Ivey Business School asks business leaders if better leadership could have prevented the economic crisis. The answer is yes.
LONDON, ON, Sept. 21 /CNW/ - Following nine months of roundtable discussions with business thought leaders in nine cities on three continents, The Richard Ivey School of Business today announced the release of a report entitled "Leadership on Trial: A Manifesto for Leadership Development."
"Our goal was straightforward," said Carol Stephenson, Dean, Richard Ivey School of Business. "We had a strong feeling that the quality of leadership was a major reason for the recent global financial crisis. The failure to address this issue in the past helps explain why so-called 'black swan events' are in fact recurring events. Based on these assumptions, we felt it was imperative to engage leaders in a discussion on the role that leadership played before, during and after the crisis; in effect, to answer the question, 'Would better leadership have made a difference?'"
In the summer of 2009, Ivey Business School assembled a multi-disciplinary faculty team to host candid discussions with more than 300 senior business, public sector and not-for-profit leaders from across Canada, New York, London, England and Hong Kong to examine the true state of leadership in the 21st century.
Four central questions were explored:
- What went wrong with leadership that contributed to the 2008/9 financial crisis?
- Was the problem confined to the few organizations at the epicenter of the crisis or was it widespread in both private and public sectors?
- What can we learn from those organizations and leaders who anticipated the crisis and avoided it or who coped well throughout?
- What do we need to do to prepare the current generation of leaders to deal with the kinds of challenges that they will face in the future?
The research group of Ivey Professors Jeffrey Gandz, Mary Crossan and Gerard Seijts discovered a powerful consensus that a failure in leadership was indeed a root cause, and that it was not confined to organizations or leaders at the epicentre of the crisis. Public and private sector, regulators, central banks, Wall Street and Main Street companies, institutions responsible for leadership and governance education and theory - all share responsibility.
Business schools themselves did not escape criticism from participants in the roundtable. "It's hard to play the 'blame game' when blame is widespread and includes your own sector," said Stephenson. "At the same time, we won't learn from our mistakes if we don't introduce some accountability into the post-mortem process."
Leadership failures were broadly classified as follows: competence (e.g. failure to conduct effective environmental analysis, risk management and control); character (e.g. poor values and ethics; personality traits such as overconfidence, hubris and hyper-competitiveness); and commitment (e.g. failure to commit to the hard work of proper corporate governance for large and complex organizations; failure to live up to responsibilities to community and society).
"Leadership on Trial" identifies five areas where action is needed:
- Management educators need to put greater emphasis on studying economic and business history in order to gain greater insight into today's challenges. They also need to encourage students to bring their values and ethics to bear in decision-making, and to understand and avoid the behavioural pitfalls that can lead to disasters such as the ones we have recently experienced.
- Today's leaders are called upon to be "the strongest advocates of anticipatory leadership and the prime enemies of complacent thinking." They are further encouraged to place as much emphasis on character development for rising corporate stars as is placed on the development of competencies. They must also develop corporate cultures in which constructive dissent is welcomed and in which people can speak up and speak out when they believe that poor business decisions are being made.
- For those who specialize in developing leaders, a useful starting point would be creating leadership profiles that capture the key competencies, character and commitment that is expected of leaders. Leadership development activities that are designed around these profiles have a higher probability of resulting in good leaders being developed rather than less systematic development initiatives.
- Boards of directors are encouraged to avoid complacency, become more independent of management, rely on information sources other than the CEO and senior management, and seek to continuously improve their own governance skills.
- Finally, next-generation leaders are encouraged to become more self-aware, delve deeper into their own values and personality traits, and the role these attributes play in exercising leadership.
"There's an old adage that says we should never waste a good crisis," said Stephenson. "This last worldwide recession certainly qualifies. It has forced us to examine the gap between what we know and feel about good leadership, and what took place in the past few years. What we hope will eventually emerge - and what we are working towards - is a solid set of guideposts for leadership in the 21st century."
"Leadership on Trial: A Manifesto for Leadership Development" can be purchased at http://www.ivey.uwo.ca/research/leadership/research/books-and-reports.htm.
About the Richard Ivey School of Business
The Richard Ivey School of Business (www.ivey.ca) at The University of Western Ontario is Canada's leading provider of relevant, innovative and comprehensive business education. Drawing on extensive research and business experience, Ivey faculty provide the best classroom experience, equipping graduates with the skills and capabilities they need to tackle the leadership challenges in today's complex business world. Ivey offers world-renowned undergraduate and graduate degree programs as well as Executive Development at campuses in London (Ontario), Toronto and Hong Kong.
For further information:
Mary Weil, Richard Ivey School of Business, 416-203-0664, [email protected]
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