Losing the Level 5 Leader: Why Companies Fall From Great to Good or Worse.

When you look at the companies that Jim Collins has identified as being great, few could be described in those terms today.  Why?  The short answer is that companies change.  Or more specifically, the people leading them change.  Collins identified so-called “Level 5 Leaders” as one of the attributes of great companies.   These leaders combine a determination to build a great organization with personal humility.  No factor is more important to an organization’s success that having Level 5 Leaders because they have a positive effect on employee engagement. They infuse the organization with values such as excellence,  work ethic, open-mindedness, humility, and courage to speak truth.  These are values that help create a Connection Culture, primarily by increasing the elements of Vision (Inspiring Identity) and Voice(Knowledge Flow) in the organization’s culture.  

When a Level 5 Leader hands over the organization to a leader who isn’t a Level 5, the new leader may fail in several ways.  He may not be openminded causing people to fear telling him the truth.  Lacking sufficient knowledge to make optimal decisions, he makes suboptimal decisions and the organization’s performance declines.  Lacking humility, he may fail to be participative by not informing or seeking the opinions and ideas of others. When this value cascades throughout the organization, 75-80 percent of employees will become disengaged so that they stop putting their best efforts in their work and they stop communicating.  The failure of communication, once again, leads to suboptimal decision-making and performance decline.  The point here is that developing and selecting leaders is critical to sustain superior performance.  An organization may be great for a season with a Level 5 Leader on top but if it fails to develop a pipeline of Level 5 Leaders, however, you can be sure it won’t remain there.

Who is responsible for talent management in your organization?  Does she have the CEO’s ear?  Does he have the resources required to get the job done?  Your organization’s future depends on it.

Marc Effron, VP of Talent management at Avon and head of the New Talent Management Network, is a thought and practice leader in talent management. He will be my guest in a webcast on the October 30 at 11AM Eastern.  Marc will talk about how he and his team have transformed talent management at Avon with the “One Page Talent Management” approach they developed. You can sign up to hear this webcast live by clicking on
employee engagement.     

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