Want outstanding company performance? Then ensure your CEO takes a people-centred approach rather than having a controlling, target-driven style.
This may be obvious to HR directors but chief executives have far too long been fixated on targets. No wonder when the CEO's financial reward so rarely reflects the organisation's success. Commenting in Bloomberg Businessweek on a survey of the pay of 271 US CEOs, which found little realignment of remuneration to reflect company performance, compensation expert Graef Crystal is clear: "Simply put, companies don't pay for performance."
But, according to research from the Work Foundation, the leaders who are outstanding, not merely good, and who deliver sustained business performance are those that focus on people, attitudes and engagement, co-creating vision and strategy.
"Outstanding leaders are focused on performance but they see people as the means of achieving great performance and themselves as enablers," says Work Foundation report author Gemma Pearson. "They don't seek out the limelight for themselves but challenge, stretch and champion others, giving them the space and support to excel."
Successful global chief executives interviewed for new book The New Secrets of CEOs by Steve Tappin and Andrew Cave concur with this view. "I was asked why we hadn't articulated people as one of our five priorities," Dell boss Michael Dell tells the authors. "The answer is simple. They're the ultimate priority. I spend a good portion of my time on talent."
Steve Holliday, chief executive at National Grid, goes a step further, aiming to spend 20% of his time on talent development and having his performance against this target calculated every two months. "If you get really good people, it's amazing the difference they can make," he says.
However, in the same book the authors quote one HR director who argues that CEOs don't make time to put people and talent on the agenda. "It comes back to us and stays an HR initiative. They get it but are not executing."
It is no surprise then that recent Kenexa research finds that less than 47% of UK employees rate their senior leadership team as effective.
For these reasons HR magazine decided to ask workplace engagement specialist Best Companies to number-crunch its database of employee surveys to determine the best leaders and senior management teams in both the private and public sectors.
For the private sector, the ranking is divided into large (more than 5,000 people), mid (between 250-4,999 employees) and small organisations. The public-sector list covers all size of employees. Best Companies analysed the results of three questions related to leadership and three related to the senior management team. The best leaders are those scoring highest when employees were questioned on their faith in the person leading the organisation, whether they were inspired by the person leading the organisation and whether the leader runs the organisation based on sound moral principles.
The best senior management team is that which scores highest when employees were asked whether senior managers did a lot of telling but not much listening, whether they truly lived the values of the organisation and whether the employee had confidence in the leadership skills of the senior team.
Our Top CEO rankings combine the scores of best leaders and best senior management team. Our winning CEOs in the private sector, Michael Sherwood and Richard Gnodde, co-chief executive officers of Goldman Sachs International, may be controversial given the civil suit against the Wall Street giant, filed by the Securities and Exchange Commission in April and claiming the bank created and sold a mortgage investment that was secretly devised to fail. The subsequent Senate interrogations and now subpoenae from the Financial Crisis Inquiry Commission, which is investigating the cause of the financial meltdown last year, has not helped the banking group's reputation.
Yet Goldman is still the graduate employer of choice according to High Fliers research, and no one can doubt the company's strong culture and employee engagement. Leading by example is built into Goldman's culture and all leaders are responsible for helping to develop people. Sherwood and Gnodde are among those who participate in cross-divisional and global activities in order to break down silos and encourage teamwork. Roughly 35% of senior leadership's time is spent addressing internal audiences. For this reason, employees rate Goldman best for leaders and, separately, best for senior management team - giving them the number one spot in our ranking and also garnering them HR's Most People Focused CEO Private-Sector award (see page 53).
Second place Ian Powell, chairman and senior partner at PricewaterhouseCoopers, is described as having an 'everyman' approach that means that he is able to connect with people with ease. His leadership style is "fresh, genuine and emulated across PwC" and he puts strong emphasis on personal communication, either personally or via webcasts. On being appointed he received 800 emails and responded to them all personally. Staff want to talk to him as he always listens and he is regarded as inspirational. This is seen clearly in his consistent messages during the recession, maintaining confidence and clarity of purpose.
Nando's David Niven is also in our top five. The company has been making waves since launching in the 1990s and charismatic founder Robbie Enthoven based the business around people from day one - employing an HR director when there were only five restaurants. Now there are more than 200 and Niven continues the tradition of putting people at the heart of the organisation, with a relaxed style and constant communication with employees. Four times a year, he holds a central support meeting (called Putney Chutney) where senior leaders and heads of departments discuss business achievements and future goals in an informal group atmosphere while, together with Enthoven, he holds a Q&A session at the Nando's conference, which all employees attend.
Employees at car dealership group Sytner also rated the senior management team and leadership as among the best. The motor retailer, which sells new and approved prestige and executive cars, holds regular team meetings and directors, including group MD Gerard Nieuwenhuys, take part in a back-to-the-floor exercise. Every member of staff also has the personal mobile number of chairman Laurence Vaughan.
Detective superintendent Gary Linton, head of ACPO Criminal Records Office, tops our public sector CEO ranking and also walks away with HR's Most People Focused CEO Public Sector award (see page 54). ACRO has only been in existence for four years and its prime focus is to produce operational benefits and ensure maximum public protection from dangerous offenders. It was set up in response to a perceived gap in the police service's ability to manage criminal records and, in particular, improve links to biometric data. It provides guidance and management on access to these criminal records and seeks to improve their effective operational use, working with all UK police forces, the Serious Organised Crime Agency and the National Policing Improvement Agency among others.
Linton is described as approachable and available to staff at all levels, with great vision and interpersonal skills. His leadership scores are outstanding - 85% of staff have a great deal of faith in him and 77% find him inspirational. His senior management team is regarded highly for listening, not telling.
All of the top five public-sector CEOs have an open door policy. Second place William Moyes, who has now retired as executive chairman of Monitor, is described as leading from the front and inspiring to staff and external stakeholders. His work is being carried on by David Bennett as interim chief executive.
Jonathan Godfrey, principal, Hereford Sixth Form College, is trusting and caring, committed and hard-working, according to employees, with great integrity. Among the glowing reports of his leadership style are that he "acts out what he says; is a great role model; listens and understands what make a difference".
Meanwhile both Jack Hegarty, managing director, Wychavon District Council, and Robin Hales, chief executive, Sevenoaks District Council, are described as charismatic. Hegarty is rated for his ability to be open about both good and bad news, combined with a sense of humour that makes him approachable to employees. Hales "takes a genuine interest in staff as individuals, his management style is empowering and he mentors and coaches staff at all levels to develop them to their full potential and is passionate about delivering the best possible service for residents". He is driven to achieve but also a team player, giving staff the confidence to challenge in an open and mutually supportive atmosphere.
As well as our top ranking CEOs, above we list the organisations that scored highest in Best Companies' employee surveys for leadership and senior management team in mid and smaller-sized companies. All these organisations have faced challenges over the past 18 months. Keeping employees engaged during recessionary times is tough but the business benefits are proven. Best Companies has tracked the performance of the publicly-quoted companies it measures versus the FTSE 100 share index and, according to managing partner Wayne Clarke: "The results blew even us away." Those organisations with strong leadership and senior management teams have nearly doubled the rate of return for investors, according to Best Companies. "We're not saying that an engaged workforce will, without question, deliver strong financial returns, as there are many other forces at work, but we do know that as a general rule, organisations that have strong leadership and management have managed to navigate their unique challenges far more effectively than those that don't," says Clarke.
The CEOs and leaders of organisations in our rankings share characteristics and demonstrate behaviours in common, resulting in agile, aware and forward-thinking workforces. "These leaders, and indeed their leadership teams, live the values of the organisation, they have an ability to excite people about where the organisation is going, they have an ability to inspire people and probably most important of all, people feel that their leaders and the leadership team listen, and listen well," explains Clarke.
He adds: "Our research has shown us that leaders who do all these things on a regular basis will have employees who have better levels of wellbeing, they will have better teams, they will have people who have a better sense of direction and personal growth, and they will, maybe most importantly, have a middle level management community that have the leadership 'air cover' they need to push the whole organisation forward in a cohesive manner."
What our first CEO and leadership ranking shows is that 'people' characteristics may be seen as soft, but they are in reality highly commercial and the differentiating factor in creating sustainable organisations that succeed in the long run. The leaders listed here have created organisations where their people want to work and the link between being human and being successful is alive and well, even in tough times.
TOP CEOS - PRIVATE SECTOR
1. Michael Sherwood and Richard Gnodde co-chief executive officers Goldman Sachs International
2. Ian Powell, chairman and senior partner, PricewaterhouseCoopers
3. Raymond Joabar, senior vice president/country manager American Express Services Europe UK
4. David Niven managing director - UK & USA Nando's
5. Gerard Nieuwenhuys managing director, Sytner Group
6. David Miles managing director and chief UK economist, Morgan Stanley
7. Amy McPherson president and managing director for Europe, Marriott Hotels International
8. Ben Gordon chief executive, Mothercare
9. John Connolly chief executive and senior partner, Deloitte UK
10. John Dunford director, Bourne Leisure
TOP CEOS - PUBLIC SECTOR
1. Detective superintendent Gary Linton head ACPO Criminal Records Office
2. William Moyes executive chairman (retired), Monitor - Independent Regulator of NHS Foundation Trusts
3. Jonathan Godfrey principal, Hereford Sixth Form College
4. Jack Hegarty managing director, Wychavon District Council
5. Robin Hales chief executive, Sevenoaks District Council
6. Asha Khemka principal and chief executive, West Nottinghamshire College
7. Sir Paul Grant head teacher, Robert Clack School
8. Angela Lockwood chief executive, North Star Housing Group
9. Stephen Pegg principal, Cardinal Newman College
10. Jonathan Burnett principal, Truro and Penwith College
SMALL COMPANIES: BEST LEADERS
1. Christians Against Poverty
2. Lane4 Management Group
4. Brand Learning Partners
5. Shine Communications
7. Fairbairn Private Bank
10. Mount Anvil
BEST SENIOR MANAGEMENT TEAM
1. Christians Against Poverty
3. Brand Learning Partners
5. Lane4 Management Group
6. Shine Communications
7. ANS Group
9. Fairbairn Private Bank
10. Red Commerce
LARGE COMPANIES: BEST SENIOR MANAGEMENT TEAM
1. Goldman Sachs International
3. Sytner Group
4. Signet Trading
6. Bourne Leisure
7. American Express Services Europe UK
8. Mott MacDonald
10. Morgan Stanley
MEDIUM-SIZED COMPANIES: BEST LEADERS
1. Luminus Group
2. Kenneth Green Associates
3. Beaverbrooks the Jewellers
4. P3 (the social inclusion charity)
5. Peter Vardy
7. Calico Housing
8. Think Money Group
9. Napp Pharmaceutical Holdings
10. Production Services Network (UK)
BEST SENIOR MANAGEMENT TEAM
1. P3 (the social inclusion charity)
2. Beaverbrooks the Jewellers
3. Office Angels
4. Luminus Group
5. Kenneth Green Associates
6. Think Money Group
8. Admiral Group
9. Kent Union
10. Sewell Group