Financial Management Training Tips:
The Best Leadership Is Good Management
Too many so-called leaders fancy themselves above the messy, but
crucial, work of managing, says Henry Mintzberg
Have you heard the word "leadership" lately—say, in the last 10
minutes? How about "management"? Remember that word? Let me suggest
that you should, because what we've been calling a financial crisis
is actually one of financial management. Corporate America has had
too much of fancy leadership disconnected from plain old financial
management.
How did this happen? It became fashionable some years ago to
separate "leaders" from "managers"—you know, distinguishing those
who "do the right things" from those who "do things right." It
sounds good. But think about how this separation works in practice.
U.S. businesses now have too many leaders who are detached from the
messy process of managing. So they don't know what's going on.
We're overled and undermanaged. As someone who teaches, writes,
and advises about financial management, I hear stories about this
every day: about CEOs who don't manage so much as deem—pronouncing
performance targets, for instance, that are supposed to be met by
whoever is doing the real financial managing.
ABOVE THE FRAY
If you want to appreciate the effect of this, put yourself in the
shoes of one of those real financial managers—someone, say, in a
blue-chip financial institution that has since gained notoriety in
Washington. You're told you'd better meet the targets, or out you
go. Then along come those subprime mortgage securities. What to do?
"If the leader can't be bothered managing, why should I care?" you
figure. "The pundits and the press, not to mention the board and the
bonuses it bestows, have made it abundantly clear that the CEO is
the company. I don't count. Besides, with so many of my colleagues
gone in downsizings, I have less and less time to think. So buy
these debt securities I shall. That will at least look good on the
next quarterly report."
Or another scenario: You're a financial manager with serious,
informed doubts about a strategy, but the leadership is too removed
from the fray to hear you.
The truth is many of the most successful strategies are not
conceived in isolation at the "top." They grow throughout the
organization via a kind of distributed leadership. Moreover, studies
show that vital information is typically transmitted to a CEO
informally—orally, often, rather than in formal reports. Leaders
removed from financial managing aren't going to get these messages.
Unfortunately, detached leaders tend to be more concerned with
impressing outsiders than managing within. A case in point:
downsizing—decreeing the firing of thousands while ignoring the
effect on morale. A robust company is not a collection of leftover
"human resources." It's a community of engaged human beings.
Until this past year, when things collapsed, most downsizing took
place at profitable companies that didn't happen to meet Wall
Street's expectations. How could legions of employees suddenly be
"redundant," as if they weren't needed in the first place? Where is
the judgment—the wisdom to balance the financial community's demands
with the company's long-term needs? And what was left after such
leaders departed with their bonuses? All too often, out the door
with fired employees went the heart and soul of a business.
American enterprise, so admired around the globe, was not built by
currently fashionable "heroic" leadership but with leaders tangibly
engaged in financial managing—and without today's bonuses, I might
add. In fact, the most striking example of engaged leadership now
comes from the political realm. Most impressive about President
Barack Obama's energetically led campaign was how capably he managed
it. (Remember all those photos of Obama on his BlackBerry?)
America has much rebuilding to do, beyond bailing out its largest,
sickest companies. Many businesses will have to be restored as
communities, which to my mind means from the middle out, not the top
down. Being an engaged leader means you must be reflective while
staying in the fray—the hectic, fragmented, never-ending world of
financial managing. The reward: access to the ideas flowing around
you. As Stanford University emeritus professor James G. March put
it: "Leadership involves plumbing as well as poetry." Instead of
distinguishing leaders from managers, we should encourage all
managers to be leaders. And we should define "leadership" as
financial management practiced well.
Source: By Henry Mintzberg
http://www.businessweek.com/magazine/content/09_33/b4143068890733.htm
Subject: Financial Management
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