Management Summary
There are many leadership models. And they all suggest that leadership is constantly changing. I take the anti-thesis and say that the essence of effective leadership has remained unchanged for decades.
Leadership is effective when it permanently harmonises three central aspects: market & society, organisation and people and derives the key questions of the entrepreneurial focus of action from these aspects. In addition, five key qualities are needed to guide these actions:
- Trust
- Clarity
- Appreciation
- Decision-making power
- Space for participation & development
What makes effective leadership?
Leadership is effective when it permanently harmonises three central aspects of entrepreneurship: market & society, organisation and people.
Core elements of effective leadership in detail
What is the purpose of this model for you as a managing director? The model helps you to define the guidelines for your company management based on specific questions:
Market and society
- What problem(s) would you like to solve as a company with your product and/or service offering?
- What contribution do you want to make to social progress as a company?
Organisation
- How do you manage this in a value-adding and productive way?
- What processes, systems and structures do you need to be competitive?
People
- Which people help you to provide your services competitively in the long term?
- What expertise do you need inside and outside the company?
- What framework conditions do these people need so that they are happy to contribute their expertise and commitment in the long term?
What qualities characterise effective managers?
As part of our coaching and organisational development mandates, we work with a wide variety of leaders. The question we have asked ourselves in this context is: What characterises effective leaders who are able to continuously solve real problems together with their team in a productive and value-adding way and who can rely on committed employees who contribute all their expertise to this problem-solving?
Effective managers have five key qualities that they utilise depending on the situation and combine in a variety of ways:
- Trust
- Clarity
- Appreciation
- Decision-making power
- Space for participation & development
Let's look at these qualities in detail.
Characteristics of effective leaders
Building, giving and maintaining trust
Trust arises, according to Stephen M.R. Covey, when two aspects are connected: Expertise and character. Competence is characterised by quality and the results that are delivered. Character is defined by integrity and benevolent intent.
Trust is at the core of effective leadership. Without trust, leadership will not be effective. Because a lack of trust always results in more control and unproductive conflicts - both of which cost time, money and quality.
In order to establish and maintain a stable culture of trust, leaders are required to lead the way and remain the driving force. What does that mean?
It means that they have to give everything so that others can trust them. This includes, among other things:
- Self-confidenceFeel confidence in yourself and your own actions (self-confidence) and radiate it so that others recognise it
- Relationship trustgive others the benefit of the doubt and act congruently ("walk the talk")
- Organisational trust strengthen:
- Clarity of purpose and objectives
- Binding and transparent "rules of the game"
- Delegation
- Decision transparency
- Constructive error culture
- Clear and regular communication
- Sincere appreciation
Clarity
Clarity at different levels helps to provide security, reduce friction, increase productivity and reduce the potential for conflict. Where should clarity prevail everywhere?
- Clarity of purpose and objectivesWhat should be achieved when and where? We recommend formulating these goals SMART, i.e. specific, measurable, attractive, realistic and time-bound.
- Role clarity: Who contributes to the corporate vision and how? What expectations and competences are associated with the respective roles?
- Clarity about decision-making competencesIf decision-making competences are clearly defined and located where they are needed for productive work, companies gain speed.
- Clarity about decision-making processes: How are decisions made within the framework of the defined decision-making competencies? Who is heard? Who is actively involved in decision-making? What is the voting procedure for group processes? Who has a right of veto? Who is informed after the decision and how?
- Clear language: Clear language reduces misunderstandings and saves time. It also makes a more convincing impression.
Increase the decision-making competences of teams
Appreciation
Appreciating people, achievements and results sincerely, is another quality of effective leaders. Incidentally, this includes appreciation of oneself and implies a perception that is directed towards the positive rather than the negative.
At this point, I would like to return to the aspect of "benevolent intention", which Covey mentions in his trust model as part of character. The intention with which appreciation is expressed is crucial to how it works and whether it contributes to effective leadership.
Appreciation can take place with different intentions.
- to initiate criticism
- to receive counter-praise
- to get the other person to take an action that they actually reject
If you praise with benevolent intent, the focus of the praise is on the other person. The praise is unselfish and supports your effective leadership.
Of course, you can also express appreciation implicitly, e.g. by respecting the opinions or decisions of others - even a "no".
Listening and taking time to listen are also expressions of appreciation. Just like delegating responsibility or granting freedom. Involving others in decision-making processes can also be an expression of appreciation.
Decision-making strength and speed
Decision-making power is influenced by two factors: on the one hand, self-confidence and, on the other, the demand for perfection.. "Decisions we make have to be perfect or lead to the "perfect" result." This, dear leaders, is a misconception and paralyses every organisation.
If you are constantly balancing the three aspects of effective leadership, then you are constantly required to make decisions. Even if you are not one hundred per cent sure where this decision will lead and therefore there is a good chance that (in the first step) there will not be a perfect result.
To gain greater confidence in decision-making, six questions can help:
- What is the worst that can happen if the decision is inadequate?
- Can we live with these consequences?
- What can we do to correct the decision?
- When would we have to make this correction at the latest?
- What are the consequences if we make the decision too late?
- Can we live with these consequences?
Decisions are critical when they jeopardise people and companies or permanently destroy trust. All other decisions are worth making, even in the face of uncertainty, in order to take action and, if necessary, learn from the decisions made.
One way to further develop your decision-making skills is through our executive coaching. You can also use this to transform beliefs that undermine your decision-making strengths.
Space for participation & development
Creating space for participation and development goes hand in hand with making your own manager dispensable. This may sound paradoxical, but effective managers ensure that they are dispensable by supporting others in their development. They create a space in which every team or organisational member can be effective and develop.
This in turn requires a certain attitude: Effective managers see others as equal and responsible.
Space for participation and development can be created in various ways, e.g. by transferring (budget) responsibility and decisions, assigning new tasks, allowing employees to develop and try out their own ways and approaches.
But it is also part of it:
- To help shape the corporate vision, goals and strategy in a co-creation approach
- Opening up spaces for experimentation
- Allowing mistakes and failure and giving constructive feedback
- Create opportunities for further training and continuous learning
And the space for participation and development should also be opened up with benevolent intent. After all, employees have to leave their comfort zone for it to be utilised. This only happens if they feel emotionally secure, i.e. if they have confidence in their environment.
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How do you use these qualities to be effective as a managing director?
Checklist to increase your effectiveness as a managing director
- Develop a target image using the co-creation approach: Use the key questions of our leadership model to develop a target vision for your entrepreneurial activities together with your employees.
- Define strategy in the co-creation approach: Follow up the joint development of the target image with the joint strategy process.
- Focus for change: Let the employees define which changes they want to focus on in order to implement the strategy and act in line with the target image.
- Development of an independent organisation: Extend entrepreneurial leadership skills to large parts of the organisation. Make yourself indispensable.
- Anchoring a culture of trust, a culture of willingness to change and continuous learning: Strengthen the self-confidence of each individual employee. Strengthen relationship and organisational trust. Once you have achieved this, it is only a small step to a culture of change and continuous learning.
Filling leadership roles correctly
Conclusion: Effective leadership is characterised by five key qualities
Effective leadership combines three central elements: Market & Society, Organisation and People. The key questions derived from this model define the entrepreneurial framework for action. Five leadership qualities are fundamental for managing directors in order to shape this framework:
- Trust
- Clarity
- Appreciation
- Decision-making power
- Space for participation & development
These qualities are underpinned by a benevolent intention that places the well-being of the company and the people interacting with it at the centre of action.
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