Last Updated Aug 9, 2011 6:41 PM EDT
What makes a great CEO? That question came to mind recently when I read the news that Chief Executive magazine had named Alan Mulally of Ford Motor Company its 2011 CEO of the Year. It's easy to understand why Mulally was chosen. After all, he presided over one of the more remarkable corporate turnarounds in recent memory.
But a look at the magazine's criteria gives some insight into what makes a great CEO truly great. Some of the criteria was typical: the honoree had to show evidence of looking ahead, driving value, focusing on people, fostering corporate citizenship and sustaining business results.
But one factor was unusual: the winner had to maintain a "stable, consistent 'moral landscape.'"
Tom Saporito, CEO of RHR International, who helped develop the selection criteria, defined moral landscape as "courage, integrity, reputation and having a coherent and high purpose" embedded in the corporate culture, due in part to the CEO's example.
From day one on the job in September 2006 when Mulally took the reins of a faltering Ford, he has pushed hard to drive purpose throughout the company. It was no easy feat; other CEOs had tried and failed, but Mulally made it clear through the development of One Ford that the company had to become leaner and more focused on developing products that were uniquely Ford.
Mulally himself preaches this but, and stuck his neck out on the line for, notably by taking out a $20 billion-plus line of credit to ensure the transformation. This line ensured that Ford would not need to take advantage of federal bailout funds, nor would it have to declare bankruptcy to avoid paying its creditors. Something that its Detroit competitors GM and Chrysler both did. I would call Ford's behavior in this instance highly moral.
There is another side to sense of purpose that Mulally talks about extensively: you create greater levels of buy-in when people know what you stand for and are committed to doing. Ford's pride of purpose took a beating in the early part of the decade when it suffered year after year of losses. But now that it's firmly in the black and has paid all but $3 billion of the $23 billion it borrowed, the pride is back. Not because the books are balanced but because Ford is making and selling products that consumers in North America, Europe and South America want and will pay a premium for.
The drive for purpose emanates from the leadership team, but as I have discovered in research conducted for a forthcoming book, employees are hungry for it. Purpose, as supported by my research, drives clarity because it enables people to see the big picture. Even better they see themselves painting part of that picture.
Savvy leaders trade on this quest for purpose as a means of giving the organization sharper focus. When people know what it expected of them, they can deliver more readily. And if they believe in the purpose they feel part of something greater than themselves.
The coda to RHR's description of "moral landscape" is a leader who puts "the interest of the organization above personal gain." That's a foundation of servant leadership; leaders do what the organization needs doing. Easy to do when times are good, but hard when times are tough.
But it is this orientation toward others that drives organizational purpose. Employees want to follow their leader; they believe in what he or she stands for. If they sense the leadership team is only out for self-enrichment and self-aggrandizement the underpinning of purpose erodes.
None of this will come as a surprise to anyone who works for a living. They know instinctively if the boss has their back. If there is mutual support, people are engaged. If something is missing, no amount of preaching about purpose will do anything. Leaders need to walk the talk.
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