MT EXPERT: How to be a leader

Faith in leadership is being tested, but that's because those in charge haven't looked at their defining characteristics, argues says Egon Zehnder's Damien O'Brien.

by Damien O'Brien
Last Updated: 24 Jan 2014

The defining characteristic of leaders is the fact that people, groups, individuals, nations, choose to follow them. There is something about a leader that makes us feel that he or she will take us where we need to go. It is an act of faith.

But in today’s world our faith in leaders is being tested. The Edelman Trust Barometer has revealed trust in business leaders is at an historic low: in 2013 only 18% of respondents said they trust business leaders to tell the truth. This is not merely a function of the global economic crisis.  The complexity, transparency, speed and connectivity of today’s world have made the task of leadership much more exacting and the scrutiny far less forgiving.

Diminished trust

The cost of these changes has been a loss of trust in business leaders. This is not just an issue of sentiment. It has significant economic implications. Companies in Fortune’s ‘Top 100 Companies to Work For’ list, essentially a trust ranking, consistently out-perform the market.

We also know trust is highly correlated with productivity and innovation. Employees in high trust environments are more creative and take more risks. And high trust organizations enjoy greater loyalty and lower employee turnover. In a talent constrained world this has critical economic implications. 

The question is: what can we do about it? The answer, I believe, is how we think about leadership. Historically many business leaders relied on positional power to exercise authority. They also had a control of information that was a source of power. And frankly, stakeholders had less choice.

These fundamental parameters no longer hold water. The real time public scrutiny of leaders, the mobility of talent, the increased competition in all sectors, and the changing views on the meaning of work and the purpose of business, have created new expectations - and new demands on leaders.

Some leaders are already responding to this new world. Paul Polman, the CEO of Unilever, is a good example. In a recent essay for Egon Zehnder’s magazine, psychologist Daniel Goleman describes Polman as a leader whose new approach to addressing sustainability concerns is inspiring trust from consumers and employees alike.

Changing expectations

Egon Zehnder’s evolving view of leadership reflects these changes. When I joined our firm 25 years ago, we believed past behaviors were the best predictor of leadership potential. We don’t think that any more. We now focus on who the person is before we consider what they have done.

A large part of our global practice is identifying future leaders. When we evaluate leadership potential today our first assessment examines the individual’s personal motives. To be a leader we believe you must be motivated by a deep desire to have a positive impact on others. Without that you will simply not inspire the trust of followers.

We then look at identity. We have found in our assessments of thousands of senior executives that the most successful leaders saw themselves as leaders, and indeed acted as leaders, long before they were appointed to leadership roles. In other words, believing you are a leader is key to becoming a leader.

Then we look for particular leadership character traits especially curiosity, resilience and determination, the ability to derive insights in a complex, changing environment, and the ability to engage and positively influence others. These are the essential character traits that we have found in our executive appraisals that all successful leaders share.

It is only then, after we have looked at motivation, identity and leadership character traits that we focus on the ‘hard’ elements like skills, competencies and industry knowledge. These hard things are of course essential - but not sufficient to be an inspiring, trusted business leader.

Character is key

At its core, effective business leadership is first and foremost about character. This has significant implications for companies endeavouring to identify and develop their own future leaders.

The old model for leadership development no longer works. Companies need to be more creative, more daring, and more personal when it comes to knowing, assessing and developing their leaders and building a strong future leadership pipeline.

Identifying individuals with the motivation, the identity and the character traits of leaders is the critical first step. Ensuring those individuals have the competencies, skills and industry knowledge follow. If we don’t get this right, we will simply fail to inspire the trust of stakeholders – and that is not an option.

- Damien O’Brien is chairman and CEO of international executive search firm Egon Zehnder

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