What is leadership, and how is it different from management?

Before considering what it means to be a responsible leader, it is first important to understand the basics of what leadership is all about, how it is different from management, and why leadership is so important. Leadership is a process of influencing the behavior, attitudes, beliefs, and even values of people, willingly on their part, in the pursuit of organizational goals. In contrast, management is the process of controlling people, costs, equipment, and systems to maintain organizational performance. A few key differences should be noted with regard to these definitions. First, leadership is more clearly all about people and relationships between the leader and people who would be followers. Management could involve people but it is also focused on such things as cost control and systems (eg, human resource systems, machinery). Second, leadership is all about voluntary influence, in that people want to follow others whom they perceive as leaders. On the other hand, management is more about control and sometimes even coercion to get compliance.

I do not suggest here that a doctor or practice administrator should focus on one of these roles and exclude the other. Both management and leadership are important processes. However, I do contend that rather than leadership, management is often emphasized more in a variety of organizations. I further contend that this emphasis is unfortunate because it is increasingly clear that leadership, especially in the responsible terms described later, is necessary for the long-term welfare of an organization. Several positive outcomes have been associated with leadership practices including employee commitment, extra effort on the part of employees, and better performance.

When approaching the topic of effective leadership, it is best to have a guiding theme or model. Indeed, several characterizations of exemplary leadership have been put forward in recent years. The existing lexicon of descriptors includes terms such as transformational, charismatic, authentic, ethical, participative, servant, shared, and even spiritual leadership. So why introduce another term—responsible? I am not trying to reinvent the wheel of effective leadership here, and I recognize that each of the characterizations mentioned earlier above has something to offer. At the same time, I also propose that the responsibility element is somewhat missing from these descriptors and that it is actually this element that is at the heart of what effective leadership is all about. In a nutshell, to be not responsible is to be not effective as a leader.

The first step toward gaining a feel for this contention is to examine the precise nature of responsible leadership. To whom or to what should leaders be responsible, and how will responsibility be demonstrated?

The nature of responsible leadership

In everyday language, the term responsibility has several meanings but they all revolve around the notion of controlling one’s behavior through internal mechanisms. Some people may view responsibility as largely a legal matter. If the law is followed, one is acting responsibly. Others may see responsibility in more than just legal terms. Specifically, they would argue that there are moral considerations, and as such, values come into play in the pursuit of responsibility. I lean toward the latter, a more encompassing view of responsibility. Thus, to be considered responsible, an individual will need to feel an inner obligation to do the right thing toward others and to be accountable.

I contend that responsible leadership is more basic and potentially less controversial, than similar concepts, such as ethical leadership. For example, a focus on ethics can be potentially confused with values of particular religions and personal behavior on the part of a leader, which may not affect others, whereas a focus on responsibility directs attention in particular toward the others to whom a leader may be accountable. So, although responsibility is based on broad moral and/or legal standards, it is geared toward the specific concerns of others, an obligation to act on those standards, and to be accountable for the consequences of one’s actions toward others.

But who are these others, and how exactly does a leader show responsibility toward them? Effective leaders of organizations realize that they are responsible toward, and accountable to, a broad set of stakeholders who are both internal and external to the organization. These stakeholders include employees, clients/customers, and the broader community in which the organization operates. In the case of a private medical practice, the broader community includes not only the local community in which the organization exists but also the broader medical profession. This perspective of responsible leadership would suggest that the needs or interests of each of these groups need to be balanced in decision making and in the actions of people in positions of leadership. For example, this perspective would suggest that the responsible leader takes into account the needs and interests of employees when making key decisions that affect the practice.

At this point, it should be acknowledged that responsible leadership, as I am defining it here, may not fit neatly within the value system of the typical doctor who goes into private practice or for that matter, the typical entrepreneur. Entrepreneurs tend to be highly independent with a sense of responsibility that is limited to themselves and perhaps to the clients/customers whom they serve. Any talk about responsibility toward broader stakeholder groups, such as employees, might be met with some degree of skepticism. That is, any sense of responsibility toward employees might be limited to honoring a formal work contract or employee policy guidelines, complying with work-related laws, and so forth. Many entrepreneurs might view responsible leadership toward employees in a highly transactional manner. As described later, to be a true organizational leader and to realize maximum employee effort and commitment, a broader sense of responsibility is imperative.

The nature of responsible leadership

In everyday language, the term responsibility has several meanings but they all revolve around the notion of controlling one’s behavior through internal mechanisms. Some people may view responsibility as largely a legal matter. If the law is followed, one is acting responsibly. Others may see responsibility in more than just legal terms. Specifically, they would argue that there are moral considerations, and as such, values come into play in the pursuit of responsibility. I lean toward the latter, a more encompassing view of responsibility. Thus, to be considered responsible, an individual will need to feel an inner obligation to do the right thing toward others and to be accountable.

I contend that responsible leadership is more basic and potentially less controversial, than similar concepts, such as ethical leadership. For example, a focus on ethics can be potentially confused with values of particular religions and personal behavior on the part of a leader, which may not affect others, whereas a focus on responsibility directs attention in particular toward the others to whom a leader may be accountable. So, although responsibility is based on broad moral and/or legal standards, it is geared toward the specific concerns of others, an obligation to act on those standards, and to be accountable for the consequences of one’s actions toward others.

But who are these others, and how exactly does a leader show responsibility toward them? Effective leaders of organizations realize that they are responsible toward, and accountable to, a broad set of stakeholders who are both internal and external to the organization. These stakeholders include employees, clients/customers, and the broader community in which the organization operates. In the case of a private medical practice, the broader community includes not only the local community in which the organization exists but also the broader medical profession. This perspective of responsible leadership would suggest that the needs or interests of each of these groups need to be balanced in decision making and in the actions of people in positions of leadership. For example, this perspective would suggest that the responsible leader takes into account the needs and interests of employees when making key decisions that affect the practice.

At this point, it should be acknowledged that responsible leadership, as I am defining it here, may not fit neatly within the value system of the typical doctor who goes into private practice or for that matter, the typical entrepreneur. Entrepreneurs tend to be highly independent with a sense of responsibility that is limited to themselves and perhaps to the clients/customers whom they serve. Any talk about responsibility toward broader stakeholder groups, such as employees, might be met with some degree of skepticism. That is, any sense of responsibility toward employees might be limited to honoring a formal work contract or employee policy guidelines, complying with work-related laws, and so forth. Many entrepreneurs might view responsible leadership toward employees in a highly transactional manner. As described later, to be a true organizational leader and to realize maximum employee effort and commitment, a broader sense of responsibility is imperative.

Some real-life examples from the corporate world

There can be little doubt that leaders of business organizations are coming under increased scrutiny in recent times, and a lack of responsibility seems to be the basis of their troubles. A 2007 Harris poll showed that when Americans are asked, “How much confidence do you have in the leaders of major corporations?” only 14% responded, “A great deal” ; 29%, “Hardly any”; and the remainder, “Only some.” Similar numbers were posted for leaders on Wall Street, and the numbers have probably become even worse since 2006 because of recent Wall Street–based scandals and bailouts. In total, these numbers do not bode well for corporations and their popularity.

The negative upshot includes increased regulatory reactions such as the Sarbanes-Oxley Act of Congress, which was designed after the corporate scandals of the late 1990s and early part of the present century. The purpose of the act was to ensure proper enactment and reporting of financial activities on the part of firms and supposedly to prevent the sort of financial misreporting and deception that became well known after the Enron scandal. In reality, the act has simply caused a waste of corporate resources in efforts to assure regulatory compliance. More recently, we see the government’s movement to actually take control of industries (eg, financial, automobile, health care). My purpose here is not to get into a consideration of the politics or public policy implications of these government actions. However, it is at least somewhat clear that much of this negative backlash from the government and public stems from prominent cases of irresponsible leadership in firms. This is not to say that such irresponsibility is necessarily widespread among corporate leaders. Nevertheless, if the type of responsibility that I am describing here was more commonplace, I suggest that there would be less backlash and a stronger belief in our society regarding the value of capitalism and free market systems.

Do examples of highly responsible corporate leaders exist? The answer is yes, and it is these individuals who should serve as role models for others. Many of the statements and actions of John Mackey, CEO of Whole Foods, would seem to personify responsible leadership. Although acknowledging that a company’s assets belong to investors and that management must manage those assets well, he goes on to clarify that such an acknowledgment “is not wrong so much as it is narrow.” He states that, “I believe that the enlightened corporation should try to create value for all of its constituencies. From an investor’s perspective, the purpose of the business is to maximize profits. But that’s not the purpose for other stakeholders – for customers, employees, suppliers, and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate… It’s a question of finding the appropriate balance and trying to create value for all of our stakeholders.”

Howard Schultz of Starbucks is another example of a CEO who personifies a strong concern for the well-being of employees, customer satisfaction, and being a good member of the larger global community. As a specific example, Schultz is notorious for providing strong benefits to employees, as well as sharing information in a widespread manner among employees with regard to firm finances, concerns, and strategies. Moreover, Starbucks is known for its cooperative agreements with farmers in the developing countries that supply the firm with the coffee ingredients for its products.

Highly responsible corporate leaders have also existed in the recent past. Now deceased, Anita Roddick, founder of the Body Shop, was notorious for her strong sense of ethical values and doing good in the world. As a specific example, she prohibited the use of laboratory animals for the testing of any of her products. One of my personal favorites is Herb Kelleher, founder and former CEO of Southwest Airlines. Kelleher is famous for 2 things.

First, he stated that his priorities were in the following order:

• 1.
  

  Serving employees

  
  
• 2.
  

  Serving customers

  
  
• 3.
  

  Making profits.

In other words, profits were always treated as more of an afterthought that would follow the other 2 priorities.

Second, he attempted to build a strong, enduring organizational culture that emphasized hiring based on employee attitudes (rather than experience, educational pedigree, and other such qualifications), having fun at work, cooperativeness and openness, and the autonomy and ability to experiment and even make small failures.

So what is the common denominator of these leaders? I think that Jim Collins has summed it up well in his book “Good to great.” He stated that the truly great leaders are those who combine a sense of strong professional will with a demeanor that stresses humility and humbleness. Collins referred to the Level 5 leader as one who channels his or her ego and ambition into building a great organization. He or she is humble at the personal level but extremely ambitious at the organizational level. He writes, “The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results.” As an element of humility, Collins points out that Level 5 leaders are eager to attribute credit for their success to luck and other individuals, while accepting personal responsibility for failure. In contrast, more narcissistic leaders are likely to follow the “genius with a thousand helpers” model in which the leader possesses the grandiose ideas and others are designated to simply implement them.

My own take is similar but with a slightly different emphasis. The leaders whom I described have a strong sense of purpose and passion for achieving a broad vision—one that encompasses adding value and serving the interests of multiple stakeholder groups. Although guided by a moral compass, that sense of purpose does not ignore economically based concerns such as profits and cost control. However, such economic concerns neither take the center stage in a leader’s value system nor do they dominate his or her day-to-day communication and actions. But, perhaps ironically, when compared with leaders who constantly talk about controlling costs and making money, responsible leaders are actually the ones who are able to achieve the best economic results in the long run. In addition, there is an air of selflessness that surrounds these responsible leaders. They are not narcissistic, and it is not all about them. They are more than willing to admit their shortcomings, while sharing the limelight and giving credit to others.