting and niche specialist firms. Given the ever increasing complexity of business, this proved to be a timely opportunity to update my risk management mindset in anticipation of facilitating the 'Strategy, Change & Systems Thinking' module of our forthcoming ISL|MBA (scheduled to start in August).
In addition to all the 'bright-side' aspects that we focus throughout our SLP and LP, we all need to be mindful that strategic leaders also need to take the lead on managing risks so that their inspirational Visions flourish well beyond a pipe dream.
Here follows some key insights that I learned and consider to being key to leading a sustainable organisation, and protecting one's personal and organisation's brands.
BRIBERY & CORRUPTION UNDER THE SPOTLIGHT
I was astonished to hear the views, experiences and recommendations from the Summit speakers and participants.
-China based offices of MNCs are being regularly hit by Dawn Raids from Chinese government investigators over corruption issues.
-Bribery and corruption, in the new Xi Jinping led China , is a serious offence.
-Apparently it's not "If the Chinese investigators visit, it's when they visit".
-Pharmaceutical companies have been held to account for bribing / incentivising doctors in China to use and prescribe their brand of pharma-drugs. The financial and reputation risks are significant (both in China and back in the MNC's home / headquarter country).
GlaxoSmithKline, for example, was recently fined US$460 million for funneling billions of renminbi to hospital doctors and officials in an attempt to boost sales in one of the world's biggest and fastest growing pharma-drug markets.
-Recruiting sons and daughters of Government officials (by companies) is regarded as an offence if the purpose is to gain access, influence and competitive business advantage.
-A paradigm shift is well underway and, as a consequence, 'Compliance' is now top-of-mind for all MNCs operating there.
-Cyber hacking is inevitable everywhere and companies need to protect and have back-ups.
-Companies dealing with China need to train their people about the complexities of doing business in and with China, and be mindful of the risks to them personally and to their organisations.
-Third parties are often involved (e.g. suppliers) and are being investigated; so companies need detailed stakeholder maps to identify and mitigate risks. In an investigation, a company needs proof that it is not using third parties (e.g. travel agents and bogus Conferences) to build up 'cash banks' for subsequent use in bribing customers and officials.
-MNCs are using sophisticated analytics to identify potential unethical practices and high risk individuals within their companies.
STRATEGIC THINKING & RISK MITIGATION
Strategic Thinking is a key success factor for Boards, CEOs and senior executives, as well as for politicians and regulators. In the rapidly emerging 'New China' paradigm, Strategic Thinking takes on a whole new dimension.
Given the importance of China as a market for New Zealand (and nearly every other major Western country), strategic leadership is not just about 'opportunities'. It is also about thinking through 'unintended mid-longer term consequences".
It is clear that Risk identification and Compliance are evolving into a much more complex and sophisticated science involving analytics and diagnostics. Executive travel and entertainment patterns are typically used in algorithms as proxies for identifying potentially high risk individuals.
SOME RISK RELATED ISSUES TO PONDER
On arriving in London, I opened the paper over breakfast to find that syncroniciy was at play; a supplement in the 'Independent' focusing on Business Risk Strategies. Here follows some abstracts that provide further 'food for thought'.
-Hackers can bring chaos and even ruin to businesses often with impunity, but what can be done to counter cyber attacks?
-Stress and mental health remains a taboo subject among many employers who fail to provide help for staff which could not only benefit individuals but also their organisations.
-Social media demonstrates every day how the world has moved on, but many businesses are stuck in their silos.
-Intangible assets, such as key personnel and brand value, along with damage from cyber attacks, are difficult to quantify - and are strikingly underestimated by senior leaders.
-Safeguarding corporate reputation and brand value is now firmly on the boardroom agenda and executives must learn to be nimble in response to questions, criticism and crises.
-What is risk management all about? Is it simply about avoiding things that threaten your organisation? Or is it something deeper - how you think about business performance?
-Mao Zedong said "food before ethics" and that while no one would suggest that bribery and corruption are good things, if you believe your job is dependent on offering or paying a bribe, the corruption policy sent round by head office may have little bearing on your decision in the moment.
-Creating a culture that influences employees' actions, decision making and behaviour can be a challenging and lengthy process. Corruption can be so ingrained into a company's culture in terms of "the way that we have to do business and compete over there". This is especially important for companies who use agents and other intermediaries, and who operate in countries where facilitation payments are seen as the norm. -Getting staff to see that a backhander is actually a form of corruption takes time and requires regular communication and training. Backhanders often start out as corporate entertainment and favours (that come with expectations of reciprocity) and ultimately prove to be the thin end of an unethical wedge.
DAME DIANE ROBERTSON (SLP 3)
Congratulations from ISL and our alumni to Diane Robertson who was awarded the New Zealand Order of Merit. Diane (now Dame Diane) has been the Auckland City Missioner for 17 years.
The NZOM award recognises both her talent and compassion as a community leader, and the significant contribution she has made (directly, and through the City Mission) to so many poverty-stricken and homeless people in Auckland.
Diane is ISL's first women alumnus to reach the status of Dame; joining Sir Jerry Mateparae and Sir Bruce Ferguson as alumnus who have been recognised at the highest level by our country for their leadership achievements .
Diane is one of a number of ISL alumni leaders in the NFP sector who make a significant contribution to the community .
45th STRATEGIC LEADERSHIP PROGRAMME (SLP 45)
The week before last, we ran our SLP for the 45th time. Twenty-one participants took the Step | Up supported by an ISL faculty team of 11. A very international bunch - several originated from the UK, two from Holland, one from the Philippines (an Argentinean), one from Malaysia, and one from the USA - covering a wide range of commercial and government sectors.
The weather was awesome - frosty mornings and blue skies; unfortunately we missed the picturesque snowfall by just one day!
The strategy development exercise on SLP 45 was gifted to Surf Life Saving New Zealand http://www. surflifesaving.org. nz - a not-for-profit organisation that plays a very valuable role in our community.
At midday on the Thursday, just as I walked across to the Millhouse to observe the five Strategy presentations, a person called out and introduced herself as a SLP 8 graduate (2004) and reminded me that her SLP 8 class developed strategies for the Westpac Rescue Helicopter Not-for-Profit organisation.
She went on to say that she and her husband were down at Millbrook on a holiday during the week of SLP 45 and that sadly he had a Heart Attack during the previous weekend. Coincidentally (and fortunately) one of the staff at the Millbrook reception was previously a surf life saver who applied his training with the Fibrilator and reactivated her husband. Then, ironically, the Westpac Helicopter flew them both to Dunedin where he was fitted with a Heart Pacer. She went on to say with a smile that her husband was back out on the golf course hitting balls down the fairway, and was "as good as gold!"
Trevor Taylor (former CEO of Outward Bound), one of the Board Members of Surf Life Saving New Zealand, told the SLP 45 class that he had previously attended Millbrook ten years ago when ISL gifted a strategy development exercise for Outward Bound. He said that the strategies had proven to be very insightful and useful, and as history proved, they turned out to be 'right-on-the-mark'. Trevor further mentioned that he recently handed over the strategy presentations to his successor, ten years later, as part of the on-boarding process.
During the Cheese & Wine Tasting 'after-match' session, Trevor noted that ISL graduates have made a difference to many peoples lives in New Zealand over the last 15 years and 45 programes during which SLP participants have applied their talents to creating strategies for 40 not-for-profit organisations including: NZ Heart Foundation, NZ Neurological Foundation, NZ Cancer Foundation, Hospice NZ, Water Safety NZ, World Vision, and Barnados.
Over the years ISL has provided many scholarships to CEOs and senior leaders of NFPs enabling them to particulate on the SLP (in addition to the strategy cases). On SLP 45 we had the pleasure of having Vanessa Winning, Marketing Director of Heart NZ, participating on a NFP scholarship.
OTHER INSPIRATIONAL WOMEN WHO ARE LEADING THE WAY
Maru Quindimil (an Argentinean based in Manila), who was awarded a Leadership Excellence Award by the Global Leadership Congress in Mumbai earlier this year, attended the recent SLP 45. Maru has held senior executive roles in the Pharmaceutical industry and worked in 35 different countries. I interviewed Maru in Auckland last week about her views on leadership. The 7 minute video clip can be accessed at: https:// http://www.youtube.com/watch?v=ikxLq1BIImQ&feature=youtu.be
Anna Campbell (SLP 17, ISL | MBA 3), Chief People Officer at the Warehouse Group, was recently recognised by the HR Institute for her exceptional leadership as a people developer and change leader. Anna is a wonderful role model to other women leaders and it is great that she finds time in her very busy professional and family lives to support the First Foundation as a Mentor of young people. The First Foundation was also an ISL Strategy Exercise recipient.
Adding to the growing number of ISL women alumni who are leading the way, is Navy Captain Captain Maxine Lawes (LP 13, SLP 43) who took over command of HMNZS Philomel, Devonport Navy Base's administrative unit, from Captain Corina Bruce (LP 6, SLP 36, ISL | MBA 1) last October.
Speaking of inspirational women leaders, we also acknowledge the contribution of the highly talented Amber McWilliams (ISL Case Writer), for the superb job she did writing the Life Saving New Zealand Case Study .
How wonderful it is that nobody need wait a single moment
before starting to improve the world.
Annelies “Anne” Marie Frank, better known as Anne Frank
CE CLASS 4
We recently facilitated the 4th ISL CE CLASS at Millbrook and had the pleasure of having Rear Admiral Jack Steer (Chief of Royal New Zealand Navy) in attendance. Jack follows in the footsteps of other senior defence leaders who have joined with top commercial business leaders to learn with and from one another. These include Lt. Gen. Desmond Kuek (former Chief of Singapore Armed Forces and now the MD of SMRT Corporation) and Maj. Gen. Dave Gawn (Chief of NZ Army).
OUR FRIENDS IN NEPAL
Last, yet most importantly, on behalf of ISL, our coaches, staff and alumni, I send our heartfelt wishes to our alumni and friends in Nepal as we think of you at this most challenging time.
Director of Institute for Strategic Leadership, Geoff Lorigan, reflects on The Power of Acknowledgement and how it shapes the people around us.
DASHBOARD users can offer and read feedback / ideas in the DASHBOARD Blog at http://www.isldreamteam.com/dashboard-blog/the-power-of-acknowledgment