Leadership Impact and Risk

Impact finds the sweet spot between behavioural competencies and organisational metrics, says Scott Ruhfus MAICD, organisational psychologist and Managing Director at Saville Assessment.

Reimagining leadership effectiveness

True leadership remains a rare and valuable commodity. Fail to nurture it and you risk losing it. Successful organisations need leaders to create a real impact on both teams and individuals, but this must be focused in the right areas. Change is constant, but human behaviour is relatively stable and enduring. To change behaviour, correct diagnosis is essential.

Developing leaders to do what?

Thirty years in psychometrics have told me that convoluted capability frameworks and silver bullets tend to obscure and hinder rather than help understand and develop our leaders. In the serious literature, there are two main approaches to measuring leadership effectiveness:

1. Well-validated behavioural competencies offer a conceptual link between a leader’s performance and their specific behaviours and actions. However, effective leadership often depends on the role and the context. This specificity can render it impossible or inappropriate to compare leaders in different contexts using the same competencies.

2. On the other hand, leaders can, and often are, judged against higher-order performance measures such as share price, profitability, employee engagement levels and other organisational-level metrics. These criteria are broader and more generalisable across contexts and situations, but are often somewhat disconnected from the specific

“81% of hirers cite “lack of readiness” as a top reason that a high-potential candidate declined to fill a leadership role.“
Gartner, 2020

Impact

Saville Assessment’s latest research argues for a model of leadership performance that acknowledges the impact of leaders in the achievement of organisational outcomes, while also recognising that the behaviour of individual leaders matters. The resulting Impact Model tries to find the sweet spot between an over-reliance on specific behavioural criteria and very general organisational outcomes.

Nine primary Impact areas enable you to articulate the context of any given leadership role (see the Leadership Impact/Risk graphic). All nine are important to organisational success but you cannot expect one leader to be good at all of them. We find that a focus on four or five primary Impact areas for any one leadership role is more realistic.

Across your leadership cohort however, and within leadership teams, it is advisable to have all nine areas covered, and ensure you have enough breadth and diversity of style within your high-potential pipeline to cover different leadership roles.

How can we develop for Impact?

Using Impact to frame conversations about what is required gives leaders a better understanding of what the organisation will demand of them in the future. This also means development can be focused against the areas where individuals can deliver the greatest impact. Using a personality profile such as the Wave Leadership Impact Report helps leaders understand the link between their behaviour and the impact they can make. An online dashboard can help you utilise the Impact Model to identify and manage leadership pipelines now and in the future.

Risk

Leaders may or may not derail because of certain personality foibles. However, boards want to know the risk of a leader failing in a particular area of impact, such as New Products & Markets. At Saville Assessment, we think of leadership risk as “too much of a good thing”. This is akin to getting the balance of flavours right in a recipe. For this reason, we align Impact and Risk, enabling two reports to be generated from the one questionnaire.

How can we develop for Risk?

Now let’s look at a potential leader with great concepts and an eye to the next horizon. They know how to sell themselves. They are a catalyst for new ideas. They should make an impact on New Products & Markets. But this can quickly become a little too disruptive if they cannot also stay the line with structure and procedure. We would expect this person to derail on delivering new products to deadline.

The Wave Leadership Risk Report goes beyond the individual focus and looks at the potential threat to the organisation and its culture, as well as providing practical tips to help mitigate the risks and repercussions. For the coach or mentor, it opens up a more constructive development discussion without the need to infer aberrant behaviours.

Lead the change

Bringing both Impact and Risk into leadership development activities can drive extremely powerful development conversations. It’s crucial that leaders start to think of their personal development in line with organisational values and outcomes, and that as an organisation you ensure that you give them the tools to create impact and avoid risk where it really matters.