Decoding leadership: What really matters

Article|McKinsey Quarterly

New research suggests that the secret to developing effective leaders is to encourage four types of behavior.

January 2015 | byClaudio Feser, Fernanda Mayol, and Ramesh Srinivasan

 

Telling CEOs these days that leadership drives performance is a bit like saying that oxygen is necessary to breathe. Over 90 percent of CEOs are already planning to increase investment in leadership development because they see it as the single most important human-capital issue their organizations face.¹ And they’re right to do so: earlier McKinsey research has consistently shown that good leadership is a critical part of organizational health, which is an important driver of shareholder returns.

A big, unresolved issue is what sort of leadership behavior organizations should encourage. Is leadership so contextual that it defies standard definitions or development approaches?³ Should companies now concentrate their efforts on priorities such as role modeling, making decisions quickly, defining visions, and shaping leaders who are good at adapting? Should they stress the virtues of enthusiastic communication? In the absence of any academic or practitioner consensus on the answers, leadership-development programs address an extraordinary range of issues, which may help explain why only 43 percent of CEOs are confident that their training investments will bear fruit.

Our most recent research, however, suggests that a small subset of leadership skills closely correlates with leadership success, particularly among frontline leaders. Using our own practical experience and searching the relevant academic literature, we came up with a comprehensive list of 20 distinct leadership traits. Next, we surveyed 189,000 people in 81 diverse organizations⁴ around the world to assess how frequently certain kinds of leadership behavior are applied within their organizations. Finally, we divided the sample into organizations whose leadership performance was strong (the top quartile of leadership effectiveness as measured by McKinsey’s Organizational Health Index) and those that were weak (bottom quartile).

What we found was that leaders in organizations with high-quality leadership teams typically displayed 4 of the 20 possible types of behavior; these 4, indeed, explained 89 percent of the variance between strong and weak organizations in terms of leadership effectiveness (exhibit). 

Exhibit

Four kinds of behavior account for 89 percent of leadership effectiveness.

• Solving problems effectively. The process that precedes decision making is problem solving, when information is gathered, analyzed, and considered. This is deceptively difficult to get right, yet it is a key input into decision making for major issues (such as M&A) as well as daily ones (such as how to handle a team dispute). 
• Operating with a strong results orientation. Leadership is about not only developing and communicating a vision and setting objectives but also following through to achieve results. Leaders with a strong results orientation tend to emphasize the importance of efficiency and productivity and to prioritize the highest-value work.
• Seeking different perspectives. This trait is conspicuous in managers who monitor trends affecting organizations, grasp changes in the environment, encourage employees to contribute ideas that could improve performance, accurately differentiate between important and unimportant issues, and give the appropriate weight to stakeholder concerns. Leaders who do well on this dimension typically base their decisions on sound analysis and avoid the many biases to which decisions are prone.
• Supporting others. Leaders who are supportive understand and sense how other people feel. By showing authenticity and a sincere interest in those around them, they build trust and inspire and help colleagues to overcome challenges. They intervene in group work to promote organizational efficiency, allaying unwarranted fears about external threats and preventing the energy of employees from dissipating into internal conflict.

We’re not saying that the centuries-old debate about what distinguishes great leaders is over or that context is unimportant. Experience shows that different business situations often require different styles of leadership. We do believe, however, that our research points to a kind of core leadership behavior that will be relevant to most companies today, notably on the front line. For organizations investing in the development of their future leaders, prioritizing these four areas is a good place to start.

About the authors

Claudio Feser is a director in McKinsey’s Zürich office, Fernanda Mayol is an associate principal in the Rio de Janeiro office, and Ramesh Srinivasan is a director in the New York office.

The authors wish to thank Michael Bazigos, Nate Boaz, Aaron De Smet, Lili Duan, Chris Gagnon, Bill Schaninger, and Ekaterina Titova for their contributions to this article.

Teach the Key Ingredients for Leadership Success

There’s a major disconnect between what companies look for in their top performers and best leaders, and what students learn in school. Why don’t we better align these skill sets?

For instance, among educators there is lots of talk these days about “grit”: the tenacity to focus on working toward a goal despite obstacles and setbacks. It’s been found crucial in many ways – for instance in determining whether disadvantaged kids finish high school. That’s well and good.

But don’t think grit will make you an effective leader. Of course leaders need to be motivated – everyone does. But that’s not what makes them high-performing leaders.

Such self-motivation can help make you an outstanding individual performer – an accountant, say, or a programmer. But leadership requires an additional skill set: social intelligence.

In my model of emotional intelligence, grit falls under self-management, one of four essential leadership skills. The others are self-awareness – which is the basis for managing yourself – and empathy plus social skills.

A chronic complaint among companies who promote individuals to a leadership position who are excellent performers on their own is this: if they lack social intelligence, they will fail as leaders.

Claudio Fernández-Aráoz, a world expert on hiring, did a study of C-level leaders who were fired. The conclusion: they were hired for their intelligence and business expertise, but fired for weakness in emotional intelligence – usually the social variety.

“The best worker on the shop room floor can fail as a foreman for lack of social intelligence,” is how Edward Thorndike, the psychologist who first developed the concept, put it.

When I looked at competence studies done by companies to identify the skill sets of their outstanding performers – what sets top leaders apart from average – the vast majority fell in the emotional intelligence category.

With a fresh crop of college grads heading into a tight job market, I wish they had had help in developing their emotional intelligence skills during their studies. But with a very few exceptions colleges ignore this crucial skill set for success. Students acquire these abilities on their own time, and rather randomly, depending on happenstance.

As a trustee at MIT told me, when they did a study of the grads who had given the school the largest donations, the conclusion was that these had not been the top-of-the-class whizzes while in college. Instead they were good enough students (after all, they had gotten into MIT), but with strong side interests: often president of a club or sports team. Many had already showed entrepreneurial promise by starting their own small businesses on the side.

There are many successful programs on emotional intelligence for grade levels kindergarten through high school. These fall under the umbrella of “social and emotional learning.” One meta-analysis of more than 270,000 students showed that the courses boost pro-social behavior – e.g., behaving well in class – while lowering antisocial ones like bullying. 

Bonus: students’ achievement test scores jumped 11 percent.

Maybe it’s time to help all students at all levels get better at these life – and leadership – skills. 

Posted by:Daniel Goleman

Research: What CEOs Really Want from Coaching

Two-thirds of CEOs don’t receive any outside advice on their leadership skills, and yet almost all would be receptive to suggestions from a coach. These stats are from a Stanford University/The Miles Group survey released this month, which asked 200 CEOs, board directors, and other senior executives questions about how they receive and view leadership advice. I asked the survey’s co-authors, Stanford Graduate School of Business’ David Larcker and The Miles Group CEO Stephen Miles some questions about what they found and how it applies to CEO coaching specifically. An edited version of our exchange is below. 

 

Why is getting coaching from outside the company important?

Blind spots are less obvious when things are going well. It is very easy for executives to become almost strictly inward looking, especially when they have been very successful. But these blind spots can become devastating when performance moves in the other direction. A good, neutral third party assessment is a clear reality check for executives.

Additionally, every single person inside the company has an agenda of some sort. This makes the coaching environment a rare and safe place to think through various topics against the framework of what is in the CEO’s best interest. The coach is only concerned with the CEO’s wild success as the leader of the company.

In your survey, CEOs say the area they most want to develop is in conflict resolution. Why?
Conflict management is critical in the CEO role — just about anything that gets to the CEO’s desk has an element of pleasing someone and making someone else unhappy. When the CEO avoids conflict, it can shut down the whole organization: decisions are not made and problems fester, creating a domino effect of unproductive behaviors down the ladder. A CEO who can manage and channel conflict in a constructive way can get to the root of issues, apply rigor to the team’s thinking, and, ultimately drive the best outcomes. So cultivating this skill can be a powerful tool to help the entire organization.

The survey also reveals that nearly two-thirds of CEOs do not receive coaching or leadership advice from outside consultants. What’s behind that?
There is still some residual stigma that coaching is somehow “remedial,” as opposed to something that enhances high performance, similar to how an elite athlete uses a coach. But there really is not a single top athlete who does not have a coach. CEOs should not be insecure about this issue, and instead see coaching as a tool for improving their already high performance.


Part of this stigma comes from board members themselves, many of whom grew up in an era when coaching was truly remedial and not something in which a CEO would ever voluntarily engage. So even CEOs who believe in coaching and want to engage have to ensure that they bring these board members in particular along with them on the journey.

So there’s tension between boards and executive teams when it comes to coaching. How does it manifest itself?
Again, when things are going well, there can be a tendency on the part of some CEOs to be less open to feedback and a corresponding “If it ain’t broke…” attitude from the board. If things are going well, boards often feel as if they don’t need to have this difficult conversation with the CEO. Both of these attitudes/approaches are a problem and certainly do happen. 

It’s probably not surprising, then, that 79% of CEOs said it was their idea to receive coaching. But should it only be their responsibility, or should it involve others?
Fundamentally, it is a responsibility of both the executive and the board of directors, while a trusted Chief Human Resources Officer can also play an important role. If some of a CEO’s behaviors are truly dysfunctional, these need to be identified and worked on. If the CEO is introspective, he or she will recognize their weaknesses without prodding from the board. However, there are also times when the board says to the CEO: “It might be good to do some personal development on X.” This is a key part of CEO performance evaluation: What things need to be improved?

Many times coaching starts through a partnership with the board of directors on the CEO evaluation, and out of that usually come a few specific actionable development themes that can prompt an advisory relationship with the CEO. It typically does come from both sides, and so boards must be sufficiently up to date to see high performance coaching for what it is, versus being purely remedial. The board can help set the conditions for success.
The CHRO can also be instrumental in setting the stage for CEO coaching, as they are often the ones who originate the idea with the CEO.

Is there any evidence that the things CEOs want to be coached in aren’t areas they need help in, and vice versa?
I think that we should look at the “gaps” between what is being worked on and what weaknesses are highlighted. For example, 23 percent of CEOs are working on their team-building skills, but only 13 percent of directors believe this is an area that needs improvement.


Comparatively, there’s a reluctance to be coached on so-called “soft skills” like motivation, compassion, and persuasion. How important are these, and should CEOs and execs take a closer look at being coached on them?
“Soft skills” have an important place in the CEO toolkit. Skills such as motivation and being able to coach and develop people allow a CEO to build a “complementary leadership structure” at the top of the organization. This kind of organizational design allows the top team members to work more effectively together and on their own, but relies on a CEO who can motivate, inspire, and coach those below him.

Is there a way to be transparent about a CEO being coached without causing shareholder and market panic?
Coaching is a private and personal activity. The fact that your CEO is being coached is not something that would normally be disclosed to shareholders. However, you can certainly imagine situations where something bad happened in the company (unfortunate press coverage, loss of top managers, etc.), and the CEO admits that he/she is responsible and his leadership style was instrumental in the problem, and that he/she is going to work on this weakness. Done in an open and honest manner, this type of disclosure can have a very positive impact on reputation, motivation, and performance in an organization.

Many of the highest performing CEOs disclosed that Peter Drucker advised them. They may have used a different term in that era because of the stigma, but we are now moving clearly into an era where there is less stigma associated with having a coach.

Is there an internal risk for company employees if their CEO or a senior executive is open about getting coaching?
This will be influenced most importantly by the culture of the organization and the delivery of the message. The employees that you want to keep will probably be grateful to hear that a problem is being addressed. However, it is certainly possible that the admission of a need for coaching might be interpreted as a personal weakness of the CEO. This happens all the time in political settings. Matching the message to the employees is essential. 

It is also important to not simply see coaching through the lens that there is a “problem.” Many times you are not focused on a problem when coaching someone. Rather, you are advising them on the issues they face — such as the expansion of the leadership team or transforming from a private company CEO to public company CEO — and helping them be even more effective. 

Ultimately, is there a relationship between coaching and getting to the top?
This is fairly common in tech firms such as Dell, Google, etc., where coaches/advisors have been brought in to help young CEOs. But Jack Welch is another prominent example of a top business leader who worked with an advisor — Ram Charan — for many years.

In general, where there is a relationship between coaching and getting to the top is when an executive believes in continuous learning and development. The saying “It’s what you learn after you know it all” resonates here. These kinds of chief executives seek out a number of different coaches/advisors who help frame topics for them and play a point of challenge and reflection. CEOs who do this are also triangulating information, and their set of coaches/advisors help frame, challenge, and assimilate all of the information/data.

How should CEOs choose the right outside coaches or advisors?
You need coaches who are very smart, intuitive about business and interpersonal dynamics, neutral in their assessment (i.e., not captured by their client), and can tailor the training to the individual needs (not a canned approach).

A good coach does not make someone feel badly about themselves, but will engage in training so that the CEO gets up the next morning and is excited about trying something new or doing something in a different way.

What did you find most surprising in the report, and what is the actionable takeaway for CEOs and boards?
We were very surprised to learn the low percentage of CEOs who have coaches. The key takeaway for CEOs and boards is that seeking out a coach or advisor is not a sign of a fundamental problem or weakness, but instead a key attribute of being a superior leader. 

For boards and other stakeholders, they should understand that it could help make the difference between a good organization and a visionary one. 

Gretchen Gavett

Gretchen Gavett is an associate editor at the Harvard Business Review. Follow her on Twitter @gretchenmarg.

The Most Overlooked Leadership Skill

by Peter Bregman 

Even before I released the disc, I knew it was a long shot. And, unfortunately, it was a clumsy one too.

We were playing Ultimate Frisbee, a game similar to U.S. football, and we were tied 14-14 with a time cap. The next point would win the game. 

I watched the disc fly over the heads of both teams. Everyone but me ran down the field. I cringed, helplessly, as the disc wobbled and listed left. Still, I had hope it could go our way.
Sam was on my team.

Sam broke free from the other runners and bolted to the end zone. But the disc was too far ahead of him. He would never make it.

At the very last moment, he leapt. Completely horizontal, Sam moved through the air, his arms outstretched. Time slowed as he closed in on the disc.

The field was silent as he slid across the end zone, shrouded in a cloud of dust. A second later he rose, Frisbee in hand. Our team erupted in cheer.

Sam's catch won us the tournament.

It also taught me a great lesson: Never underestimate the value of a talented receiver.

I was reminded of Sam's catch recently after broaching a sensitive topic with Alma*, a client. The conversation was about some concerns I had about an upcoming meeting she was leading as well as my own insecurity about how I could help.

Before I spoke with her, I was hesitant and worried. Was I overstepping my bounds? Was I exposing myself? Would she reject my thoughts? Would she reject me? 

I entered the conversation awkwardly, apologizing, and offering too much context. Even once I broached the issue, I felt tentative, unclear. I cringed as I felt my words hang in the air.

Thankfully, though, Alma turned out to be a Sam-level receiver.

Alma listened without a trace of annoyance. She asked questions — not to defend herself or refute my thoughts — but to understand my perspective more clearly. She was gracious, skilled, and accepting.

Her ability to receive me, and my opinions, led to a deep and valuable conversation about her performance, my role, and the needs of her team. A few weeks later, she showed up powerfully and led a remarkable meeting.

Typically, we choose our leaders for their skill at conveying messages clearly and powerfully. But, in my experience, it's their ability to receive messages that distinguishes the best leaders from the rest.

That's because the better you are at receiving, the more likely people will talk to you. And that's precisely what every one of us needs: to be surrounded by people who are willing to speak the unspoken.

So how do you become a great receiver? 

1. Be courageous. We often attribute courage to the speaker, but what about the receiver? 
I may have been scared broaching topics with Alma, but I had the advantage of time and preparation. I could control what I said and how I said it. I was able to think about it beforehand, write down a few notes, and test my thoughts with someone else. 
The receiver has no such advantage. Like Sam, he has to receive my throw, however, whenever, and wherever it lands. He has to be willing to listen to something that might make him feel afraid or insecure or defensive. And if he is a great receiver, he will take in the information or message thoughtfully, even if the delivery is awkward or the message jarring. That takes tremendous courage.


2. Don't judge. Receiving is as much about what you don't do as it is about what you do. 

Resist the temptation — blatantly or subtly — to be critical of the speaker or what the speaker is saying. Don't argue with her, poke fun at her, shame her, act aggressively, turn on her, become defensive, or act cold toward her.
 

3. Be open. In order to receive a pass in any sport — and at work and in life — you need to be free, open, and unguarded. 
Yet we often guard ourselves. Powerful feelings like fear, anger, sadness, and insecurity do their best to block our ability to receive a pass. If you want to be a talented receiver, your task is to feel your feelings without letting them block or control you or your response. Breathe. Acknowledge what you're feeling to yourself — maybe even to the other person — without dwelling on it. 

Reiterate what you're hearing, ask questions, be curious. Not curious in an "I-will-find-out-enough-information-so-I-can-prove-you-wrong" way. Curious to understand what the person is saying and to understand what's underneath what they're saying.
If you can be courageous, avoid judging, and stay open — even if the toss is awkward and the message unsettling — then, like Sam, like Alba, you'll be able to catch pretty much anything. 

And when you're skilled at that, you'll be a most valuable player of any team you're on.

Peter Bregman

Peter Bregman is a strategic advisor to CEOs and their leadership teams. His latest book is 18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done.