Leadership as a Brand: Part 2

Dave Ulrich and  Norm Smallwood
Posted: 09/30/2008
Branded Leadership Matters

When firms have a leadership brand, they win on multiple dimensions. They win with investors because investors will grant higher market value for similar earnings, often called intangibles. Quality of management or leadership gives investors confidence in the future, leading to a higher share price. General Electric, for example, has a reputation for great leaders. Those who leave GE to lead other firms carry that leadership brand with them and often create intangible market value. Of course, as we noted earlier, if the perceived brand value is not rooted in reality, or if the brand does not transfer to the demands of the new consumers, the brand image fades. But branded leaders are often in firms that have a higher price/earnings ratio than others in their industry.

Firms with branded leadership win with customers because the customers have confidence that the leaders at every level of the organization will respond to their needs in a consistent and appropriate way. Nordstrom wins in the service game because its leaders are branded with a service mentality at all levels of the organization. They don't have to ask for permission to serve customers, they just do it because it is a part of who they are. And customers respond with very high customer share. Target customers who spend $1,000 every six months on products Nordstrom sells buy a larger percent of their products at Nordstrom because of the service brand that is embedded among all Nordstrom leaders.

Finally, firms with branded leadership win with employees. When a consistent and effective leadership brand exists in an organization, employees know what to expect and the productivity and engagement draining dissonance is eliminated. One leader told us that he treated his best customers as if they were his best employees and his best employees as if they were his best customers. If a firm makes a customer brand promise of timely and responsive behavior, the same brand should be reflected in employee relations. Herman Miller wants to be branded as the innovator in the office furniture business and the company consistently creates innovations in products and services to customers. In extending and consistently applying the leadership brand, that same spirit of innovation permeates how they treat employees, offering creative and flexible approaches to employee terms and conditions of work, work settings for employees and work processes.

Building Leadership Brand

In the last few years, we have worked to define how leaders can build their personal brand to be consistent with the firm's brand, thus creating leadership market value. More recently, our work with excellent firms has helped us identify six steps to creating branded leadership within a firm and being a branded leader.

Step 1: Create a need for leadership brand. Before making investments in creating a leadership brand, the senior team needs to recognize that investing in a leadership brand will help the company's financial and customer performance. While some senior leaders will immediately understand that creating a leadership brand can deliver much the same value as a firm or product brand, others may want something more substantial. Here are a few ways to gather the data you'll need to create a need for leadership brand:
  • Plot your company's earnings and stock price vs. your largest competitor. How have you done? If your price/earnings ratio has exceeded the industry average over a significant period of time, you probably have a favorable leadership brand. If not, or if it has declined in recent quarters or years, you may be losing intangible value tied to your leadership brand.
  • Identify the leadership brand for your company. Ask yourself: "What are the top three things we want to be known for by our best customers in the future?" and "What attributes and results do we need to exhibit in order to achieve that reputation?" Once there is consensus on these attributes, identify the extent to which your current leaders possess them in their day-to-day behaviors.
  • Review your growth strategy and pose the question: "Do we have enough leaders with the right skills to deliver this strategy?" To deliver on strategic aspirations requires money, technology, product innovation and leadership. Which of these key ingredients is missing? Often firms have better access to capital than to leadership.
Step 2: Articulate a declaration of leadership. In the Declaration of Independence the signers stated their beliefs by way of a clear statement ("We hold these truths to be self evident...") that rallied both their intellectual and emotional energy. It gave them clarity about why they wanted change and what they wanted from the change. Likewise, we believe that branded leadership is more effective with a declaration of leadership. This declaration states clearly and succinctly what leaders should know, do and deliver. It combines attributes or competencies of leaders and their results. For a company's leadership brand, it sets the standards of what leaders at all levels should know and the results they should deliver. At a personal level, a declaration of leadership brand articulates the personal reputation that a leader aspires to, what he or she wants to be known for. Because the organization and individual brand statements are aligned to results, they are not generic, but instead crafted for the situation. And, like the Declaration of Independence, they offer both an intellectual and emotional roadmap for personal and institutional leadership.

Step 3: Assess leaders against the leadership brand standard. With a clearly articulated declaration of leadership, a standard is set that can now be assessed. Leadership assessment requires collecting perceptual and objective data on leaders' behaviors and results. Since personal assessments are rarely accurate, data should also be collected from multiple stakeholders in a 360 Degree Assessment with input from superiors, peers and subordinates or, even better, in a 720 Degree Assessment, which includes these individuals plus key stakeholders outside the corporation (e.g., suppliers, customers, investors, community, etc.). An assessment should be tracked over time to look for patterns—not events—and to build the next generation of leaders.

Step 4: Invest in leaders to enhance the brand. Using data from an assessment, investments can be made to enhance the leadership brand. There are three general types of leadership investment: training, on-the-job experience and off-the-job experience. Training offers structured learning experiences where individuals may learn academic principles and apply them in structured settings. On-the-job experience allows individuals to learn from their day-to-day experiences. These experiences may be more structured with coaches, mentors and task forces or less structured through job assignments and presentation opportunities. Off-the-job experience also offers leaders a great source of learning. Serving on not-for-profit boards, doing community service and being engaged in other off-the-job activities builds relationships and leadership skills.

Step 5: Measure the quality of leadership and the impact of leadership investments. Measurement of leadership investments is critical so that appropriate resources are invested in next-generation leaders in effective ways. Measurement starts with the business case for why leadership matters: "Why are we investing in leadership brand?" "What results do we expect to see as a result of this investment?" Often this means tracking things like employee engagement, customer share or investor intangibles. Measurement may also focus on behaviors that leaders demonstrate. Too often, however, this is where the measurement stops. Therefore, the initial business case should include a plan for routine measurement and assessment of results, followed by adjustments, as necessary, to investment strategy to ensure appropriate results are being achieved.

Step 6: Publicize the leadership brand in ways that encourage continuity. In the first five steps we have focused on ensuring that our leaders have efficacy to deliver on the leadership brand proposition. To ensure brand recognition, however, we must develop awareness that these investments are worth it. The major aim of this awareness campaign is to build stakeholder confidence in the future of the organization. The CEO should be the brand manager of the company leadership brand and he or she should take the lead in building brand awareness. This is done by ensuring that employees, customers, analysts and investors understand the leadership brand, what leaders are doing to build the brand and the results that have been achieved as a result of the investment.

Leadership Matters

Leaders matter. But just as leaders matter to organizations, so too does leadership—specifically, the brand of leadership—matter to organizations. Branded leadership helps turn the desire for leadership into the actions required to make it happen throughout the organization—in a way that is aligned with the organization's strategy.

Further, branded leadership offers insights on what those who are invested in building leadership throughout a company should pay attention to. For those who want to become more effective leaders—in our experience, most anyone who is in a position of leadership—branded leadership provides a clear roadmap of what they should know, what they should do and what they should be. What is your firm's leadership brand?

For more information on Leadership as a Brand visit www.rbl.net.

Originally published in Link & Learn, April 2006.
Dave Ulrich and  Norm Smallwood
Posted: 09/30/2008

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