What differentiates one leader from others? Many people would conclude that a leader needs to be great at everything and that seems like an insurmountable task. However, research shows that leaders who were very effective at just three competencies, where 16 in total were evaluated, were rated overall at the 81st percentile.
After studying the difference between good and great leaders, it can be concluded that in the lion’s share of cases, great leaders do a few things well. The research also revealed that some competencies had a substantial impact on overall leadership effectiveness while others had almost none.
From the research, Zenger Folkman generated Extraordinary Leader 360, a unique dataset that helps to understand some key leadership competencies for finance leaders. Leadership effectiveness data was gathered on 125 leaders who were considered potential candidates for the top job in the finance function. These candidates were from approximately 100 different Fortune 500 companies in diverse industries and locations
While the majority of these leaders were located in North America, most of them represented global organizations. On average each leader gathered feedback from 11 respondents, including their manager, peers, direct reports and others, along with their own self-assessment.
Comparing the results from these 125 leaders to Zenger Folkman’s global database of 35,000 leaders, this group was at the 58th percentile, with 31 percent of these leaders rated in the top quartile, 9 percent rated in the bottom quartile and 15 percent in the top 10 percent. This group was, obviously, clearly above average.
Which Leadership Capabilities Most Separate ‘Average’ From ‘Great?’
What does it take for financial leaders to really differentiate themselves? To understand this, results were compared for financial leaders who were below the 50th percentile to those who were at the top 10 percent of this group. The analysis showed significant differences on all survey items but by looking at the top 15 items, six key characteristics were identified that really made the top leaders stand out from the pack
1. Inspires and Motivates Others
In the study, raters were asked to indicate which of 16 leadership competencies were most important for the person being rated to do well to be successful in their current job. The competency selected most frequently was “Inspires and Motivates Others.” It was especially high on the list of the direct reports. However, this competency is rated as the one that is done least well. Again, it is the most important and at the same time, done the least well. Most leaders are unclear about what they can do to be inspiring. Many leaders assume that inspiration is an inborn trait or a natural ability and if they don’t have it they cannot develop it. Studying leaders who are highly effective at inspiring others reveals quite the opposite
This is a skill that can be developed. One technique for inspiring and motivating a team is for the leader to frequently convey his or her own passion and commitment about the work he or she does. Emotions are extremely contagious.
The tone of the leader’s voice and the expression on their face communicate far more than the words spoken. The leader himself or herself is the strongest force for creating high levels of engagement and commitment within his or her people
2. Communicates Vision and Direction
Research with new mothers found that a few months after having a new baby, mothers often stop focusing on longterm goals. Every time they make a plan, their new baby needs their attention. It becomes very difficult to accomplish any goal or plan for anything beyond taking care of their new baby. As one mother stated, “My long-term goal every day is to take a shower.”
The finance function — or any deadline- driven task — can have some very similar characteristics. A schedule consisting of a steady stream of transactions and reports can create an overwhelming focus on the immediate and urgent, while everything else is put on a back burner.
Finance leaders who keep their teams focused on long-term strategy and goals and objectives help others to understand the contribution they are making to the long-term health of the organization. This in turn builds increased engagement. One technique for clarifying the vision and direction is to frequently invite team members to present their view of how the group contributes to the important strategic initiatives of the firm. Make sure each person understands the impact they can have on the overall success of the organization.
3. Deals with the Outside World
It is easy to get so caught up in the internal workings of a company that leaders forget to look outside the organization and recognize trends and changes. Data consistently shows that the most successful leaders are an antenna for the organization, bringing in relevant information that benefited the group. These leaders help people understand how meeting customer needs are central to the mission and goals of the organization.
The outside world for any team or work group includes other groups and departments in the organization. Understanding the issues and concerns of other groups can help departments create positive synergy between them. If the leader travels and meets people from other organizations, she should bring important information back to her own team members. If the leader reads important information about competitors or the industry, he should bring this back to his group, too
4. Sets Stretch Goals
Some leaders assume that in order to have direct reports with high levels of engagement, they must be protected from challenges that are too demanding. Meanwhile, data reveals quite the opposite.
Leaders who encourage their team members to achieve high standards and difficult objectives tend to have more engaged, satisfied and committed employees.What engages employees is not doing less, it is doing more. People want to make a difference, they want to help others, they want to do a great job; and when that happens, they love their work.
Consider doing the following with the team: Extraordinary leaders ask team members to raise their bar. When U.S. President John Kennedy announced the goal to land a man safely on the moon within the decade, everyone recognized that as a stretch goal. The technology did not exist. It was unlike anything that the space agencies had done before. But the challenge was met.
There is great power in a dramatic, challenging goal. It unites people and evokes a level of hard work and creativity that does not occur otherwise. Effective leaders learn the power that stretch goals have when properly introduced and supported.
5. Champions Change
Many people in finance become excellent at executing processes but find themselves challenged and even threatened at the prospect of changing processes. The best leaders are willing to become a champion for new projects or programs, and presenting the opportunity so that others support them. They also developed the skill of marketing projects, programs or products.
Though sometimes finance leaders may say in frustration: “I am in finance, not sales or marketing,” having the ability to introduce new processes and get others to embrace and accept the change is an important skill that can help leaders succeed. Here is one thing every leader can do: encourage everyone on your team to propose changes before an external force makes you act. Ask the team for their ideas about what needs changing and how that can best happen.
6. Encourages Collaboration
Organizations are complex. Many people with different roles and responsibilities need to work in a coordinated fashion in order to achieve success. When sales, marketing, manufacturing, human resources, legal and finance work together flawlessly, then organizations succeed. When any piece of the collaboration chain fails to function effectively, the entire process looks ineffective. When collaboration fails there is a tendency for each group to point to the other groups as the source of the problem. Leaders who think of their group as an independent entity in competition with everyone else are themselves a significant part of the problem. Leaders who know how to collaborate and look for common ground with other groups have team members who are more engaged and satisfied.
Here is one step to take in the coming weeks: create networking opportunities; initiate business lunches with peers; invite others to make presentations at staff meetings or to merely come in to answer questions; develop and maintain effective working relationships with people outside the immediate work group and initiate discussions with colleagues regarding ways the teams could work together more effectively. Having a positive relationship is critical in order for groups to collaborate. Leadership Challenge for Financial Executives.
This year, select one of the six high leverage leadership behaviors that can be built into a profound strength. Select the one that would have a great deal of positive impact in your current job and where you have passion to improve. Using the development suggestions at the end of each section, along with original ideas; write a daily goal and place that goal on your desk or monitor so that you will see it every day. Share the goal with your manager and ask for his or her advice on what specific things to do to build a strength in that area.
Research has shown that after engaging in such leadership development activities described above individuals will be surprised with the impact they can have on their personal effectiveness and on the results of their team.
Jack Zenger, co-founder and CEO of Zenger Folkman, a professional services firm providing consulting and leadership development programs, is considered a world expert in the field of leadership development. Joseph Folkman, Ph.D., the firm’s president and cofounder, is an authority on assessment change and as one of the nation’s renowned psychometricians, focuses on survey research and change management. Zenger and Folkman are coauthors of How To Be Exceptional: Drive Leadership Success By Magnifying Your Strengths (McGraw-Hill, 2012).
(This story first appeared in the January/February 2013 Financial Executive magazine)