The success of an organisation is dependent, to a very large extent, on how well it is led. But which is the best type of leader? One who inspires and motivates their staff by making them part of his or her vision for the firm? Or one who is bold and decisive, who knows what needs to be done and will drag the organisation, if needs be, in the direction they have chosen?
The two leaders I mention below are great examples of both types:
Herb Kelleher, the founder of Southwest Airlines was a charismatic leader who built an enormously successful business by putting employees, not customers or shareholders first. His reasoning was simple: your employees come first, because if they are treated well, they treat the customers well, the customers keep coming back, and that makes the shareholders happy.
In 2012, Southwest notched up 40 consecutive years of profitability – that’s some achievement in an industry that’s been ravaged by the effects of terrorism, rising fuel prices and the global economic recession. It’s also regularly voted among the best companies in the world.
His leadership style inspired such devotion among his employees that when he stepped down from the board of Southwest Airlines in 2008 its pilots paid for a full-page ad in USA Today thanking Kelleher, saying it was “an honour and privilege” to work for him. How many other CEOs have had that done for them by their workers?
Mart Laar, the former Prime Minister of Estonia, took over in 1992, when the country’s economy was in ruins: devastated by decades of Soviet economics it had high unemployment and rampant inflation. In barely two years in charge, Laar’s government introduced a flat tax, privatised 90% national industries in transparent public tenders, abolished tariffs and subsidies to encourage international trade. His bold actions balanced the budget and turned Estonia into one of the fastest-growing economies.
When in 1999 Estonia’s economy lurched into crisis again, dragged down by Russia’s financial collapse the year before, Laar was re-elected and restored the country’s economic fortunes once again. He had a reputation for being a leader who wasn’t afraid to take tough decisions that weren’t universally popular – he slashed public spending and hacked back bureaucracy – but his legacy was a peaceful, prosperous country.
So which leadership style is best: inspirational or bold?
The short answer is: neither. A leader’s style should be dictated by the circumstances. “Cometh the hour, cometh the man” as the Biblical proverb goes. There are times when it’s necessary to be bold and there are times when it’s necessary to be inspirational. It’s no good being autocratic when your employees want to be inspired, and you’re unlikely to get far by leading an organisation on your charisma alone if you lack an effective strategy.
The key to being a good leader is to be pragmatic: to understand the challenges facing your organisation and to tailor your leadership style accordingly.
Someone who I think has shown their great leadership qualities through their adaptability doesn’t come from the world of business, but from sport. And following the news of his retirement last week, it makes sense to mention him here. It can be argued that Sir Alex Ferguson is the most successful British football manager, whose career at the top has spanned three decades in which football has changed almost out of recognition. Yet his team clinched this year’s Premiership title (the 13th of his reign at Old Trafford) at a canter over its rivals.
When he arrived as manager of Manchester United in 1986, most footballers didn’t earn too much more than the average working man. Today, the top stars earn more money in a week than most people earn each year and attract transfer fees running into tens of millions of pounds. They are privileged icons.
But despite his image as a strict disciplinarian, whose half-time rants at players became known as the “hairdryer treatment”, he has managed to inspire the loyalty and trust of players who have driven his teams to success: Roy Keane, David Beckham, Christiano Ronaldo, Eric Cantona and Wayne Rooney.
Also, Manchester United underwent a controversial and bitterly divisive takeover during his time in charge, which saw the club forced to shoulder a mountain of debt. But Ferguson remained as manager and changed his style, forgetting expensive, big-name signings to concentrate on shopping around for younger players. Still the club enjoyed success, despite being outspent in the transfer market.
His management style has earned Ferguson plaudits far beyond the football terraces. A Harvard Business School professor wrote a case study on his success and last year he went to speak to students at the university to discuss his management style.