Today’s companies are structured differently than they were a generation ago. And, in order for today’s businesses to perform well, managers require different leadership skills than they did in the past.
The incoming CEO of a family-owned financial services business, Jed is a strong willed and decisive leader. Aggressive and demanding, he is bottom-line oriented. Jed likes to be in control. Given his focus on results, Jed steps on the toes of his direct reports (and his wife) very often. Like the Green Beret he once was, Jed issues orders and commands. He is not very empathic and sensitive to the needs of others. He is critical and sometimes threatens. Jed does not listen well and, at times, he does not “read” people well. It is difficult for him to slow down and relax.
Jed is a successful leader in some respects, like short-term performance and profitability, but not in others. His leadership style is “commanding” or coercive, according to the very useful leadership typology developed by psychologist Daniel Goleman in his recent book Primal Leadership. While helpful in a crisis or to turn around a failing company, a commanding leadership style creates a negative climate. Direct reports feel intimidated, sometimes scared and angry. This negative mood spirals down through the organization and contaminates everyone. Productivity and long-term profitability often decrease.
Forty years ago, Jed’s commanding leadership style was the norm in business. Organizations were structured hierarchically, with a command-and-control orientation. Visualize a triangle, with owners and executives at the top and first-line supervisors as well as workers at the bottom. Communications in such an organization was primarily vertical. The bosses issued orders; supervisors and workers carried them out, usually without question. If problems arose, these were communicated upwards through the “chain of command” and new orders were issued by the bosses. Problem solving was a slow and reactive process.
Today companies are structured differently. Similarly, the leadership skills required in the new millennium are different. These changes are in direct response to an increasingly competitive marketplace. The challenge is for business leaders to be more customer-driven, more quickly and creatively responsive to the marketplace, more able to retain motivated employees, and ultimately more profitable.
In terms of structure, we see “coordinated,” less hierarchical organizations. Imagine again a triangle but a flatter, diverse, actively changing, and moderately democratic structure. We still have a pecking order, with owners and executives as well as first-line managers and workers. But workers are empowered to make decisions in response to marketplace needs because they are closest to customers. Cross-functional and cross-level teams spring up to anticipate and solve problems. Some teams continue to function while others are disbanded after problems are solved. This new, coordinated organization relies on more synchronized and robust efforts among team members at all levels. People communicate both vertically and horizontally within the company. As a result of these dramatic changes in business structure, we see increased productivity, improved quality, significant cost reductions, as well as improved profitability.
What leadership skills are required in this new age to drive business success? At its core, good leadership demands a person deeply tune into and respond to the needs and emotions of a group of people. Through this process of self-awareness and connection to others, what Daniel Goleman terms “resonance,” a leader is able to set a positive mood and tone for people within an organization. This allows the leader to guide, direct, and inspire people to superior performance.
To lead well, a person needs several personal and people skills or “soft” skills, what we term “emotional intelligence” or EQ, as well thinking skills, intelligence, or IQ. Goleman summarizes EQ skills into 4 categories:
1) Self-Awareness. This is ability to be aware of emotions, to accurately assess strengths and weaknesses, and to be self-confident.
2) Self-Management. This involves keeping disruptive emotions under control, a readiness to seize opportunities, a desire to achieve excellence, honesty and trustworthiness, flexibility, and an optimistic attitude.
3) Social Awareness. An emotionally intelligent leader is empathic (senses the feelings of others), understands organizational politics, and wants to help others.
4) Relationship Management. This includes a leader’s ability to inspire and influence others, to build collaborative teams, to cultivate personal relationships, to manage conflict, to encourage change, and to develop or “grow” other people.
We can identify several leadership styles based on these emotional intelligence skills. While some styles generally are more effective than others, good leaders are able to style-flex, using whatever leadership skills are appropriate to a given challenge. In addition to Jed’s commanding style noted at the beginning of this article, leaders can be:
-Visionary. The visionary leader articulates a vision for the company’s future, helps employees understand how their work fit into the vision, and creates a team process for the implementation of the vision. This leadership style is potentially the most effective because of its inherent power to motivate people to positive action. A political example of a visionary leader is former president Ronald Reagan. His “It’s morning in America” speech set out at least for some a compelling vision or direction for the future of the United States.
-Coaching. The coaching leader focuses on helping people develop or grow in their work in order to reach long-term goals or realize dreams. The coach will assist a person in setting goals, assure a good “fit” between the person and job requirements, and delegate assignments to assist in a person’s development. Coaching is a very effective leadership style because of the personal interest the coach shows in a person being successful.
-Affiliative. This leader openly shares feelings with people. He or she is more concerned about employee needs than specific performance goals. This leadership approach can create a very positive organizational climate; it generates loyalty, builds team spirit, and improves communications. It may have a limited effectiveness in driving employee performance and, if overused, can get in the way of acknowledging organizational problems.
-Democratic. A democratic leader invites input into decision making and tries to build consensus for a course of action. This style can be useful in generating new ideas or support for a project or team endeavor. Highly independent professionals may value or insist upon this approach. On the downside, democratic decision making is often a slow process and may not be appropriate when quick decisions are needed. Also, consensus building may mask a leader’s indecision and encourage organizational drift.
-Pacesetting. A pacesetting leader sets high performance standards for him or herself as well as employees and drives constantly for improved productivity. Poor performers are confronted and told how to do better. Often pacesetters will jump in and rescue poor performers by doing their work. While aspects of pacesetting are useful for leaders (e.g., having high standards or taking initiative), over the long-term it can have negative repercussions. Morale plummets because employees feel driven by leaders or believe leaders do not care about them as people or do not trust them to do their jobs their own way.
It makes good common sense for business people to develop their leadership skills and adopt effective business structures. According to research, good leadership combined with newer, coordinated business structures are, in part, directly related to a company’s improved financial performance. In a 1995 study of CEOs by the Hay Group, the most successful leaders of companies with the highest profitability and growth rates 1) spent time coaching their senior executives, 2) developed collaborative business relationships with them, and 3) cared about people personally. So the soft people skills can result in hard dollars and cents for businesses. Bob Dylan makes sense after all!
Robert A. Isaacson, M.A., M.S.S., is a business and executive coach, speaker, writer, organizational consultant, and therapist. Bob’s website is and he can be reached at . Or you can contact his virtual assistant, Kathy Zengolewicz at .