Achieving Business Success
By Robert L. Bailey
Despite the huge amounts of money and time being invested in leadership training at both the university and corporate levels, I believe that leadership in America is getting worse, not better.
A panel of prominent businesses leaders recently disagreed with my position. "Let's ask the real experts," I said to the some 300 people in the room who were attending an all-day symposium on leadership. When asked if leadership in America is getting better or worse, some 70% of the audience said it is getting worse. Perhaps others would have raised their hands had their bosses not been in the room.
Audiences across the country to whom I speak – as well as my own experience in the corporate world – confirm my position. During a career, most employees will have more bad bosses than good bosses. And unfortunately the trend is worsening.
Three major factors in the American economy are contributing to poorer leadership. First is consolidation. Nearly every major industry in America is consolidating, and that has been the case throughout history whenever there is excess capacity and/or a healthy dose of complacency.
In the early 1920s some 2,000 companies manufactured automobiles, clearly excess capacity. And there was plenty of complacency. In 1921 the president of the Pierce Arrow Automobile Company was asked what changes he anticipated in the 1922 model year, and he said, "None, because we have built a perfect automobile." You may have noted that the parking lot this morning was not overflowing with Pierce Arrow automobiles.
That's the story in nearly every industry. In 1955 there were 355 wholesale drug distributors in the United States . Today three dominate the market with a 90% market share. Gasoline stations owned by six companies control 55% of the market. Three beer producers control 88% of the market. Ten supermarket chains have 51% of the market. The ten leading homebuilders will soon build some 40% of the homes in the United States .
Due to consolidation, companies become so large that it's more difficult to take a people-centered approach to leadership. Bureaucracy grows, communication becomes more difficult, and concern for people becomes secondary to good financial results.
When my former company became publicly owned in 1991, the investment bankers asked, "Which constituency will receive the highest priority – stockholders, agents, policyholders, or employees?" I answered, "There can be no priority treatment. The company cannot be successful without all four of the constituencies. Remove any one and it won't work. Their interests must be balanced."
The bankers didn't like my answer, but I believe it is true. They believed that profit is the only thing that matters and that financial success is supposed to occur mysteriously without regard to the employees, the agents, and the policyholders who make it happen.
Second, our global economy affects the quality of leadership in America . Many U.S. companies are owned by foreign financial organizations, just as U.S. financial groups own foreign companies. A company owned by a foreign financial organization very likely is looked at simply as an investment, nothing more. The owner is looking at its return on investment. When the return is not satisfactory, or an acceptable profit can be made by selling the company, it is sold, with no more thought to the interests of the constituencies served than you or I might give to the sale of a hundred shares of stock.
With such arrangements there tends to be too little concern for the people, their morale, job security, and opportunities for advancement. Little thought is given to the company's treatment of customers or the company's reputation in the community and the industry.
All this contributes to poorer leadership in American businesses because the focus is on quarterly results with little or no emphasis on the many other dimensions that contribute to great leadership – the dimensions that may negatively affect earnings over a quarter but that are essential to success over the longer term.
Third, I believe that the actions of the leaders most visible in today's news often adversely affect the quality of leadership in America . Who are those leaders? Politicians. Many politicians violate nearly every dimension of good leadership, especially during campaigns for reelection. Telling the truth doesn't seem to matter. The challenger second-guesses every decision of the incumbent with the benefit of 20/20 hindsight. Personal attacks fly in every direction.
Little happens in politics that a successful business organization would want to emulate. Yet this is what aspiring leaders see each day in newspapers and on TV. Great leaders go about their business of building people and businesses without fanfare. Leadership is about you, not me. In politics, it's me, me and me.
Still, as bad as the election process is, we have the best form of government in the world. Another one of life's miracles.
Are there exceptions to my contention that leadership in America is getting worse, not better? Certainly. There are many outstanding managers and many well-managed companies in America . But I believe strongly that the trend is moving in the wrong direction.
My purpose is to change that trend to a positive one. It all starts with a commitment to improve leadership skills – starting now.