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Leading from the front

Leading from the front

Despite an ever-expanding role, a few simple qualities can still ensure a chief executive's success.

Deloitte Australia's chief executive for the past five years, Giam Swiegers, is familiar with most of the theories about essential qualities of successful corporate leadership. But they are not for him. "Leadership is more practical than abstract," Swiegers says. "My interest has always been to understand what leaders do to produce positive outcomes and at the end of the day it's the really simple things that work."

That is why Swiegers can unself-consciously avow what some may consider to be a management cliché: successful leaders are good with people. "Chief executives may possess a variety of attributes, but if they're not good with people, that's going to be a problem. If you go back the last 20 or 30 years, successful leaders have always been good with people."

Capturing the essence of corporate leadership is a well worn staple of management scholarship and how-to authors. But it has taken on a sense of urgency as the chief executive's job becomes more onerous. The managing director of management consultant Hay Group Pacific, Richard Hardwick, says the chief executive role is evolving in response to new competitive pressures.

The chief executive's agenda, he says, contains a dizzying group of priorities: Achieving growth, managing costs, getting closer to customers, expanding the sources of leadership, managing relationships with external stakeholders, creating a culture for growth and innovation, adopting a global focus, identifying and managing talent, and ensuring greater accountability at executive and management level.

"The demands of the chief executive role are becoming too complex for any one individual - no matter how talented," Hardwick says.

At Deloitte, Swiegers is no stranger to leadership, although this is his first chief executive role. Previously he was chief operating officer of Deloitte Australia, and before that a managing partner for Deloitte in Brisbane and Pretoria in South Africa. In those roles, and since becoming chief executive, he has satisfied himself that there are two keys to successful leadership: producing positive outcomes and the ability to get people to work towards a common goal.

This simple formula was the basis for the not-so-simple growth strategy he introduced at Deloitte in 2005: cluster-based organisation. Determined to increase growth across the organisation by unlocking "pockets of opportunity", Swiegers divided the firm into discrete business units, or clusters, defined by geography and service line. The number of clusters has grown from 44 in 2005 to 54 today, each comprising 50 to 100 people. Each cluster has its own leadership - led by partners of the firm - and performance objectives. Cluster leaders have greater autonomy in pursuing agreed objectives, which Swiegers follows using standardised performance indicators.

"I've always believed in the power of small communities. Small groups, with their own leadership, are excited about what they're doing because they feel a sense of ownership," he says.

The strategy seems to be paying off. Since 2005, the number of partners has risen from 241 to 398 and revenue has increased from $482 million to an estimated $765 million this year. Employee numbers have also grown from 2800 in 2005 to 4500 now.

Swiegers says the addition of new partners to push the cluster-based growth has enhanced Deloitte's leadership capacity. "There are a lot of good leaders in large organisations - you just have to find them and develop them. Given the right environment, they have displayed outstanding leadership qualities," he says.

A former partner of management consultant McKinsey & Co, Mehrdad Baghai, who is managing director of his own firm, Alchemy Growth Partners, says sustaining growth is a critical problem facing the chief executives of large companies, particularly those with maturing businesses. Baghai warns there are many risks associated with an ageing business: innovation starts to slow, returns gradually decline, and executives lose touch with customer needs, new competitors and new business models.

Rather than relying on sheer size for growth, chief executives need to look deeper - at a "granular" level - to understand the causes of growth better. And they need to share the leadership load across the organisation.

Information technology has made it easier to break a business into its constituent parts in greater detail. Baghai calls this "creating islands of insight from oceans of data".

In this environment, the chief executive's role is to identify the sources of future growth, set a direction for the organisation, communicate strategies and direction for the business, and create the organisational architecture to achieve that growth. And in redesigning the structure of a company, a chief executive should be prepared to devolve accountability and authority to "a legion of leaders. A natural consequence of the granularity idea is that a chief executive must be capable of creating a team of leaders to drive that strategy," says Baghai, co-author of The Granularity of Growth, (McKinsey & Co, 2007). "It's a much more distributed leadership and the chief executive has to be comfortable with that."

Orica Mining Services chief executive Philippe Etienne says the days of "the heroic, larger than life" chief executive are numbered. At OMS, leadership is a shared responsibility. "Organisations are much more complex - operating in global markets, dealing with global regulatory environments and competitive complexities. At some point that level of complexity gets beyond even the super-human chief executive," he says. "To properly handle the complexity, you need to find a different way of managing the organisation, rather than just barking orders from the helm."

OMS, which supplies explosives and blasting systems to the mining, quarrying and construction industries from operations in 50 countries, is the jewel in the Orica crown. Last year it accounted for 56 per cent of Orica's $5.53 billion in revenue and 71 per cent of the group's earnings before interest and tax of $813 million.

Etienne emphasises that OMS is a global business, rather than a multinational business. "Being a multinational [company] is simply a statement of where you have offices; being global is a statement about how you choose to operate. Orica Mining Services operates across the globe, not just in individual countries," he says.

It's a distinction that has shaped his approach to the leadership of the company. He says the task of integrating a global business, with consistent service standards and uniform business practices across its operations, requires collective leadership.

Etienne's hand-picked leadership team reflects the company's global spread and its mandate to take a collective approach to decision-making on such issues as organisational performance, inter-regional transfer pricing, business processes, safety standards and strategies for growth.

The team comprises nine senior executives: four regional presidents as well as five global presidents with functional responsibilities in finance, marketing and technology, human resources, manufacturing and supply chain, and sustainability.

It is critical to the success of the leadership team that members share the chief executive's approach to collective decision-making. "There is a real clarity about what we believe can only be achieved as a united team," Etienne says. "When we consider where our growth is going to come from, for example, we come together as a group and provide collective leadership. We make collective decisions. The alternative is to have each region pursuing growth in its own context."

Etienne says assembling an effective leadership team has been "incredibly tough" because senior executives are often uncomfortable with collective decision-making. "It's taken years to get the right team together. In some cases people have had to leave because they just didn't get it, or just didn't operate that way. I can understand that. From school we're taught that it's individual performance that counts. So when I tell a senior executive, 'we're going to share all these decisions', for some it's not a natural state."

Hay Group's Hardwick agrees that managing an effective leadership team is not easy. However, he says that in an environment growing ever more complex, a strong leadership team, with collective capabilities and skills, is the best way of ensuring that a chief executive can lead with an organisation-wide perspective.

Hardwick identifies three keys to creating an effective leadership team: it needs to be a real team with real boundaries and interdependent tasks; it needs to have the right people (not necessarily all direct reports of the chief executive); and it needs a compelling direction and purpose.

Shareholders will play an important role in securing the demise of "lone-ranger" chief executives, he says. "Shareholders are increasingly interested in leadership teams. They need some confidence that there's a team of quality leaders below the chief executive."

That's a challenge Rohan Mead, managing director of insurance and financial services group Australian Unity, readily accepts. "As a chief executive, you've deliberately got to create a space and a culture that enables others to lead," he says.

Mead says diverse leadership provides a depth of thinking that improves the quality of decisions. "My own preference is for difference to be a strong ingredient [in the leadership team]. Whether it's character, education, background or experiences, it's increasingly important, particularly around an executive table, to have different modes of thinking represented.

"It's important that corporate cultures and structures don't smother the potential for conflicting discussion and debate around the leadership table."

The role of chief executives to develop internal leadership capabilities is keenly felt by Australian corporate leaders. Mead considers it a personal responsibility to provide his board with several "credible, prepared, seasoned" potential internal successors.

The chief executive of UBS Investment Bank Australasia, Brad Orgill, agrees. As well as a range of professional and leadership development programs, Orgill personally mentors six emerging leaders at UBS and encourages his executives to mentor talented candidates.

UBS, convinced that Australian business leaders will be required to have a global perspective, posts 3 to 5 per cent of Australian and New Zealand employees at overseas positions with the bank. For Orgill, it is about giving employees the opportunity to reach their potential as future leaders.

"Leaders can be created; they're not just born," he says. "It's the responsibility of the chief executive and board of directors that they give sufficient weight to succession planning and leadership development."

Qualities in demand

Watermark Search International executive chairman Nick Waterworth describes what a head-hunter looks for in a chief executive:

1. Integrity and honesty: Some 78 per cent of clients listed integrity as the number-one requirement on the specification in searches over the past 12 months.

2. Ability to motivate and engage others: Companies don't want dictators just giving orders; they want chief executives who can create a vision and encourage the leadership team to think.

3. Energy: Chief executives must cope with huge travel demands and flourish in a non-stop business environment. 4. Toughness and focus: Companies are looking for people who will not shy away from making difficult decisions.

5. Cultural sensitivity: In Australia and in overseas operations, chief executives are dealing with a plethora of different cultures.

© Fairfax Business Media

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