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Leadership, Management & Governance

“A Level 5 leader is an individual who blends extreme personal humility with intense professional will… executives who possess these traits are catalysts for the statistically rare event of transforming a good company into a great one. Level 5 refers to the highest level in a hierarchy of executive capabilities. While Level 5 leadership is not the only requirement for transforming a good company into a great one — other factors include hiring the right people and creating a culture of discipline – research shows it to be essential.”

Jim Collins 2001

Crowds waiting to enter the Prado,
Madrid (More)

All enterprises and organizations, for profits and nonprofits, which conduct their business through genuine involvement and respect for those who work in them, achieve superior results. This is one of the critical aspects of management and leadership. Seeing that it happens is part of governance. The process of change constitutes organizational and personal development.

The articles and research described in these pages focus on instances of proven success rather than personal stories, let alone unsubstantiated dogma. The unifying and underlying conclusion from the studies reported here is that what matters is how people work together, how decisions get made and how leadership is practiced. Leaders create the right climate for productive and satisfying work. Carefully considered recruitment of and support for people appropriate for the context and the tasks are the key functions of those charged with the longer term future of the organisation.

The lessons about what makes a difference, what really works, are most likely to come from watching what happens in successful organizations. We are not living in a newly colonized country ripe for magic philosophies which will bring us to the promised land! Or are we?

When these summaries, or even articles, have been read, you may care to think on these things. Ought we not to consider what is really happening and what it is that makes for success all round? Why is a TV series like “The Office” which shows a dysfunctional organization where the employees survive despite the blatant exercise of power for its own sake, so popular? Is it because it strikes a strong chord with viewers. That it mirrors truth for many is shown by surveys of the employees ratings of best organizations to work for – you can find out more about that from the Hewitt Associates site and employees views of managers (‘bosses’)

What do we make of companies changing their name for no obvious reason, mutual organizations demutualising only to find themselves short of money and embroiled in board turmoil, companies shifting their headquarters offshore, directors of one company fighting over their right to benefit other companies of which they are directors without regard to the success of the company of which they are a director, companies signing up to protocols which they abrogate and then defend their abrogation when the union points out the error? And particularly, what do we make of “guilds” such as Chambers of [you name it] or Councils of [whatever] who advocate policies which favour their member organisations but are completely unsupported by any good evidence?

Management is not simply a bad habit learned from the church and the army. Nicolo Machiavelli’s essays such as “The Prince” are often depicted as nothing more than lessons in how to conspire against your enemies. They are not that! They represent one of the very first attempts to describe and analyse how people in positions of power actually behave and what the consequences are. Like Shakespeare’s plays, ancient philosophies, and indeed all great writing, they contain lessons for us today!

Unfortunately, much current management commentary (especially in the media), its language and its supposed lessons, are seriously flawed and do not pay attention to what is really happening in the most successful enterprises, forprofits and nonprofits both, as revealed by serious studies. Instead current managementspeak has been invaded by philosophies like public choice theory [1] and other approaches which focus on the individual, approaches no more relevant to today’s world of work than Taylorism, so wonderfully depicted in Charlie Chaplin’s film “Modern Times”.

“Power centres around scarce and critical resources and in times of uncertainty those with established credibility tend to be favoured as the enlightened. Those in power tend to define problems in ways which institutionalise their power. The more institutionalised the power is the more likely it is that the organization will be out of phase with its environment.”

Gerald R. Salancik and Jeffrey Pfeffer 1977

People are treated as rational actors with the near complete knowledge needed to effect exchanges of goods and services which most meet their unchanging preferences. Those same rational actors are at the same time considered to be most likely to act in their own self-interest and, if they are in positions where they can wield power (such as in executive positions), they therefore need oversight from those who have a prior claim on the results of their actions (such as stockholders) or their representatives.

Success is considered to mean being efficient which means lower wages and fewer staff, trimming costs by itself leads to working smarter and if organizations, especially those in or associated with government, can’t live within their budgets then they are deemed ineffective managers and need corporatisation or privatisation which will also produce better results for the customer through increased competition and reduction of government monopoly.

In practical terms the result instead has been small government and its attendant decline in community services, continued failures of boards to meet their obligations to stockholders/shareholders, excessive salaries for senior executives who are employed on limited term contracts and increasingly uncertain employment conditions for employees. In the worst organisations, the focus is exclusively on maximum output at minimum cost, a regime no different from that depicted in the Charlie Chaplin classic, “Modern Times”.

In the corporate sphere change has meant revenue management, valuing assets not by the price that would be realised on their sale but by the revenue that could be attracted through their use. In the public sector utilities have been privatised resulting in higher charges to consumers and large fees to directors of the privatised companies. And, just as worrying, there has been an avoidance of debt which has led to a run down in infrastructure; the cost of fixing up that infrastructure – railway lines, roads, vehicles, school buildings and hospitals for instance – is not shown in the accounts.

This section includes collections of commentaries concerning important aspects of leadership, management and governance.

There is a special page devoted to a paper by the late Sumantra Ghoshal on governance.

Original essays, as opposed to summaries of and extracts from published papers, are included under the “Essays” section of the site. This incloudes an essay on Governance.
Here are summaries, and occasionally comments on, papers I consider to be particularly significant in the areas of management and leadership including recruitment, ethics, governance, organizational development and personal development, futures and marketing.

Articles from the online journal Leader to Leader are included frequently. The URL for these pages are part of the site devoted to the work of Peter F. Drucker, the Drucker Nonprofit Innovation Discovery Site.

[1] The following entry is from “The Concise Encyclopedia of Economics” Public Choice Theory by Jane S. Shaw

“Public choice theory is a branch of economics that developed from the study of taxation and public spending. It emerged in the fifties and received widespread public attention in 1986, when James Buchanan, one of its two leading architects (the other was his colleague Gordon Tullock), was awarded the Nobel Prize in economics. Buchanan started the Center for Study of Public Choice at George Mason University, and it remains the best-known locus of public choice research.

“Public choice takes the same principles that economists use to analyze people’s actions in the marketplace and applies them to people’s actions in collective decision making. Economists who study behavior in the private marketplace assume that people are motivated mainly by self-interest. Although most people base some of their actions on their concern for others, the dominant motive in people’s actions in the marketplace – whether they are employers, employees, or consumers – is a concern for themselves. Public choice economists make the same assumption – that although people acting in the political marketplace have some concern for others, their main motive, whether they are voters, politicians, lobbyists, or bureaucrats, is self-interest. In Buchanan’s words the theory “replaces… romantic and illusory… notions about the workings of governments [with]… notions that embody more skepticism.”

In the past many economists have argued that the way to rein in “market failures” such as monopolies is to introduce government action. But public choice economists point out that there also is such a thing as “government failure.” That is, there are reasons why government intervention does not achieve the desired effect. For example, the Justice Department has responsibility for reducing monopoly power in noncompetitive industries. But a 1973 study by William F. Long, Richard Schramm, and Robert Tollison concluded that actual anti-competitive behavior played only a minor role in decisions by the Justice Department to bring antimonopoly suits. Instead, they found, the larger the industry, the more likely were firms in it to be sued…”