LEVEL 5 LEADERSHIP

Abstract:
This paper deals with the concept of Level-5 leadership, a theory postulated by Jim Collins in his seminal books-Built To last(1994) and the sequel Good to Great(2001). This paper focuses on the several paradigm shifts that Collins has, willy-nilly, forced us to confront. In his books he does not talk of paradigm shifts but outlines the principles of his theory based on empirical data. But, on a careful and critical examination of his theory, and compared with the many current, accepted theories on leadership, several paradigm shifts have been identified which will make it easier for us to relate to Collins’ theory, especially when read in the backdrop of the earlier theories.
1.      LEVEL 5 LEADERSHIP PRINCIPLES
Jim Collins had changed several paradigms of conventional wisdom that were gleaned over several decades of research on leadership. His theory, although revolutionary, is however, based on empirical research and stands on sound footing and is therefore not easy to challenge.
Level 5 Leadership theory changes our perception of successful leadership strategies or styles.
 Paradigm shift-1:
 Level 5 Leaders embody a paradoxical combination of personal humility and professional will.
They do not hesitate to sack non-performers; humility is combined with rigor for the Company’s interest. They are fanatically driven, with relentless focus on results; even prepared to sack their brothers (Collins,2001,pp-30, Good-to-Great). These two qualities– professional will and personal humility appear to be like oil and water; they do not mix. Yet, the Level 5 leader achieves this seemingly impossible task of combining these two qualities. The result is that while the Level 5 leader is driven, like all successful leaders, yet he retains his humanity and does appear to be cut-off from his team. Rather, he functions as a part of his team. He may be the ‘First Among Equals,’ but he never reinforces this; with the Charismatic leader, one is never in doubt as to who is the boss.
Level 5 Leaders give credit to others and take blame if things go wrong—window and mirror concept, unlike charismatic, ego-centric leaders who are the opposite; Level 5 Leaders are self-effacing and shun publicity.
Charisma
Charisma as much of a liability as an asset as people tend to filter brutal facts from you (Collins,2001,pp-73).
The whole philosophy of Level 5 leaders is based on equality which is best represented by personal humility. Their style of leadership encourages people to voice their critique without fear of being discriminated against; whereas the charismatic leader is so much larger-than-life that most subordinates would rather not question or critique his decisions. Their ego is a huge hurdle and the charismatic leader builds his invincibility on his intellect and all-knowing persona and therefore it is very difficult for him to admit his mistake or to let anyone question his wisdom. This invincible aura prevents him from getting honest feedback on his decisions.
Paradigm-shift-2:
Level 5 Leaders are born rather than made; the in-born traits are strongly embedded in some, more than in others.
Some can never subjugate their ego needs for the greater good of the organization no matter what, while the others are capable of evolving eventually into capable Level 5 Leaders through a combination of nurturing and conducive environment.
This directly challenges the Behavioral theories which came into being in response to the trait theories and are postulated on the premise that leadership is a set of skills that, like any other skills, can be learned. Collins rebuts this theory, albeit not directly, but it can clearly be inferred from his principles of Level 5 leadership as can be evidenced later in this paper.
Paradigm shift-3:
First get right people on board and get wrong people off, (Collins,2001,pp-51),  then decide on strategy, i.e. where to go, unlike the  approach of the Transactional or Charismatic leader – first, vision, mission, strategy and then get the right people.
People are not your most important assets.
The right people are; this implies that one must –unhesitatingly- remove the misfits.
This begs the question-who are the right people?
Definition of right people:
     People with-       a)character, b) work ethics, c)  basic intelligence, d) dedication towards fulfilling commitments, e) values.
According to Collins, these qualities are more ingrained or intrinsic, whereas specific knowledge and skills are more teachable. In other words, these qualities cannot be imparted unless the inclination is already inherent in people.
There should be no compromise on hiring the best people, one should never settle for less.
The other side of the coin is– get rid of unsatisfactory/inefficient performers quickly.
Collins, in his research, discovered that people either stayed on for a long time or left quickly in Good-to-Great companies.
Paradigm-shift-4:
Compensation-the purpose of compensation should not be to get the “right” behavior from the “wrong” people but to get the “right” people in the first place and to keep them there.
Motivating people is a waste of effort
While compensation should be guided by market considerations but companies should not focus on using compensation as a motivating factor to bring about right behavior. The motivating factor for level 5 leaders is the complexity and challenging nature of the job rather than mere monetary rewards.
Don’t manage the people, manage the system (Collins,2001,pp-125).
If you hire the right people, they will be self-disciplined and you don’t need to manage them– only manage the system.
If you have the right people in the first place they will be self-motivated (Collins,2001,pp-89). The Level 5 leader does not believe in any special motivating schemes and efforts. According to Collins this is a waste of effort.
Paradigm shift 5:
Do not decide on vision, mission strategy first but “ask what is to be done?” and search for facts, and only then arrive at a strategy.
Vision is important but Truth is more important. Create a climate where truth is heard without dilution (Collins,2001,pp-60).
To make that happen, a Level 5 leader:
Ø     leads with questions, not answers
Ø     engages in dialogue and debate, not coercion
Ø     conducts autopsies without blame
This paradigm shift yet again illustrates the personal humility of a Level 5 leader in that he does not pretend to be all-knowing and does not direct his team. Instead, he asks for their advice and opens up channels of feedback which the Charismatic leader shuts off right from the outset by his directive approach which brooks no challenge to his intellect and his vision. The Level 5 leader, on the other hand, goes about his work in an unassuming manner, almost in a self-effacing style. He places a premium on truth and the hard brutal truth without any dilutions.
Level 5 leaders are prepared to Confront brutal facts– but without losing faith(Collins,2001,pp-65).
Paradigm shift 6:
Put your best people on biggest opportunities, not biggest problems—managing problems well can only make you Good, not Great, but building on opportunities is the way to Greatness.
Sell off your problems (divisions) but not your best people-retain them (Collins,2001,pp-59).
This is in stark contrast to the normal practice of putting the best managers on the critical problems to resolve them. Collins states that the Good to Great companies do not practice this and instead, put their best people on the biggest opportunities. The road to greatness lies in the realm of opportunities by taking advantage of them, not by merely resolving the big problems.
Paradigm shift 7:
Most of the Good-to-GreatCEO’s (Level 5 Leaders) came from inside(10 out of 11 Good-to- GreatCEOs); whereas the considered wisdom was to appoint a CEO from the outside(Collins,2001,pp-31).
Traditional Management Concepts Vs Level-5 Leadership Concepts
Traditional Management Concepts
Level-5 Leadership Concepts
Charismatic/Transactional Style of Leadership where the Leader takes charge and directs the employees
A paradoxical combination of personal humility and professional will;
Charisma as much of a liability as an asset as people tend to filter brutal facts from you
Leadership is a set of skills that, like any other skills, can be learned(Behavioral Theories)
Level 5 Leaders are born rather than made; the in-born traits are strongly embedded in some, more than in others
People are your most important assets
People are not your most important assets;
The right people are assets.
Motivating employees an important aspect of Management
Motivating people is a waste of effort; Don’t manage the people, manage the system
Outline the Vision, Mission and Strategy first.
Do not decide on vision, mission strategy first but “ask what is to be done?” and search for facts, and only then arrive at a strategy;
Vision is important but Truth is more important. Create a climate where truth is heard without dilution
Put the best people on biggest problems as an integral part of crisis management strategy.
Put your best people on biggest opportunities, not biggest problems—managing problems well can only make you Good, not Great, but building on opportunities is the way to Greatness.
Appoint a CEO from the outside
Most of the Good-to-Great CEO’s (Level 5 Leaders) came from inside(10 out of 11 Good-to- Great CEOs)
Bibliography:
Collin, Jim, Built to last (1994)
Collin, Jim, Good to Great (2001)
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