Can Organizations Develop Leaders?

December 8, 2007

A myth about how people learn and develop that seems to have taken hold in American culture also dominates thinking in business. The myth is that people learn best from their peers.Supposedly, the threat of evaluation and even humiliation recedes in peer relations because of the tendency for mutual identification and the social restraints on authoritarian behavior among equals. Peer training in organizations occurs in various forms. The use, for example, of task forces made up of peers from several interested occupational groups (sales,production, research,and finance) supposedly removes the restraints of authority on the individual’s willingness to assert and exchange ideas. As a result, so the theory goes, people interact more freely, listen more objectively to criticism and other points of view, and, finally, learn from this healthy interchange.

Another application of peer training exists in some large corporations, such as Philips N.V. in Holland, where organizational structure is built on the principle of joint responsibility of two peers, one representing the commercial end of the business and the other the technical.

Formally, both hold equal responsibility for geographic operations or product groups, as the case may be. As a practical matter, it may turn out that one or the other of the peers dominates the management. Nevertheless, the main interaction is between two or more equals.

The principal question I raise about such arrangements is whether they perpetuate the managerial orientation and preclude the formation of one-to-one relationships between senior people and potential leaders.

Aware of the possible stifling effects of peer relationships on aggressiveness and individual initiative, another company, much smaller than Philips, utilizes joint responsibility of peers for operating units, with one important difference. The chief executive of this company encourages competition and rivalry among peers, ultimately rewarding the one who comes out on top with increased responsibility. These hybrid arrangements produce some unintended consequences that can be disastrous. There is no easy way to limit rivalry. Instead, it permeates all levels of the operation and opens the way for the formation of cliques in an atmosphere of intrigue.

One large, integrated oil company has accepted the importance of developing leaders through the direct influence of senior on junior executives. The chairman and chief executive officer regularly selects one talented university graduate whom he appoints as his special assistant and with whom he will work closely for a year.At the end of the year, the junior executive becomes available for assignment to one of the operating divisions, where he or she will be assigned to a responsible post rather than a training position. This apprenticeship acquaints the junior executive firsthand with the use of power and with the important antidotes to the power disease called hubris – performance and integrity.

Working in one-to-one relationships, where there is a formal and recognized difference in the power of the players, takes a great deal of tolerance for emotional interchange. This interchange, inevitable in close working arrangements, probably accounts for the reluctance of many executives to become involved in such relationships. Fortune carried an interesting story on the departure of a key executive, John W. Hanley, from the top management of Procter & Gamble to the chief executive officer position at Monsanto.8 According to this account, the chief executive and chairman of P&G passed over Hanley for appointment to the presidency, instead naming another executive vice president to this post.

The chairman evidently felt he could not work well with Hanley who, by his own acknowledgment, was aggressive, eager to experiment and change practices, and constantly challenged his superior. A CEO naturally has the right to select people with whom he feels congenial. But I wonder whether a greater capacity on the part of senior officers to tolerate the competitive impulses and behavior of their subordinates might not be healthy for corporations.At least a greater tolerance for interchange would not favor the managerial team player at the expense of the individual who might become a leader.

I am constantly surprised at the frequency with which chief executives feel threatened by open challenges to their ideas, as though the source of their authority, rather than their specific ideas, was at issue. In one case, a chief executive officer, who was troubled by the aggressiveness and sometimes outright rudeness of one of his talented vice presidents, used various indirect methods such as group meetings and hints from outside directors to avoid dealing with his subordinate. I advised the executive to deal head-on with what irritated him.

I suggested that by direct, face-to-face confrontation, both he and his subordinate would learn to validate the distinction between the authority to be preserved and the issues to be debated. The ability to confront is also the ability to tolerate aggressive interchange. And that skill not only has the net effect of stripping away the veils of ambiguity and signaling so characteristic of managerial cultures but also encourages the emotional relationships leaders need if they are to survive.

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