Effective Leadership

The best way for a leadership to demonstrate that it values diversity is by being diverse itself.  This sends a strong message to colleagues and also enhances the performance of that team and hence of the organisation.  Research suggests that organisations run by men and women together will perform better than those run by men or women alone. There is significant evidence of a strong positive relationship between the representation of women on boards and financial performance.  

• A study of female directors in the FTSE 100 shows that those with female directors show an average return on equity (ROE) of 13.8% compared with 9.9% for those with all male boards. [1]

• In the US a study by Catalyst of 353 Fortune 500 companies revealed that within each business sector, the companies in the top 25% when ranked for gender in the top team achieved a higher average ROE than those in the bottom 25%[2]

• A study of over 1000 senior managers and executives by the American Association of Management concludes that a mixture of genders, ethnic backgrounds, and ages in senior management consistently correlates to superior corporate performance, (measured as annual sales, gross revenues, market share, shareholder value, net operating profit, worker productivity, and total assets). [3]

These studies underscore a fundamental principle: strong diversity strategies are the sign of a well managed organisation.  Organisations with successful diversity strategies are companies that have developed successful strategies to meet other challenges as well.  The ability to develop these strategies is inextricably linked with the ability to leverage the benefits of their diverse workforce. 

Unfortunately too few UK organisations benefit from diverse leadership:

• Only 77 of FTSE 100 companies have female directors.
• Only 13 of these have female executive directors, totalling 3.8% of all executive directorships.
• Only 70 women sit on FTSE 100 senior/group executive committees, compared with 528 men.
• In the public sector in 2005, 23.9% of Board-level equivalent posts in the Civil Service were filled by women (compared to only 3.7% of executive directors on the boards of FTSE 100 companies.)[4]

“Transactional” and “transformational” leadership

Much academic time has been spent investigating leadership’s styles.[5]  Over the last decade leadership studies have contrasted transactional with transformational leadership, the latter being generally considered more effective.  Transformational leaders are admired and trusted, they inspire and stimulate those around them acting as role models and encouraging followers to challenge assumptions and innovate. Transactional leaders on the other hand are limited to rewarding and punishing appropriate and inappropriate behaviour.  A number of academic studies have shown that women in leadership positions are equally if not more likely than men to display transformational qualities

• A study of anonymous 360 degree feedback found that women were rated by their male and female direct reports as displaying key aspects of transformational leadership more frequently than men. [6]
• In a meta-analysis of 45 studies of leadership styles, there was wide agreement that female leaders are more transformational than male. [7]

A model for UK leadership

In a study of 4000 men and women in the public and private sectors, Beverly Alimo-Metcalfe Professor of Leadership Studies at the University of Leeds [8] argues for a specifically UK based model of leadership which rates concern for others well being and development as the most highly rated leadership quality and is more complex than the US model which rates vision and charisma most highly.  In this study, great leaders are those who engage their followers as partners, empower others to lead create environments that are conducive to creative thinking and are sensitive to the needs of all stakeholders. Alimo-Metcalfe says that this model of leadership is essentially more feminine than existing models and that her research shows that “a more feminine model is desired at all levels of the organisation”

Balanced leadership

A study 1500 women leaders by Carlotta Tyler calls for a balanced view of leadership  combining the best of women’s and men’s models of leadership to create a new paradigm. She argues that the male approach; a  linear progression from conception to completion where each step is deliberate and quantifiable and the focus is on outcome complements the “spiral” female approach; a circuitous route focusing on attracting interest and involvement, sharing ideas and creating loose collaborative networks. [9]

Leaders in high performing organisations

Research by the Work Foundation into high Performing Organisations[10] identified openness, visibility and accessibility as characteristics of the prevailing leadership and management style in high performing businesses.  In fact more apparent than the ‘transactional’ or ‘transformational’ behavioural styles  was a general lack of hierarchy, accompanied by a strong focus to give people access to the resources, information and technology they needed to get the job done effectively.  Leaders in these firms appear to set high standards and expectations of everyone around them but, at the same time, are aware of their position as role models.