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Posted: October 30, 2012

Leadership & management: So misunderstood

Big bucks don't guarantee a great leader

Laurence B. Valant

(Editor's note: Here is another valuable excerpt from the Laurence B. Valant/Gayle W. Hustad book, "Lead and Manage! The definitive guide for getting the results you want.")

One would think that Fortune 500 companies would be comprised of individuals who exemplify superior leadership and management. The presumption? The ability to pay large salaries should assure the best leadership and management.

Yet a 2007 Booz Allen survey of CEO turnover at the world's 2,500 largest publicly traded corporations found that performance-related turnover within these large companies had increased during an 11-year period by an astounding 318 percent. Their survey indicated that in 2006 among Fortune 500 companies, nearly one in three CEOs left involuntarily.

Superior leadership and management are not a function of the size of the company. Huge salaries do not correlate to leadership or management success. Leadership and management are misunderstood at virtually all levels - within and including graduate schools and Fortune 500 companies.

Paradoxically, some companies are extremely well led and managed by people with limited formal educations who are gifted to lead and manage and therefore achieve substantial and in some cases astounding performance results in the value growth of their companies.

Whether through formal education or through natural gifts, those leaders and managers who produce extraordinary results have companies that are characterized by:

• A clearly stated direction or vision
• Employees who clearly understand their roles and responsibilities
• Leaders and managers who regularly clarify expectations
• A commitment on the part of virtually all to meet those expectations
• A fair and consistent reward system
• A work environment that is safe, rewarding and enjoyable
• Consistency in making their planned numbers every quarter and year
• Increased value growth every year regardless of the economic environment

While rare, such companies exist and are models of what is possible with superior leadership and management.

When we accurately define leadership and management, we make clear their distinctions and help many in positions of leadership and management become more effective. We deliberately chose to use the word many. While concepts and tools of leadership and management can be easily understood and applied, not everyone will succeed when doing so.

The personal makeup of an individual may prevent success in a leadership or management role, for such roles demand a fundamental soundness in terms of ego, trustworthiness and genuine caring for those they serve.

Leadership and management are on the whole misunderstood. Most writings on the subject are primarily motivational in nature. As subject matter, leadership and management provide interesting areas of discussion for teachers and students of organization behavior. However, a correct understanding of leadership and management is of paramount importance and must be a crucial focus for CEOs whose corporate survival literally depends on doing so.

Chief executive officers are expected to grow the value of the enterprises for which they are responsible. Their failures in this regard are regularly documented. Failures, we believe, that are driven by their inability to provide superior leadership and management, quite different concepts, resulting in their inability to execute their plans on time and on budget.

Most companies simply don't make plan on a consistent basis, if at all. Companies that consistently make plan quarter after quarter, year after year are those that are well led and managed.

Correctly understanding both leadership and management and properly applying their fundamentals will provide the basis for executing effectively, consistently and reliably growing your company's value year after year.

Laurence B. Valant is President and CEO of Valant & Co., a Denver-based business performance improvement consultancy that has worked with almost 300 firms to increase their value by billions of dollars. He is co-author of the hot-selling new book, “Make Plan! With Effective Execution” and now, “Lead and Manage!” Valant can be reached at lvalant@valantco.com or at 303-589-3840. If you want more information or would like to order a copy of “Stop Breaking These Rules! 100 Hard-Hitting Truths for Business Integrity and Performance,” please visit www.valantco.com.

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