Stefan Stern on Management

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In 2008, some of the world’s most important people headed to Davos in Switzerland for intensive high-level debate and supercharged networking. I went to a presentation near Smithfield meat-market in London.

Those of us who made it to Haberdashers’ Hall, London EC1 last Tuesday morning were reminded of one of the classic leadership dilemmas that should have been – but wasn’t – on the Davos agenda. The view from the Swiss mountain tops may be splendid but down on the ground managers are wrestling with other, less glamorous but ultimately more significant matters.

The presentation I saw was given by the Roffey Park Institute, a venerable management training and research body. Every January for the past 11 years Roffey Park has presented its ‘management agenda’ report, based on the responses of managers to a large set of survey questions.

This report provides an annual barometer reading of managers’ attitudes and concerns. Not every finding comes as a devastating surprise, of course. Organisations are worrying about how they should deal with change, how to attract and retain the best people and how to develop future leaders. They are still not sure what an “HR business partner” is and what he or she might do for you.

But just when your correspondent feared he was about to become the next sorry victim of the techno serial-killer known as PowerPoint, a magical slide popped up on the screen. It was headed “Effect of hierarchy”, and it uncovered the stark differences in the opinions held by managers, which varied depending on the position those managers held in their corporate hierarchy.

For example, 82 per cent of board directors felt that the leadership enjoyed by their organisation was good or excellent. But only 52 per cent of middle managers felt they could describe their business’s leadership in such a positive way. Where 37 per cent of board directors declared morale in their organisation to be high, only nine per cent of middle managers thought it was as well. While only 26 per cent of board directors found a mismatch between the ‘espoused values’ of their organisation and what actually went on, a startling 75 per cent of junior managers found precisely such a gap.

In fact views on these (and other) issues varied at all managerial levels. Not so much a case of ‘us and them’ as ‘us and them and them and them’. What seems true in the C-suite can look utterly different elsewhere in the organisation.

So did lobbyists, consultants, politicians and other assorted Davos hangers-on (oh, all right then, journalists) waste their time last week trying to grab a few minutes’ schmoozing time with those global chief executives? I don’t suppose they did. Power resides at the top. Deals are signed in boardrooms, not in the staff canteen. But, equally, if you want to find out the truth about the organisations that these elite chief executives are leading, more time has to be spent listening to middle and junior managers. Their views may not be quite the same. They are hardly irrelevant.

But what explains this mismatch of perceptions? Jo Hennessy, Roffey Park’s director of research, says that, inevitably, business leaders often end up losing touch with the rest of the organisation. The upward flow of information can be unreliable and intermittent. At the presentation last week, Ms Hennessy described how one business leader had said to her: ‘People tell me what they think I want to hear. I have to work really hard to find out what’s going on.’

The problem of hierarchies is hardly new. Cain and Abel had their own hierarchical bust-up, with fatal consequences. John Hunt of London Business School used to say that whenever two people meet a hierarchy is immediately formed. But a big effort is needed if leaders want to bypass the costly misunderstandings hierarchies inevitably create.

Would Chuck Prince have kept calling for the ‘dancing’ to go on at Citigroup if he’d been able to communicate better with traders lower down the firm? Why did Tom Kirby, former Games Workshop chief executive, seeking to explain away poor figures last week, have to tell investors: ‘I’m sorry we have not done as well as we should the past two years. We grew fat and lazy on the back of easy success.’ Why was no early warning signal reaching him from the shop-floor?

Most of us want to climb the career ladder. Natural born leaders will force their way to the top. But there is danger in that ascent. And, as we all know, the higher a monkey climbs . . . the easier it is for the vet to carry out an intimate examination.

The late John Garnett, the former head of the Industrial Society, an even more venerable (and now reconstituted) organisation, used to say that leaders needed to have “their eyes on the hills”, while keeping “their feet on the ground”. We can all dream of one day reaching the snow-topped peaks of Davos. In the meantime, other more important work will be carried out elsewhere.