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March 17, 2014

Taking the lead: CEO insights

Seven CEOs from the for-purpose sector share their insights on the role of the leader, and what is required to lead our sector today.

Most CEOs have been on leadership courses. Reams have been written on leadership. So, do all CEOs think about leadership in the same way? And do we have the leadership that we need to negotiate the changes that the for-purpose sector is already seeing and will certainly see more of in the coming decades?

Toby Hall
Toby Hall: ‘Inspirational, almost crazy thinking is important’.

To understand the challenge for the sector more clearly, and the role that leadership can play in addressing it, we interviewed some of the Australian for-purpose sector’s most experienced and well-respected individuals. Their thoughts are synthesised in this article. Our interviewees – Leah Armstrong, Reconciliation Australia; Toby Hall, shortly to head up the St Vincent’s Health Australia Group, and currently at Mission Australia; Tony Nicholson, Brotherhood of St Laurence; Andrew Richardson, House with No Steps; Sanjib Roy, Yooralla; Rebecca Scott, STREAT; and Claire Vernon, Jewish Care – represent an array of experience and perspectives. Our gratitude to all seven.

… a leader is someone with the courage and commitment to ‘inspire dreams in others’.

We discussed what it means to lead; the difference between leadership and management; how they recruit, develop and evaluate leaders in their organisations; and their views on the ‘state of leadership’ in the Australian for-purpose sector.

What is a leader, and what is leadership?

rebecca scott
Rebecca Scott: ‘Great leaders need to be great storytellers’.

There is no question that a leader is someone with the courage and commitment to ‘inspire dreams in others’. Someone who can paint a vision and take people to it; a vision that the audience would not have been able to enunciate or even perhaps envision themselves.

In Hall’s experience “large, inspirational, almost crazy thinking is important!” Richardson talked of “convincing people of the worthiness of the cause”. Similarly, Scott stated that, “Great leaders need to be great storytellers. They have to have an ability to tell a grand narrative of ‘what if’.”

… effective leaders need to have a very high degree of self-awareness.

But there are two parts to leadership: the vision and taking people to it. As Roy noted, the latter is arguably about management (investigated further below). Vernon and Scott agreed that you need to lead from the heart and the head. This involves being able to paint the vision, tell the inspiring stories but also understand the mechanics of the organisation. For Scott this is critical because “… the story also needs defined chapters that keep staff motivated and feeling that progress is being made along the way”.

Tony Nicholson: ‘Leadership is built on integrity’.

Both Nicholson and Roy were emphatic about the moral dimension of leadership. In Roy’s view taking people to a bleak future (as despots do) is not leadership. Geoff Aigner makes this point elsewhere in this issue in The fantasy of leadership’. Nicholson observed that leadership is built on integrity: honesty, transparency and trust in personal relationships; but also integrity between the values of the organisation and personal values.

Another important quality for many of our interviewees is that effective leaders need to have a very high degree of self-awareness. Hall, Vernon, Scott and Nicholson noted that this is critical in the organisational context so they can see their own flaws and ensure they are addressed by having complementary skills around them.

… leadership is not about having all the answers.

At the same time, and by the same token, leaders must genuinely respect others. Hall spoke about St Ignatius, the founder of the Jesuits, who talked of a ‘love for others’ which Hall interprets as exactly this profound respect. “It was this respect which, coupled with a passionate vision, made St Ignatius a great leader,” said Hall.

A further critical component in organisational leadership that Nicholson identified is the ability to set strategy. “This is about more than vision. It is the ability to make challenging decisions about the allocation of resources,” he observed.

Clare Vernon: ‘Leadership requires a learning strategy’.

Vernon added that while the ability to set strategy is important, leadership is not about having all the answers. “It is not about coming up with all the answers in isolation then coming down from the mountain with the script. It is about developing the answers with others. This requires both being comfortable with not having the answer and consulting with others. It requires an awful lot of listening, a lot of stimulating of debate and conversation, and more listening – to distil and capture the information.”

Andrew Richardson: ‘A leader is someone who attracts followers’.

Richardson made an observation that, on the surface, seems to state the obvious: “A leader is someone who attracts followers”. However, this is important.

The title of ‘leader’ has sometimes become equivalent to ‘chief’ (as in CEO) and so there are plenty of people who have been called ‘leader’ who are not followed. We need to be clearer that ‘chief’ is a structural position, and ‘leader’ is an acclamation. Another CEO – Rachelle Towart at the Australian Indigenous Leadership Centre – puts it neatly, “It’s not the job you hold, it’s how you hold the job”.

… we should not be defining leadership as “the person at the front, the person who is charismatic”.

This raises the interesting and much debated questions of whether anyone can be a leader, and whether leadership can be taught. All our interviewees were very clear that everyone has the capacity to exercise leadership. However, there was general consensus that leadership was situational – there is no such thing as a ‘leader’, but rather there is leadership in different circumstances. Our interviewees also suggested that there are different levels of innate skill. So leadership can be developed, but perhaps not taught if there is no inherent aptitude.

The emphasis on integrity, or ‘authenticity’ as Roy put it, raised an interesting issue. If integrity is intrinsic and cannot be taught, then perhaps there are people – those without integrity – who cannot be leaders.  On the other hand, if integrity can be trained or developed might we identify people with the other attributes of leadership and develop their integrity?

Another type that attracts the title ‘leader’ is the ‘charismatic person’ or ‘hero’. These were viewed as a mixed blessing. Sometimes they do indeed meet the criteria of both painting a vision and taking people to it, but more than one example was cited of very visible charismatics who failed to take people there – often through a lack of strategic thinking and managerial competence.

Leah Armstrong: ‘Leadership can come from anywhere and anyone’.

Armstrong asserted that we should not be defining leadership as “The person at the front, the person who is charismatic. Leadership can come from anywhere and anyone, be it someone working in the field, a mum, aunty or grandad – someone who is empathetic, who has humility and is determined.”

Roy also asserted that the 20th Century concept of leadership vested in an individual is no longer valid. Referring to the long history of leadership theory, from Arthashastra in about 400BCE, through Plato to Sun Tzu, Machiavelli and beyond, Roy observed that our model of individual leadership is consistent with the monotheistic cultures from which it sprung. He argued that now we need to embrace a shared or joint leadership model in which the vision is continually being rebuilt.

Leadership today is about building relationships across sectors and cultures …

Armstrong agreed that today’s issues are not like the complicated technical problems of the past that could be addressed by a singular, smart person working hard. They require a more open and inquiring mind that can see patterns, understand, and even integrate the multiple frames of different people and cultures. “Leadership today is about building relationships across sectors and cultures,” she said.

Sanjib Roy: ‘We need cross-sector dialogue and learning’.

Vernon agreed, “Leadership requires a learning strategy. The adaptive demands of our societies require leadership that takes responsibility without waiting for revelation. One may lead perhaps with no more than a question in hand.”

Interestingly, both Scott and Vernon highlighted that a powerful source of learning and inspiration for them has come from observing the failures of others. “I consciously determined my own leadership style in reaction against the style of my multiple, male bosses across 10 years at CSIRO,” Scott stated.

Leader or manager

A colleague recently observed that we sometimes attribute ‘leadership’ as an excuse for poor management. What she meant was that we sometimes forgive bad managerial skills because someone has charisma, visibility and vision. How do management and leadership relate?

Here our CEOs differed somewhat in their views. Hall is clear that management is functional and leadership is about passion. But Armstrong, Roy, Scott and Vernon believe that you cannot be a leader without managerial skill (the ‘taking people to the vision’ requires management capability).

And Nicholson was clear that a leader must set the strategy (as noted above) and “run the organisation”. They therefore have to have some managerial skills. Richardson was less adamant, noting that if the leader was, indeed, self-aware then they would see this weakness and be able to corral good management skills around them. But Richardson also noted that, “With the leader who cannot manage, the question is ‘could they have achieved more?’”

A couple of interviewees agreed that in confusing the two concepts we run the risk of making mistakes. Some roles, in Scott’s and Hall’s view, require managerial skills rather than leadership and sometimes “… we put leaders in where we require managers”.

… a CEO needs to be a manager and a leader.

Specifically, is a leader or a manager required in the CEO role? After all, it is a role with many managerial responsibilities.

Roy was clear that a CEO needs to be a manager and a leader. He drew the analogy with the two halves of the brain. The right (creative) half creates the vision and has the courage to make change happen; the left half manages the ensuing consolidation. But Roy also agreed that it was possible to recruit consolidation skills in others.

Armstrong was adamant that you must have both. “To get the buy-in from a team and support their development you need to be able understand the issues they will be facing on a day-to-day basis. This is particularly important in an organisation that works across cultures.”

All seven CEOs agreed that a lack of awareness of managerial shortcomings (and therefore a lack of self-awareness) would almost certainly impede leadership.

Managerial needs change depending on the size of an organisation (e.g. larger organisations require more processes and rubrics). So while an entrepreneurial leader may not fail in their leadership as an organisation grows, they may not have the managerial skills to manage through different phases of growth.

Scott believes that in a small, growing social enterprise you have to wear both hats. “You need to be able to exercise both good leadership and good management and be very adaptable. The trick is knowing when to do what and importantly to not get sucked into the day-to-day operations. As a leader you have to be constantly stepping in and out.”

Managing leaders

So how do our interviewees recruit leadership, and how do they manage it (e.g. setting targets, reviewing performance)? There was consistency in that they all clearly recruit personality at least as much as skill, experience or based on the CV.

“People have to pass the management bar, then I look for character and attitude,” Hall observed. Another interviewee was more specific: “… ultimately I won’t hire anyone into a senior role regardless of skill whose values don’t align.”

Nicholson noted that, “We used to spend a lot of time writing position descriptions, but we have backed away from them. We take the approach of getting in really good people!” Nicholson also observed that good followers make good leaders, “They understand the pressure on leaders”.

… in senior roles it is vital to monitor and evaluate leadership.

Vernon has spent a lot of time and energy building her team’s ability to think strategically. This has included involving them in the development of the next three-year strategy and investing in appropriate training that gets managers to understand the big picture issues.

To build leadership qualities within her team, specifically in managing diversity, Armstrong has recently invested in a program to increase the team’s resilience. “This is critical in working across cultures but also for dealing with the complex challenges faced by Reconciliation Australia,” said Armstrong.

Setting leadership targets is hard, but observing and evaluating it is possible. Voice surveys and 360 degree feedback were cited. For Hall, the opinion of peers and feedback from those that the organisation serves is key. All agreed that in senior roles it is vital to monitor and evaluate leadership. As Richardson said, “Leadership is my job description”.

Leadership in the Australian for-purpose sector

All interviewees agreed that we do not have the leadership that the changing sector needs. In Hall’s words, “We will need people who can adapt. What will be important in the next decade will be the ‘how’; we need innovative, effective ways to create change.”

… organisations have lost a sense of their mission, and think about themselves as contractors to government.

Some organisations have lost their way, according to many of our interviewees. “Over the last 20 years the quality of service provision has been ratcheted up,” said Nicholson, “but organisations have lost a sense of their mission, and think about themselves as contractors to government. They need to recapture their mission.”

Richardson echoed these sentiments, “We have a lot of organisations with little passion about their mission!”

Vernon supported this, “We have a reputation in the non-profit sector as money soakers not problem solvers. There is limited recognition and understanding of both people management and the outcome you are trying to address. It is also difficult for leaders in the government sector as most of the time you are working to support a minister and the political context, rather than taking time and responsibility to question and challenge how we can do better together.”

Nicholson went further, “I love the term ‘voluntary organisation’. It is an expression of community altruism.” He identified that for-profits and for-purpose organisations increasingly look alike, “Surely something has gone amiss!”

To find the next generation of leaders who can think outside the box, we should look for them outside the box.

Most agreed that leadership (not just at the executive level, but also the board) has a vital role in realigning the organisation around its mission. Vernon believes for this to happen we need to have less sector content heavy boards and more skilled professionals. Sector expertise can be brought in to support the board but should not be the dominant make up.

Where will the leadership come from? Surprisingly, three interviewees immediately suggested that it had to come from outside the sector. As Hall noted, “To find the next generation of leaders who can think outside the box, we should look for them outside the box”.

Roy also highlighted the need to, “Open up the sector to bring other people in. We need cross-sector dialogue and learning.” But he also bemoaned the lack of education and development, “We need post-graduates in non-profit management and leadership, as well as the salaries and wages that compare with those in the for-profit world”.

The non-profit sector can no longer stand on moral high ground and say ‘this is our place, we care more’.

Armstrong noted a blurring between the sectors and rather than resist it we need to embrace the opportunity. “The non-profit sector can no longer stand on moral high ground and say ‘this is our place, we care more’. We need to continually develop our own skills and embrace collaboration and partnership opportunities to exchange with the for-profit sector.”

And while debates about the female leadership gap persist in the private sector, the glass ceiling remains unexamined in the non-profit sector, a sector which employs up to 85% women but has only 51% in board roles and 60% in senior management teams. While the board figures compare favourably against the gender composition of both public and private sector boards, women are less likely to be in formal office bearer positions than men. In the organisations surveyed 44% had a woman as president, 35% as secretary, and 31% as treasurer. And management positions in the health care and social assistance sector (which includes the community sector) had the largest gender pay gap at 32.6%[i]

Vernon, Scott and Roy all stated that women tend to have a collaborative leadership style, a style that is needed in complex and ever changing environments.

One interviewee noted – perhaps rather pessimistically – that in the younger generation there was plenty of idealistic thinking, but less thinking through of the process. “They have vision without the ability to get people there, and therefore not leadership.”

Lead on!

Our interviewees reaffirmed that leadership is absolutely critical, particularly in our world in which change seems to be accelerating. And while the potential for leadership may exist in us all, excellence in the multiple dimensions identified by our interviewees is exceptional.

Still, the themes our interviewees identified represent a rich set of opportunities for those leading to boost their effectiveness. To synthesise these themes, we close with three insights to help leaders (and followers):

  1. Leadership is about working for a better world: we need to talk more about leading with a purpose and, in particular, stop confusing the term with ‘head of …’, ‘boss’ or CEO. We should test and judge our leaders as those that must have ambition for a cause greater than themselves.
  2. Leadership is not managing; but you need to have managerial skills to lead effectively: all these CEOs believe that to lead you need to have the capability to both paint a broad vision, seeing opportunities far into the future, and have the ability to manage day-to-day challenges.
  3. Our for-purpose sector needs new collaborative leadership, and new leaders, to address our challenges. For-purpose leaders need to be more flexible, and learn, borrow, engage and collaborate across the private and public sectors.
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