Jul 12, 2015

The anatomy of a true leader

What are the most important characteristics a managing director should possess?

Here is my list — I wonder how it compares with yours.

■ The ability to motivate: to command their troops effectively in battle, generals need to be able to inspire them. Orders alone are never enough — if their hearts aren’t in it, staff will simply “consent and evade”, as they say in the army. Whether it is closing a sale or running a production line, a boss who can enthuse a workforce will generally do better than one who rules by fear or lethargy.

■ Domain knowledge: whoever is in charge must be endowed with sufficient technical understanding to obtain the respect of their team. I suspect one of the key issues within the NHS is that doctors mostly refuse to become trust chief executives. Even though there are more than 150,000 doctors working in the NHS, fewer than 5% of trusts are led by them. As a consequence, clinicians very often dismiss their leaders as “management” in a disparaging way. The man or woman managing a business needs to know the competitors, customers, markets, margins and myriad details that provide insight and intelligence. This requires time and study working in that field.

■ The ability to listen: the best bosses do not dominate debates. They encourage feedback and suggestions, and in hearing what others say, they gain wisdom. They leave their doors open so employees can come and discuss problems openly, and so they can find out what is happening at grassroots. They manage by wandering around the shop floor hearing what junior staff say, rather than having it filtered back via umpteen layers of hierarchy.

■ Decisiveness: ultimately companies cannot function effectively as pure democracies. Someone has to make decisions — in a definitive way. Procrastination or wishy-washy thinking are not the habits of a high-performing leader. Groups of people working together need a sense of direction or their energies are dispersed. That is why the formal name for the boss is managing director.

■ Financial literacy: whoever controls a business must be able to interpret its financial statements readily. I am surprised how many senior managers I meet cannot read a cashflow statement. This is basic stuff for anyone running a big organisation, or indeed starting an enterprise. I studied accountancy at night school to get a grounding; every ambitious executive should be able to analyse accounts.

■ A sense of humour: this trait might seem out of place in such a list, but life is short and, as they say, “a day without laughter is a day wasted”. This applies as much to corporate cultures as anywhere. I always used to think David Page, chief executive of PizzaExpress while I was chairman, had a philosophy of management by fun. While remaining a deadly serious restaurateur, he always made meetings more enjoyable, so that one looked forward to a day working in his company.

■ Reliability in a crisis: every company suffers problems — sometimes these can become full-blown disasters. Be it strikes, litigation, industrial accidents, fraud or supplier insolvencies, I’ve experienced many difficulties in business. The firms that coped best were those where the person in charge didn’t panic, but rolled up their sleeves and got down to work in a professional and diligent way, without histrionics.

■ Frugality: the most impressive principals with whom I’ve partnered have adopted a thrifty approach to business, and indeed life. Extravagant chief executives set a bad example and typically live beyond their means — which usually ends in trouble. In this hyper-competitive age, every operation must be a lean one; there is no room for waste or profligacy.

■ Delegation: this is the only mechanism by which start-ups can become large companies. Not all founders can make the transition from being a proprietor/manager to becoming an accomplished group chief executive of a big undertaking. They need to learn to identify, promote, trust and empower talent. Entrepreneurs like Sir Richard Branson have made fortunes by hiring and retaining superb managers who have built substantial companies.

■ Adaptability: modern companies need to be flexible. Competitive threats are all around, and rapidly evolving technology means no business model is secure for long. Intelligent leaders thrive on change, are constantly learning, and do not adopt a dogmatic mindset. There is a crucial difference between being firm and being unrealistically stubborn.

■ Bravery: outstanding leaders need the courage to make unpopular choices. Often that means personal sacrifice for the greater good, or risking their position for a strongly held belief. I am disappointed at how many eminent public figures fail to speak out on controversial issues, or prefer to abide by the consensus in order not to seem like “troublemakers”. To me they are at best followers, not leaders.

Perhaps readers could tell me which attributes I have missed.