Want to innovate? Develop top leaders

Flickr user seth1492

(MoneyWatch) If you want to make your company more innovative, focus on developing better leaders.

That is a key finding of a new study by the Hay Group, a talent management consulting firm, that identified the best-managed U.S. companies for 2011.

The top 20 highest-rated companies for leadership development included corporate stalwarts such as General Electric (GE), Procter & Gamble (PG), IBM (IBM) and Microsoft (MSFT). One common ingredient -- these businesses all place a premium their leaders emphasizing flexibility, customers, new ideas, and collaboration. It is in this last category where leaders show their stuff because as the study concludes, "collaboration is the process that brings [people and resources] together."

For example, nearly 90 percent of employees surveyed in the top 20 companies said that their company "evaluates and rewards our leaders based on their ability to build excellent relationships with their peers." Nine of 10 workers also said that their employers "take clear action when a leader is not collaborating (even if he/she has strong business results)."

Collaboration fosters innovation. As the Hay Group notes, the top 20 companies for leadership spend time on customer needs. They also value a getting a range of ideas from all levels of the organization, encourage employees to think broadly, and invest in leadership development.

Collaboration within a company emerges from bringing people of different mindsets together in ways that allow them to respond to emerging customer or market needs. Employees also need the freedom to try new solutions -- even if such remedies do not turn a profit. For example, over 85 percent of employees surveyed at the top 20 companies said their company "runs unprofitable projects to try new things."

Collaboration is also essential to teamwork, something that most companies preach but not all value when it comes to making it work. Although rank-and-file employees often embrace the idea of working as a team, individual managers commonly sidetrack it. Sometimes, that's because they are pushed and pulled in different directions by their bosses. But it's also often because of their own negligence.

Managers fail to set the right example by putting themselves before the team when it comes to workload, appreciation, and even compensation. In such a corporate culture, there may be two sets of standards -- one for managers and one for employees. That double standard erodes respect, undermines trust, and leads to disengagement. Employees lose heart and end up just going through the motions.

Of course, leadership is vital to a company's bottom line. It is no coincidence that over a 10-year period, the top 20 companies as ranked by Hay outperformed the S&P 500 at twice the rate as other companies.

That underscores the pragmatic focus on effective leadership, which at its core is about achieving intended results. Not all results are quantifiable, but good results from a leadership perspective are when employees know their jobs, are valued for their contributions, and are rewarded for their efforts.

That only occurs when men and women of good intention get into a position of authority, insist that employees have a voice in their work, and provide them with the resources and support they need to succeed.

Image courtesy of Flickr user seth1492

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