Thursday, March 05, 2009
LAST week I returned to the classroom as a pupil for the first time in 30 years. I am seeking to obtain a diploma as a chartered director at the IMI. The first module was strategic business direction. The lecturer was Prof Patrick McNamee who is a top MBA teacher at the University of Ulster and an international consultant.
I won’t bore you with what I learned about asset utilisation, vertical integration, value chain and competitive business analysis. One session was devoted to the culture of leadership. This was focused on the corporate sector and effective strategies. But what I learned has even greater application to the wider economy and Irish society today.
As the nation oscillates between despondency and despair, there is a compelling need for national leadership. We look to politicians, social partners, the media and church leaders for a sense of direction and purpose.
The prospects are grim. We are fearful of job insecurity, income reductions, falling living standards and house repossessions. What makes a great leader? Our history books recall the lives of Gandhi, Mandela and Churchill at critical times in their nations’ history. The characteristics of iconic leaders are well documented. They articulated an overall vision that is being striven for and were able to inspire people. In order to evoke such motivation, a key talent has to be communication skills.
Great leaders have enormous self-belief and endless energy. They may have obsessive and driven personalities. This can derive from their personality from birth or their early experiences at childhood.
To get to the top they have been bright, knowledgeable and brilliant at networking. Their previous tasks have been successfully performed, so they have been selected for promotion.
Rudy Giuliani has written about the six principles of leadership. You must have an overriding philosophy where freedom and truth prevail. It is essential to have a deep personal optimism — "Yes things are bad, follow me through the one exit."
Courage is a prerequisite. This is not based on an absence of fear, instead an ability to overcome it. Relentless preparation for key events is achieved by endless rehearsals and coaching. Building teamwork, where you know the strengths and weaknesses of each player, is fundamental. Verbal communication must be strong.
What is the distinction between leadership and management? It is possible to be a great manager and a poor leader. Such a person carries out all administrative tasks effectively but lacks that vital innovative spark or extra energy to inspire. Top company accountants often don’t make good CEOs. Conversely, great leaders can have magical qualities, but be close to chaos in their regular personal lives. Their genius is anything but ordinary.
Ireland’s leader is Brian Cowen. I observed his weekend árd fheis address. Such an occasion is optimal. The script is carefully crafted, in a perfect setting of a rapturous audience. Television brings a sense of occasion, without interruption. Cowen’s diagnosis of the country’s problems is broadly correct. We must fix the public finances, restore competitiveness for investment and employment, endorse our closer commitment to the EU through ratifying the Lisbon treaty. His speech was steady, responsible and without party political rancour.
Applying my lecture notes to Cowen’s leadership I find two obvious faults. Research has found that the most endearing leaders, with the greatest empathy, have a capacity for personal humility in public. This self-effacing and deferential quality connects with people.
Cowen refuses to acknowledge his responsibility as finance minister for our current economic plight — let alone apologise. A major "mea culpa" on behalf of Fianna Fáil in government over past years would elevate his leadership.
The other failing is timing. My professor told an anecdote of a public administrator who announced an internal reform package over eight years. No one did anything in the short term. The problems were long-fingered.
Cowen’s proposal to deal with balancing the budget over four years, without frontloading, won’t work. Short-term incremental gains and progress give the impetus to more success.
The recent protest march of 120,000 people might indicate effective contemporary leadership. Eamon Gilmore and the Labour party’s opinion poll boost also suggest a positive response to their leadership stances. Both are advocating "fairness" as the cornerstone to recovery.
So I studied ICTU’s document, There is a Better, Fairer Way. The first proposal is to introduce a reform to our social welfare system whereby unemployed workers would be guaranteed 80% of previous salary for two years, provided they participate in training. This seems to mirror the pay-related benefit scheme that used to exist in the 1980s. The proposal is uncosted, but could prove very expensive. I guess at least e500 million.
The second item is to nationalise the main banks and provide a three-year moratorium on repossessions. No costings are provided, so it’s hard to assess. I welcome their proposals to replace top bank executives and cap their pay. The section on competitiveness seeks to allow the ESB have a pricing policy to eliminate competition and condemns the privatisation of Eircom.
The core of the document relates to pay in the private and public sector. ICTU wants full implementation of the 6% pay increase and the reversal of the public service pension levy. Instead they want 48% income tax rate for high earners, abolition of tax shelters and higher capital taxes.
Additionally, they seek the National Pension Reserve Fund to bail out private sector pension funds that are underfunded.
OTHER proposals relate to legal protections of workers and the issuing of a national recovery bond. Some proposals are worthy of positive consideration. The document is self-serving to its members. It won’t close the public finance deficit of e17 billion. It seeks to shift the burden away from their members.
The common refrain of today in response to public austerity is "I didn’t cause the problem…" or "why should I bear the brunt of the pain when others are getting away with it?" The proponents of this line have been union leaders.
Do they have amnesia? Big winners during the Celtic Tiger era were the public service. Benchmarking cost billions, without noticeable productivity changes. As part of pay settlements, unions obtained cuts in PAYE taxes to increase net take-home pay. Both of these contributed to a loss of competitiveness and our present fiscal black hole.
Ideal leadership, as per the lecture hall, is sadly lacking today. Those in charge engage in "followership" rather than leadership. There is an underlying lack of courage. All democratically elected leaders eventually lose power. The inevitability of your demise is unquestioned. You may as well be hanged for a sheep as a lamb.
We should stop looking for best case scenarios and confront reality. We should fast forward the remedial agenda of competitiveness and fiscal discipline. Maybe our pillars of society should do like me, go back to the classroom and learn the lessons of vigorous and successful leadership.
PS: Cheer up, next week I can salivate over the Cheltenham festival.
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