Managers Manage, Leaders Lead: How to Tell the Difference
May 3 2010 by Sharon Daniels
What separates a leader from a manager? One thing is certain: It’s not determined by the organizational level of the person. According to AchieveGlobal’s recent international study of leaders today, a CEO might be a manager – and a supervisor, even an individual contributor, might be a leader. The key difference revealed in our research is that leaders take positive action in six key practice areas, or what we call “zones of leadership.” Managers, in contrast, exhibit competence in one particular zone.
Our study began with an analysis of 80 industry and academic studies published since 2006 in eight leading business journals. We then tested a preliminary leadership model in focus groups with 30 senior and mid-level managers, followed by a multi-level, international online survey that yielded 971 responses. This three-phased study produced a final model of strong leadership today: 42 best practices - some behavioral, some cognitive - sorted into six categories, or zones of leadership.
Zone 1: Reflection (Finding Strength Within)
Mort Meyerson, CEO of EDS and later Perot Systems, captured the essence of this zone when he said, “My first job as a leader was to create a new understanding of myself.”
Confirming that observation, our research found that leaders habitually consider their own motives, beliefs, attitudes and actions. This ongoing self-assessment helps them recognize the limits of their knowledge, make the most of feedback, and gain the ability - and credibility - to help others do the same. To meet today’s challenges, genuine leaders ask themselves such questions as:
- Do I understand the big picture?
- Am I really in touch with the day-to-day?
- Do I take responsibility for my own mistakes?
- Do I treat failure as a chance to learn and grow?
- Am I truly considering ideas at odds with my own?
- Does anybody push back when I need perspective?
- Do I model what I ask of others?
Many corporate boards recognize the value of reflection by asking chief executives to submit an annual self-assessment - at Xerox and Delta, for example, covering employee morale, enterprise guardianship, strategic planning, and other areas. Portland General Electric asks the CEO to evaluate other executives as well. Ten years ago, Health Net Inc. CEO Jay Gellert volunteered an annual self-assessment, and the board made it mandatory two years later.
As CEO of Southcoast Hospitals Group, Ronald Goodspeed used a self-assessment to create a “how to manage me” manual for the new VP of performance improvement. When Dr. Goodspeed shared this manual with other executives, he noted, they began questioning him during meetings, asking him to curb his verbosity and clarify his points.
This kind of reflection can be life-changing: Before he became CEO of think3, Joe Costello took a break from his PhD studies in physics at Berkeley to work in high-tech. As he described his work, a colleague said he sounded more excited about Silicon Valley than about Berkeley. Reevaluating his interests, Costello saw his true passion and began pursuing a career in high-tech.
Zone 2: Diversity (Finding Value in Human Differences)
The best leaders act on opportunities to create and guide a diverse workforce for maximum productivity. They understand that diversity helps them hear the voice of the customer and become a global competitor. They also recognize that diversity fosters creativity. Effective leaders encourage collaboration in order to leverage basic human differences including gender, ethnicity, age, nationality, beliefs, and work styles.
Ernst & Young, widely known for the value provided by employees from previously under-represented groups, requires the entire workforce to attend one day of diversity training each month, sponsors minority and women’s leadership conferences, and provides structured and informal ways for these employees to access senior management.
At Johnson & Johnson, diversity results determine six percent of the bonuses for leaders reporting to CEO William C. Weldon. The company’s board of directors is nine percent African-American, nine percent Asian, nine percent Latino, and 27 percent female. At last count, women represented 31 percent of senior executives. In each of the company’s communities, both the management population and the total workforce reflect local demographics.
Zurich Financial Services CEO James J. Schiro listens attentively to his company’s younger employees, inviting them to express their views at meetings and seeking out younger people in local offices. He says, “They seem to have a better idea of what’s going on in the organization.”
A study reported in World Development concluded that, compared to countries with gender parity in education, countries without it have lower annual per capita economic growth between one and three percent. A World Bank study found that a one-year increase in female education correlates with per capita GDP growth of 0.7 percent.
Zone 3: Ingenuity (Accelerating Innovation)
Genuine leaders create an environment in which innovation thrives. They continually rethink core assumptions with such questions as:
- Do established systems pay off as they once did?
- What are the organizational barriers to new ideas and their commercialization?
- Are we allocating resources to ideas with the greatest potential?
- Do we truly encourage people to try something new?
- Is innovation everyone’s job?
- Do we help people adapt to the changes that come with innovation?
To encourage innovation, Unify Corporation CEO Todd Wille (when he rejoined the troubled company as COO) got the product development team to talk to customers, learn what they needed, and then build it.
Leveraging “the wisdom of the crowds” can boost innovation as well. When Motorola employees began flooding the idea generation system, the review board revamped the system to allow employees to identify the best of the ideas for a rapidly-changing market. GE and Best Buy use a similar approach. At the online retailer ModCloth, customers vote on what clothing to include in the catalog.
Other well-known examples highlight the leader’s continuing need to foster innovation, despite market conditions:
- Google’s founders allow company engineers to spend one day per week on innovative projects, either something new or a creative solution to a persistent problem.
- Apple launched the iPod within months of the 9/11 attacks, in the midst of a recession.
- DuPont introduced neoprene and nylon during the Great Depression.
Zone 4: People (Connecting on the Human Level)
Leaders understand the importance of employees’ self-esteem and sense of belonging. They try to make every human interaction an opportunity to connect, and to demonstrate the behaviors they expect of others.
Campbell Soup chief executive Douglas R. Conant keeps a pair of sneakers in the office and uses them often to walk the halls and talk to employees. He believes a company can’t win in the marketplace unless it first wins in the workplace. Chief executive Vineet Nayar of India’s HCL Technologies posts his 360-degree evaluations on the company intranet for viewing by 50,000 employees. He calls this “reverse accountability.”
Pepsico CEO Indra Nooyi wrote to the parents of her 29 senior executives to tell them they did a great job bringing up their children, who do extraordinary work for the company. The letters unleashed unbelievable emotions, she said.
When Frank Blake became CEO of Home Depot, he made it clear that he wanted everyone in the company to connect better. Within days, he abolished the free catered meals for senior executives in the corporate dining room and had them pay for their own lunch with other employees in the cafeteria. On business trips, Blake eats take-out with employees in the break room.
Zone 5: Society (Working for the Common Good)
True leaders know that what’s good for society is good for business. Henry Ford recognized that good pay for employees created good customers for his cars. His 1914 pay raise from $2.34 to $5.00 per day for qualifying workers was criticized by other industrialists and Wall Street. But the move reduced employee turnover to the point where Ford no longer bothered to measure it. He labeled the increased compensation “profit-sharing,” rather than wages.
Wal-Mart is creating new customers and combating negative press by going green in many aspects of its business. Pfizer, which paid $2.3 billion last year for improper drug marketing, is providing free prescriptions for a year to consumers who lost their jobs during 2009 and lack prescription coverage. CEO Jeffrey Kindler says, “In the long run it will help our business.”
Efforts at building trust among customers, employees, and business partners can provide impressive payoffs. A study of eight leading auto manufacturers, here and abroad, showed that the most trusted parts buyers paid one fifth the price for parts paid by the least trusted buyers. The University of Michigan’s hospitals no longer reflexively fight malpractice claims. As a result, the costs for settlement payments and litigation have dropped markedly.
Anglo American provides HIV benefits to employee dependents in Africa, thereby increasing retention rates and decreasing absences of employees who otherwise would stay home to care for sick family. Hindustan Lever gives microcredit grants to make rural women distributors of its products in a market it couldn’t profitably access in other ways. Health benefits for part-timers help Starbucks recruit and retain its choice of baristas. And a range of companies has found productivity and retention payoffs in wellness and employee assistance programs, training in safety and literacy, and efforts to help employees on work/home balance.
Referring to “values-based capitalism,” Harvard Business School professor Rosabeth Moss Kanter says, “The goal of making Wall Street happy - to the detriment of all else - is in the past. Vanguard companies produce more than profit and growth. They create an unbeatable combination of innovation and social responsibility.”
Zone 6: Business (Planning and Executing)
This is the zone in which leaders as well as managers have to perform successfully. Both groups must develop and implement effective business plans, secure and analyze hard data to make effective decisions, adapt quickly to changing business conditions, organize the work of others to achieve predicted results, control their operating costs, and manage customer acquisition, retention, and lifetime value.
The simple difference between these groups is that managers focus primarily in the business zone, while leaders develop their abilities as well in the five other zones identified in the study. It’s no surprise that the most valued zone among survey respondents - at every level in every global region -was business, without which no organization can succeed. A manager skilled in business becomes a leader by taking the interest and mastering the skills to succeed in the other zones.
It is all but impossible for a leader to give equal attention to 42 practices in six leadership zones. Still, the study concluded, long-term success requires leaders to develop the awareness to make conscious trade-offs among six critical activities:
- Self-assess for personal improvement.
- Leverage the value in diversity.
- Accelerate innovation.
- Connect everyone on the human level.
- Promote the good of society and the organization.
- Plan and execute for competitive advantage.
Sharon Daniels is chief executive of AchieveGlobal, http://www.achieveglobal.com/, which provides performance-improvement consulting and solutions in leadership, sales, and customer service. With offices in 42 countries, the company offers customized learning in 30 languages and dialects.