Globally renowned HR Guru Professor Dave Ulrich talks about the causes for the downturn and what political and business leaders should be doing to survive the unprecedented global financial crisis.
Professor Ulrich based on your latest research and your new book the Leadership Code what kind of leaders do we need to manage a downturn?
Effective leaders/CEOs succeeds in good times and bad. In tough times, leadership matters more because of increased pressure to produce, shorter periods, and more scrutiny. We have found that leaders need to do five things in tough times:
-Strategy: prune and focus attention on the top priorities; stay connected to key customers; create strategic unity throughout the organization
-Execution: make things happen, have clear accountability, be willing to make tough decisions decisively
-Talent management: remove people boldly and fairly if necessary, communicate extensively to those who stay, maintain an employee value contribution for current or future employees, and selectively source talented people.
-Human capital development: create career plans for employees, maintain values and culture, streamline the organization and simplify organization processes
- Personal proficiency: act with integrity, learn constantly, be transparent and visible, and maintain personal energy.
When times get tough, should leaders only focus on one thing - the bottom line?
It is so tempting to focus on cutting costs in tough times that many leaders fall into this trap. In fact, we have found that good leaders have to manage paradoxes:
-Manage short term and long term … keep thinking about tomorrows impact of today’s decisions
-Manage cost and growth … reduce costs to reduce current risks, but invest in innovation and expansion to avoid future risks
- Manage inside and outside … pay attention to employees and also be connected to customers and investors outside
-Manage stability and change … in a world of change, we need to adapt, but we also need to maintain continuity of the things that are unique to us.
You have defined a succinct set of principles that you call the Leadership Code. Can you elaborate?
If you go to google or yahoo and search for "leadership" you would get over 250,000,000 hits; about 150,000,000 would define what leadership is all about. Therefore, It is very hard to say something new about leadership that has not been said over and over again. Sometimes in our quest for new ideas, we lose sight of the basic principles we were taught way back in our Business Schools. So in order to get something new on leadership we interviewed 15 of the top thought leaders in leadership who had collectively done over 2,000,000 leadership feedback sessions with some of the best CEOs in corporate America and written close to 100 books and authored over 1,000's of article in newspapers and magazines. We asked them two questions:
 What percent of effective leaders have basically the same set of abilities? Their general answers were 60 to 70%
 What are those basic things that all leaders must know and do? The answer was the leadership code.
We know that in our book the Leadership Code we are making a bold and large statement: we found that there are five basic things that all leaders must do! When we share this with senior executives, they recognize the elegance and power of simplicity.
So, what are the five basic things that all leaders must do what you now call the five-part Leadership Code?
-Strategist: has a point of view about the future and can position your organization with future customers
-Executor: can get things done and ensure results
- Talent manager: works well with people today to help them be competent and committed
-Human capital developer: plans for the future people and organization
- Personal proficiency: is personally grounded, authentic, emotionally intelligent, and takes care of him or her self.
If the principles of the Leadership Code is embedded in an organization, will it help to improve the performance of leaders and the organization in downturns as well as upturns?
Yes, in changing times, companies often under-react and do nothing or wait too long to respond or over-react and radically try to change. Neither works well. Just like summer turns to winter and winter to summer, economies have up and down cycles. Mastering the basics of good leadership helps the organization maintain continuity and long-term success.
Based on your latest research what do great CEOs have in common?
We would argue that great leaders do the five dimensions of the code with ease. We found that the personal proficiency domain is critical. Without personal proficiency, leaders are not trusted, credible, or followed. For the other four domains, leaders often have a pre-disposition or bias towards one of the four (e.g., I may be more comfortable with the ambiguity of strategy that the discipline of execution). As leaders mature and move up the organization, they must learn and master the skills of all four roles.
Do you think President Obama without getting overwhelmed and overreacting, is creating confidence to face the crisis?
He has started by taking some very good decisions and is displaying good judgment. First, he picked a team of rivals who are different from him and he is listening to them. He does not claim to have all the answers to complex problems, but he is working to engage and involve others. Second, he is facing and making decisions. He is not afraid to see options and to make a choice. Third, he admits if he is wrong, apologizes, learns, and moves on. Fourth, he takes care of himself and seems to cope with the enormous stress of the demanding job. With a good team focused on solving problems and dedicated to learning, he is off to a great start. Even his opponents are hopeful that he will do things that help him set an agenda not only for America, but also for the world. If he can replace rancor with cooperation and focus on solving problems more than on claiming credit, he can lift all of us to see our better selves.