The case of Mr Bo –a premier figure in Chinese politics, recently being sacked due to a mysterious case involving his wife and links with the death of a British businessman. The death was reported as a heart attack, as it was quickly ‘covered up’ by local police, who were very fearful of Mr Bo, who presided over his local area like a feudal king from reports from anonymous sources, too fearful to come forward publicly.

This has highlighted the leadership trait of transparency and honesty. These are two traits absolutely essential for politics to work effectively, but is rarely found because these traits, combined with the ‘gotcha’ media and war-cries of the public mob, means that an honest politician would likely not hold office for very long.

Another case was revealed in the recent emergence of Mitt Romney as the US republican hopeful candidate. Perhaps the most important leadership position in the world is at stake, and yet his party (the GOP) is shockingly unsupportive of his candidacy. Mitt has not been able to demonstrate another important leadership style – the ability to relate to people and show them that you understand their concerns. This is closely linked with the ability to listen.

Mitt Romney keeps on getting caught making references to his very rich lifestyle (Romney owns almost $300m in assets) by using phrases such as ‘My wife loves Cadillac’s, my wife has a couple at home)’. For such a wealthy man, who obviously lives in a slightly different world to the rest of us; that the GOP could expect him to come across as Average Joe is a little unrealistic!

In theory, personal finances and company finances are a completely separate domain. With publicly listed companies – a directors own funds will never be used to finance the company (director loans are only common in small, unlisted business) and thus the success of the business will never depend on the financial stability of the executive himself.

Of course, theory does not always play out true, and a theoretical separation between leadership and finance does not mean that there will not be a link in appearance. At the heart of this question is the area of trust. Rather than looking at the cold hard facts (such as ‘has the CEO managed the company sensibly?) we would let personal financial struggles affect our trust in the leader. Once the trust is gone, shareholder sentiment will nosedive and rumours will begin to circle that leading institutional investors are not satisfied with the ‘stewardship’ ability of the manager, and this could lead to a vote of no confidence or an outright eviction from the board itself.

Example of such bankruptcies are rare, and are usually caused by the leaders other financial interests taking a nose dive (e.g. large losses on development of condos). But there is one key reason why personal finances and corporate finances are inexorably linked: management incentive schemes.

Management incentive schemes allow leaders to earn rewards for taking risks and increasing earnings at the business. However if the leader is approaching bankruptcy – they have nothing to lose and everything to gain from taking excessive risks in the hope of a big payoff, in the knowledge that bankruptcy would wipe all their debts anyway. So there is certainly reason for concern.

We often hear about celebrities making bad investments, and becoming bankrupt in celebrity gossip columns or occasionally the television. You rarely hear of the (unfortunately) all-too-common instances where normal business leaders also commit the same mistakes. You may mistake this gap in reporting as meaning that business executives are far too switched-on financially to make the same blunders as the rest of us, but you’d be wrong! The press simply don’t find those stories as notable or sensational as the other material they decide to print.

So make no mistake – a broad knowledge on personal finance will assist you in maintaining credibility in the world of management and leadership. Hearing that a leader or manager is particularly wealth adds instant respect because you understand that they have clearly been successful so far in their career.

The Price of Education

We all know that education is an expensive process. The cost involved go way beyond the labour costs of the tutor, as Universities aptly demonstrate by charging up to £9,000 per year in the UK for tution only. Education is expensive, and there are few ways around this if you want a high quality experience delivered by a reputable institution. Ultimate Team Leader gave an interesting discussion on the pros and cons of leadership video courses, which I won’t be outlining here, but in many ways – similar factors apply across both areas of debate.

Leadership courses come in many shapes and sizes, and therefore the price of leadership courses can vary widely across different providers. One can, for instance take the Advanced Leadership Programme provided by Lancaster University’s World-Renowned Management School. The course contains 3 intense one-week modules, each held on a different continent. The quality of speakers is extremely high (such as Henry Mintzberg) and I’m sure everyone leaves that course with plenty of food for thought. However this level of education comes at a price – €100,000 to be precise. At this price level – only executives sponsored by their employer would be able to afford such a course.

Well what about the other end of the spectrum? Are there any budget leadership courses available in institutions? Well courses tend to be cheaper when you look at smaller private providers. I-L-M, for instance, offers small leadership programmes that build upon each other and provide ‘progression’ up many ‘levels’ of leadership. Some could say this has a ‘Belt-Factory’ element to it, but the courses are much more affordable and are provided by local training providers, rather than a grand central teaching facility.

Value?

The value of leadership courses can never be underestimated. Cynics who attend any form of training will always be likely to draw a negative view of it, because they refuse to engage and do not see the experience as an opportunity to truly invoke personal change. Instead – focus on those who actually want to attend such an event – these candidates will have quite the opposite experience. These will but as much energy into the exercises as possible, and if they had to really push their management to help fund the course, they will also be looking for every opportunity to prove their reluctant seniors wrong.

Inspiration is often undervalued by management, but it can often make the difference between employees who actively take progression opportunities by the leash, and those who only look for other ‘job’ opportunities.

The Sampling Mistake

The studies have been largely inconclusive. Even those that have highlighted specific behavioural traits as being condusive to successful business outcomes, still cannot escape the ‘survivorship’ flaw of such studies. This is basically a causality flaw in the design of the methodology, and is extremely difficult to avoid. Simply put – researchers are forced to conclude that where a correlation is seen – the leadership quality must have caused the successful outcomes. And therein lies the problem. Even if you can show that the more of a certain traits, the higher a certain outcome, this does not necessarily prove direct causality between the two. That is to say, if you see that leadership trait A is positive correlated with outcome B, you cannot expect to cause outcome B by actively introducing trait A.

The Pets Know Best

Take a look at this family example from sociology. Imagine if a study from a survey of households revealed that families that had pets such as cats and dogs, reported higher levels of happiness than families that did not have pets. Many would read this article, and think ‘Brilliant! If I want to be happier, I’ll go out and buy a pet! They must cause happiness!’. This is a fallacy. One cannot draw that conclusion, because we can observe this relationship, but we do not know of other factors that might be at play here.

To take the example further – perhaps the reality of the world was that only families on good incomes could raise pets, and therefore all the families that reported high happiness, were also on higher-than-average incomes. Or another alternative is that people who are loving and kind tend to experience more happiness, and this type of person also likes the idea of having a pet more than the average family.

As you can see – this type of logic plagues those looking into leadership traits and qualities, and trying to draw sensible conclusions which managers could take out into the industry. You’re on your own I’m afraid! Well, except you have us to!

To be awarding honours to business leaders will be predictably scorned by many ‘Daily Mail readers’ as an ‘outrage’ given the recession. But these people are completely missing the point. These business leaders have had careers that have spanned decades, and will probably not be defined by the last 5 years, as they may indeed continue for another couple of decades. Secondly, it would be a mistake to imagine that all businesses have done terribly during this recession! The recession is not a blanket of doom which covers the economic landscape. Believe it or not, fortunes are still made everyday just as before. If the economy contracts by 4% during the year, then 96% of the economy is still running! This may squeeze margins intolerably depending on the foresight and planning of leaders, but will not be sufficient to crush all businesses with a recession axe.

Indeed when you look at the surprising run that commodities have had in the past few years (Read How to Invest in Commodities if you’re unsure what I’m talking about), you’ll realise that some people who were in the right place at the right time have made a lot of money during the recession. And again, while the envious masses may scream and shout that these ‘evil people’ have made money at their expense, in reality – commodity owners were generally those who took fright at the financial crisis and invested in what they viewed was safe – this is hardly an ‘evil’ investment strategy, and I wouldn’t say commodity investing individuals deserve any form of punishment.

So let me end this opinion piece by just summing up what I’m trying to say here. A recession and tough economic climate does not make profitable business ‘unacceptable’, nor does it make it ‘evil’, and nor is it unlikely! If anything is keeping Britain in a continual state of depression, it’s this attitude that when 0.5% of the population are being made redundant, the other 99.5% must act like they’ve been pushed into poverty out of sympathy. The pursuit of bettering ones lot is the driver of economic growth and development. Rather than scorning at profits we should be lauding them, and rather than opening every letter, email and article with ‘in the current economic climate’, we should be getting straight to discussing business, growing income and creating jobs.

So when the paradigms that held an old regime, or leadership style in place, change radically – how is a leader supposed to retain control? Or perhaps more topically, how does a new leader successfully take the reigns – when a new direction may not even be clear? It is these questions we will be discussing in this article.

Change of Direction = New Leader?

Does a radical change in policy actually require a new leader? Would only a fresh set of eyes, ears and arms be able to take on the challenge of turning a country, business or community around? If we are to look to politics for the answer, it would seem the answer is yes. When a country decides that it wants a new direction, in a civil democratic state – it will typically choose to elect a new party. This is a vote of non confidence in the ability of the prevailing politician to be able to execute that change for themselves.When the USA decided that the Republican Party under the leadership of George Bush wasn’t sufficient as to meet their needs, they switched to the Democrats.

In part, I believe this doesn’t represent the actual reality. I believe that much like ‘savvy’ customers switching companies when bad service is received – ‘fast switchers’ are simply switching to the brand that hasn’t let them down. In a world dominated by >a href=”http://www.scribd.com/doc/3979762/Brand-Management”>brand, leadership is no different. Once a leader’s brand has been tarnished, the competitors brands will look far superior, regardless of their ability to execute real change. The lesson we can learn from this, is that perception is extremely important for a leader. When a leader can be switched out after one mistake, every decision that leader makes is absolutely crucial. Management change experts like Stephen Warrilow will explain that “A step change initiative needs to be led – and it needs to be seen to be led“, and herein lies the key technique.

For an existing leader to successfully lead change, and be allowed the time to execute change, it must be seen first. What follows is that leaders must identify change opportunities and jump on them as soon as possible, so as to regain the confidence of their followers. Otherwise, their leadership brand will be tarnished and followers could ‘jump ship’ to the apposing brand before the (potentially very competent) leader has had the chance to turn the ship.

There are 5 major leadership styles, and we’ll talk through them in this article.

Democratic Leadership Style

The democratic leadership style is probably the most popular leadership style in the 21st century management arena. It’s a style that remains popular due to the positive reaction employees have towards it. If you lean torwards the democratic leadership style, this means that you seek to consult your employees or team members over decisions that will effect them. Naturally, followers prefer this strategy for several reasons. Either their self-interest attracts them torwards managers that allow them to make the choices that benefit them, or it’s the euphoric confidence bounce they experience when they’re allowed to make decisions that were previously ‘above’ them.

However, be warned. The democratic leadership style isn’t perfect in every occasion. Democratic decisions aren’t perfect, in the sense that they take longer to make. When one only has to consult oneself, a decision can be made almost instantaneously. In a war-time, life-threatening or high-risk situation, ‘democratic’ debate simply isn’t relevant. It simply isn’t optimal. Examples of these high pressure decision-making jobs include surgeons, army generals, fire-marshals and air traffic controllers.

The democratic process is used best in simple manufacturing sectors, where a respite from the harsh and ‘robotic’ leadership styles recommended by Ford or other factory managers of times gone by.

The Autocratic Leadership Style

Management may not be the worlds ‘oldest profession’, but the autocratic leadership style is probably the original type of management style ever employed. Simple at heart, the autocratic style of management involves making the decisions yourself and passing them onto subordinates. In the autocratic world, leaders are there to make the decision, and followers are there to follow. This promotes an ‘obedient’ style of follower present in the army, and perhaps some of the ‘tougher’ working cultures such as farming, logging, haulage and fishing.

This isn’t to say that an autocratic leader would fail miserably in, say, customer service. However, the more that workers are left to do imaginative or creative tasks largely on their own, the less likely an autocratic leadership style would really ‘bring the best’ out of the average worker.

The Laissez-Faire Leadership Style

Laissez-Faire literally means ‘leave alone to act freely’. It’s the complete opposite to the autocratic style, and you’d expect as a result to find leaders in completely different industries. As I said above, autocracy doesn’t apply well to creative industries, so as you’d expect, fashion designers, film directors and photographers are given plenty of ‘room’ by their managers to do their day-to-day work, but the laissez faire leadership style isn’t just great for creative industries, it’s also useful in the professional jobs.

I’m talking about lawyers, doctors, accountants, surveyors, architects and also teachers. These are individuals whom have spent upwards of 3 years in a training contract and have emerged into either a well paid or respected job. As a result, they expect a certain degree of ‘laissez faire’ from management in the way they work. In other words, they expect to be entrusted with plenty of responsibility and be left to discharge their professional duties with less supervision than say, a sous chef.

The Bureaucratic Leadership Style

Bureaucratic leadership is often met with a wince from a management team. (Almost) everybody dislikes the idea of bureaucracy. Almost by definition, bureaucracy involves time-intensive and often time-wasting rules and procedures within a rigourous and slow framework. Employees operating within a bureaucracy are given very little choice as to how they perform their work. The vast majority of their day-to-day tasks will be governed by the rule book. You may be wondering who this actually benefits. The answer is you, as the bureaucratic manager! Forcing employees to perform tasks in an efficient and prescribed manner will usually faciliate in a speedy review by yourself, or perhaps lower maintenance costs, or even more productivity of workers who use the data further in the process. The restraint and ‘discipline’ put in by your bureaucratic workers will have the exact effect you designed the procedures have, therefore you have great control. The drawback is that your employees feel that they’re being controlled, each rule at a time. Also, in a high-wage economy, bureaucracy can be a very expensive use of employee time.

Are you pro-active? Are you re-active? Do you speak more, or do you listen more? Do you imagine, or do you empower? Are you kind, or are you ruthless? These are all characteristics within our personality, our habits and our projected-self. Some of these can be changed easier than others. Leadership development is concerned with identifying your weaknesses and one-by-one, proactively engaging in activities and experiences that will improve them. Perhaps your leadership style is too autocratic and you’re having difficulty delgating properly. Maybe you lack confidence when it comes to public speaking, which is undermining your teams confidence in your. Whatever the weakness, whatever the issue, you can work to resolve it, and you can become a greater leader.

Now, I fully understand why a lot of people would read the above and take a critical view of leadership development. To many, it must seem like a very negative, very harsh and perhaps even endless pursuit. But let me convince you otherwise. To  understand ones faults is only to know oneself better, and to appreciate that they exist is far more positive than to deny that there is anything wrong. Finally, to go on step further and engage in leadership development in order to actually reduce or remove those faults, is a very noble pursuit that will be beneficial to not just yourself, but to those who work with you.

It’s truely inspiring to work with someone who is commited to personal development and growth. I believe that personal development is infectious, just like a smile. Once you can see for yourself that progress is possible in some of the most set-in-stone characteristics in a man, you fully realise the true potential of personal development, and what it could hold for you. You don’t even need to stop at leadership skills. Development of yourself is a hollistic pursuit that will introduce more happiness into all areas of your life, be it health, relationships, wealth or business.

Read around, and discover more about what leadership development can do for you.