WHITE PAPER
The Economic Value of Leadership Brand
The Economic Value of Leadership Brand
T
his report is the result of the research conducted by the
Economist Intelligence Unit and is an outgrowth of work done
by Mercer on the economic value of a strong leadership brand that
is recognized in the marketplace. It was hypothesized that, in these
difficult economic times, solid leadership brand took on greater relevance, and the research outlined in this report was undertaken to
test that assumption.
This research addresses the value of leadership reputation by looking
at evidence drawn from the responses and opinions of business
leaders. Its findings are based on both a survey of 153 senior executives and detailed interviews with approximately 20 corporate executives, equity analysts, and business researchers.
Both survey respondents and interviewees agreed that a company’s
reputation for leadership is a valuable intangible asset: a reputation
for leadership excellence makes it easier for companies, especially
in difficult times, to maintain the support of analysts and secure a
favorable opinion in the marketplace, to raise capital when needed,
to forge partnerships and alliances with other companies, and to
have their pick of the best talent.
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Mercer
About the survey
In January of 2009, the Economist Intelligence Unit (EIU) surveyed 153 senior
executives to test the concept of leadership brand equity. The respondents came
from large companies: over half with annual revenues of $10 billion or more and
none below $1 billion. They were also a senior group, with 90% in the C-suite,
on the board, at the VP level, or running a business line. The respondents came
from around the world: just over one-third from Western Europe, 29% from the
Asia-Pacific region, and approximately one-fourth from North America. Finally, the
respondents worked in a wide range of industries, with 60% in financial services,
consumer goods, health care and life sciences, technology, and manufacturing.
Figure 1: Profile of survey respondents
Responses by region
Responses by respondents positions
BU/Dept Head
17%
Western Europe 36%
Eastern Europe 3%
Latin America 3%
Middle East and Africa 5%
C-level
37%
Asia-Pacific 29%
North America 23%
SVP/VP/Director
46%
Responses by annual revenue
$1B to $5B
31%
Responses by industries
Financial
Services
26%
All Other
33%
$10B or more
54%
$5B to $10B
15%
2
Consumer
Goods 10%
Professional services 7%
Manufacturing 7%
IT and
Technology
8%
Healthcare, Pharmaceuticals
and Biotechnology 9%
The Economic Value of Leadership Brand
Leadership brand defined
Business has acknowledged the importance of organizational leadership since the 1970s. More recently, corporate executives have come
to recognize that a reputation for effective leadership can actually
be positioned as a distinctive brand—a succinct message, projected
inside and outside an organization, describing the unique qualities,
values, and strengths of its leaders.
The idea underlying the notion of a leadership brand is that there
are distinctive and specific leadership traits that can help a company
execute its strategy. This unique combination of skills and characteristics emerges from the nature of the company and what it has to do
to achieve its strategic objectives.
Leadership brand is distinct from other brands; however, it works in
parallel with or in support of other brands serving customers and as
an employer. Taken together, these specific brands constitute the
overall corporate brand that defines a company’s unique position in
the marketplace (see Figure 2).
Figure 2: Leadership brand defined
• Corporate brand is the central, competitively
• Corporate
brand
is the
central, competitively
positioned
brand
concept,
which prescribes the
Customer
Employer
Customer
Employer
brandbrand
brand
brand
Corporate
Corporate
brand
brand
positioned brand concept, which prescribes the
base content of customer, employer, and
base content of customer, employer, and
leadership
brands.
leadership
brands.
Customer
brand
associates
product or
• •Customer
brand
associates
a producta or
service
withwith
certain
qualities
or characteristics
service
certain
qualities
or characteristics
that
make
it special
or unique
to buyers.
that
make
it special
or unique
to buyers.
• Employer brand defines an organization’s
•value
Employer
defines
an organization’s
propositionbrand
for employees
and
value hires.
proposition for employees and
potential
potential brand
hires. defines an organization’s
• Leadership
philosophy
and promise
•leadership
Leadership
brand
definesrelevant
an organization’s
Leadership
brand
Leadership
to all stakeholders.
leadership philosophy and promise relevant
to all stakeholders.
brand
Source: Mercer, Leadership Brand Equity™:
Optimizing the Value of Your Organization’s Leadership, September 2008
Customer
brand
Customer
brand
Corporate
brand
Corporate
Employer
brand
Employer
brand
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Defining a successful company’s leadership brand depends on
understanding both where a company intends to go and what
specific leadership capabilities it needs to get there. What are the
critical success factors in the organization? What must it get right to
succeed? The answers to such questions will suggest behaviors that
leaders need to demonstrate in order to make that happen. This then
translates into the implicit or explicit promise that leaders make to
all of a company’s stakeholders. That promise, stated succinctly, is
the leadership brand.
The importance of leadership brand is widely acknowledged. As
Figure 3 shows, the overwhelming majority of survey respondents
agreed that the reputation of a company’s leadership helps it to
acquire and retain equity investors, high-quality customers, and
high-quality talent. Overall, it increases the value of the company.
What is more, 78% of all respondents reported that their company’s
leadership had been talked about in the press: leadership attracts
public attention. For most companies, their leadership’s reputation—
good or bad—is already in the public domain.
Figure 3: The value of leadership brand
Leadership reputation is important to:
Disagree Agree
Attract and retain high-quality customers
Attract and retain high-quality talent
Attract and retain equity investors
Increase the economic value of the company
-100%
4
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
The Economic Value of Leadership Brand
Leadership brand and
corporate success
The survey results suggest that the best-performing companies are
also those that pay attention to leadership brand. Respondents were
asked to rank their companies relative to peers in terms of revenue
growth, net income growth, and (if public) share-price performance.
Those who ranked their companies in the highest quintile were characterized as top performers. These respondents were 90% more likely
to say that their organizations are very well known for their leadership
brand than the rest of the survey respondents. And top performers
were more than twice as likely to affirm strongly that the company’s
leadership qualities drive its economic value.
Figure 4 illustrates the strong correlation in the survey between
a strong leadership brand and corporate performance. In fact,
leadership-branded companies outperform those with unknown
leadership brands in terms of revenues, net income, and share price.
Figure 4: Leadership brand and corporate performance
“Over the last three years our company performed much
better relative to industry peers in…”
Revenue
Net income
Share price
Companies that are cited as having a “very well known” leadership brand
Companies that are cited as having a “not very well known” or “not at all known”
leadership brand
Source: Survey of 153 senior leaders by the Economist Intelligence Unit, 2009
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It is not hard to see why this correlation exists. It is well known that
analysts consider leadership as a key factor when they evaluate
companies. Bob Venable, managing director of research at the asset
management firm Baird, is explicit about the importance of a distinctive leadership brand: “A good market and a good strategy without
the right leadership will not get you there. Conversely, the right
leadership can help redirect a company to better markets, a better
product strategy, and better execution. It is one of the single most
important factors in how we evaluate a company’s potential success.”
Attracting investors
If leadership attracts the attention of analysts, it also will be highly
regarded by the investors who follow the opinions of analysts. Of the
executives responding to the survey, 93% said leadership reputation
was important to making a decision to invest. More than 79% of all
respondents also said that leadership reputation becomes an even
more important consideration in challenging economic times. The
survey clearly suggests that companies with a solid reputation for
leadership will find it far easier to attract capital.
Many companies recognize the importance of leadership reputation
in securing the support of the marketplace. Ann Marie Neal, vice
president of talent strategy and executive development at Cisco, reinforces this idea when she suggests that “our ability to sustain growth
depends on our leadership brand and our capability to build sustainable leadership strengths in the organization.”
In the opinion of Manpower CEO Jeff Joerres, “A public company’s
value is based on the credibility of the management team—its ability
to manage through good times or not-so-good times. How much
of that is baked into the multiple, that’s pretty hard to tell. But we
clearly attract a certain kind of investor attracted to our management
style, a more value-based investor that is ready to take short-term
hits in order to produce long-term value.”
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The Economic Value of Leadership Brand
Attracting clients and customers
A reputation for strong leadership attracts investor interest and
publicity, but it is also associated with superior relationships all along
the corporate value chain. Ted Hoff, vice president of learning at
IBM, recognizes the importance of leadership brand for both investors and clients: “Wall Street clearly gives a premium to companies
that are led by leaders they believe in. I think that that is well
established, and we at IBM understand that. We also understand
that clients need to bet on who’s going to help them with all these
underlying business challenges.”
In other words, not only investors but also a company’s clients
look to its leadership. And the best companies seek to develop
relationships with firms that have superior leadership brands—ones
associated with sustainability, reliability, and quality. Especially
in times of economic difficulties, clients need to know that the
company will survive and the quality of its products will not be
compromised. According to the survey, 83% of the top-performing
companies felt that leadership reputation was important as a
criterion for choosing their vendors.
Attracting talent
It is also clear that a company’s leadership brand is vital in helping
it attract people. In the survey, 97% of all respondents agreed that
a reputation for leadership made it easier for a company to recruit
talent. And 92% reported that they would look at a firm’s reputation
for leadership in deciding whether or not to work there.
Perhaps the best illustration of these points comes from GE, a
company that has nurtured its leadership brand successfully for
many decades. Susan Peters, vice president of executive development
and organizational learning, says that this brand has made it very
easy for GE to recruit the best and the brightest in the business:
“Our ability to attract people around the world and to retain them
is very intertwined with our leadership brand.”
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Mercer
T
he bottom line is that the business community responds favor
ably to companies with a positive leadership reputation. The
survey demonstrated the strong link between recognized leadership
brand and superior business performance. Executives from the bestperforming companies acknowledged that a solid leadership brand
attracts the attention of analysts and investors, reinforces the
connection with clients and customers, and eases the recruitment
process.
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The Economic Value of Leadership Brand
Building leadership
brand equity
A company’s leadership brand is an asset that
contributes to the value of a company. The value
of the asset can grow as a result of careful investment, or it can dwindle as a result of indifference and neglect. In a time when asset values are
under intense scrutiny, companies cannot afford
to ignore leadership brand any more than other
assets. In the survey, 87% felt it was important for
their company to raise the quality of its leadership
brand—yet over half (54%) said that their companies were taking no initiatives, or at best were
pursuing only moderate action to build their
leadership brand.
What is the best way to build the equity in a leadership brand? Some companies already enjoy a
significant leadership brand that enhances their
overall value. Many other companies, however,
have yet to build a distinctive brand. For them,
there is a process with four components (see
Figure 5) that they can apply systematically in
order to enhance the equity in this important
corporate asset.
“Brand equity engine”
Figure 5: The process of building
leadership brand equity
fig 1: model
To undertake this process, a good place to begin is
with an examination of the organization’s existing
reputation for leadership. This can take the form of
an audit that seeks to determine the current value
associated with the reputation.
Using that as a reference point, the company can
then identify the leadership attributes that are
integral to the success of its business and unique
to its organization.
These brand promises can then be consciously
embedded throughout the organization by building
them into job descriptions, targets, development
activities, and evaluations.
To project these values both inside and out, efforts
should be undertaken to ensure that employees
internalize them at the same time as external
observers recognize them as part of the firm’s
unique value proposition.
Finally, there is an ongoing need to manage the
leadership brand
and circumstances
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leadership brand
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preserve and enhance its reputation for the leadership
most appropriate to its corporate objectives.
Process of building leadership brand equity
Process of building leadership brand equity
Define
Live
Project
Define
Live
Project
the
leadership
brand.
the
leadership
brand.
the
leadership
brand.
the
leadership
brand.
the
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the
leadership
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Manage
Manage
the leadership brand.
the leadership brand.
Source: Mercer Leadership Development
fig 2, 3, 4, 5: design anchors
Define it.
Live it.
Project it.
Manage it.
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Mercer
Defining the leadership brand
Enhancing leadership brand equity starts with an examination of
current leadership assets. The objective is to define what makes a
company’s leadership brand distinctive. What qualities characterize
current leadership? What do those qualities contribute to the business?
Many companies recognize the importance of leadership, but think
of leadership in a generic way—and act accordingly. The more
discriminating ones, however, look at the specific qualities and
characteristics of leadership required for the company to achieve its
strategic objectives. In a technology company, for instance, leaders
might foster idea sharing, creativity, and innovation as their most
important characteristics. In a company that delivers a personalized
service to customers, leaders might reflect reliability, solicitude, and
responsiveness. Each company faces different challenges and each
company needs leaders who embody qualities that address those
specific challenges.
The charismatic leader as brand model
Often, the leadership brand will emerge as a reflection of the qualities of a successful archetypal leader—frequently the founder. In
such organizations, the original leadership style was responsible
for the company’s initial successful growth. And in many cases, this
early leadership style continues to embody qualities suited to the
company’s ongoing needs. Recognizing the importance of this initial
example, these companies consciously choose it as the model for their
leadership brand.
At Southwest Airlines, a distinctive leadership style emerged around
Herb Kelleher, the company’s co-founder, and Colleen Barrett, the
first woman to become president of a major airline. Fiona Macleod
Butts, director of development at Southwest Airlines, points to the
power of their example: “We have a couple of iconic leaders, who
are pretty famous in terms of unconventional leaders. A couple of
years ago, a number of our senior leaders, including Herb Kelleher
and Colleen Barrett, got together to see how we set the bar for what a
great leader is at Southwest Airlines. The Southwest Spirit was articulated as having the heart of a servant, a fun-loving attitude, and a
warrior spirit. The underdog airline became the darling of America
with that kind of maverick attitude.” Today, Southwest employees are
known for taking themselves lightly but their jobs seriously.
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The Economic Value of Leadership Brand
Similarly, at the Gates Foundation—as at Microsoft
before it—a distinctive brand of leadership has
emerged around the values of the founder, Bill
Gates. “The mission of the two organizations is
quite distinct,” Melinda Gates told a group of newspaper reporters in 2008. “But I would say that
in both organizations there are people who look
for rigor in their jobs, really try and measure the
results, set ambitious targets, and move forward
on those. I would say those things are the same.”
On the other hand, although strong leaders can
often instill an overall brand for an organization,
there are examples where they have undermined
organizational success. For instance, Bob Nardelli
at Home Depot tried to instill the GE model of
leadership on a culture that was not fertile for that
brand. His brand of leadership was inconsistent
with the embedded Home Depot leadership style.
Likewise, Allan (“Chainsaw Al”) Dunlop’s tenure
at Sunbeam showed how dysfunctional leadership
can take down an entire organization.
In the case of the giant retailer Wal-Mart, one
of the most critical periods in its history came
in 1976, when Sam Walton “unretired,” pushing
out his handpicked successor, Ron Mayer. Mayer
was just over forty. He was ambitious. He was
charismatic. He was, in the words of one Walton
biographer, “the boy-genius financial officer.” But
Walton was convinced that Mayer was … in defiance of Wal-Mart’s inclusive culture. Mayer left
and Wal-Mart survived. After all, Wal-Mart is an
organization, not an all-star team. Walton brought
in David Glass, late of the Army and Southern
Missouri State University, as CEO.; the company
is now ranked No. 1 on the Fortune 500 list.1
The lesson to be learned from such examples is
that charismatic leadership only works when it
is directly related to the underlying structure and
objectives of the organization. Building an effective
leadership brand depends on tailoring the performance of leaders to the company’s requirements,
not distorting the company to accommodate the
ambitions of “stars.”
The fact is that charisma alone is not enough.
Malcolm Gladwell has observed that Enron’s disastrous collapse was directly attributable to promoting
corporate “stars” to positions of leadership without
considering the needs of the organization or its
underlying performance. A comparable disaster
was averted at Wal-Mart because the founder
reasserted collaborative, performance-oriented
leadership over mere charisma.
1
Malcolm Gladwell, “The Talent Myth,”
http://www.gladwell.com/2002/2002_07_22_a_talent.htm.
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Basing the brand on the nature of the
organization
In fact, few companies have a charismatic leader upon which they
can model their leadership brand. In many organizations, the brand
emerges from a careful analysis of the company and the kind of
leadership it needs to achieve its objectives.
Cisco offers an example of a company that bases its leadership
expectations on what the business needs. According to Ann Marie
Neal, vice president of talent strategy and executive development,
Cisco’s leadership brand is linked to far-flung “disruptive” collaboration across a flat organizational structure. It emerges from the
nature of the company—which produces the routers that power the
Internet—and what it seeks to do. “The best way to describe the
Cisco executive is a highly capable, execution-oriented leader who
pays a lot of attention to two things. One, the customer, and two,
building operational engines to support products, service, or delivery
to that customer.”
Six top drivers of
leadership brand
In the EIU leadership survey, top
performers were more likely
than bottom performers to
report that their leaders:
„„
„„
„„
„„
„„
„„
12
Develop winning business
strategies
Make sure that the business
strategy is understood across
all levels of the organization
Stand out from the leaders
of their competitors
Stay in tune with the needs
of customers
Are able to guide the company through times of change
and uncertainty
Are known for integrity and
ethical behavior
In the case of Manpower, the leadership brand is linked to its need to
work directly with people in a way that provides them with practical results. CEO Jeff Joerres says, “The term we use inside is that
a Manpower leader is ‘practically brilliant.’ You may be the smartest
person, but if you can’t translate that intelligence into practical
action, you won’t get respect inside this company.”
While specific companies require specific leadership traits, there are
also some general characteristics that are shared by most successful
leaders. Top-performing respondents to the EIU survey selected six
characteristics that they felt were especially important in shaping a
strong leadership brand (see sidebar).
The Economic Value of Leadership Brand
Living the leadership brand
Defining a leadership brand that adds value to a company is only
the first step in the process of building leadership brand equity. The
next is encouraging a shared sense of responsibility for providing the
required leadership—in other words, making leaders across the organizations accountable for living the leadership brand.
Southwest Airlines offers a good example of how to live the brand.
Fiona Macleod Butts recalls that the company has kept its leadership objectives manageable: “We agreed that this model needed
to be very simple, in order to avoid being something that was just
framed and hung in the halls. It would actually live, breathe, thrive,
and shape leadership.”
Southwest also takes care to recruit people who are compatible with
its core leadership values. “It’s easier to get into Harvard than it is to
get hired at Southwest Airlines, and that’s because we hold everyone
accountable to the warrior’s spirit, servant’s heart, and a fun-loving
attitude. We are really picky about who we bring in. Because our
culture is so strong and so cherished and protected, we want to make
sure that we bring in the right people to allow it to live on and
redefine itself.”
Finally, Southwest ensures that the right kind of leadership remains
a priority for employees by building it into their performance evaluations. “Our whole goal-setting and performance appraisal system for
leaders is wrapped around our leadership expectations. As a senior
leader, in December, I’ll get a performance appraisal from my leader
in which he and I will discuss my results in terms of how I performed
against leadership expectations.”
Southwest is only one example of how companies live their leadership brand. GE keeps employees focused on it through a variety of
techniques. As Susan Peters says, “We tend to measure the results of
our individual leaders. We also have a lot of discussion about leadership and results in our various reviews of people. And they’re intimately intertwined. We really look at what a person does, meaning
results, and how they do it, which is their leadership capability.
Those discussions take place on and off throughout the year in a very
robust way, with lots of involvement from leaders.”
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Mercer
Projecting the leadership brand
Maximizing the value of leadership brand requires that it be
projected to and by all levels in the company, from the CEO to individual contributors. Once defined and anchored internally, leadership brand value is optimized by projecting it not only to internal
stakeholders but also to external stakeholders: potential recruits,
customers, and the investment community.
Projecting the brand internally
The survey contained a question designed to gauge how consistently
the leadership brand is projected within a company. Respondents
were first asked to record five words or short phrases that characterize
the company’s leadership. They were then asked to judge how likely
it was that others in the company would provide the same words or
phrases to describe their leadership’s qualities.
The answers were revealing. Responses to the first question were
overwhelmingly positive among all classes of respondents. In general,
the executives who responded to the survey think highly of the leaders
in their companies. This is illustrated by Figure 6, in which the size
of each word represents the proportion of survey respondents who
used it to describe their own corporate leadership. Although some
negative words did surface, they were the exceptions, as indicated by
their relatively small size.
Figure 6: Words executives used to describe
leadership at their own companies
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The Economic Value of Leadership Brand
The responses to the second question—how
likely it was that others in the company would
choose the same or similar words—were even
more revealing. Top-performing companies were
over three times as likely to say that others in the
company would “definitely” answer in a similar
way. The higher the company’s performance,
the more confident respondents were that the
leadership traits were consistently shared across
levels of the organization.
Companies promote leadership brands internally
in many ways. A common thread is constant
communication. Manpower CEO Jeff Joerres
reports, “I and the rest of the leadership team spend
a lot of time having dialogue and conversation.”
Continuous interaction is critical to brand success.
In companies with a strong leadership brand, an
understanding of that brand penetrates deeply
into the organization. Fiona Macleod Butts at
Southwest says, “You could probably stop any of
our leaders in the hall and say, ‘What are our
leadership expectations?,’ and they could recite
them to you: ‘The warrior’s spirit, servant’s heart,
fun-loving attitude. Build great teams, think
strategically, and get excellent results.’ That’s our
leadership brand, and it is very well understood.”
The same direct involvement by the CEO can play
an important role in ensuring consistency in how
the leadership brand is understood and applied
throughout the organization. George Wolfe reports
that, at Steelcase, “Our CEO and the direct reports
to our CEO teach a segment of our leadership
development every month, and so they send a
signal to every leader across the company that
this is an urgent, important part of being a leader
at Steelcase.” Such hands-on involvement helps
to shape a single unambiguous message about the
brand. Without such consistency, there can be no
single powerful leadership brand in an organization.
For some of the senior executives interviewed,
there is a recognition that an important job of
leaders is to develop other leaders who understand
and apply a consistent brand. Yet this is only
partially understood within the corporate world.
Only 15% of the business leaders participating in
the survey strongly agreed with the statement
that the leaders of their own companies are deeply
involved in developing other leaders.
Philippe Tartavull, CEO and president of electronic
payments specialist Hypercom, says, “My job is to
develop the leadership team and the leadership
brand attached to the team. I spend a lot of time
with my direct reports working on a leadership
culture that my reports will expand into a similar
model and develop their own people.”
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Mercer
Projecting the brand externally
Being able to project a brand internally is only half the story. It is
also necessary to ensure that key external audiences—customers,
analysts, investors, partners, and other stakeholders—are also made
aware of a company’s leadership brand and its value. Ultimately,
everyone in a company bears some of the responsibility for maintaining its leadership image before a wider audience. Ted Hoff of
IBM notes that all IBM employees are seen as brand ambassadors,
responsible for projecting its reputation for leadership wherever they go.
Susan Peters at GE emphasizes the importance of persistence and
dedication at the top. She talks about how her organization is happy
to share its approach to leadership branding with others: “This phone
call that you and I are having is a perfect example of our willingness
to share our views on leadership brand. Articles allow us to articulate GE’s leadership brand. We don’t believe that a lot of this stuff is
intellectual property, because in the end, what we do and how we do
it comes down to the commitment and willingness of our leaders to
put time and attention into it. You can give somebody the recipe, but
if they never want to take the time to do the grocery shopping and
get the ingredients and put them all together, it doesn’t matter.”
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The Economic Value of Leadership Brand
Managing the brand:
An ongoing process
Companies build leadership brand equity by
understanding the drivers that enhance reputation and managing them intentionally and
proactively. According to the survey, the most
important drivers include the reputation of
company leaders in the broader business and
investment community, the track record of key
leaders, and a perception of leadership bench
strength beyond one or two personalities at the
very top.
An example of a deliberate and consistent
approach to managing a leadership brand is
offered by GE. Its leadership brand is a corporate
asset universally recognized by other companies,
investors, and prospective employees.
Leaders at GE are oriented toward five core values:
maintaining an external focus, clear thinking,
displaying imagination and courage, promoting
inclusiveness, and developing expertise. According
to Susan Peters, “If you were outstanding at all of
those, you would be an outstanding GE leader, and
you would represent what GE’s leadership brand is.
But it is those values combined with an ability to
lead and execute financial and operational disciplines. I don’t think you can have one without
the other. You need that ability to deliver and stay
focused and get results, to which you add these
capabilities and values.”
and Barron’s. So we do get a lot of attention out
there. That in itself builds our leadership brand.”
Indeed, the brand is now so strong that GE has
received requests to set up similar leadership
academies in other countries.
GE’s commitment to leadership development not
only has attracted the attention of other companies, it also attracts and retains new leadership
recruits. Its employment brand and its ability to
attract people around the world and to retain them
are very intertwined with its leadership brand.
The point is borne out by Jeffrey Anderson,
associate dean for leadership development at the
University of Chicago. In talking with students in
his leadership development courses, he notes that
“almost universally, one of the things that they tell
me is that they’re looking for an organization that
demonstrates a very real and genuine interest in
their continued development.” GE’s reputation for
such development means that it has its pick of the
brightest graduates from the best business schools.
Indeed, Susan Peters says that the brand of GE is
leadership: “When we’re in a room with GE leaders,
we’re able to look them in the eye and say, ‘You are
the brand of this company.’”
GE is so serious about leadership development that
more than 50 years ago it established a dedicated
training facility at Crotonville to enhance the skills
of its managers. Given GE’s reputation for developing leaders, the academy has attracted a lot of
attention—even a segment on the NBC comedy
30 Rock. Susan Peters reports, “I pulled a bunch
of articles this last summer that had the word
‘Crotonville’ in it, and there are hundreds that
mention it. Some of them are training magazines, but some of them are on the order of Fortune
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Mercer
The analyst’s perspective:
Evaluating leadership brand
The process of managing a leadership brand involves creating
common values and direction—but according to analysts, it does not
consist of promoting conformity. The strongest leadership brands are
those that are refined and strengthened through the creative tension
of questioning and challenge. The point is made by David Fondrie,
senior vice president at the asset management firm Heartland Funds.
He says that he looks for “Collaboration, yes, but also willingness
to push back and challenge leadership. Leadership should always
be challenged. Leadership should be open to all ideas. We look for
those kinds of characteristics within the leaders when we’re investing.”
A leadership brand forged through that kind of process reassures
investors that a company will remain at the top of its game because
it is open to constantly rethinking its assumptions.
Alongside traditional financial measures, analysts examine a
company’s leadership for consistency and coherence before investing.
Explains Michael Vinciquerra of BMO Capital Markets, “One of the
most important things to me when I’m doing my research among
specific companies is to find companies with people at the top who
can portray a very clean message as to what the company’s goals are,
how they intend to get there, and what their competitive advantages are.”
Beyond that, however, analysts try to get to know a company in
detail, and that includes getting to know its leaders. Says David
Fondrie of Heartland, “Investors all do financial analysis. Anyone
with the right background and experience can do it. What differentiates us is the ability to go out and make sure that we understand
what the business is about and get to know the leaders who are
running it so we know when to have confidence in those people
and in their plans.”
Despite a consensus within the analyst community of the importance
of leadership, there does not seem to be a widely used methodology
to determine the value leadership brings to the bottom line. Many
companies invest in leadership development, and some articulate
and promote a distinctive leadership brand, but estimating the
link between the investment in leadership brand and the growth
in value due to the leadership brand has proven to be elusive. Those
companies who not only focus on establishing a relevant leadership
brand but also create a dashboard to measure its impact will have a
distinct advantage.
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The Economic Value of Leadership Brand
Conclusion
Companies increasingly recognize the importance of leadership
brand. Moreover, both analysts and companies agree that leadership
brand is correlated with corporate success. The survey undertaken
for this report further confirms it: companies with strong leadership
brands are also judged by respondents to be top performers in
their industries.
While companies intuitively recognize the correlation between
leadership branding and performance, not all of them know how to
proceed in developing that brand. They fail to communicate the
leadership advantage that they have already built either to the world
at large or to the investor community.
Yet a process is available for defining, living, and projecting a leadership brand, while implementing an ongoing process for managing it.
Successful companies have already applied this method. Those that
have yet to do so can start by examining their organization, the
values that guide it, the strategy that sets its future, and the necessary qualities of leadership that will ultimately ensure success.
This is a process that needs to be undertaken with deliberation and
dedication, but the result can realize the value of untapped equity
that is critical in these challenging and uncertain times. As these
challenges mount on every side, every bit of corporate value needs to
be mobilized and directed toward the fundamental goal of surviving
and ultimately thriving in the economy of the future. Recognizing,
optimizing, and deploying the value inherent in a company’s leadership brand can be critical to tipping the balance toward success.
19
About Mercer
Mercer is a global consulting leader in talent, health,
retirement, and investments. Mercer helps clients around
the world advance the health, wealth, and performance of
their most vital asset — their people. Mercer’s more than
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operates in over 140 countries. Mercer is a wholly owned
subsidiary of Marsh & McLennan Companies (NYSE:
MMC), a global team of professional services companies
offering clients advice and solutions in the areas of risk,
strategy, and human capital.
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