Leaders Who Care: The Chief Executives’ View Of Leadership In Social Enterprises: Natural Aptitude Versus Learning And Development

Jonathan Gravells- Fargo Associates Ltd

(This is an Author's Accepted Manuscript of an article published in Human Resource Development International, April 2012, Volume 15, No. 2, copyright Taylor & Francis, available online at:

Abstract

The author examines what factors determine leadership success in U.K. social enterprises.Despite the attention prompted by the U.K. government’s ‘Big Society’ policies, this remains a relatively unexplored field in the leadership literature.Based on in-depth interviews with successful social enterprise chief executives, carried out between April and December 2010, this paper challenges the dominance of competency models, based on purely behaviourist tradition. It examines the impact of personality, values, circumstance and career arc on the way these leaders perform, in an attempt to take a fresh look at the interaction of traits, behaviours and situational flexibility in determining successful leadership in this type of organisation.A number of key factors are identified and categorised as dimensions of ‘being’, ‘doing’ and ‘style’. Consistent contra-indicators are also identified, providing the basis for an approach to both leadership selection and development in this growing sector of the economy.

Keywords: Authentic leadership; social enterprise; traits; competencies; caring; values

Introduction

This paper looks at the nature of leadership in social enterprises, whether commonly-agreed success factors exist (according to our sample of successful practitioners),and the extent to which these factors provide a universal agenda for leadership development or more diverse and personalised patterns which vary according to the typology of social enterprise, the stage of growth or maturity, the background of the founder/chief executive, or the challenges of the prevailing operating environment.

There has historically been very little research into leadership in these organisations, in comparison to the for-profit sector (Thach and Thompson 2006), but at the time of this research, more public attention had been focused on the social enterprise sector due to public sector cutbacks and U.K. government policy statements relating to the ‘Big Society’.

The research is based on in-depth, semi-structured interviews carried out between April and December 2010 with nine successful chief executives from a mix of social enterprises of different types, sizes and stages of growth. Four of the CEOs were women and five were men, and the enterprises had been established for between five and thirty years, varying in size from eight to four thousand employees. Obviously, it is not easy to define ‘successful’ in an entirely objective and consistent way for a group of very different organisations. However, almost all of the enterprises had won national or regional awards for their work in the last few years. Nearly all of them were continuing to grow, either organically or through acquisition, with some migrating from regional to national influence. Several of the CEOs were national social enterprise ambassadors and several had received personal honours and awards for their work in the field.

Prevailing environment

At the time the research was carried out, the common perception of the prevailing climate for all of these enterprises was as follows:

  • Public sector spending cuts would make it much harder to obtain grant support at a time when demands on social enterprises from the most vulnerable in society were likely to increase.
  • This would put a lot of pressure on social enterprises to obtain a greater proportion of commercial income, manage their own costs rigorously and demonstrate clearly where they could ‘add social value’.
  • One result of this pressure would be to put some enterprises out of business, and force others to merge or cut back.
  • Messages about the ‘Big Society’ were still very vague and, at worst, based on a dangerous misunderstanding that gaps in public sector provision could be filled by organisations who could work for nothing or next-to-nothing.
  • Provided this misunderstanding could be corrected, there could be real opportunities for robust and successful social enterprises to pick up business and increase their impact.

....the image that's going out is that the community sector can pick stuff up for free……yes we're good value, but we're not free...... (Interview respondent no. 6)

Leadership Research – Overview

A meta-analysis of leadership research to date, conducted by Avolio and Chan (2008) provides a convenient overview of current thinking. Early trait theories, having initially been abandoned in favour of later approaches, have enjoyed a partial comeback, with research identifying a number of stable traits, such as extraversion, conscientiousness (Judge et al. 2002), intelligence (Lord, DeVader and Allinger1986), and centralised self-efficacy (Smith and Foti 1998).

This focus on who we are tends to favour the importance of good leadership selection over training, whereas later behavioural theories focused primarily on observable behaviour - what we do – and therefore lent themselves much more readily to the idea of leadership development.Behavioural approaches have enjoyed prolonged popularity, as evidenced by the continuing widespread use of competencies. However, competency frameworks have been increasingly criticised as inadequate on their own to explain expert behaviour in complex work situations (Kuchinke and Han 2005). They have always struggled to account for the manifest differences between the behaviour of equally successful leaders, and the tendency for successful leaders to play to their strengths and develop their own unique style. This was nicely summarised by one of our interviewees:

I think what we've always described it as is recruiting the right people, finding out what they can't do and then not asking them to do it.

Research has revealed the extent to which factors such as personality and emotion recognition can positively influence transformational leadership(Rubin, Munz and Bommer2005), and emotional intelligence(EI) is increasingly cited as essentialin good leadership (Goleman2004; Wood and Vikinas 2007), although in academic circles controversy remains as to how much EI is truly competency-based (Peltier 2010). Many will argue that it is perfectly possible to develop self-awareness and emotional intelligence, and that these are therefore simply additions to the growing list of required leadership behaviours (Goleman 1998).An alternative view, however, is that whilst leaders can learn to become more self-aware and conscious of the impact their behaviour has on others (i.e. improve their emotional competence), the inevitable influences of upbringing and personality meanthat EI is well-established by early adulthood and can only be modified to a small degree after this (Mayer and Salovey 1997). Some would even argue that EI is entirely trait-based, (Petrides andFarnham 2001).

Alongside these behavioural and trait theories of leadership, the final school of thought might be seen as situational and contingency theories (Fielder 1964; Hersey & Blanchard 1977), which focus attention on the way in which leaders can apply different combinations of behaviour, or styles, in a flexible and adaptive way according to either the needs of the situation and environment or the needs of particular followers.

Research findings

Turning to those interviewed in this research, one aspectcited frequently as enabling success as a leader can be summarised by the word Courage. Despite the military references which sometimes accompanied the discourse, this is most definitely not some vague, gung-ho fearlessness in the face of all obstacles. Rather it can be very specifically summarised as:

Having the self-confidence and self-belief to take appropriate risks without either the fear of failure or the desire for perfection paralyzing one’s ability to act decisively.

Six out of nine respondents mentioned this specifically, and most were able to give clear examples of how this factor had contributed to success:

….crap happens and sometimes you just have to accept it and...that's life and it doesn't mean you've done something wrong,..... and that actually some things can be good enough without being perfect.

....Perhaps prepared to go very close to the line with things...And like with this community centre thing, I thought 'I can see it's a massive opportunity for us..... But when I came back....I could see the staff were thinking 'What is she doing now???!!.....How's this gonna work? ...

The next aspect, closely associated in respondents’ minds with Courage, might be termed Calm. This refers to the leader’s ability to ‘hold’ a difficult situation. It is not about patronising or being dishonest with employees, but can be defined as:

Remaining open with employees about the challenges and potential consequences of a particular set of circumstances, whilst presenting the appearance of being in control and able to respond without panic or paralysis.

It requires a certain degree of self-awareness and self-control to do this successfully, but also an implicit quality of being able to remain calm under pressure. Seven out of nine respondents mentioned this specifically and again the majority were able to recount specific examples:

And also if they see me going 'Right, well we've got a twenty grand gap between now and the end of the financial year' and I've got a plan, and I'm not panicking, then there's no reason for you guys to panic...... but they still know the facts. They know what's going on.....

Without exception, CEOs interviewed singled out clear Values as being fundamental to their credibility and effectiveness as leaders, as well as their decision-making and clarity of vision. A strong belief-system helped these leaders in a number of ways:

  • It made them feel a passion and enthusiasm for what they were doing and sustained them through adversity and opposition.
  • It gave them credibility as leaders and role models for what their organisations stood for.
  • It enabled them to self-monitor decisions against some sort of moral and ethical framework.
  • It allowed them to set an authentic tone for the organisation, and signal what kind of behaviour would be approved of and recognised.

Other than a common (and unsurprising) dedication to social benefit, the exact nature of the values mattered less than the fact that individuals saw themselves as subscribing to a strong belief system within which their decisions and behaviour were seen as consistent:

I'd say some of my core values are around honesty...... and in hard work.....My own personal philosophy is, right, if you work hard you get rewarded. And you'll see that through the whole organisation. If the young people work hard, they get rewarded…... If the licensees work hard, they get rewarded………. If the members of staff work hard, they'll get progression through the organisation......

Caring for people was another common factor. This is a difficult quality on which to gather evidence other than respondent’s opinions, but the best consensus might define it as:

Being interested enough in those who work for you to want to know about them as human beings with lives outside work, not simply units of resource or even members of a team.

It meant creating the feeling in followers that their boss had their interests at heart, as much as those of clients or trustees, and genuinely appreciated their skills and effort. It has to be genuine, (which is why descriptions of it in terms of a learned behaviour are unconvincing), and it is what inspires loyalty and discretionary effort in followers:

…and my sort of concern for people in its broadest sense as well. I think people sort of know that I do care for people. And I think knowing you're cared for is very important...... I don't care for people because they're useful to me. I think I care for people anyway, if you know what I mean, and I think people know whether that's for genuine or not.

All of these CEOs demonstrated clear-sightedness about what they were good at and equally what they were not good at. Self-awarenessis a notoriously problematic quality to identify accurately, so it was particularly important to stress test statements directly about self-awareness with other comments which might serve to corroborate these. We might summarise this factor as:

Understanding one’s own values, skills and personality, and realising how the behaviours these produce might affect others for good or ill.

Respondents were generally disarmingly candid about the limitations of their skills, and what they did to compensate for these or mitigate any impact. This quality is what enabled them to communicate and act authentically as leaders, showing humility and being able to accept the ideas and help of others when appropriate:

Well, here's a perfect example. I'm absolutely rubbish at negotiating the final details of ….contracts. And every time I do it I leave money on the table. And so I've just decided I'm no longer going to do it. You know, I recognise my own failings and, if I were to pat myself on the back, I'd say I was pretty good at setting things up, you know....I'm like Emile Hesky. I can set the ball up, just can't stick it in the back of the net…..So I just need not to be doing that job.

Managing performancewas another critical success factor for all of the CEOs interviewed. This encompassed having a clear focus on outcomes and impact, and having measures in place to demonstrate these. Respondents were highly critical of the tendency for social enterprises to be seen as relaxed in their approach to performance, emphasising the need for ‘operational tightness’ and a firm grasp on the financial numbers.

They think that social enterprise is a freedom to do what they want. The reality is you've just got another set of rules. So you can set up an organisation with structure, which is inclusive in decision-making and consultative...but in the end you've gotta pay your bills, and you've gotta pay your wages and you've gotta make sure that you're not breaching the law....So you need to performance manage it......

In some of the smaller organisations, this led to CEOs insisting on staying closer to the financial management of the enterprise than they might have wished, due to a combination of the absolute need for sound practice and the difficulty (especially for smaller enterprises) of recruiting good finance people into the sector. A development need identified for members of their leadership teams by some CEOs was the ability to recognise the ‘core offering’, the essence of what the enterprise did best, and to spot opportunities in the marketplace which would fit well with this.

When it came to managing the performance of people in the organisation, anotherspecific development need cited by many was the reluctance of managers to confront behaviour and performance problems promptly and robustly enough. There was a sense that working in a social enterprise remained inconsistent, in some people’s eyes, with being tough on performance.This had been a misconception that most CEOs had had to overcome:

What's got in the way? I think it's been the converse of us being a nice bunch of people...We've been unable to confront bad behaviour ...or poor performance effectively. …A slightly misplaced niceness...I think at times we don't have the necessary scepticism and rigour...

There were noticeable differences here between the priority needs of smaller and larger enterprises. Regardless of maturity, the larger enterprises (150 employees +) on the whole had leaders more capable of dealing professionally with poor performance. This suggests that smaller social enterprises were subject to the kind of family-style dynamics and relationships, common to many other small firms, which make such performance management techniques difficult for many managers to adopt.

Communicating – Regular, clear and open communication with employees was another skill consistently highlighted by our chief executives, and one which very much differentiated more successful leaders from the rest, in their eyes. There is nothing new about communication as a leadership skill, but it is worth noting that the characteristics of good communication most consistently identifiedby this population were authenticity and openness, stemming from a lack of affectation and ‘rehearsal’. Harder to achieve in larger organisations, this was sometimes demonstrated via the maintenance of a limited number of informal relationships with key individuals at different levels in the organisation, whose feedback was highly-valued.

...quite a lot of people said 'We really appreciate the fact that, whatever we think about what you're saying, you've set your stall out and... you've not gone for a kind of processual management message with us. …….and I think the perception is, you know, being accessible, being open, being unscripted is very important, because they know that what you're saying is going to be believable and they know that you don't have any affectations or anything….

It is significant that, when asked to describe their role, seven of the nine chief executives prioritised communicating the strategy and vision of the enterprise, both internally and externally, along with building the profile of the organisation in the world at large. These were the only really common themes in descriptions of the CEO role and both require heavy use of well-developed communication skills.