Wednesday, December 29, 2010

IPOs and Organizational Leadership Capability

The book "The 2020 Workplace" by Karie Willyerd and Jeanne Meister discusses a future where organizational teams are hired intact into new organizations and where you are hired into an organization based upon your social capital. So it was with interest when I got a response from last week's blog on Leadership Capability Portfolio Management from one of my LinkedIn connections...Suranjan Benjamin Soans. He asked the following questions, which were intriguing:

"Keith, do you think sometime in the future, investors are going to have access to Leadership Capability Portfolio Management of companies? Or, is it better if that is treated as a company's secret? Do investment bankers take a good look at this (LCPM) before an IPO is issued?"

It's possible that understanding and measuring the overall organizational leadership capability as a critical component to an organization's financial rating in the future. Why? Let's look at some examples of why leadership capability already matters in organizations...

- Leaders impact the organization through factors such as employee retention and employee engagement. Both critical to organizational performance and financial performance.

- The 2010 IBM Global CEO Study indicates that CEOs continue to see the relevance of having a leadership capability that are creative, act under uncertainty, drive innovation and organizational performance.

While I study the impact of leadership and leadership development on organizational performance at the UPenn Chief Learning Officer (CLO) program, I know that before I invest in companies, I want to know what the company's leadership capability is. Companies leverage their position on such lists as Leadership Excellence's top leadership development programs and Fortune Magazines Best Places to Work when advantageous.

While award winning leadership development programs are good publicity, I reference Dr. Bradley Hall's quote from his book "The New Human Capital Strategy." There he states that "Success is not world-class leadership development but best-in-class industry leaders." If you believe that...we need an ability to measure the best-in-class industry leaders part of Dr. Hall's statement.

With this in mind, wouldn't you want to know whether an organization's leadership capability is having the intended impact on organizational performance...especially before you invest in it?


Twitter: JKeithDunbar
DNA of Human Capital:


  1. Keith: May I suggest that you re-post this piece near the end of the first quarter when everyone is back to work. It is very thought provoking.

    Can you help me with this question? It would seem intuitive that World Class Leadership Development programs would produce "best in class leaders." What am I missing?

  2. Hi Mike...I am glad it spurred your thinking. I will take your advice. I typically do a Twitter and LinkedIn groups blog marketing campaign. I will wait until next week for that.

    Regarding your last comment...Dr. Hall was trying to make the point that best-in-class leadership capability is the desired end result and not world-class leadership development programs. We sometimes lose sight of that in our work. Plus I would argue that there is an infested assumption that the first leads to the second. Read my blog from September about lack of academic research on linkage between leadership and organizational performance. Probably my dissertation topic there for me...

    We should connect on LinkedIn...


  3. Thanks Keith for initiating the conversation. I fully agree with your comments and you've picked my curiosity on the book, I'll look it up. Like you, I'm quite dissapointed by the lack of evidence between leadership investments and org. performance, having to rely too often on anectodes. My current focus is on employee engagement, and I would argue that commitment cannot be imposed, same thing with passion. Basically, any investments to develop great leaders has to start with looking at the person's attitude: one needs to be passionate and driven at all times. @GreatLeadership talks 'bout being humble and always remaining curious in his Dec.24 post. My point: beyond formal indicators, there will always be a personal side to leadership that comes from the heart, that speaks to how the energy is channeled within any org. Are there any good indicators to measure this? Sorry for rambling off topic.

  4. Keith: Thanks for the quick response and your answer was as I suspected it might be.Too much emphasis on form and not enough on outcomes.

    Plus, if you run a clunker through a car wash it is still a clunker when it comes out clean.After 20+ years working in human capital development the most common statement I still here is that companies continue to promote the strongest technical person in hopes that they will magically become best manager/leaders.

    Have you seen any evidence of this pattern changing?

  5. Keith
    Thanks for making the connection between this important topic and our book, The 2020 Workplace.
    I think investors will insist on knowing the leadership capability of a company's top and mid level leaders-- Many of the awards recognize only C level leaders--but what about those at mid level who really make a difference with customers.
    Let's continue the dialogue.
    Jeanne C Meister
    The 2020 Workplace: How Innovative Companies Attract, Develop & Keep Tomorrow's Employees Today (Harper Business, 2010)

  6. Hi Jeanne...Happy New Year's!

    Looking forward to our conversation tomorrow.

    I think everyone agrees that the quality of your leadership has impact on company's performance (Though academic research disagrees...See "Leadership and Organizational Performance...Lack of Linkage...") and that the current economic environment and lack of trust/integrity that was presented has presented an opportunity...