According to a 2011 study by Opportunity Now, inclusive leadership is good for business: 84% of respondents said it improves motivation, 83% loyalty and 81% productivity and performance.
Opportunity Now’s director Kathryn Nawrockyi defines inclusive leaders as exhibiting three main behaviours. “Firstly, adaptability,” she says. “They are aware of differences and similarities between people, viewing it as a strength. Secondly, they have the ability to seek out and develop diverse talent. Thirdly, they are good at building inclusive relationships; they remain a leader without letting hierarchy be a barrier to a relationship.”
To help develop leaders for today’s diverse business environment, Opportunity Now is carrying out further research about inclusive leadership, in partnership with Shapiro Consulting. Financial services organisation Citigroup is one of the companies on board.
“Being a diversity-aware leader is not enough,” says Carolanne Minashi, EMEA head of diversity, employee relations and engagement. “When people feel included the organisation sees an increase in effort, retention and collaboration.”
To educate leaders about inclusive leadership, the HR team at Citi used an annual diversity week to raise awareness by holding events and discussion forums. Inclusive leadership has also been added to Citi’s core leadership programmes. “We believe inclusive leadership is integral to everything we do and will be embedded in all our processes,” adds Minashi.
And why is there a need for inclusive leadership? “Some risky behaviour has resulted from group think. [The traditional] leadership model isn’t sustainable and we need to enable better diversity of thought at the top of organisations,” says Nawrockyi.
“In the last decade we’ve seen a shift in the expectations employees have of their leaders,” adds Minashi. “There is an expectation that leaders will be personally engaged, lead with a coaching style and be less hierarchical. As we live in an increasingly globalised world, our most inclusive leaders are those who have an awareness and appreciation of diversity, and can foster an environment where creativity and innovation thrive.”
The clue is in the name when it comes to organisational democracy: taking the principles of democracy and implementing them in an organisation. “It’s a design choice that impacts all areas of the business and boosts performance, efficiency and morale,” says Traci Fenton, CEO of WorldBlu, an organisation that accredits democratic companies.
“The purpose is to have a more effective business structure for an interconnected world,” she continues. “You need all your people being smarter in today’s competitive market, not just the person at the top. You need to be agile and able to tap into the wisdom of the crowd.”
Brighton-based digital marketing agency Propellernet is one of 41 certified democratic workplaces. “Enabling our people to express creativity, adaptability and curiosity through democracy at work is fundamental to our success,” says managing director Nikki Gatenby. “We don’t subscribe to strict rules, policies and hierarchies. They can breed fear, which is an innovation killer.”
At Propellernet, employees are free to develop their skills and work outside their job descriptions, everyone is encouraged to contribute ideas (via tools like an internal Wiki) and the quarterly bonus is divided equally. Everyone is given a day off a month to devote to their personal development and the organisational chart “has been drawn a million different ways,” says Gatenby, “top-down, bottom-up, matrix, elliptical, even 3D; the emphasis is on what we all contribute”.
Reflecting on her own leadership style, Gatenby says she is “the conductor of our symphony”. “I think there is a role for a charismatic leader who creates a vision of the future, but that doesn’t mean there’s only one leader,” she adds. “You can easily have a more junior person leading because they might be better at it.”
Gatenby adds democracy doesn’t mean there’s no structure. “I’m a fan of flatter structures but not so flat that no one knows where they fit,” she explains. “Without [structure], you get chaos. Most people want to know that they are progressing and trying to progress through something flat is hard.”
Some might be sceptical, but Fenton emphasises the business benefits of working democratically. “It’s not idealistic, it’s highly practical,” she says. “People think it means losing control, but actually it still means being a leader; you’re just bringing out the leadership of everyone. The risk of not doing so is losing talent. That impacts hugely on the bottom line.”
And for Gatenby, the statistics are hard to argue with: retention rates of over 95% and sickness levels of less than one day a year per person.
Collective leadership and healthcare
Michael West, professor at Lancaster University Management School’s Centre for Performance-Led HR believes collective leadership could transform the NHS. “Command and control was the dominant leadership culture, and that’s the worst cultural type you can have in healthcare,” he says. “The only way we can achieve cultural change is through leadership.”
Here, Larry McEvoy, former CEO of Memorial Health System in Colorado, US, reflects on how implementing collective leadership helped him direct a $100 million turnaround.
“I’ve been trained to be an individual expert. But as I’ve managed teams, from nine people to 5,000, I’ve grown to understand healthcare and modern business are all about helping teams work together.
My understanding has evolved to viewing leadership as a shared phenomenon that’s extremely situational. Look at the complexity of what organisations have to deal with now: it’s impossible to ask one person or small group to do all the leading. Now I think of leadership as a capacity within an organisation. It’s as much about that shared capacity as the ability of an individual.
My organisation financially crashed during the US economic meltdown. We had to effect a $100 million turnaround at a very tough time. Historically, we’d been a very top-down culture – and not a healthy one. We asked employees about our unwritten rules, and the ones they came up with weren’t pretty. They were preventing us from doing what we needed to do. We had to rewrite them.
It was hard for some of our executives at first, this idea that everyone was a leader. If there are that many leaders, who’s following? Collective leadership is multi-dimensional. You can go top-down, but also side-to-side and bottom-up. We were intentional and strategic about encouraging side-to-side spread – getting different units to work together, for example – and bottom-up leadership.
The biggest barriers to people leading or following in a different way are mindset and habit. We would understand we needed to approach a situation differently, but the minute we began to interact with each other we would fall back into our old patterns. Someone might have realised that ‘leading up’ was important, but the minute they started talking to their manager, they would relapse into acting according to an old model of leadership and be afraid to speak up. Or leaders would relapse into control.
Habits are hard to change, so we had to be courageous. When you encounter a habit, understand it, make a decision not to give up, and learn from it.
Soon a mosaic of collective leadership began to emerge. Things began to get healthy quickly and you really did see ideas coming from everywhere and the growth of that leadership capacity.
Can this work in other sectors outside of healthcare? Absolutely. Teams all over the world are after higher performance and want to be more agile, adaptable and sustainable.”
Zappos and holocracy
From offering new starters money to quit, to hiring almost entirely based on cultural fit, US online retailer Zappos has never been the most traditional organisation. Its latest idea: getting rid of job titles and adopting ‘holocracy’. Everyone in the company is being re-organised into decentralised teams that choose their own roles and goals. CEO Tony Hsieh hopes it will help him make fewer decisions.
Zappos, with 1,500 employees, is the largest company to try holocracy and is currently halfway through the rollout. HR director Hollie Delaney explains how it’s working out.
“In the new model, everyone is considered a leader. People need to pick up authority and run with it, and people in traditional leadership roles have to put down their authority. It’s a big change and a powerful one. You go from directing work and telling people what to do to inspiring them.
The HR function was the pilot group. The best way to help is leading by example. HR is the guardian of culture, so we thought it best to start with us and see what the pitfalls were. Starting with HR makes the transition easier for others.
When we started, I thought I was a leader who helped people find their own way and come up with their own ideas. But the simple fact we had a hierarchy meant people thought they had to ask my permission to try different things. When we started to tear down that structure, people started to come up with new things, like our Zappos Insider recruitment programme. [Zappos has eliminated job listings – instead people sign up to become a ‘Zappos Insider’ and are considered for positions as they become available]. I’ve seen employees grow leaps and bounds in a year.
The biggest challenge is the mindset shift, especially for those people who’ve come from leadership positions in traditional organisations. But it’s also hard for people who are used to being directed. You need to train for different behaviours. Our leadership development went from training managers to training across the organisation. And when you’re recruiting, you need to make sure people understand that if they were a director at their old company, it doesn’t mean the same here.
From an employee relations and performance management standpoint, we’re still in the process of figuring out how it works without a management structure where someone is making the decisions on disciplinaries or firings. How do you tear that down and rebuild it so it makes sense in the system but also for employees?
I hope this concept goes wider. It’s a different way to run a company; it speaks to people, not profit. Some people say it’s nonsense, but why? If you think about it, the type of leadership we are asking for is much more powerful. If you could be a leader who inspires someone to reach their full potential, how much better would your organisation be?
Look at innovation in technology and compare that to innovation in the workplace. We haven’t made changes to how we conduct business in close to 100 years. If we treated technology the same way, we wouldn’t have smartphones or computers. If we can innovate in technology, why can’t we innovate in other areas of business?”