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The Economic Value of Leadership Brand WHITE PAPER
The Economic Value of Leadership BrandWHITE PAPER
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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 rel-evance, 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 execu-tives and detailed interviews with approximately 20 corporate execu-tives, 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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$10B or more54%
$1B to $5B31%
$5B to $10B15%
North America 23%Latin America 3%
Middle East and Africa 5%
Eastern Europe 3%
Asia-Pacific 29%Western Europe 36%
Responses by region
Responses by annual revenue
All Other33%
Healthcare, Pharmaceuticalsand Biotechnology 9%
Financial Services
26%
IT and Technology
8%
Manufacturing 7%
Professional services 7%
ConsumerGoods 10%
Responses by respondents positions
Responses by industries
BU/Dept Head17%
SVP/VP/Director46%
C-level37%
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
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The Economic Value of Leadership Brand
Business has acknowledged the importance of organizational leader-ship 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 character-istics 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).
Employerbrand
Customerbrand
Leadershipbrand
Corporatebrand
Employerbrand
Customerbrand
Leadershipbrand
Corporatebrand
• Corporate brand is the central, competitively positioned brand concept, which prescribes the base content of customer, employer, and leadership brands.
• Customer brand associates a product or service with certain qualities or characteristics that make it special or unique to buyers.
• Employer brand defines an organization’s value proposition for employees and potential hires.
• Leadership brand defines an organization’s leadership philosophy and promise relevant to all stakeholders.
Employerbrand
Customerbrand
Leadershipbrand
Corporatebrand
Employerbrand
Customerbrand
Leadershipbrand
Corporatebrand
• Corporate brand is the central, competitively positioned brand concept, which prescribes the base content of customer, employer, and leadership brands.
• Customer brand associates a product or service with certain qualities or characteristics that make it special or unique to buyers.
• Employer brand defines an organization’s value proposition for employees and potential hires.
• Leadership brand defines an organization’s leadership philosophy and promise relevant to all stakeholders.
Leadership brand defined
Source: Mercer, Leadership Brand Equity™:Optimizing the Value of Your Organization’s Leadership, September 2008
Figure 2: Leadership brand defi ned
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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:
Increase the economic value of the company
Attract and retain equity investors
Attract and retain high-quality talent
Attract and retain high-quality customers
AgreeDisagree
-100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100%
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The Economic Value of Leadership Brand
Leadership brand and corporate successThe 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 char-acterized 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
Source: Survey of 153 senior leaders by the Economist Intelligence Unit, 2009
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
Share price
Net income
Revenue
“Over the last three years our company performed much better relative to industry peers in…”
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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 distinc-tive 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, rein-forces this idea when she suggests that “our ability to sustain growth depends on our leadership brand and our capability to build sustain-able 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 inves-tors 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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The 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 best-performing 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
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 invest-ment, or it can dwindle as a result of indiffer-ence 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 compa-nies 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 lead-ership 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.
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 as markets and circumstances change. The company does this through the appli-cation of appropriate tools that are deployed to preserve and enhance its reputation for the leadership most appropriate to its corporate objectives.�g 1: model
�g 2, 3, 4, 5: design anchors
“Brand equity engine” v.2a, kristin rogers brown
Manage it.Project it.Live it.Define it.
Defining the leadership brand
21 3Criticalsuccessfactors
Leadershipattributes
Leadershippromise
Managethe leadership brand.
Livethe
leadershipbrand.
Process of building leadership brand equity
Definethe
leadershipbrand.
Projectthe
leadershipbrand.
Managethe leadership brand.
Livethe
leadershipbrand.
Process of building leadership brand equity
Definethe
leadershipbrand.
Projectthe
leadershipbrand.
Building leadershipbrand equity
Figure 5: The process of buildingleadership brand equity
Source: Mercer Leadership Development
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Defining the leadership brandEnhancing 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 quali-ties 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 artic-ulated 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 news-paper 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.
The fact is that charisma alone is not enough. Malcolm Gladwell has observed that Enron’s disas-trous 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.
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 defi-ance 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 perfor-mance of leaders to the company’s requirements, not distorting the company to accommodate the ambitions of “stars.”
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” collabo-ration 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.”
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 prac-tical 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).
Six top drivers of leadership brand
In the EIU leadership survey, top performers were more likely than bottom performers to report that their leaders:
�� 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 compa-ny through times of change and uncertainty
�� Are known for integrity and ethical behavior
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The Economic Value of Leadership Brand
Living the leadership brandDefining 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 orga-nizations 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 leader-ship 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 evalua-tions. “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 leader-ship 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 leader-ship and results in our various reviews of people. And they’re inti-mately 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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Projecting the leadership brandMaximizing the value of leadership brand requires that it be projected to and by all levels in the company, from the CEO to indi-vidual contributors. Once defined and anchored internally, leader-ship 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.”
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.”
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.
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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 main-taining 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 articu-late 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
Companies build leadership brand equity by understanding the drivers that enhance repu-tation 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 disci-plines. 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.”
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 devel-oping 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 maga-zines, but some of them are on the order of Fortune
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 compa-nies, 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.’”
Managing the brand: An ongoing process
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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 differen-tiates 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
ConclusionCompanies 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 leader-ship 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 neces-sary 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 leader-ship brand can be critical to tipping the balance toward success.
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 20,000 employees are based in 42 countries, and the firm 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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