Just as leading a team is more complicated than one-on-one leadership, leading an entire organization is more complicated than leading a single team. Yet organizational leadership is worth mastering because an effective leader’s influence on an organization can bring people and systems together into a harmonious whole.
The first step in leading an organization is to diagnose the organization’s development level. The second step is to adapt your leadership style to that development stage. How do you diagnose the development level of an entire organization? The answer is to look at the organization’s results — the amount and quality of work accomplished in relation to the organization’s purpose and goals — and its relationships — the quality of interactions people have within and outside the organization.
There are four stages of organizational development: start-up, improving, developing and high-performing. Following is a framework for matching each stage with an appropriate leadership style.
In a stage one start-up organization, results are typically low because goals are new, and most people haven’t worked together before. However, relationships tend to be strong because when people come together to create a new venture, they are enthusiastic. At this stage, a directing style is appropriate. People look to the leaders to provide direction and get the organization moving.
In a stage two improving organization, results are getting better as people gain skills, but relationships often decline as the difficulty of building a new business sets in. At this stage, a coaching leadership style is appropriate. People need leaders to provide direction and support, keep results moving in a positive direction, and deal with frustrations and growing pains.
In a stage three developing organization, results continue to improve as skills within the organization are strengthened and effective strategies are put into place. Relationships are variable; people are working hard as the organization becomes more creative and nimble. At this stage, a supporting leadership style is appropriate. People are not yet fully confident and need encouragement from leaders to take initiative.
In a stage four high-performing organization, results and relationships are strong. People are working together with enthusiasm, leaders are emerging when and where they’re needed, and customers are raving fans. At this stage, a delegating leadership style is appropriate. This does not mean there is no direction or support, but it is coming from individuals and teams throughout the organization. The focus for leaders at this stage is to cultivate new strategic challenges and opportunities.
Diagnosing an organization’s level of development can take some time. We’ve seen too many situations where new CEOs — wanting to make a quick impact — enter organizations and immediately go to their favorite leadership style rather than the one that is needed.
A good example is how Carly Fiorina entered Hewlett Packard with a “my way or the highway” leadership style. Relationships took a beating as the company lost several of its most talented, high-performing people. Instead of involving people in leading the change, Fiorina resisted delegating authority. Results declined, and she was asked by her board to resign.
When a leader enters an organization and adopts the right leadership style, the results can be close to miraculous. Consider Alan Mulally. The year Mulally joined Ford Motor Co., the company reported a $12.7 billion loss — the biggest in its 103-year history. Mulally began the tough climb back to profitability by adopting a coaching leadership style appropriate for an organization with low results and declining relationships. Understanding that Ford’s people would be the key to a turnaround, Mulally ate with employees at lunch and regularly conversed with secretaries and assembly line workers. Mulally and the company’s executives sat down with union officials and shared the books. The leadership team and union collaborated to reduce Ford’s employees from 100,000 to 45,000 through retirements and voluntary buyouts instead of involuntary reduction.
By the time Mulally retired in 2014, Ford had posted 19 consecutive profitable quarters.
The skills required to lead an organization are complex but the results can create an enduring legacy.
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