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LEADING ORGANIZATIONS: Moving Up The Leadership Hierarchy

In the book The Leadership Pipeline, Charan et al. described up to six career steps or passages that an executive will pass through while moving up the leadership hierarchy. Each career step is a major life-changing event for the leader.

As visualized in the model above, each career step is triggered by the executive passing from one leadership level to the next, the new level encompassing a completely new set of leadership competencies. In fact, each individual career step immediately invokes a performance gap because the candidate moving up to the next career level/gate does not possess the skills, competencies, or experience required to succeed at the new level. As a result, the candidate is not immediately capable of delivering results. Thus, coaching, training, and support are required to make the candidate decision-making competent.

Awareness about the challenges inherent in each leadership level will help disclose leadership landmines at every organizational layer and potentially help transitioning leaders navigate and avoid the most obvious landmines. Hence, to successfully transition to the next leadership gate/level, the executive must be prepared to take various initiatives to accelerate his/her learning and to develop a whole new way of leading and managing. We term these leadership transition initiatives leadership transition accelerators, and they encompass:

  • Acquiring new leadership skills – new leadership competencies are required to successfully perform at the new leadership gate/level (e.g. communication skills and situational leadership skills).

  • Expanding level management navigation – new competencies are required to successfully cross individual levels of management (i.e. from operational to tactical to strategic).

  • Building value chain understanding – new competencies are required to successfully build a broader value chain understanding (e.g. from functional to business and from group to enterprise).

  • Growing stakeholder management platforms – new competencies are required to successfully identify, segment, target and interact with the new set of stakeholders that will invariably surround a new leadership gate/level.

  • Improving time management – executives need to focus on time management, making sure that time allocated to themselves and their employees match the key priorities (Kaplan, 2005). The keyword in this regard is focus, as it is essentially a lack of focus that potentially becomes a key obstacle to success – not a lack of time.

The key to a successful transition from one leadership gate/level to the next rests in the ability of the transitioning executive to learn and integrate the new leadership skills required, cross to the appropriate level of management, expand value chain understanding, undertake appropriate time management, and grow stakeholder management platforms – in accordance with the new leadership gate/level. However, leaders moving up the leadership hierarchy often receive little or no support in this transition. We have seen leaders fail in transitioning from one gate/level to the next – and within six months going from top performer ratings in the prior leadership gate/level to struggling with low performer ratings in the new leadership level.

Feelings of incompetence, confusion, and vulnerability are often connected with leaders transitioning into new roles. In an unconscious re-enforcement of their self-worth and self-esteem, executives begin to drift towards areas where they feel competent, which leave them open for gaps in the required skills and competencies. It is our assertion, that these leaders very well could have succeeded in their transitions had they received the proper support, coaching, and tools from their line manager, HR, and other key stakeholders.

As Michael Watkins (2003) writes in his book The First 90 Days, there is a sort of Darwinian sink-or-swim managerial culture in most companies today in the sense that “…promising managers are thrown into the deep end of the pool to test their evolutionary fitness for advancement. The swimmers are deemed to have high potential, and the sinkers…sink.”. In these organizations, the learning aspect of transitioning is not in focus. Consequently, lessons learned by younger managers will often not equip them for the next level, why they make early mistakes and drown. Others swim, but only because they end up in the right kind of position or have received the right level of onboarding support.

Transitioning from one leadership level to the next

Career Step 1: From Managing Self to Managing Others

Most employees believe that transitioning from managing yourself to managing others must be one of the most difficult of the six career steps. However, from our experience, this is not the case. This is mainly because, at this leadership level (managing others), the team is often so small that the transitioning employee can play a dual role of part manager/part specialist. This will allow the transitioning manager to continue to shine with his/her expert knowledge. Employees becoming first-time leaders typically become so because of their history of good results and skillful individual contributions, and often it is the most professionally respected specialist who has also demonstrated collaborative skills. Before moving this skillful specialist into the leadership gate/level of managing others, it is crucial that the candidate is comprehensively assessed for leadership potential. If the candidate demonstrates little or no leadership potential, it is better for all parties not to proceed or, instead, to consider giving this person a professional leadership role – not a formal people management role.

This leadership level entails building skills within:

  • prioritization

  • planning

  • assigning work

  • motivating employees and measuring employee performance

Additionally, it should help expand the executive’s focus from being sheer operational, to also including a tactical perspective, assisting the executive in identifying new position-relevant stakeholders.

Career Step 2: From Managing Others to Managing Through Managers

When transitioning from managing others to managing through managers, the leader must expand his/her focus to being more strategic. In our experience, three things, in particular, make this career step one of the most difficult:

1. The leader must communicate through others (i.e. his/her managers) rather than directly to each team member. Complexity increases, as the leader now has to ensure that the communication given to his/her own manager trickles down to the remaining organizational layers, is broadly understood, and contains the content/message originally intended.

2. The leader will transition from a very hands-on leadership role, leading others directly with room for operational and tactical focus, to a more strategic role with a focus on strategic issues and the longer-term implications of decisions. Here, there is seldom room for individual contributions; rather, the focus is on hard-core management.

3. The leader will often find him/herself “swamped” in reporting requirements spending a significantly higher proportion of his/her time in generating reports for local, regional, and global management. In larger companies with matrix structures, the leader will face additional reporting requirements to (e.g. functional heads). We often see that the extensive increase in reporting is a killer for many leaders moving up to this level for the first time. In fact, this is the one career step that takes most casualties. People with brilliant careers excelling in the first two levels, suddenly find themselves in a situation, where their “raison d’être” is lost because what used to make them shine – their ability to save the world with their expert knowledge and skills – no longer is in focus, and a completely new set of (leadership) skills are required.

In sum, the biggest challenges for first-time managers of managers is a continuous short-term, operational focus, lack of setting a clear direction, and problems with delegating to managers.

This leadership level entails building skills within:

  • communication

  • delegation

  • strategy

  • broader business understanding

  • budgeting/resource allocation

  • stakeholder management and reporting

Formal training on how to be a manager is critical at this stage, combined with intensive coaching in the first year (for example by the direct manager and HR). Unfortunately, while most companies have formalized training programs for first-time managers, only few have for managers of managers.

Career Step 3: From Managing Managers to Functional Manager

In our experience, most executives at the previously discussed career step 1-2 are often given quite some operational and tactical support and guidance. They are monitored closely, perhaps even mentored and coached. However, when moving up to career step 3-6 your sources of genuine feedback and support become fewer and you are more or less on your own. Your manager focuses on mainly your strategic KPIs and only little, or not at all, on your day-to-day actions. Mistakes are often caught a stage too late, after they have shown a detrimental impact on your business results.

When transitioning from managing managers to being a functional manager, the leader must expand his/her focus to incorporate a two-layer complexity, while letting go of his/her old silo behaviors. The leader must recognize that he/she is no longer a member of the function but has become the overall leader of the functional area. While still maintaining a role within the functional area, the role is elevated to encompass all functional disciplines within this area, often generating possible blind spots for the leader. For instance, if the leader’s experience comes from running a manufacturing unit and now he/she is put in charge of “operations” (e.g. manufacturing, procurement, logistics, and warehousing), certain blind spots are likely to appear. In theory, this career step does not involve a paradigm shift. However, the complexity has increased as functionally widening aspects have been added. In our experience three things, in particular, characterize this career step:

1. The leader must expand his/her value chain perspective, as he/she will move from reporting to a functional head to reporting to a multifunctional business manager. The functional manager will also enter a cross-functional leadership team with peers and a business manager that will expect the leader to contribute a wider business perspective and who is prepared to transcend functional boundaries. Thus, the leader’s functional strategies must be explicitly anchored in the overall business strategy.

2. The leader is lucky to have team managers in his/her team who will deliver most of the inputs to the reports mentioned in the previous career level. However, time freed from this exercise will often be overtaken by an increased volume of meetings with his/her own management team, the business management team, regional/global functional heads, project teams, etc.

3. As the leader is moving through this career step, he/she will learn that the stakeholder sphere is becoming much wider and that it moves beyond those who seems to have an evident impact on one’s project. This requires increased political skills for the leader to navigate effectively across organizational boundaries. Therefore, the leader must become a skillful interpreter of motivation and the reasons behind the behavior.

To be successful at this level, the leader will need to manage with the entire function in mind and formulate value propositions that explicitly offer win-win situations for his/her leadership peers. The ability of the leader to strike a constructive and value adding cooperation with his/her leadership peers, while “fighting” them regarding budgets, resource allocations, etc., is absolute key.

This leadership level entails building skills within:

  • political navigation

  • multi-layer communication

  • stakeholder management

  • longer-term thinking

  • meeting management and consolidating all areas of the function into a whole

At this step, an executive MBA or university classes can be very helpful in order to acquire a broader perspective of the broader value chain of a business. Highly developed analytical skills are also required at this level – particularly the ability to navigate smoothly behind the numbers in a budget – is crucial. At this leadership level, the leader needs to find inspiration outside the corporate context. It is highly recommendable at this level that the leader connects with an external business coach/consultant on a continuous basis or, alternatively, with a confidant who has sufficient insights into personal aspects about the leader as well as the cycles and mechanisms of corporate life.

Career Step 4: From Functional Manager to Business Manager

When transitioning from functional manager to business manager, the leader will head up the integration of functions while having the full business area P&L responsibility. Accountability spans from developing a product to actually commercializing it. The decisive moment in this role often hits when it becomes clear how visible and exposed the leader must become. In our experience, introverted leaders often struggle in this position. As complexity rises exponentially, this is the role that is often perceived to be the most enjoyable, and alternatively, where the leader feels truly alone for the first time. In our experience, four things, in particular, characterize this career step:

1. The leader will need to balance multiple functional platforms and value all functions appropriately. The key is to make the necessary connections between the capabilities (people), structures (functions), systems, and processes. Often, the business manager will originate from a functional area that is rooted in his/her original expertise going back to the first career level. Here, for the first time, the leader’s functional expertise becomes a potential liability. Why? Because it represents a significant personal vulnerability. When judging business problems, the leader will still have a natural – and often unconscious – preference for viewing a problem through the eyes of his/her functional and educational roots and capabilities. In turn, this will create blind spots for the leader, who will need to build a team of loyal contributors, who can compensate for those blind spots.

2. At this level, the leader will need to focus on bridging the business strategies with the corporate strategiesvision, mission, and values. In essence, the leader must focus on ensuring that the business as a whole, and in each of the functional areas, operates in compliance with corporate strategies.

3. The leader must be able to take a full value chain view of the business and the opportunities and challenges faced individually and interdependently by the functional areas while playing out their roles in the value chain. In essence, the leader must ensure that each functional area contributes to ensuring a robust flow through the value chain.

4. At this level, the leader must move up to helicopter view and ensure that the KPIs set for each functional area are clearly aligned with the overall business area KPIs, and direct focus and effort, in the desired direction underpinning continued growth of the business area. The KPIs must reflect a mix of short-term and long-term perspectives.

This leadership level entails building skills within:

  • multi-functional integration

  • handling complexity

  • time management (striking an appropriate balance between spending time working up, sideways and down the hierarchy, with customers, collaborators, industry associations, etc.)

  • corporate strategy development and implementation

  • internal and external communication (the leader must inspire)

  • full P&L navigation

  • building a strong team (due to the increased complexity, volume, and diverseness of the role)

At this step, training in the deployment of sophisticated financial analytical tools can be very helpful. Additionally, as this level could involve engagement in potential M&As, asset investments, or similar, training within such processes and subsequent integration processes may be similarly beneficial to undergo. Moreover, for instance as country manager, taking an active part in the collaboration with local industry organizations, authorities, press, etc. will be expected, for which reason skills enabling you to navigate these contexts and strike a balance between risks and opportunities are equally favorable. Thus, it is advised to establish relations with external advisors who can contribute to building the business manager’s knowledge and competency level. Additionally, at this career level, increased focus should be on building a strong network, both inside the company at the global or regional level and outside the company with peers in similar roles, who face similar challenges.