PART I

Why Don’t We Have More Best Bosses?

Jane is the Senior HR VP for a large regional bank, and she was sharing the leadership challenges facing the organization. During the conversation, the topic of Best Bosses came up and she recounted her own personal story. When asked how many senior leaders at the bank possessed the qualities of her Best Boss, she thought for a second, then answered candidly: “One … and everyone wants to work for him.”

Jane’s story supports our hypothesis that working for a great boss tends to be the exception and not the rule during one’s career. Far too often, the employee/manager relationship isn’t all that it could be. So, to answer the question of why we don’t have more Best Bosses, the first place to look would seem to be organizational design factors such as strategy, structure, process, rewards, and culture.

Strategy

The link between people leadership and business strategy must be clearly established for an organization to be consistently committed to the development of the Best Boss leadership philosophy and practice. Otherwise, accountability for leadership development will ebb and flow with bottom line results. A long-range plan and an annually implemented leadership development strategy will accelerate the blossoming of Best Boss behaviors and potentially impact the bottom line in a positive way. Furthermore, a statement of leadership philosophy that is conceptually tied to the organization’s strategy and success can add even more impetus to the ongoing development of an organization’s leaders, and hence, a culture of Best Bosses.

Coauthor John recalls helping an industry-leading multinational consumer products company address this precise issue. The European business unit conducted a succession planning readiness audit across half a dozen countries, and determined that the number of “ready later” and “unlikely to ever be ready” replacements across many business functions in each country far outnumbered “ready now” and “ready soon” candidates. On top of that, competing organizations were snatching up bachelor level and MBA graduates, as well as experienced managers, at an alarming rate. As a result of these internal and external factors, the growth goals of the organization were in serious jeopardy due to the lack of succession bench strength within middle and upper levels of management.

To address this need, the company devised a pan-European leadership development strategy that addressed managerial role definition (to make leadership development an explicit requirement), skill development (including coaching and career development skills), visible and continuing senior executive support, and enhanced communication, recognition, and rewards to acknowledge progress and success. Not only did this strategy deliver the leadership talent necessary to meet the growth needs of the European organization, the strategy was subsequently adopted and successfully implemented by North American business units as well.

Structure

There are a variety of ways to think about “structure” within an organization, and how it can affect the presence or absence of great leaders of people. For example, through short-sighted job and organization design, many bosses suffer from time constraints and/or large spans of control that discourage or prevent them from taking the time to develop meaningful relationships or conduct coaching activities with their direct reports.

We might also think of “structure” in terms of the existence of overarching models or programs that are intended to guide the path and development of leaders in general. Consider that, in many organizations, the best functional performers become supervisors—for example, the best engineer becomes the engineering supervisor, the best accountant becomes the accounting supervisor—often with disappointing results as it pertains to leading people. This is because such supervisors frequently lack preparatory training, experience, knowledge, and skill, not to mention role models for outstanding people leadership.

Charan, Drotter, and Noel (2011) support this notion by arguing that many organizations focus too much of their career mobility and succession planning efforts on promoting individuals with functional expertise, and don’t pay enough attention to people with leadership capability:

To address this continuing error and what they perceive as a leadership deficit in general, the authors proposed a “leadership pipeline” process model that requires the delineation of skill requirements, time applications, and work values associated with each passage to successive levels of leadership (rather than positions) in an organization. In this model, employees making the passage from individual contributor to first-time manager, for example, “learn how to reallocate their time so that they not only complete their assigned work but also help others perform effectively… they must shift from ‘doing’ work to getting work done through others” (Charan, p. 17).

Process

Top tier leadership development organizations institute a strong competency-based talent review process to help managers calibrate the performance and potential of those managing employees at the level below them, according to predetermined and comprehensive criteria. In turn, they systematically make decisions about who is ready for promotion, needs further development, or possibly termination/reassignment. These organizations then integrate a strategically aligned, well-planned, fully invested, and robust leadership development process into the mix. Unfortunately, there are far too many organizations that allow the rise and fall of company profits to diminish their talent/leadership development process. These organizations do not view leadership development as a strategic imperative that’s a “need to win,” but more as a “nice to have” initiative that only receives investment when times are good.

Reward Systems

Organizations understandably focus on tangible business results when rewarding individual or team performance. However, rewards based only on “hard” results can produce leadership behaviors that may be paradoxical to Best Boss behaviors. Based on our study and personal experiences, we would argue companies that successfully integrate “soft skill” people results—like learning and development, potential identification, coaching/mentoring, and communication—into their leadership reward structure will be better positioned to drive continued superior performance. Through our extensive work in organizations, we also have observed the futility, and often cynicism-inducing practice, of incorporating people-focused rhetoric in vision and values statements without the hardwiring of supportive practices, processes, and specific behaviors to the organization’s reward systems.

Author Duncan recalls two examples from his corporate HR experience that successfully produced individual rewards and recognition based on both tangible and intangible results. One organization incorporated a “values multiplier” into their leadership bonus structure, where the ‘hard results’ bonus would be multiplied by a percentage of anywhere from 80 to 120 percent based on how well they “lived” the corporate values. A second organization used a “right result, right way” matrix to assess individual performance that equally assessed results and behaviors in the calculation of both salary increases and readiness for promotion. In both examples, a clear message was sent to leaders on the importance of balancing results with how they were achieved. A leader who accomplished top results but was a poor people manager was equally at risk as a values-based leader who did not achieve results.

Culture

Organizational culture evolves over time, beginning with the views and values of the founders, then seasoned and enriched by the collective experience. The leadership persona of an organization typically assumes the characteristics and views of the leader in chief, and thus manifests itself within the organizational culture. Predominant themes in organizational cultures, such as focusing on financial and operational results to the exclusion of people results, may discourage an emphasis on “Best Boss” behaviors, particularly if such themes are the mantra of the CEO.

Conversely, the leadership personality of the top executive can have a deep and positive impact on the organization’s leadership culture. One example of this is our earlier story describing CEO Peggy Troy’s influence on the culture at the hospital. Not only does her behavior impact her direct reports, it appears to impact multiple levels of leadership, and therefore the entire culture of the organization. Time and time again, we’ve seen the leadership persona in an organization take on the characteristics and views of the leader in chief, and so whatever those characteristics are matters exponentially, as they manifest in the guiding culture of the organization.

We enthusiastically endorse the efforts to use strategy, structure, process, rewards, and culture to promote effective leadership. We further suggest that nonexistent or ineffectively designed strategy, structure, process, rewards, and culture help explain the scarcity of Best Bosses in modern organizations. However, we do not believe this represents the root cause of the issue, and so we persist in asking “why” at least once more.

Why do so many organizations perpetually tolerate deficient or missing structures, processes, reward systems, or cultural characteristics that in turn suppress the development or natural occurrence of great leaders? We contend it is due to powerful internal and external forces that dictate the relentless focus on short-term results that overall please the shareholder at the expense of the employees and other external stakeholders. Interestingly, there is an emerging point of view on the part of researchers and business leaders that the practice of sacrificing the long-term for the short-term achievement of business results might be conceptually flawed in nature. To explore that thinking, let’s investigate how economic and legal forces impact an organization’s decisions concerning the development of its leaders.

Impact of Traditional Corporate Governance and Corporate Law

In their 2017 Harvard Business Review article, “The Error at the Heart of Corporate Leadership,” Joseph Bower and Lynn Paine argue that the decades old agency theory of corporate governance is worthy of deliberate and serious debate as a model for the management and governance of today’s companies. Simply defined, agency theory is

The authors explain that the idea of maximizing value for shareholders (principals) should be a fundamental goal sought by corporate managers and assured by company directors (agents) can be traced back to theories put forth by academic economists in the 1970s. One example is the University of Chicago’s Milton Friedman, whose views became well-known in the 1970 New York Times article, “The Social Responsibility of Business is to Increase Profits.” The authors also explain that this “goal” would be considered obligatory, since at the center of agency theory is

As described in the following, Bower and Paine take significant issue with this premise, and instead, begin to describe an alternative model of corporate governance that is more balanced between the interests of the shareholders and those of the company:

What other flaws exist that potentially lead to the rarity of Best Boss leadership? In his book, The Living Company, Arie de Geus (1997) speaks to the preponderance of short-lived companies, in contrast to those that have lasted for literal centuries. Four defining features of long-lived companies were identified, including one which relates conceptually to the community feeling that is engendered by the Best Boss. Long-lived companies were found to be “cohesive, with a strong sense of identity” (De Geus p. 6). No matter how diversified, all company members, and sometimes even suppliers, felt a sense of community and that they were part of something bigger than themselves. De Geus explains that except for when the company was in crisis mode, the top management priority was the health of the institution as a whole. Such strong bonds serve an organization well during challenging times.

Community is defined as a feeling of fellowship with others, as a result of sharing common attitudes, interests, and goals. Let us point out that it is this same feeling of fellowship that develops in the relationship between a Best Boss and direct report—and that trusting relationship is what unlocks the cycle of positive performance and intense engagement that follows as exemplified by the following Best Boss study quote:

De Geus goes on to explain that companies die when the true nature of the organization—that of a community of humans—is ignored, and instead, the focus of managers and shareholders is riveted to the “economic activity of producing goods and services” (De Geus, p. 3). Furthermore, living companies will grow in number only when they are set up according to the same principles that form the basis for human development. De Geus goes on to suggest that without deliberate changes in governance, short-term orientation on profits will continue, and that the culprit behind this may be anachronistic in nature.

In conclusion, “maximizing shareholder value” as a management mandate is an almost universally held perspective today. By virtue of its definition, it is easy to understand how various organizational priorities and budgeted initiatives will come and go with the rise and fall of profits. Unfortunately, the systematic and ongoing development of an organization’s leaders to properly lead its own people and the alignment of related strategies, structures, processes, reward systems, and culture fall into this category. Based on what we have learned and experienced about Best Bosses, this seems so tragic and unnecessary for employees and organizations alike.

The answer to the question “Why Don’t We Have More Best Bosses?” seems both obvious and out of sight. Now is a good time to pose and fully answer that question—perhaps better than ever before—as we try to adjust to the rapidly changing workplace due to the environmental, societal, and public health issues that confront us. With that said, we will now dive into the new thinking by business community leaders regarding the importance of considering the interests of multiple stakeholders versus shareholders alone in determining how companies invest.