How to Grow Great Leaders

Last Updated Nov 2, 2007 12:50 PM EDT

The Idea in Brief

Leaders who do what's best for their business units and their companies are a rare breed. When asked to put the enterprise first, most unit leaders think zero-sum: "If I share clients with another unit, I'll lose control and the revenue associated with them. Better not share."

But as customers demand integrated solutions requiring cross-unit collaboration, synchronizing units' actions with enterprise goals is more crucial than ever.

To help leaders put your enterprise front and center, Ready recommends three practices:

  • Air unit/enterprise tensions through mechanisms such as open dialogue.
  • Bust silos by offering people challenging assignments in different parts of the company.
  • Provide rewards that foster cross-organizational collaboration.

When Canadian financial services giant RBC adopted these practices, its formerly silo-bound unit managers started creating new offerings together, making RBC's strategy of growth through sales of integrated solutions a reality.

The Idea in Practice

Here's a closer look at Ready's three practices for growing enterprise-minded leaders:

Airing the tensions. Provide forums for addressing the inevitable tensions that arise when leaders are asked to work across organizational boundaries.

RBC designed Leadership Dialogues for its senior leaders, run by the CEO and two rotating members of the executive team. At the gatherings, executive team members told stories of their experiences trying to reconcile pushing unit performance and supporting enterprise goals. The heads of Personal/Commercial Banking and Risk Management acknowledged the strain this tension put on their working relationship and discussed steps they were taking to resolve their concerns. Attendees saw that they could remain passionate advocates for their units while maintaining an enterprise perspective. After the Leadership Dialogues were cascaded down to lower-level leaders, people reported they had a better understanding of the company's new enterprise strategy.

Busting the silos. Clear lines of authority and strong unit boundaries have their place. But silos become destructive when they deprive customers of better products or services or hinder a company's overall growth. To break up silos, take people out of their career comfort zones and offer them challenging assignments in different roles.

One RBC Leadership Dialogue attendee had spent her entire career inside RBC's Capital Markets unit. The CEO offered her a new job--RBC's first senior vice president for brand management and advertising--that would require cross-unit thinking: She drew on the networks she had developed through the Dialogues to organize an operating committee for marketing. She also began building relationships across all of RBC's units, functions, and regions.

Establishing the right rewards. Create economic and noneconomic reward systems to manage the tensions between unit and enterprise priorities.

RBC changed its short-term incentives to encourage people to pay attention to unit and enterprise performance simultaneously. These incentives are divided into two categories: 1) Personal performance--rewarding leaders for meeting or surpassing unit objectives as well as making clear, measurable contributions to the company as a whole; and 2) bonus pool--based on how close RBC as a whole comes to achieving its return-on-equity goal and how its earnings-per-share growth fares against competitors. Top executives further motivate desired behavior by giving high performers plum assignments, such as placement on an enterprisewide task force.

Copyright 2007 Harvard Business School Publishing Corporation. All rights reserved.