Scholarship over the years has documented multiple definitions and theories of leaders and leadership. These definitions focus on functional and positional leaders. Definitions of executive leadership are comparatively few and stress higher echelons within organizations—top of the pyramid—where individuals participate in strategy formulation, solve complex problems, exercise employee control, and improve motivational levels. Functional definitions come closest to an understanding of executive leadership that recognizes leaders as possessing the ability to comprehend organizational purpose and communicate with and lead members toward a common objective. There are two key functions associated with this role: (1) internal coordination and (2) external adaptation. In sharp contrast to functional leaders are the positional leaders, who implement processes and policies by virtue of their position and authority.
This entry discusses the role played by executive leaders, together with the skills, traits, and communication capabilities essential for exhibiting positive behavior. It then proceeds to document the impact of executive leadership on the organization and reflects on the implications for corporate reputation.
Role Played by Executive Leaders
The roles and responsibilities of functional/executive leaders are clearly outlined by the organization. As part of the senior leadership team, their responsibility is to draw policies, create strategic road maps, develop synergies, and influence stakeholders. Their path is complex and riddled with challenges at every level, be it in interaction with internal or external stakeholders. For instance, when interacting with internal stakeholders, they display a bouquet of skills, traits, and practices, whereas for appealing to external stakeholders, innovation, environmental stewardship, performance (financial), social impact, and the common good are emphasized. In both of these forms of interaction, the environmental trends, internal and external, shape leadership patterns and facilitate behavior essential for communicating. This communication is important as it helps create an image in the minds of stakeholders of what the organization stands for and its reputation.
As reputation helps in according better financial performance, it has become imperative for leaders to constantly manage interaction with internal and external stakeholders, share the organization’s form and purpose of existence, and build credibility and faith. Entrusted with the task of building reputation, these executive leaders are also the face of the organization. Their skill sets, traits, behavior, and communication skills undoubtedly affect the reputational quotient of the organization.
The role of the executive leader in building corporate reputation has been universally acclaimed. Major reputation rankings include quality of the executive leader as one of the criteria for evaluation. For instance, Fortune magazine’s “Most Admired Companies” and Businessworld’s “India’s Most Respected Companies” consider quality of management, and the ACNielsen Corporate Image Monitor includes vision and leadership as major components of corporate reputation.
Skills and Traits
Leadership skills are required for addressing management issues and objectives that are complex and require concerted decision making. Executive leaders, thus, need to excel in managing issues and people, demonstrating leadership, and taking decisions. An executive leader inherently possesses some of these skills, but some skills have to be acquired. These skills help the leader in agenda setting as per organizational priorities that revolve around people, profits, and the planet and in making good decisions.
For effectiveness in performance, executive leaders consider a host of issues: who is the target and who is the beneficiary, what are the anticipated organizational benefits, why a specific set of actions should be followed, when is the right time to implement and execute, where the implementation should commence, and how the process should be executed. These issues help link thought with concrete action and behavior.
The skills and traits required for effective executive leadership are those that subscribe to the organizational purpose and credo. All other factors pale when balanced against the organizational purpose championed by these leaders. To comprehend the required skills and traits, it is important to first understand the difference between these two terms and then consider the set of questions for achieving the organizational goal and objectives. While skills emphasize an ability to perform, traits are behavioral or attitudinal and sum up the individual personality.
There are four skills required to perform the aforementioned tasks: (1) decision making, (2) communication, (3) monitoring, and (4) review. Understanding the decision-making process of executive leaders is crucial. Identifying the problem is but a step in the six-stage process of making good decisions. A faulty or wrong problem definition will lead to an incorrect handling of the situation. The process begins with an analysis of the situation as determined by the boundary conditions, followed by identification of the problem, formulation of options, and generation of criteria. Based on these criteria, in the subsequent step, the options are evaluated, and finally, the decision is arrived at. The decision is communicated to the team, monitored for effective implementation, and periodically reviewed. The review is important as it provides feedback on the implementation process and helps in people and performance management.
In performing executive leadership tasks, good communication skills are a major driver. Upward, downward, and horizontal forms of communication require different skill sets. For instance, the ability to analyze and present leads to success in upward communication; the ability to delegate and monitor helps in downward communication; and the ability to collaborate and share helps in horizontal communication (a detailed discussion of the same is given under the section “Communication Skills”). Traits such as sensitivity and a positive attitude reflected through communication for developing team member capabilities make for effective executive leaders.
Interestingly, a discussion on the skills and traits an executive leader should possess for generating profits does not yield any substantial point. Research shows that when executive leaders address issues related to people and the planet, profits automatically accrue.
The literature describes a successful executive leader as one who is able to create an enabling environment with positive attributes, generating a positive image about the organization in the minds of employees. Their perceptions are influenced by the environment of trust, credibility, fairness, and adherence to ethics created by the leader. Using the skills of connecting with people, a leader projects a compelling vision of the future, which encourages employees to stay committed. The positive environment and commitment to vision ultimately create a favorable corporate reputation among internal stakeholders.
Leadership skills and traits required for managing the planet include developing sensitivity to the gravitational pull of environmental cues. The critical concern in this process is finding the best manner of responding to the pull: by proceeding at random or devising means and strategies to demonstrate interest in all stakeholders. Together with an inherent sensitivity, effective leaders develop discerning abilities of understanding the requirement for the organization and its potential benefits. Once an environmental assessment is done, the strategies are woven into the fabric of the organization at the policy formulation level, leaving no room for isolated or incomplete implementation of activities.
All this requires time and effort and maybe organizational change. As agents attempting to bring about a total change, executive leaders develop a vision, a mission, and a credo in congruence with that of the organization. Interacting with multiple levels of stakeholders, changing perceptions, building trust and confidence, and creating impact require effort in developing a skill set and the belief that this is the only right way to proceed.
The process of influencing perceptions and formulating views needs to be examined too. This is done by proactively anticipating and implementing change. As change agents, these leaders search for opportunities for creative detours and are willing to take responsibility for their decisions. In this process, leaders develop the skills of asking the right questions, developing focus, and unifying the team. The associated credibility from asking the right set of questions is a lever for developing other skills. A deep-rooted conviction stemming from knowledge about what it is that “I” want is often the first step in the process. Undoubtedly, clarity in the purpose of the self leads to integration with the organizational purpose. This is usually followed by a reflection by the leader on what can or should be done to achieve the purpose. An ambitious assembling of tasks is not always the right answer. It is observed that moving ahead while retaining focus on two to three tasks at a time is the most rewarding strategy.
An executive leader focuses on developing the traits of shouldering responsibility and being accountable for the decisions taken. When there is in-depth knowledge and a focused understanding of the correct action for the organization, it is possible for the leader to develop an action plan, delegate responsibility, and periodically review the process. Delegation naturally builds trust and unifies the team. The unification is complete when the leader navigates through complex situations and communicates using pronouns such as “we” and “our” instead of remaining focused on “I,” “me,” and “mine.”
Though the skills and traits essential for an executive leader have been discussed, it is necessary to also distinguish excellent from good or effective leaders. Research points to emotional intelligence as the key differentiating factor. The most effective executive leaders are knowledgeable about their strengths and weaknesses, possess the capacity of self-restraint, and are capable of empathy and motivation. They are cognizant and appreciative of individual performance, which, when viewed collectively for all employees, moves forward as a wave affecting organizational performance.
Developing skills and traits appropriate for executive leadership results in behavior reflective of transformational or transactional leadership.
Transformational leadership is a process of engaging with team members in a manner that transforms and elevates both parties to a concurrent position of ethical and moral behavior. This behavior, which is directed toward follower needs and goals, can be learned and adopted. Based on the skill of communication, transformational leadership is idealized by championing a cause and communicating values and a vision that help build trust, faith, and respect. In the optimistic communication of transformational leaders, there is inspiration and stimulation, with an emphasis on transformation through coaching and mentoring.
Another form of executive leader behavior is transactional, with a focus on achieving targets through well-defined goals and clear-cut, hard-core tactical measures. In sharp contrast to transformational leadership, this behavior is grounded in everyday reality, emphasizing power and position. There is little to no concentration on long-term transformation of people. Instead, the top line and bottom line of the organization, systems, and structures are emphasized, and all communication and behavior are geared toward achieving the same.
It is difficult to categorically affirm the significance of one type of leader behavior over the other. Both are found in executive leaders, and both are crucial to the growth of the organization. There are moments in a crisis when transactional leadership is the preferred style. However, a careful analysis reveals that these critical moments in an organization’s life are few by far. This means that leaders can change their behavioral patterns according to the situational requirements. In general, transformational leader behavior is found to yield optimum long-term results.
Effective communication with internal and external stakeholders is a crucial component of the executive leader’s role, and hence, the importance of communication skills cannot be overemphasized. Executive leaders are responsible for developing channels that promote easy and two-way communication for achievement of higher goals, systematic sharing of knowledge, understanding cultural assumptions, and building trust in existing systems.
Successful communication leads to commitment. Empirical evidence shows that organizations where leaders are able to effectively articulate their vision and strategies and influence stakeholders have more success in taking the vision and strategy to fruition.
Effective leaders are successful in devising methods for managing the flow of communication and creating stakeholder-friendly communication patterns to build and maintain a positive reputation. Research demonstrates that a democratic communication style, emphasizing the creation of value through continuous stakeholder interactions, is more effective in building better teams, solving problems, and bringing about strategic change. Such a style involves creating a friendly environment, maximizing face-to-face interactions with employees, and focusing on talking “with” instead of “to” employees. Efforts toward this end are rewarded with greater employee engagement and strategic alignment.
Though the end result is desirable, the process itself is time-consuming. The executive leader necessarily begins by ensuring strong conviction in all messages to stakeholders to build trust. Instead of using scripted texts or simply stating values, the leader attempts to promote interactive two-way communication by weaving the personal concerns of employees into the organization’s story. The storytelling technique is used to advantage by a large number of executive leaders across the world, to secure instant buy-in for organizational values and beliefs.
Listening empathetically is the second most crucial part of the communication process, one that is often ignored. Effective leaders listen to their teams and involve them in decision making. They encourage sharing of creative ideas and suggestions and even promote constructive confrontation. Such a collaborative decision-making process helps in goal alignment and creates a culture of reciprocity.
Leaders make a conscious decision to create a strategy aiming at focused, directional, and meaningful, goal-centric communication. The emphasis is on deciding the message and the medium of communication and building trust and an inclusive climate conducive to open and honest interaction. Engagement and interaction with stakeholders are strategically designed such that communication can be both intentional and routine, as per the situational requirement. For instance, communication with external stakeholders may be intentional and carefully planned with the objective of creating a positive image. At the same time, communication with internal stakeholders may be routine but still effectual.
An effective leader utilizes his or her own individual communication skills to the maximum and also creates an environment of trust and sharing in the organization that facilitates optimum communication with all internal and external stakeholders.
Executive Leadership Impact
Executive leadership focuses on developing integrity, authenticity, and an ethical code of conduct to create the desired impact within organizations. The executive leader walks the talk and talks the walk to meet the requirements of all stakeholders and demonstrates a commitment to doing the right thing at the right time for the right benefit. For instance, the energy and dedication demonstrated by the leader help in building internal synergies enabling one team to leverage the strengths of the other for gainful returns.
Executive leaders follow a process to achieve the desired organizational goals. The first step is formulation of a purpose. While discussing the purpose, the organizational benefit in terms of revenue and profits is kept in mind. The ethical and moral code of conduct for achieving the larger purpose is integrated with the organization’s ultimate goal of profit generation. Stakeholders, internal and external, are influenced inadvertently by a company that professes an ethical stand and demonstrates adherence to the same through its best practices. Stakeholder support and appreciation are reflected in purchase decisions that are directly proportional to the rising sales graph, positive recommendations of the company or its products to other customers, and investment decisions.
To create an impact, it is essential for executive leaders to develop certain techniques and traits, some of which are inherent and some learned through environmental cues.
Implications for Corporate Reputation
As a fragile and intangible concept, reputation leads to concerns about the person responsible for building and safeguarding it and the strategy to be used for managing and communicating it to internal and external stakeholders. All these tasks are accomplished by the executive leader.
There are many attributes for which companies may develop reputations, some tangible and some intangible. These include the company’s financial performance, leadership, innovation/creativity, citizenship/environmental stewardship, workplace culture, products, and services. When all these defining attributes of corporate reputation are considered, it is found that leadership is the key that gives shape to the remaining attributes. This is one of the reasons why it is important for the executive leader to develop skills and traits that complement the growth of reputational assets.
Bearing in mind the significance of building corporate reputation, companies strategically plan the process of nurturing employees as they progress to executive leadership positions. Research shows that organizations with a history of developing effective executive leaders engage in many of the following practices:
- Providing opportunities for individuals to develop skills and competencies essential for leadership
- Allowing room for leaders to walk the talk and talk the walk
- Developing an ecosystem with emphasis on people, profits, and the planet
- Ensuring that sufficient room is provided for developing emotional intelligence
- Nurturing both transformational and transactional behaviors
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