Sudhir Chadalavada

Leadership 3.0: Next Practices to inspire exceptional leadership and organizational effectiveness
Many well-meaning and well intentioned professionals and people from all walks of life are grappling with some critical questions. I certainly have.

Where are all the good leaders? Where are we headed as a country and world? Is there something wrong with our economic model? Is our capitalist economic model perfect the way it is or does it need evolving and tweaking? Is our political system in Washington broken? How can we come out of the socioeconomic crisis and political partisanship and gridlock? What would enlightened leadership look like at this time? Is government the problem or the solution? How well are our business organizations being run? Can business organizations and business leadership be models for good governance or the way we run our business organizations also contribute to the crisis we are facing?

I am afraid I do not agree with the general diagnosis and conclusions which sound something like this:

  • Things used to be a lot better. We are getting more violent and greedy, less tolerant, and our moral and ethical values have degraded.
  • Businesses, corporations and their leaders are selfish and greedy. We cannot trust them.
  • Politicians cannot be trusted either, so let’s vote out the incumbents and bring in fresh blood.

The situation in reality is a lot more complex and not as simplistic or black and white. Sure we are facing serious challenges which if not resolved could have catastrophic consequences. At the same time, this is a great opportunity, perhaps the best in human history, to solve the unresolved challenges that have been around for a very long time. I also strongly believe that this is the best time to run a business organization that is in tune with human nature. Following is my take:

  • We have a tendency to selectively pick information and glorify the past. Most socioeconomic indicators such as employee productivity, health and wellness, social inclusiveness and harmony, economic wealth creation, etc. suggest that we are much better off now than ever before.
  • Even in the political arena, the divisiveness and ideological differences that we are witnessing is not new. It is the culmination of a trend that has always been there. In fact our wise founding fathers understood this aspect of human nature very well and setup the two-party system with appropriate checks and balances.
  • What is this aspect of human nature? It is the necessity to choose either or solutions, seeing any issue or challenge as black or white and right or wrong. The good news is that this happens only in early stages of mental and emotional development. As we mature and become wiser (this is not dependent on age alone, old age and experience is no guarantee for wisdom. In fact many youngsters today are a lot more inclusive and thrive a lot better in diversity), we see the complexity of the challenge more clearly and do not opt for simplistic either or solutions.
  • For example, the financial crisis and social tensions are neither created nor can be fully solved by a democrat or a republican, a liberal or a conservative. We are at a stage in our history where this reality is dawning upon a larger percentage of our country’s population than ever before. Typically this happens because of the convergence of two forces: (1) existing systems begin to crack and show signs of failing (2) we the people (the collective consciousness) get more evolved and are unwilling to put up with incomplete either or solutions.
  • So the problem is not merely a selfish politician or a greedy banker or businessman, it is the collective will of the people. In an advanced democratic society like ours, we cannot play victim and blame “them” for our problems. Our political and business leaders are a true reflection of who we are collectively as a society. We have politicians and business leaders (1) who have high integrity, strong morals and ethics, (2) others who are in the middle of the road and (3) a few others who are much weaker. Now, if we are honest to ourselves, we can see the same behavior pattern in the families, societies and organizations that we are a part of.

In summary: We are facing a serious crisis today because of the culmination of bad behavior over time. This bad behavior is becoming more obvious now because of the increased transparency and technological tools. We are waking up and are unwilling to put up with questionable morals and ethics in our business, social and political organizations and its leadership.

Proposed Solution
If this is my take on the diagnosis of the problem, what do I propose is the solution? Let me answer it in the context of a business organization. We are witnessing a similar trend in business: trust in corporations and executive leadership is at an all-time low and so is the level of employee engagement.

According to a 2006 Gallup Poll for honesty and ethics in 21 job categories; business executives ranked 16th after building contractors, lawyers, U.S. Senators; and just above telemarketers, car salespeople, advertising practitioners, congress members & stockbrokers. We can only imagine how business executives rate in the current economic environment of the “great recession.” A recent Gallup survey puts the percentage of truly “engaged” employees in the US at 33%. A majority of workers, 49%, fall into the “not engaged” category, while 18% are “actively disengaged.” Less than 25% work at full potential, 50% do what is necessary to keep their jobs.

We made great strides in employee and organizational productivity over the past several years. Much has been said, written and implemented in improving the quality of products, services, strategy and execution. Opening up the markets and creating healthy competition certainly helped to achieve significant productivity improvements. In short democracy, empowerment and capitalism were the methods employed by business leaders to achieve the success that we have seen so far.

While we witnessed some high profile legal, moral and ethical lapses on the part of a few global business leaders, I do not believe that this indicates a worsening of corporate governance and human values. I do not subscribe to the viewpoint that there has been a degradation of ethics and moral values in the society in general and in business in particular. Instead our awareness has increased and so has the desire for enlightened living and enlightened leadership.

Our tolerance for misdemeanors has gone down and our expectation from business leadership is much higher than it used to be. It is no longer sufficient for business leadership to demonstrate financial success alone. Solid business performance, financial success and enhancing shareholder value are minimum requirements. The new expectation is to achieve these benchmarks by demonstrating high moral and ethical values without compromising on honesty and integrity.

Leaders of business organizations have to become role models for running their operations the way we expect our country to be run. At a microcosmic level, a business organization has the same issues to deal with (the question underneath represents a macro issue for the nation):

1. How is income, revenue, profitability?
a. How is the economy?
2. How engaged and optimistic are the employees and stakeholders?
a. How hopeful are the people in the direction of the country?
3. How fair and inclusive is the ownership structure and compensation and reward system in the
a. What do you think of the tax structure in the country?
4. Do you trust the company’s (country’s) leadership with professional competence and personal

Most businesses and the leadership teams don’t face the tough questions and feedback from their employees and stakeholders on leadership, integrity, fairness, inclusiveness, etc. If they were to take a poll, it wouldn’t look pretty. Can we afford not to? Can we leave that to the market forces, which are primarily focused on economic indicators?

Does it make sense for smart, educated, hardworking professionals in business organizations to have as less power as they do in evaluating and selecting their leadership team, and in determining the strategic direction of the company? This may have been okay for the command and control model of the industrial age; does it have any relevance now? Can we truly unleash the full potential of an organization and inspire the employees and stakeholders to give their very best and be fully engaged without giving this degree of freedom and respect to their opinions?

When even the poor and uneducated citizens of a democratic country are given the right to select their representatives in the government, isn’t it odd to see how little the opinion of employees matters to the leadership of a business organization?
Well, cutting edge leaders and organizations are grappling with this issue. Following are two examples of companies that are accelerating this process of engaging employees and creating reverse accountability.

HCL (Hindustan Computers Limited) – This is a $4 Billion Indian IT Services company with over 80,000 employees worldwide.

  • Every employee rates their boss and their boss’ boss and the results are published online. The CEO Vineet Nayar shares the results of his 3600 evaluation with everyone in the company.
  • Company strategy is distributed online and over 8000 people collaborate to review and update.
  • Employees fill out a ticket if their issues are not resolved by their manager or internal service groups such as HR, finance, etc. It will be escalated further if not dealt within 24 hours and only the originator can close the ticket.

Semco, SA – A Brazilian ship-parts company with 3,000 employees and over $200 million in annual revenue.

  • Company books are open to all employees with a transparent profit sharing plan.
  • Meetings are voluntary and vacation time compulsory. Employees can leave meetings anytime if they are not interested.
  • Employees suggest their own pay levels, assess performance of their bosses and are involved in the hiring decision of their managers.

These in my view are great examples of what’s “best for” business organizations. We have to let capitalism evolve to its highest natural state. While great progress has undoubtedly been made from the repressive public enterprises of the socialistic model, the management structure in many business organizations is still artificially stifled. Enlightened leadership and “full or natural” capitalism are synergistic – capitalism evolves to realize its highest potential by nurturing the highest expression of human nature. An organization run in this manner becomes a true role model. In this fully evolved capitalistic model, government and business don’t blame each other. They have to play by the same rules of enlightened leadership and governance.