Social Skills

Leadership is ultimately a team sport. Leaders evolve from doing work themselves (playing the game) to supervising work done by others (coaching a team) to ensuring that work is done in their absence by the systems they establish (being a general manager for a team). To be sure of personal proficiency, investors need to know that leaders not only take care of their personal emotional well-being but can establish social connections with others. These social connections can be tracked through how well leaders build networks, engage others, and manage diversity.

BUILD NETWORKS

Are the leaders good at creating and participating in networks? Are they good at finding resources to help them do what they need to do? An early investor in Dell said that Michael Dell was a technically bright twenty-one-year-old, but his real skill was the ability to align himself with smart people who were proven industry thought leaders. His networking ability helped him both learn what it took to succeed and access resources for that success.

Effective leaders network. Investors can find out if leaders belong to social networks by asking leaders who they spend time with and who they know. A knowledge network represents who leaders learn from and their level of connection to thought leaders in their industry. Networked leaders exhibit sociability, curiosity, and energy. Investors can ask the leader in question for a network report and also ask leaders in the industry about their networks to determine if the target firm’s leaders are in their network. Leadership by Rolodex means that leaders have and use contacts to access information and nurture relationships.

ENGAGE OTHERS

When leaders interact with others, do the others depart feeling better or worse about themselves? Socially proficient leaders help people feel better about themselves. They share credit (Teflon) in success and accept blame (Velcro) in failure. They ask others their opinions and build on others' ideas. They are optimistic and focus on what is right more than what is wrong. They challenge the status quo without belittling the past. They recognize mistakes but learn from them rather than obsessing over them or finding someone to blame for them. They attend to personal feelings yet focus on business results. They know and care about people’s personal circumstances but are equally transparent about business requirements. They offer hope for what can be done in the future and avoid dwelling on what has been done in the past.

Two research streams can help investors assess leaders' ability to engage others. Wiseman and McKeown found that the type of leaders they called "multipliers” were more likely to develop talent, challenge direction, and consult with others on decisions. Investors can observe how leaders manage talent, direction, and decision-making processes. In his work on positive psychology, Martin Seligman highlights the importance of leaders' focusing on the positive. He has been able to help leaders in banks, government, and the military learn to build happiness in their subordinates by training them in principles of well-being (positive emotion, engagement, relationships, meaning, and accomplishment). Specifically, his colleagues found that successful leaders had a 5:1 positive-to-negative comment ratio in their interactions with others. Investors can observe and listen for this positive-to-negative ratio as leaders talk about their colleagues and work challenges. When leaders focus on the positive aspects of their personal work and the work of others, they have been found to be as much as 37% more productive.

MANAGE DIVERSITY

Leaders who are socially proficient surround themselves with others who complement their skills and style. By contrast, a leader who is surrounded by a weak or sycophantic staff is apt to be weak enough to be a poor investment—someone who needs to look good by comparison probably lacks inner strength and social confidence. Investors should observe the quality of staff around the key leaders: Do they have complementary skills and backgrounds? Are they as talented as the leader, or more so? Does the leader then listen to alternative points of view before making a decision? Socially proficient leaders surround themselves with people who may not be like them or agree with them.

One investor described what happened at a strategy meeting in a large family-held company. In the pre-meeting social time, executives were congenial and courteous—very much the typical corporate atmosphere. But when the doors closed and the strategy meeting started, the senior leaders challenged the family patriarch. They posed difficult questions and offered data that contradicted his point of view and direction, and this vigorous debate was clearly a matter of business as usual for them all. Instead of bland agreement, they said in the meeting the sorts of things often shared only in small groups after a meeting ends. The investor left the meeting much encouraged by the way dissent appeared to be acceptable and even encouraged in that company. When the leader finally concluded the active debate and said, "Thanks for the input, let me share how we will move ahead …,” people felt heard even if their ideas were not accepted.

Possible indicators:

Is the leader a network builder? That is, is the leader someone who knows and is known by thought leaders in the industry?

Does the leader share or take credit for success? Accept the blame or blame others for failure?

Were the people around the leader chosen to make up for the leader’s weaknesses or to make the leader look good by comparison?

Does the leader make others feel better about themselves after an interaction? Does the leader have a 5:1 positive-to-negative comment ratio?