True cost of bad leaders

Shaun McCarthy says New Zealand managers have focussed on task-related development rather than people development.

The conventional leadership style of top executives is limiting New Zealand's ability to innovate and compete in the global business market, says Shaun McCarthy, chairman of Human Synergistics Australasia.

McCarthy was commenting on research that compared top level New Zealand business leaders' leadership styles to that of 5000 of their peers worldwide. Representative data was gathered from the results of Leadership Impact Surveys, a Human Synergistics' measurement tool. Data included the responses of 189 of New Zealand's top executives who had used the survey across a range of sectors.

"Leaders who want people to adhere strongly to procedures and processes, to fit in and do what they are told are limiting the capacity for innovation quite dramatically," he says.

Creativity, teamwork, effective goal setting and personal integrity are also compromised in organisational cultures that expect people to conform, compete with each other and work longer hours. New Zealand data also revealed tendencies towards a strongly oppositional style.

"On the one hand we want people to conform and fit in and on the other we want them to be critical and faultfinding in others. That creates a kind of silo mentality in organisational cultures where everybody focuses just on their little area. If something goes wrong it is always the other guy's fault," says McCarthy.

This fosters a 'who did it' attitude rather than a 'what went wrong' and problem solving approach. McCarthy is concerned that these kinds of behaviours are modelled as the 'ideal' by leaders and are seen to represent their basic assumptions about what makes for good leadership.

"We know that these behaviours lead to, at best, volatile individual performance but they can often lead to lower performance and higher stress levels. Not things that collectively gives a company a competitive edge, nationally or internationally," says McCarthy.

"The gap will only widen between New Zealand companies and the international market if we don't start addressing some of these conventional attitudes, which will be difficult to do because the research also says New Zealand leaders are also less likely to encourage people to use their initiative and take ownership."

The survey asks questions about the impact leaders ideally wish to have on an organisational culture - how they would like people to behave as a consequence of their leadership - and the strategies they use.

The direct reports to the leaders feed back the consequences or actual impact of the leadership. This data is also compared with reports from the rest of the world.

"There is often a gap or a disconnect between the culture we want to create and the one we have unwittingly ended up developing," says McCarthy.

In New Zealand, he says, we have focussed on task-related development rather than people development and there has been little training specifically in leadership.

"If you get the best technician then you tend to be promoted to team leader of technicians. We have a set of managers in leadership positions who are very good at the task side of their job but not so good at the people side."

Some companies have shown considerable capacity for leadership and innovation and that is not lacking in New Zealand. McCarthy cites Montana Wines; Lion Nathan, DB, National Bank, Meridian Energy and the New Zealand Companies Office.

"They created a vision of living on the web about seven years ago; transformed the organisation and are very highly spoken of. Registering companies used to take two weeks, now it takes two minutes."

There are best practice organisations in New Zealand, he says, and we need to acknowledge excellence more readily.

Dr Lester Levy, chief executive of The New Zealand Leadership Institute (excelerator) and adjunct professor of leadership at the University of Auckland Business School welcomes the initiative of the Human Synergistics' study.

"Human Synergistics is making comparisons which say we are lagging behind. We know [for example] from recent work from the New Zealand Institute that people in this country work longer hours for lower output than in many other countries."

He agrees with McCarthy that there are gaps, not just between the perception and reality of leadership styles.

"I think we have a whole series of disconnects. Disconnects between management and the worker; disconnects between the short and the long term; between management and leadership."

The Leadership Institute is about to begin a different, and significant study as part of a larger comparative project that will look at leadership style and substance in 10 to 12 countries.

"In a highly connected world with New Zealand being so far away and so small we can't afford to work at the average, we need to work at our potential. We tend to talk up innovation and creativity in New Zealand but in our day to day the way we run our companies tends to have a very strong management mindset as opposed to a leadership mindset. Noone wants to diminish innovation and enhance bureaucracy, people just get so caught up, they need to be able to step back."

While he believes there has not been enough research yet in New Zealand, the predominant management style appears to be 'transactional', goal and task-focused. This style is effective and successful, however, along with a tradition of deductive thinking, it minimises possibilities, reduces [sensible] risk taking, and limits our capacity to reach our potential.

In order to reach their potential, people need to look beyond the day to day, to expand, to grow and be open to new ideas. This requires an "augmentation", both on a personal and organisational level. It does not necessarily require a massive and immediate change.

"If more people understood that, I think they would engage more easily," says Levy.

Management and leadership need to be at a very high capacity if we are to succeed, he adds.

"They are distinct from each other and interdependent. They need to be in harmony and in balance in one individual. We need people to engage with the emotional and intellectual challenge of leadership - both to engage in the here and now and to engage with the future. The here and now is more about management; the future is more about leadership. Leadership in this context is not simply dreaming about the future, it is about claiming it through innovation, teamwork and fully engaging our people."

Levy is optimistic as long as leader/managers remain in a non-defensive mode.

"If we are too defensive, and often we are, we will not sense our potential to develop and grow."

McCarthy sees New Zealand at the forefront of the 'de-mechanisation of corporations' as manufacturing processes are moved out of New Zealand and overseas.

"We experienced 15 years ago what other countries are experiencing now. With day-to-day operations contracted out to China we are only left with the innovative work to do."

And he believes this is where New Zealand's future lies, expressing a wish to see the country held up as a genuine illustration of innovation, as a country that has best practice organisations and excellence across all sectors.