Earning Isn’t Leading

Written by Allison Shirreffs Sunday, November 01 2009

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As experts picked through the rubble of last year’s financial crisis, they found evidence of several culprits, including over-leveraged institutions and a society willing to spend more money than it made. They also discovered a dearth of good, solid leadership.

“There was a total abdication of responsibility and lack of accountability,” explains John Baldoni, leadership consultant and coach, and author of the book, Lead by Example: 50 Ways Great Leaders Inspire Results. “Leaders need to put the organization first, look around corners and see what’s coming next, and make the hard, tough choices that need making.”

But the more money the leaders on Wall Street made, the more they were revered and compensated — the average CEO’s pay is approximately 300 times the average worker’s pay. As Joanne Ciulla, professor in leadership and ethics at the Jepson School of Leadership Studies, University of Richmond, wrote recently in The Washington Post, “Earning isn’t leading.”

According to the global Center for Creative Leadership’s (CCL) “What’s Next?” survey, most organizations reward their employees based almost entirely on making the numbers (33 percent) and on individual performance (24 percent). While rewarding leaders for excelling in categories like “developing others” and “long-term objectives” has gathered momentum since the organization last conducted the survey, CCL researchers deem current levels less than optimal. “It is surprising that given the high level of our sample,” states the report, “developing others and long-term objectives were not part of reward structures.”

A subsequent CCL study, “The Leadership Gap,” identified seven competencies as critical for success, including, and in order of importance: leading people, strategic planning, managing change, and inspiring commitment. The study also determined that the key gaps for leaders are those exact competencies.

And while there are methods to measure such competencies, “It’s much easier to measure how much money you can bring in,” notes Daphne Timmons, psychologist and founder, Timmons Leadership Consulting, Charlotte, N.C.