Leadership vs Management

Leadership vs. Management

• Management emphasizes planning, organizing, and executing processes for efficient day-to-day operations
• Leadership focuses on setting direction, inspiring people, and guiding change
• "Management is doing things right; leadership is doing the right things" - Peter Drucker
• Directors, especially the Chair and CEO, need to exemplify leadership at the board level

Key Distinctions Between Leaders and Managers

• Leaders articulate a compelling vision for the organization's future
• Managers break the vision into concrete targets and plans
• Leadership shapes a vision for the company’s long-term success and culture at board level
• Leaders inspire and influence through motivation, teamwork, and communication
• Managers control and administer by compliance with processes and problem-solving routine issues
• Leaders focus on change,embracing it and rallying others
• Managers focus on stability,minimizing disruptions and maintaining performance

Skill Set for Directors

• Effective directors need both leadership and management skills
• Acumen is needed to for leaders to understand the business and processes to make credible decisions
• Leadership is needed to manage at a high level,or you’ll miss long-term opportunities and demotivate people

Leadership Styles and Theories

• Many leadership styles and theories should be known by directors when evaluating CEOs or shaping board culture
• Autocratic leaders make unilateral decisions, useful in crisis but potentially demotivating
• Democratic leaders seek team input and build consensus, increasing buy-in but slowing decision-making
• Chairs should avoid being autocratic but also decisive when urgency is needed

Laissez-faire Leadership

• Hands-off approach where the leader gives freedom to the team
• At board level a chair may allow the CEO to run unchecked or doesn't assert structure in meetings
• This may lead to a lack of direction
• Boards need to be actively guiding and monitoring rather than laissez-faire

Transactional vs. Transformational Leadership

• Transactional leaders focus on exchanges, rewarding performance and punishing failure to meet standards
• Transactional leaders manage by objectives and incentives and set CEO KPIs and pay
• Transformational leaders inspire and engage people's values and creativity to elevate the organization
• Boards with transformational leadership encourage new visions, motivate management beyond pay, and foster innovation
• Transformational leadership is needed when a company must reinvent itself or undergo significant cultural change

Situational Leadership (Hersey-Blanchard)

• Effective leaders adapt their style to the followers' maturity and competence
• Directors may need to be more directive with new or underperforming CEOs
• Experienced CEOs may need more autonomy
• New CEOs may need coaching from directors in a mentoring role
• Experienced CEOs may need support and occasional course correction

Other Leadership Styles

• Servant leadership prioritizes the team and organization's needs over power
• Servant leadership means prioritizing the organization's values and people
• Ensuring every board member and executive member can contribute is key
• Emotional Intelligence (EI) is vital for effective leadership
• EI includes self-awareness, self-regulation, empathy, motivation, and social skills
• Self-aware directors recognize their biases or emotions
• Empathetic leaders understand stakeholder perspectives, helping them in sensitive situations

Board Level

• Different styles can help boards evaluate CEOs, shape their leadership approach, and plan for succession
• Discussions often revolve around needing a "transformational leader" or a "transactional executor"

The Chair's Leadership

• A pivotal leadership position that leads meetings with a collaborative tone
• Good Chairs should ensure debates are rigorous and collegial
• Good Chairs should guide the board to a decision, draws out quieter members, and synthesizes viewpoints
• Mentors the CEO and provides feedback
• The chair must able to have tough conversations if the CEO isn't hitting targets
• The Chair represents the board to shareholders by leading at the AGM or in crisis communications
• Champions good governance and ensures proper process
• Sets ethical tone with the CEO; strong chairs intervene in unethical practices

Leadership by All Directors

• Committee Chairs lead parts of governance by ensuring their committees address issues effectively and report back
• Non-Executive Directors lead by example by thinking independently and speaking up
• Moral courage by objecting dubious decisions is key
• Executive Directors align the board with operational realities and bring board guidance back to the company
• The CEO being both a director and operational leader makes them a conduit
• The CEO execute the strategy and leads upward with vision and accountability

The Senior Independent Director (SID)

• The SID leads when the Chair is conflicted or underperforming
• Gathers board members and addresses concerns about the Chair
• Steps in temporarily during emergency succession issues, showing leadership agility

Tone at the Top

• Directors set tone which influences company culture

Crisis Leadership

• Crisis Leadership is when the board steps up during a crisis e.g. major scandal, hostile takeover, sudden CEO death
• Thought through crisis roles are needed e.g. succession plans and crisis-handling
• Handle it calmly

Emotional Intelligence and Self-Awareness

• It's vital, especially at board level where relationships and judgement are key
• Requires strength, weaknesses, triggers, and biases
• Self-aware directors are less likely to dominate discussions and more likely to ask questions

Self-Regulation

• It's important to keep your cool and avoid ethical relapses
• Ensure integrity is kept in check

Motivation

• Values and goals are key
• It can infect others
• You won't just be collecting a fee, but supporting management by showing genuine commitment

Empathy

• It's critical of understanding other's perspectives
• An empathetic director ensures those considerations are weight and is important when making decisions

Social Skills

• Communication, conflict resolution, and team building
• Requires forging consensus among strong-willed individuals
• Skilled directors find common ground and network externally

Self Awareness and EI

• Also extend to understanding group dynamics
• Boards are a team
• Directors conscious of dynamics
• EL-savvy chair or SID might mediate to resolve conflict and keep cohesive board

Cultivate EI

• 360 degree reviews and feedback
• Coaching improving leadership effectiveness at board-level

Building and Sustaining High Performing Teams

• Boards need to work together and influence executives performance

The Board as a Team

• High-performing boards have trust among members and gives a valuable perspective
• Boards might have dinners or retreats
• Diversity and inclusion boards can perform better and increase range of perspectives
• Diverse views are supported by Chairs or SIDs which encourage minority to speak
• There are clear roles and expectations for board member
• Clarity avoids stepping on toes
• Feedback and continuous improvement occurs with board evaluations
• Can adjust the meeting formats

Groupthink

• Cohesion vs. groupthink can be combatted
• Devil's advocacy
• Praising critical thinking can help the team

Leading the Executive Team

• Indirectly setting it up for success by hiring the right CEO
• The Board often insists on succession planning and talent development for top management
• Setting clear expectations for board and the CEO to provide

Expectations

• Setting and balancing it with fairness can help the organisation maintain a culture
• High pressure has unethical consequences
• By having recognition the team has good performance
• Shows leadership

Team Development Stages (Tuckman's model)

• Forming
• Storming
• Norming
• Performing

Organisational Culture

Ethical Leadership

• Directors impact organizational culture
• shared values, beliefs, and norms
• the Board initiate or define values
• "cutomer first" examples will this impact customer service"

Ethics and Culture

• Ethical leadership at board level means not just preventing scandal, but proactively cultivating a value-driven culture
• Ethics and Culture come from the top e.g. decision making
• How it handles ethical dilemmas

Stakeholder Consideration

• Consider stakeholders when making decisions

Social Resposibility and ESG

• Ethical leadership extends to larger societal challenges
• BP brand now as energy company
• Setting climate targets
• ESG into discussion is ethical

Ethical Leadership Example – Indra Nooyi at PepsiCo

• Focus on talent
• Endorse a purpose strategy

Crisis Leadership Example - Tylenool

• Example of good crisis leadership

Uber leadership failure

• Uber had had leadership failure under Kalanick
• Sexism allegations, regulatory fights
• He resigned

Tesco leadership

• Post scandal Tesco brought in new leadership
• Focusing on trust

The 30% club

• Improve geneder diversity

A Director’s Self-Awareness

• A financial person realised they intimidate others so change behaviour to create more inclusivity
• Board improves because they can now contribute and points are still made
• This leads to the boardroom team can provide good leadership
• This is a micro-level example of applying El and self-awareness to become a better leader in the boardroom.