Is Ineffective Leadership & Management The Real Root Cause Of The Current Worldwide Economic Crisis?

Consider this fact: the current worldwide economic crisis is not a natural phenomenon. Instead, it is one that is man-made. And, as such, it only became a reality because self-serving individuals were not identified and prevented from their now infamous destructive actions as managers and leaders. Here they absolutely failed to effectively execute their accountabilities.

Why did this occur? More importantly, what can be done now AND in the future to minimize risk for re-occurrence? Warren Buffet recently pointed out, people tend not to apply the lessons of history but repeat their errors time and again.

One of the two root causes of ineffective leadership is simply that too many individuals in such positions do not possess or demonstrate the required capabilities for managing people, processes, problems, decisions, tasks and communications. Our work at Life Associates has typically identified that no more than 20% of manager-leaders (MLs) are considered to be effective by the employees reporting to them.

In separate research the recognized management authority, Dr. Rick Boyatzis, has pointed out that no more than 5% of all MLs perform at an optimal level. The sad truth is that too many successful individual performers continue to be promoted to ML positions that have very different critical performance requirements, not just for one’s own success, but for the success of others, their organization, and the key stakeholder groups they should be serving. It is their legal and moral obligation to their organization.

I continue to be astonished by the large number of MLs in key positions who either aren’t aware of fundamental, proven ML principles and practices, or they simply don’t use what they have been ‘trained’ to do. Too seldom, such individuals are never questioned, assessed, monitored, or held accountable. The "Peter Principle" continues to wreak havoc among organizations managed and led by too many lacking the required competencies.

The Madoff scandal as well as banking and investment house atrocities on Wall Street and in France all could have been avoided or exposed early on through effective, hands-on management of performers and review of indicators of improprieties. These were either not identified or pursued by MLs who would certainly have appraised the performance of those supervising such violators as "unacceptable". They likely would have terminated them—rather than accepting personal responsibility for the buck stopping at their own door as the leader!

The other cause of this mega-crisis is rooted in the personal motivations of still other MLs. This has been called the "Disease Of Me." While some of these individuals may also be clueless or incapable, many of them simply are self-serving only! Research by my colleague, Dr. Drea Zigarmi, has shown that such MLs who are viewed by their direct reports and peers as self-serving, have not demonstrated responsibility toward the organization’s key stakeholder groups (employees, customers, investors, others). They have a dramatically negative impact on employee passion, engagement, and sustained commitment to their organization.

In other words, they undermine and erode a high performing organizational culture. Their personal actions become the real perceived "values" in such organizations that allow MLs to remain in these positions and continue to cause mayhem. This includes "political, power-driven" actions that often involve neutralizing or dismissing the organization’s real "heroes". Those hard-working, principled individuals who are the antidote to such self-serving, career self-promoting, underperforming individuals often do excel for their own agenda— such as taking credit for what others do in spite of them, not because of sound management practices.

So how can this crisis be reversed or prevented from re-occurrence? By…

1) sound assessment, development (through training, coaching, mentoring and self-directed learning) and monitoring of those selected for such positions by diligent, objective, and qualified individuals (MLs supported by principled coaches, mentors and consultants);

2) a strong organizational culture where all are empowered to assure shared accountability to ensure ethical, effective, disciplined business practices are consistently followed, and

3) applying strong, severe consequences to violators for their irresponsible and even ‘criminal’ actions as a deterrent to others that know in advance that the extremely painful cost to them would geometrically outweigh any possible personal gain that could be attained by taking such risks!

A good starting point for putting these three actions in place is by reviewing our Life Associates On-Demand webinars. These programs provide preventative and corrective actions noted in the above paragraph: #1- Personal Style, Adaptability, and Values, Coaching ; #2- Building A Winning Culture, and #3- Effective Leadership. All can be found at www.TrainingIndustry.com and www.lifeassociatesinc.com websites.