All this leadership learning; what’s it for?
That’s the direct and thought-provoking question that Steve Kempster, Professor of Leadership Development at Lancaster University Management School, posed to GAIN delegates in his masterclass.
“This subject raises a pretty fundamental question,” says Steve. “No matter what size your business, or which sector you operate within, should leadership directly address major societal challenges?”
Corporate responsibility is actively pursued by many businesses, but it often sits alongside – separate from – the core pursuit of the organisation. It is often a cost to the business. Value is created when ‘responsible leadership’ takes an integrated approach, where social purpose is inherent to the firm’s mission and actually drives innovation and profit.
What is responsible leadership?
Steve and his colleagues are at the forefront of researching responsible leadership and its impact on creating ‘good dividends’.
“At its heart there is often a ‘moral outrage’ at board level,” says Steve. “Something truly and passionately believed by the leaders. Business as a force for good. But that’s not sufficient. There is the need to link such passion to a firm business model. You will be surprised how readily people in the business will come together around a social purpose - indeed it is social purpose that drives commitment, that leads to excellence and value to the business, the employees, customers and to communities.
“Having identified this social purpose, it takes leadership to drive it throughout the organisation,” adds Steve. “Framing the business towards this social purpose creates a new lens through which to explore innovation. What are the products, services, collaborations that could be created?
“It’s this process, responsible leadership, that leads to ‘good dividends’.”
Steve identifies six good dividends:
Greater returns to owners / shareholders
Greater returns from the responsible utilisation of resources
Greater returns for, and from, employees
Greater returns from innovation
Greater returns for our communities and our ‘one planet’
Greater returns from brand values
Can it be measured?
By integrating corporate responsibility deeply within the business psyche it touches every part of the organisation, so can be measured on many levels.
Operations measures might include reduction in materials, energy and waste; improved productivity; or the impact of your product or service on customers or the environment.
From an HR perspective improvements can be tracked relating to sickness absence; staff retention; employee engagement levels; inclusivity and diversity.
Innovation measures might include the increased number and quality of new ideas; the return on investment delivered through the product development process.
The Net Promoter Score calculates the difference between ‘brand promoters’ and ‘brand detractors’; or the Net Value Score, which invites customers to rate the value offered by your business compared to your competitors.
Financial measures are fundamental; all your numbers should improve.
Changing business structure
Responsible leaders may consider their fiduciary duty – the legal obligation for one party to work in the best interests of another – to be shared 50/50 between the owners and other stakeholders.
This is now reflected in a specific type of organisation. The Benefit Corporation first appeared in the US in 2010 as a ‘for profit’ company structure that includes responsibilities to its stakeholders, in addition to profit, as legally defined goals. B Corp certification is now available worldwide.
“Stakeholders will be specific to each individual organisation, but the point is that the benefits must be felt by them and the owners equally.
“Responsible leadership is a win-win, so why wouldn’t you do it?”
How can I learn more?
Read Kempster and Carroll (Eds) Responsible leadership: Realism and Romanticism. Basingstoke: Routledge.
This article first appeared in the QuoLux Leading magazine, Issue 01, April 2017