By Lou Centini
I believe that leadership matters. It sets the successful firms apart from the others in any industry, because without good leadership, nothing really works in organizations.
Both research and practical experience have demonstrated the value of assessing leadership effectiveness and providing feedback for improving individual and organizational performance. What this says is that leadership is not a mystical quality that only a select few are born with. Instead, leadership is a measurable, learnable and teachable set of behaviors that can be improved if the desire, awareness and competence are present.
We know now that leadership effectiveness is contingent on relationships at every level–direct reports, peers and boss. That’s why 360-degree feedback has proved one of the most effective catalysts for management development. It provides the tool—hard data, in fact—for building leaders’ awareness of their leadership effectiveness and impact on others. They learn what their strengths and weaknesses as leaders are, and are better equipped to develop action plans for improvement.
How can credit union executives become better leaders? I recently analyzed the results of a 360-degree feedback tool called Leadership Practices Inventory which was administered to 188 participants in CUES’ CEO Institute III over five years. Interpolating those results to all credit union executives, you can most improve your leadership by focusing on two of the five areas measured by LPI: Enabling Others to Act and Encouraging the Heart.
Enabling Others to Act means fostering collaboration, building spirited teams and understanding that mutual respect is what sustains extraordinary efforts. Leaders strong in this area create an environment of trust and empowerment. They enable others to act not by hoarding power but by giving it away. They strengthen others, making each person feel capable and powerful.
Encouraging the Heart means recognizing the hard work and contributions individuals make and also celebrating the accomplishments of the team. This keeps hope and determination alive, spurring people to the hard work that accomplishing extraordinary things in organizations requires. Strong leaders show people they can win and link rewards with performance.
The premise of the LPI is giving individual executives and their “observers” (peers, direct reports and bosses) the opportunity to rate the executive in fives leadership areas. The self scores are then compared to the observers’.
As is generally the case, the CEO Institute participants’ self-scores were higher than those of the observers. The greatest statistical difference in the scores for any of the five practices is for Enabling Others to Act. It also represents a significant opportunity for improvement—being rated lowest by observers.
In the case of Encouraging the Heart, on the other hand, there was close alignment between leaders and observers, with both groups rating the practice low.
As the war for talent accelerates, leaders must recognize that everyone is ultimately a volunteer and the most talented employees have the most choices. These employees want meaning in their work and want to be recognized for their contributions. Leaders must directly link rewards with performance. Leaders must also recognize the potential in all employees. This demands that leaders take on the roles of teacher and coach to tap into the vast reservoir of latent talent in the credit union.
Numerous studies have also shown that when fun and enjoyment are incorporated into work, performance goes up dramatically. As counter-intuitive as this may seem, credit union leaders would do well to embrace this notion: Celebrate accomplishments regularly and become the No. 1 cheerleader in your organization.(For ideas from two CU CEOs, check out this article.)
As credit unions grow and become more complex and at the same time are faced with the demands of an increasingly competitive market, it must be acknowledged that one or even a small group of people at the top can no longer effectively lead a credit union, regardless of size. Leadership is not a solo act. Collaboration and increased participation at all levels will be the foundation of success. Leaders must build an atmosphere of trust and mutual respect. Without trust you cannot lead. The essential skills of this leadership model are listening, delegating and empowering others, or in Stephen Covey’s words, expanding others’ sphere of influence.
The importance of improving these two practices is especially critical to the future viability of credit unions. The core essence of credit unions are their personal relationships–those with their members and those with their employees. Credit unions are also heart enabling organizations. These attributes make credit unions distinctive from other financial institutions. There is no question that credit union leaders need to do better at enabling others and encouraging the heart. The continued low scores in these two practices are moving in the opposite direction of where credit unions need to go to maintain their unique position among financial institutions.
What steps can leaders take to improve? The two most important actions are:
- Make a commitment to learn to lead. This involves looking deep within yourself and accepting feedback and support from others as gifts.
- Commit to do something. You’ll need to navigate for yourself what particular pathway of improvement to take. You’ll need to develop specific action plans for each leadership practice and diligently monitor progress along the way.
Leadership is a choice. Leaders must have a burning desire to lead and be passionate about making a difference. The good news is that credit union leaders have already established a strong foundation upon which to build a brighter future. The challenge is that even more will be required of them.
Is there need for concern? I am optimistic. We know from history that challenge is what provides the opportunity for greatness. It is time for credit union leaders to answer the call for ever greater leadership. We must again emphasize that leadership is a choice. Leaders must have a burning desire to lead and be passionate about making a difference. The good news is that credit union leaders have already established a strong foundation upon which to build a brighter future.
Lou Centini is senior director of executive education at the Darden School of Business Administration at the University of Virginia, Charlottesville, Va., and a key faculty member for CUES’ CEO Institute III. He has compiled a credit union CEO leadership profile that is available free to CUES, Directors Educational Forum and Financial Suppliers Forum members.
