1. Make Leadership Accountability a Business Priority

The first term of the leadership contract says that leadership is a decision. Chapter 5 described in detail what this means for individual leaders.

Organizations also need to make a decision which centers around making leadership accountability a business priority. As we explored in Chapter 3, 72 percent of organizations believe leadership accountability is a critical issue, but that doesn't necessarily mean they've taken action to make it a real business priority. What would this kind of action look like in practice? It would mean a shared sense of clarity among the board, the CEO and executive team, and HR on the organization's responsibility to support leaders to drive strong leadership accountability across the enterprise.

What I've seen many times is uneven commitment and lack of clarity as to who must own leadership accountability as a business priority. For example, I've seen many cases where the CEO assumes complete and sole accountability. He or she is the only one in the entire organization who is passionate and paying attention to leadership accountability. The problem is that if the CEO leaves the organization, things begin to crumble and leadership accountability is no longer an area of focus. Whatever progress was made evaporates.

I've also seen companies in which a very progressive senior HR leader single-handedly takes on the responsibility for driving leadership accountability. This creates problems similar to the first scenario. Other executives don't step up or take it seriously. The HR leader feels like he or she is pushing a boulder uphill and eventually gives up.

The ideal scenario is when the CEO, HR, senior management, and the board all have clarity and commitment around driving strong leadership accountability. When this total accountability is in place, terrific things can happen.

Conduct a Leadership Accountability Audit

You can start making leadership accountability a business priority today by conducting an audit of leadership accountability in your own organization. You can use the questions below:

• To what extent is leadership accountability a business priority in our organization?
• In what ways can we make leadership accountability a topic of conversation for the senior management team or the board?
• How satisfied are we with the degree of leadership accountability demonstrated by our leaders?
• Do we see leadership accountability gaps by level (front-line, mid-level, executive ranks)?
• To what extent has our organization set clear leadership expectations for our leaders?
• Are we confident that we have a strong leadership culture, and one that will ensure our future success?
• To what extent do we believe our leaders are fully committed to their roles as leaders?
• Does our organization have the courage to identify and address mediocre and unaccountable leaders?

Answering the questions above as an executive team (or even with your board) will certainly foster robust and meaningful dialogue, possibly even a much-needed healthy debate.

Once you've made the decision to make leadership accountability a priority in your organization, you need to reinforce this decision in visible and tangible ways.

Senior Management Must Be the Example of Accountability

Our global research also revealed that only 31 percent of organizations are currently satisfied with the level of accountability among their leaders. In order to build a culture of accountability, you first need to ensure that senior management and executives set the example of strong leadership accountability. As you know through your own experience, if senior leaders are not setting the tone for other leaders in the organization, you won't succeed. So it's important that your senior leaders personally understand that leadership accountability starts with them.

A great example of this comes from Harry S. Truman, the thirty-third president of the United States. He kept a sign on his desk in the Oval Office that read, “The buck stops here.” It's a phrase he made popular, and it signified that, as the ultimate leader of his country, he had to make decisions and accept the full accountability for them. What makes this story interesting to me is that the sign on his desk was Truman's own personal reminder to be an accountable leader. If he needed a reminder, then most of us do as well. But I find too many leaders just assume that because they are at the executive ranks, they automatically have strong leadership accountability. That's a dangerous assumption.

Human Resources Needs to Set the Leadership Bar High for Itself

Often, the HR function is at the center of this work of creating a leadership contract for the organization. And just like senior management, if the HR leaders of the organization do not internalize the terms of the leadership contract, the ideas get watered down. I've seen far too many lame HR departments trying to drive culture change without recognizing the need to change themselves first. I've also seen some amazing HR departments, led by truly accountable and inspirational leaders, set the tone for an entire company. If you are leading the HR function for your company, I encourage you to step up to your leadership accountability. Be the leaders everyone else in your company wants to emulate. I believe this is the biggest missed opportunity for HR leaders today.

I spoke recently to a CHRO of a large telecommunications and media company about how his company successfully transformed itself. During our discussion, he shared that before the company started to work on its transformation, he actually began to transform his HR team. “I knew if I didn't have a strong team in place, the transformation would not be successful,” he told me. “My team were going to be critical in supporting leaders to lead very difficult and complex change.”

This was a senior HR executive who set the bar high for himself and his team. His story showed how critical HR leaders and professionals are to helping a company when it's transforming itself. It's these leaders who have the expertise in leading change and helping leaders acquire new mindsets and capabilities; but if they are weak, then it creates executional risk.

If you are a senior HR leader, ask yourself: Do you have the team your company needs to help drive its success? Are your HR leaders models of strong leadership accountability? If you answered no to either of these questions, you have some work to do.

Have Leaders Sign the Leadership Contract at Each Turning Point

As we explored earlier in this book, there are four key leadership turning points that leaders face throughout their careers. At each, they assume more senior roles, and each step places greater expectations and demands on the individual. Organizations must be aware of this and support leaders during these times to ensure they succeed in their transitions to bigger leadership roles.

One of the ways to do this is to use your own leadership contract to have discussions with leaders as they transition into new roles. It's important for leaders to appreciate the transition, how their roles will change, and how they must step up to their increased leadership expectations.

We worked with a large energy company that created a half-day Leadership Contract workshop for employees in professional roles. These roles were essentially feeders into front-line management positions. The workshop helped the employees gain a better understanding of what it means to take on a leadership role. The company found that those leaders who continued to express interest in becoming managers after going through this program were more focused and committed than others. They had a better sense of what was expected and how they needed to focus their development to tackle the hard work ahead.

Another client, a large financial institution, used its leadership contract to provide coaching to new vice presidents in the bank. It found that this process helped its leaders integrate into their roles more quickly and confidently.

These are just a few examples of what happens when an organization creates a company-specific leadership contract and then uses it to help leaders at all levels understand what it means to be an accountable leader.

Anchor Your Leadership Contract in Your Development Programs

Your company-specific leadership contract becomes the foundation that defines what it really means to be a leader in your company. In our experience, we find it important to remind leaders of these expectations regularly. One way to do this is to include your leadership contract in all your development programs. One client of ours set aside time in every leadership development workshop and seminar to review the leadership contract and expectations.

In response to client demand, we have also included many of the ideas of this book in our own coaching process. This way our clients worldwide know that our coaches are driving strong leadership accountability in every coaching session.

Leverage Your Leadership Contract at Key Inflection Points

My colleagues and I recently launched another Leadership Contract initiative with a European client that is one of the world's leading suppliers to the industrial and automotive sectors. The company is more than 100 years old.

The managing director of Italian Operations began our session by talking to his top 30 leaders. He had just come back from a corporate leadership meeting where the discussion was all about change and transformation. He said the company was at an inflection point, and they needed to transform their leadership culture to drive success in the future.

Although the company has been a dominant industry player for many years, it is at a point where it must now evolve. New competitors are fierce. Increased customer expectations are challenging pricing; raw materials are no longer cheap.

This is becoming a common and recurring story with companies everywhere. Andrew Grove, former chair of Intel, wrote and spoke a lot about inflection points as far back as the late 1990s. Unfortunately, Grove died in 2016, but his ideas have had an enduring quality that is rare in business.

For Grove, a strategic inflection point occurs when a company experiences a major change in its competitive environment. This major change can be the result of a number of factors, including the introduction of new technologies, a shift in the regulatory environment, or evolving customer values. My client is experiencing all three.

Common to all organizations facing an inflection point is the need to make fundamental changes in business strategy. This will put tremendous stress and strain on leaders who will be responsible for affecting those changes. If they fail, it could be the beginning of the end.

In a recent article by McKinsey & Company, the authors argue that strong, dominant, incumbent players in certain industries “needn't be victims of disruption if they recognize the crucial thresholds in their life cycle and act in time.”

The article repeats a quote from Reed Hastings, the CEO of Netflix, who noted that many organizations fail to try new things out of a fear of hurting long-standing, core activities. “Companies rarely die from moving too fast,” Hastings has said, “and they frequently die from moving too slowly.”

We all know of companies that have failed to react to inflections in their industries. Leaders at those companies may have seen what was happening but didn't respond, resulting in a downward spiral. At least our client is responding early and has identified the need to transform.

The big lesson here is that just saying your company has to transform is very different from successfully transforming.

Back to our European session. When it was time for the head of HR to speak, he continued to challenge his leaders. He used the analogy of an iceberg—everything above the water surface represents the behavior and actions of leaders; everything below represents their fundamental assumptions, values, and mindsets. In order to transform the company, leaders need to first transform themselves. This will require them to act and behave differently, but only after they change their mindsets and core assumptions.

As we began to share our work in the area of leadership accountability, we focused the discussion on what exactly they must do individually and collectively to successfully lead the company through their own inflection point. These leaders will need to pause from their day-to-day grind to reflect on their roles, challenge the assumptions they have made about the company, and begin to learn new ways to be accountable as their company heads into the next 100 years.

Does this sound familiar? Are you going through a period of significant transformation? How are you and your fellow leaders responding? Are you challenging old assumptions and mindsets? These are questions we all need to grapple with as leaders.

Organizations today are always facing change—sometimes transformational change. At these inflection points, everything is reexamined: the markets in which you operate, the business strategy of your company, and ultimately the kind of leadership you will need to be successful in the new future. Navigating through an inflection point represents a significant challenge. Not every organization is successful. We have found that a company-specific leadership contract becomes a powerful way for leaders to understand new leadership expectations quickly. In fact, some of the most important and rewarding work that my team and I have done is in helping leaders and their organizations successfully transition through a critical inflection point.

Use Your Leadership Contract to Build Accountable Teams

Since writing the first edition of this book, my team and I have had many conversations with our clients about how to apply the ideas in their organizations. One of the areas that I always believed was ripe for application was in using the four terms to help build truly accountable teams.

In my own experience working with senior teams across many industries, I find that ultimately their long-term success is a function of how each individual shows up as a leader. Do they bring a real sense of clarity and commitment to make the team successful?

So it wasn't a surprise to me when one of our clients approached us with an interesting request. She was a big fan of The Leadership Contract, and she asked us how she could use the four terms with her newly formed senior leadership team. Our client shared that she had an upcoming one-day offsite and she wanted to make sure she was able to set up her team for success. So we went away and reflected on her needs. We came back to her with an agenda for a one-day session that was based on a series of questions for her to use with her team. Here's what we shared with her. You may find these questions valuable with your own team.

1. Leadership Is a Decision—Make It
   • What is our vision of a truly accountable team?
   • Are we “all in” as individual team members and fully committed to create and sustain a truly accountable team?
   • Do we have clarity regarding our mutual expectations of one another?
   • What are the Big D and small d leadership decisions that we will need to make as a team?
2. Leadership Is an Obligation—Step Up
   • What is our core obligation as a team?
   • In what ways will we individually and collectively step up to our core obligation?
   • How do we intend to leave our organization in better shape than we found it?
   • How will we set the tone and be an example of a truly accountable team to others in our organization?
3. Leadership Is Hard Work—Get Tough
   • What is the hard work that this team must tackle in order for us to be successful?
   • What is the hard work within our own organization that we must address head-on?
   • What are the tough conversations we must have as a team? And with other teams we will work with?
   • How must we demonstrate resilience and resolve as a team?
4. Leadership Is a Community—Connect
   • How will we establish a real sense of community within our team?
   • In what ways will we have each other's backs?
   • How will we celebrate our key milestones and successes?
   • How will we support the success of other teams that we will work with across our organization?

Since that request, we had more, and so we responded by building The Leadership Contract for Teams solution. It's been extremely gratifying to see how the ideas of the book have translated so effectively to help teams become more accountable. Many teams within my own company have been early adopters and have become stronger and able to drive greater success for our company. You can also review The Leadership Contract Field Guide book for ideas and strategies you can use to build your own accountable team.

Promote Leaders for Being Accountable, Not Solely for Being Strong Technical Experts

As I shared earlier in the book, one of the challenges organizations have typically faced is their reliance on promoting technical superstars into leadership roles. The tough work for an organization is to resist this temptation. Sometimes it's done because it's expedient and easy to do. Other times, it's done because we don't have a clear idea of what accountable leadership actually looks like.

Let's go back for a moment to the global research I referenced earlier in this book. We asked respondents to identify the behaviors they most associate with truly accountable leaders. It's a great list and brings much-needed clarity in terms of what accountable leaders do differently than unaccountable ones do.

Accountable leaders:

• Hold others, including their team (or direct reports), accountable for high standards of performance;
• Tackle tough issues and make difficult decisions;
• Effectively communicate the business strategy throughout the organization;
• Express optimism about the company and its future; and
• Express clarity about external trends in the business environment.

Review this list and see whether it aligns with your own definition of the critical behaviors of accountable leaders. Use this or your own list, as the basis for making promotions. Don't simply take the easy way out and promote based solely on technical expertise.

Make It Safe to Speak Truth to Power

Often, one of the hardest things for leaders to do is to speak truth to power. This means having the courage to raise and bring forward issues to senior management, even when they might be contentious. For many leaders, speaking truth to power isn't easy. Many agonize about sharing their opinions. Others simply keep quiet—seeing playing it safe as a better option. These leaders fear the potentially negative reaction from senior management.

The reason this is so difficult is that, traditionally, many companies have had a shoot-the-messenger mentality. Perhaps it's rooted in senior management's desire to hear good news only. Perhaps it's their insecurity. But when someone speaks up and is then attacked, demeaned, or fired, it creates an unsafe environment. Other leaders immediately learn that if they stick their necks out and raise an important or controversial issue, their heads will be chopped off. So everyone keeps quiet, and nothing changes. The hard work becomes even harder.

It's also hard for senior executives. It isn't easy listening to someone speak the truth or call you out on something that isn't working. You have to learn to manage your own reaction in these situations. I worked with one leader who had a tendency to lose his temper completely when his leaders spoke truth to power and raised important issues. He couldn't control himself. He would go on a rant and even be verbally abusive. His leaders quickly learned that despite all the talk about creating an open culture, the reality was much different. If this is you, you really need to work on yourself. Jim Collins in Good to Great talked about the need for leaders to accept the brutal truth. But it isn't always easy. I know from my own experience. It's really tough to hear about things that aren't working in your company when you are giving your job everything you've got.

It's important for all leaders to appreciate that when you do speak truth to power, you should do it in a way that demonstrates accountability. You can't simply come off as a complainer. You need to present your concerns in a constructive manner. I know many CEOs who react strongly when leaders share information in a blaming tone or do it in a way that shows they aren't stepping up to fix the situation. They are perceived as whiners and erode their credibility.

So get tough on the tough stuff and start making it safe for your leaders to speak truth to power. When you do, you'll tackle the real issues that may be holding your company back.

Stop Tolerating Mediocrity

My colleague and I were speaking at a conference on the ideas in this book. The question-and-answer segment with the audience became quite lively as everyone was grappling with the issue of leadership accountability.

One delegate asked us a final question: “If there were one or two things my organization could do to drive strong leadership accountability, what would they be?” I said there were two things: first, to set clear leadership expectations and, second, to stop tolerating mediocrity from your leaders.

After our session, we had many delegates thanking us for our comments. Many said that upon reflection, their organizations did indeed tolerate mediocrity and it had to stop.

I've come to learn through my own leadership role and through my work with clients that there is a price every organization pays for mediocrity, and it's significant. Consider, for example, some great research that recently came out of the Gallup organization. In 2015, it conducted a major survey of 2,564 managers, called The State of the American Manager: Analytics and Advice for Leaders.

Gallup found that a whopping 51 percent of American managers are not engaged and another 14 percent are actively disengaged. When you combine the impact of these numbers, Gallup estimates the costs to be anywhere from $319 billion to $398 billon to U.S. companies. This is staggering.

According to Gallup, these findings suggest that two-thirds of leaders in our organizations have essentially checked out, meaning they care little about their jobs, their people, and their company. How can we ever hope to be successful if we tolerate this?

But there's more. Gallup also found what it calls the cascade effect, which essentially means that an employee's sense of engagement ties directly to his or her manager's sense of engagement. In fact, employees who are led by highly engaged managers and leaders are 59 percent more likely to be highly engaged themselves.

In many ways, these insights should be obvious. Think about your own experience. I suspect it would align with these survey findings. I certainly know that when I was at my best over my career, it was always because I was working for a great leader I admired, and I showed up every day being accountable and fully engaged. What's been your experience?

It's time to start doing the tough stuff and stop tolerating mediocrity in our organizations. The price we are paying is too high.

The good news is that a company-specific leadership contract goes a long way toward achieving that goal because at least it makes your leadership expectations clear. Those leaders who don't want to be—or shouldn't be—leading know what's expected of them. They then need to make their own decisions. Or you can help them with their decisions. That's where we are going next.

Identify and Address Unaccountable Leaders

Too often, attempts to build strong leadership accountability are undermined because we fail to take action on leaders who simply are not prepared to be accountable. Keeping these leaders in their roles has consequences. It sends the message to other leaders and employees that you are prepared to tolerate mediocrity in your organization. It also disengages your high performers, who are truly accountable, as their contributions are minimized.

Our research revealed that only 20 percent of companies believe they have a culture that actually addresses unaccountable and mediocre leaders. When I traveled to cities around the world and spoke to leaders, they confirmed this. Many said, “We know who our unaccountable leaders are, but we choose to do nothing about them.” How is this possible?

It's time you get tough as an organization and identify the leaders who are struggling in their roles. Maybe they need support. Maybe they shouldn't be in leadership roles. Maybe they don't really want their roles and are looking for a way out. Maybe they are better suited for an individual contributor role. Maybe you should have left them as technical experts and not promoted them into leadership roles. Maybe they need to leave your organization. Whatever the outcome, as an organization you need to do your part and act on unaccountable leaders. I know this will be a hard message for many of you, but I think you know this is something you must do.

A client of mine in the insurance industry was going through transformational change. The way the company had operated for decades needed to change. A new CEO arrived and soon brought on a new head of HR. These two began to set a new course for the future. A critical part of their approach was to set clear leadership expectations for all leaders. The board was completely supportive of this work.

They ended up creating a set of leadership expectations that they called their “price of entry” conversation. They made things very transparent to their leaders. Their price of entry included a list of criteria and expectations that would be required of leaders of the future. Those criteria were also used to evaluate their cadre of leaders—to identify those who were not living up to these new expectations.

There were some very tough and frank discussions. Many leaders ended up leaving the organization. Some left voluntarily, and others were pushed out. It was a tough period, but in the end the organization became stronger because the leaders who remained were totally clear and committed to leading in a new way. They were the accountable ones.

Is this too drastic an approach? Some of you reading this might feel like it is. But at the end of the day, this is what it means to be serious about driving real leadership accountability. We need to wake up and stop being naïve, assuming that lame, mediocre, and unaccountable leaders will help us become successful. They never have. It's time to get tough and do the tough stuff.

Assess Your Current Leadership Culture

Before you start having your leaders connect, it's important to understand what you currently have in place by creating a baseline measure of your leadership culture. We often use our Community of Leaders Survey with our clients, and Figure 12.2 shows several statements from that survey that you can use to assess your organization.

As you review your responses, what patterns do you see? What are some areas of strength? What are some areas of weakness that you may need to address? See the remaining strategies below for ideas on how to build a strong community of leaders.

Hold Regular Leadership Forums to Help Leaders Build Relationships

As I said earlier in this chapter, one of the important organizational practices that industry-leading companies put in place is having regular leadership forums that bring leaders together. Our own client experience validates this practice. Regular forums give leaders the opportunity to come together to network with one another and build relationships. These forums help counter the isolation that many leaders experience day to day.

When done right, leader forums can help clarify your business strategy and reinforce your leadership expectations. They provide a venue for leaders to network and build relationships with one another. We have learned that it's really hard to build a community of leaders among a group of strangers. When you get it right, you will find leaders better able to collaborate, innovate, and hold themselves and one another accountable for performance.

What makes for a great leader forum?

First, it's important to be clear on who should be in the room. Often, it is the top two or three layers of leaders and high potentials.

Second, the event should begin with opening remarks from the CEO to provide an update on the state of the business, a review of the corporate strategy, and a reminder of the leadership expectations.

Third, the agenda should tackle meaty business issues that are all about leading more strongly as a collective group of leaders. Usually, these are not divisional or operational priorities but key challenges facing leaders across the enterprise. Ensure that leaders are able to drive to recommended actions that will form the basis of personal commitments.

Finally, I find the best leader forums close off with a strong call to action by the CEO. Set the bar high for your leaders. Reinforce the importance of individual and collective leadership accountability.

Set Up Leadership Accountability Peer Groups

We worked with one client recently to help design and deliver a leader forum. One of the themes we heard from leaders during the planning process was their sense of isolation from one another. We recommended that after the leadership forum, small groups of six to eight leaders hold a monthly conference call solely focused on discussing their leadership challenges and ensuring they hold one another accountable in their leadership roles.

When we proposed the idea, the CEO said her leaders were so busy that they wouldn't find 12 hours over a year to commit to this. We knew there was a hunger for connection so we pushed the CEO a little. Eventually she agreed to let us propose the idea at the forum, and based on the leader response we would either move ahead or kill the idea.

Guess what happened?

When my colleague presented the idea, the leaders overwhelmingly jumped at the opportunity. We set up some simple guidelines for them, but mostly left them to plan the calls themselves. Remember, this was to be self-managed. It was the ultimate test of their personal and collective accountability as leaders.

One year after launching this practice, the leaders were still meeting in their leadership accountability groups. To me, this is a testament to the need for leaders to connect, learn from one another, and support one another to drive real leadership accountability.

What happens in a leadership accountability peer group? Leaders begin the session by providing an update on how they are doing in their own leadership roles. They then review the commitments they made in their previous session and discuss what worked and what didn't work. Leaders then support one another by providing insights to help one another be more effective. Sometimes leaders can tackle a topic that's acting as a roadblock organizationally, such as how to drive collaboration across business units and departments. The leaders would explore this topic and identify strategies to put in place, and everyone would make a personal commitment to moving things forward in his or her own area to drive greater collaboration.