The FINANCIAL — John Dalton, Director of the London School of PR, explains the nature of leaders in periods of transformation.
“Against the background of the current global recession, companies can only survive with a strong level of leadership. Those that fail will be the victims of weak leadership,” John Dalton, Director of the London School of Public Relations (LSPR) worldwide said in an interview with The FINANCIAL. Mr. Dalton underlines the types of characters that an employer should look for when hiring someone with leadership skills.
Last week Mr. Dalton and the London School of Public Relations organized a one day master-class that attracted more than 50 business professionals. “I think their response was positive, exciting, stimulated,” says Mr. Dalton.
Q. Your master-class focused on leadership, does it mean that your audience members should only be people holding top positions at work? If not, is it reasonable to encourage everyone to strive for leadership?
A. Not necessarily. My point was that leadership is not down to one person. There is a concept of managerial leadership. Leadership is a complex form of domination but it is not necessarily a continuous act. Anyone can demonstrate and show leadership skills. Can it be learned? To some extent yes. My point is that there are many aspects which can be learned and in order to learn you should understand first. The whole purpose of the seminar was to explore its parameters. I think that people got a clear idea and some of them responded to me after the seminar that they needed to go and think. For me that is very important. When someone tells me that, I understand that I have done my job properly.
Q. Let’s talk about the main topics that you touched on. You said that the collapse of the capital market has highlighted leadership problems in business and society, but in fact we don’t see any particular examples of this issue being discussed in companies. Do you think that leadership is interested in bringing this issue to the fore of the agenda?
A. When you are in a crisis, leadership becomes highlighted. A crisis highlights the weakness of the system and the weakness of the modern free market system. You cannot allow markets to regulate and target themselves. Despite the incredible, enormous successes of capital markets, they have shown the last two years to be fundamentally faulty. Now we require our leadership to bring us out of this mess. We are looking to politicians, to the business leaders, social commentators, to provide that leadership. There is debate. There is little new coming out. What the current market has highlighted is that there is a little crisis within the crisis, a little bit of a vacuum. People do not like a vacuum, so they have tried to fill it up. However the vacuum of the leadership crisis is not being filled up quick enough. There are very few new ideas. So that was my point, we need to sit down and think up more.
Q. Considering the recent financial crisis, can you tell us the main mistakes that are being made by the leaders of global companies, in U.S. businesses in particular?
A. It’s not down to individuals, it’s down to systems; for example, the banking system. It has shown the failure of systemic leadership controlling reasons. One of the main reasons was bonuses. The bonus culture that predominates in many western countries has shown to be dangerous. Because short term self interests is often expected of long-term nationality. That’s the first point. It’s very difficult to find one person and say, that’s your fault, or one leader and blame them: this crisis is the result of your policy and strategies. This is a systemic failure. People in the top may not even be aware that they are contributing to this failure. That is the point. People working inside get accustomed to the market system. You become part of it and you cannot see everything from the outside. If you ask any of the people from the banking system, from the Government, if they understand the risks involved in the complex securitizations, risks involved in the hedging and derivatives, the answer will be probably not. It was too mathematical, too complicated. We became a victim of our complexity. So, we can’t blame any individuals in this case, because the reason is the failure of the system. Now we need to look at the systems and leaders have to analyze the risks carefully and look at the long term, not just the short term.
Q. You say “developed counties are witnessing the transition from managerial to stakeholder capitalism, which necessitates the need for stakeholder management”. What kind of changes does this process imply?
A. Pluralism is the first step of changes to be made. A leader has to understand that he needs to engage many different groups and needs to engage them in a way which does not dismiss them. For example, if you are an oil company, you cannot just ignore stakeholders who hate you and you can’t just embrace transactional stakeholders. The whole point about stakeholder capitalism is that you have to engage with people. So look, you have a problem and have to collaborate and solve it together. Let’s discuss the example of McDonalds. It’s a brand which has increased its reputation to the maximum during the last ten years. And they have done collaboration work. McDonalds has worked with the central fund of America to remove the problems in relations with packaging. They worked with an NGO. They recognized the fact that millions of packages were thrown in the streets and that they don’t want to participate in the pollution of the environment. Later they started working together in order to protect the environment. It is stakeholder capitalism, you are looking to multiple stakeholder groups to solve problems. If you will not solve these problems then they do not go away. The NGO and such other organizations will have some kind of conflict wit you. The role of an NGO is to highlight issues which governments might not. There are about 20,000 international NGOs.
When you make a business, an NGO will probably come out in opposition to it or at the least, knock on the door and ask what’s going on. The whole point of stakeholder capitalism is to say: “OK I recognize that you may not agree with my business but my business has a right to exist so let’s try to collaborate to solve our problems”.
Q. What is the difference between global leadership and local?
A. Global leadership by its nature is much more visible, much more complex and much more political. Local leadership can also be highly political. The solutions are more simplistic, because you have fewer parties involved. But none the less, the core skills, the core competences will be the same. On a global level it’s down to one person. Internationally it’s about being part of a big team. On a local level, individuals come to the fore.
Q. You talked about the leadership skills of Barack Obama and Queen Elisabeth. You ‘criticized’ Gordon Brown and George Bush. What about Georgia’s President? Very often he is characterized by global media as a charismatic leader, other times as overly dramatic, what is your opinion?
A. I don’t know enough about President Saakashvili as an individual to comment. If he is described as a charismatic person then that is positive as I have heard it said on numerous occasions that it is an essential characteristic of transformational leadership. So if you have charisma then it can be very effective in bringing about transformation.
Q. You spoke about the leadership crisis, revealed changes in social character, fear of blame and isolation, cynicism, etc. these being challenges for new leadership. But are these issues applicable to Georgian businesses that are less globalized?
A. If you look up very large organizations, you can find lots of skills that they all have in common. In small organizations you have to understand local politics. For example if I had to come and work in Georgia as a leader on the short time basis of a company, I might face opposition. I might face several negative things, resulting in all that I wanted to do not being done. The simple reason for this is that I’m familiar with how local leadership on a small level requires you to understand the culture, to understand the surrounding conditions and understand what is acceptable and what is not acceptable.
You have to be realistic. You’re trying to challenge the existing status quo of the city or of the existing business culture too easily. On a local level things are very difficult. Fundamentally the leadership skills of at least ten or twelve conferences should be entirely applicable whether they’re looking at a company which has ten people or employs 50,000.
Q. What is the impact of weak leadership on a company’s image?
A. Weak leadership causes failure. Companies have realised that for their benefit they must not put up with weak leaders, especially against the background of the current economical crisis when the need for stronger leadership has become more important. Critical decisions need to be made in current economic plans. Things need to be digested and bad components removed from companies; decisions need to be made about what’s important, what’s not. Now, more than ever, you need strong leadership. In times of financial and economic crisis strong leadership is critical. Companies can only survive with a strong level of leadership. Those that will fail will be the victims of weak leadership.
Q. Who will rule global companies in the XXI century: Managers or Leaders? Tell us more about the difference between leaders and managers?
A. The difference between managers and leaders is artificial. A manager’s role is very current. They control the job, fix any problems in the present time. It is not necessary for managers to think three, four or six months ahead. They are dealing with efficient and effective views of the resources they have got. Meanwhile leadership is very much projected in to the future, looking more than months and even years ahead. It’s more abstract by its nature. It involves more assessments of the systemic risk, and involves looking after the whole organism.
A manager looks after an organ. So the brain is like a leader, looking after the whole body. The whole point about leadership is that you are responsible for the future, for protection to the survival of the whole organism. It’s a very difficult level of responsibility.
Q. How should you evaluate leaders when hiring them? (When company owners want to hire a new CEO, a leader instead of an Executive Manager)
A. Some leaders often don’t want to look for good leadership potential in the people they hire, because they are scared of being challenged. But if you are looking for good leadership potential, you have to look for an independence of thought; to look for people who are prepared to challenge you, in an appropriate way of course.
I think that leaders don’t want to employ people who are simply ‘Yes” people. I remember a story highlighting this. One person, a leader of a country, once started picking up saltcellars from the table and putting them into his pocket. One of the men close to him said: Mr. President, why are you stealing the saltcellars. Afterwards he told his people that he wondered which of the people close to him would be honest and brave enough to bring up the subject, in doing so to accuse him of stealing. That’s the point. People don’t want “Yes” people around them. I think employers have to look for curiosity. It is a critical element of leadership; never being entirely satisfied, always striving for more. Employers are always looking for people who can find solutions. You don’t want cynics; you want people who are critical. People who constantly want to learn, and who understand what they don’t know.
Q. Do the required skills of leadership change from time to time? What is the difference between leaders of the XX century and of today?
A. Fundamentally no, but there might be some important differences. One is the social capital issue. We have a skill of risk issue analysis because of the complexity. Another important issue is the stakeholder concept. Recognition that you are responsible for a wide range of groups and that you have harmonized relationships between people. A leader of the XXI century needs to confess that rank based leadership is dying out and that they need more collective network. Vision, hope, direction, controlling people’s faith – these are universal qualities of leaders that we have seen since the time of ancient Rome.
P.S. last week LSPR alumni were awarded with the international diplomas by John Dalton.
Written By Madona Gasanova
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