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What Makes Great Leaders

Effective leadership is one of the most elusive keys to organizational success. While a number of organizations have successfully cracked the code forleveraging stellar leadership into outstanding performance, many continue to struggle.

To understand what makes great leaders, organizations that are most successful in developing their executives and senior managers:

  • Understand what makes stellar leaders.
  • Provide them with extensive development and coaching.
  • Measure their progress and then reward them.

A survey of FORTUNE 500 organizations compared the leadership development efforts of some of FORTUNE Magazine's Most Admired Companies with their peers. Again and again, effective leadership separated the most admired companies from the rest of the pack. These organizations put a premium on the importance of leadership and clearly did a better job of selecting and developing their leaders:

  • The most admired organizations are far more satisfied with the quality and breadth of leadership at both their executive and senior management levels.
  • They are also less tolerant of inappropriate leadership behavior in order to "meet their numbers."
  • They place more value on leadership development and put more emphasis on ongoing development efforts that are linked closely to strategic business goals.
  • They understand "what makes a great leader tick" by carefully analyzing leadership characteristics and building competency models.
  • They use competency models as anchors for assessment and to design a wide variety of developmental programs in selecting and advancing their leaders.
  • The leaders of the most admired organizations are perceived as demonstrating more personal mastery competencies such as self-confidence, understanding others, and initiative.

It is the personal or emotional competencies that survey participants said are critical for leadership success: Just how critical was seen in an examination of 23 candidates for the presidency of most-admired companies. The 12 who ultimately earned the title demonstrated significantly more personal mastery than the 11 who were passed over, especially in the areas of self-confidence, self-control, achievement orientation, understanding others, empathy, and collaboration.

These emotional competencies turn out to be twice as important as cognitive abilities in predicting outstanding employee performance and account for more than 85 percent of star performance in top leaders and other jobs.

Ram Charan, writing in FORTUNE Magazine on why leaders fail, noted that "the motto of the successful leader, worthy of inscription on his or her office wall, is: people first, strategy second."