The fish is still rotting from the head

Make it stand out

Are we selecting senior leadership characteristics that skew our decisions toward those who value profit over integrity or compliance over fearlessness? We may be getting the leaders we deserve.

First published in the Mandarin

Bob Garratt’s central (and timeless) observations from his bestselling book, The Fish Rots from the Head, can be summarised as “bad leaders harm organisations” and “effective corporate governance is essential”.

Persistent senior leadership failings in Australia’s public and private sector suggest Garratt’s book might be the must-have 2023 Christmas present for Australian senior executives.

It’s not just a ‘few bad apples’

The ‘few bad apples’ approach is the first response in the crisis management playbook for senior leadership failures. Isolate, contain and control the narrative: ‘We’re investigating, the guilty will be punished, it’s a few bad apples, nothing to see here, move along’.

Unfortunately, the troubles rarely turn out to be a few bad apples.

The 2019 Hayne royal commission into misconduct in the banking, superannuation and finance industry was refreshingly straightforward on the connection between leadership and governance: “A culture that fosters poor leadership, decision-making or behaviour will undermine the governance framework of the entity.”

In a recent speech, Kenneth Hayne highlighted that a key finding from the royal commission — prioritising profit over ethics — still needs to be effectively addressed.

The resonance with Ziggy Switkowski’s recent review of PwC is strong. Switkowski found a culture at PwC where ‘rainmaker’ partners were ‘untouchable’ and to whom ‘the rules don’t always apply’.

Switkowski described a leadership culture that incentivised the pursuit of profit over integrity and service quality.

Similarly, Elizabeth Broderick’s recent review of workplace culture at EY Oceania reflects themes of profit and leadership but also adds psychological safety to the list of issues. These three themes were reminiscent of Broderick’s much earlier review of the treatment of women in the Australian Defence Force.

The robodebt royal commission concluded by criticising the leadership and integrity of former ministers, the senior executive of the Australian Public Service and consulting firm partners. The Australian Public Service Commission is managing 16 code-of-conduct inquiries arising from the royal commission. Home affairs secretary Mike Pezzullo has been sacked after breaching the APS Code of Conduct at least 14 times.

Meanwhile, returning to the private sector, Alan Joyce and Qantas’s dramatic fall from grace has profit and leadership hubris as persistent reporting themes on the causes of the problems.

As Quentin Beresford highlights in his recent book Rogue Corporations: inside Australia’s biggest business scandals, these recent senior leadership failings cannot be wished away as isolated incidents. There is a pattern of not learning from experience.

Would similar reviews or investigations of the agriculture, mining or energy sectors find these failings of leadership, ethics and integrity are limited to consulting, aviation and the public service?

The persistence of national survey findings on ‘toxic leadership’, ‘toxic cultures’, and ‘quiet quitting’ speak to more widespread leadership problems.

The pity is that review after review identifies well-known causes of the harm done by poor leadership that could have been easily gleaned from a cursory reading of an introductory leadership text.

Lots of investment in leadership, but for what return?

The typical response to leadership failure takes two forms: seeking justice and systems breakdown. Both are necessary and important responses, but they lead us to gloss over another, perhaps more fundamental, question: Are we producing good-quality senior leaders?

One way to look at persistent leadership failures in the public and private sectors would be to say that leadership development in Australia should be having an existential crisis.

For example, Gallup estimates that worldwide companies spend as much as $50 billion a year on leadership development, “while surveys of executives consistently show improving leadership development is a priority challenge”.

So, there is an extraordinary annual investment in leadership training and development. Yet, we are experiencing persistent high-profile senior leadership failings that damage the reputation and performance of critical public institutions and industries.

It’s more than just a few ‘bad apples’.

Are we getting the senior leaders we deserve?

Looking at the problem through a cracked mirror, we might conclude that we get exactly what we are paying for.

Our conversations about leadership are almost exclusively focused on effectiveness. But, adjacent to this view, and less talked about, is who gets to be the leader.

There is considerable research exploring the link between the ‘dark triad’ of personality characteristics (narcissism, Machiavellianism and psychopathy) and those gaining leadership positions. For example, a survey of financial leaders in New York found they scored highly on psychopathic traits but lower than average in emotional intelligence.

Looking at the dark side of leadership distinguishes between leadership emergence (how leaders become leaders) and leadership effectiveness (what good leaders do that improves performance).

Are we selecting senior leadership characteristics that skew our decisions toward those who value profit over integrity or compliance over fearlessness?

We may be getting the leaders we deserve.

A good question

Verona Burgess, reflecting on the response of the APS to the robodebt royal commission and other inquiries, asked how, singularly or combined, the proposed initiatives would prevent future failings.

It’s a good question. The initiatives outlined by the APS seem targeted at the symptom, not the cause.

The absence of good leadership is the theme that runs through all the recent failings. In response, we are drawn to fixing the symptoms, but more might be gained from focusing on how we are developing and selecting the right leaders.

We should also acknowledge that what constitutes good leadership has been learned (repeatedly).

Bob Garratt’s book is about history but his two lessons are still relevant.