Leadership, management and the Eurozone crisis

Has someone finally uncovered the difference between leadership and management? Thanks to the Eurozone crisis, some commentators seemed to have grasped the point that, yes, there is a difference between leadership and management.

As Europe's governments, particularly Italy and Greece, struggled to manage their debt crisis, an editorial headline from the Financial Times read: "Leaders needed, not just managers".

I've long argued that when one gets appointed to a managerial position, it's the organisation that gives one the title of "manager". Then the manager is expected to carry out the responsibilities outlined in the role.

As we all know, this can be done well or not so well depending on the manager's skill. I liken this appointment to being given a hat or cap by the organisation that is inscribed "manager". People will then do things for the manager because he or she is wearing the "manager" hat.

But will these people do things well or even exceptionally well for the manager just because of the hat?

This is where the distinction between a manager and a leader comes in. In both Italy and Greece, technical bureaucrats have been appointed (not elected) to head the countries in an endeavour to get their countries out of the quagmire.

However, as the Financial Times points out "It is stating the obvious to say that appointing an unelected technocrat is less than ideal . . . It would be a fatal mistake however to presume that in either case a coalition of the old established political elite led by a technocrat, will provide a miracle fix to deeply rooted problems".

The key distinction between someone who is a manager and someone who is seen as a leader ("seen" being the operative word), is that people will do things for the leader because of who he or she is, not what they are, nor the position they hold.

A colleague, Professor Preston Bottger (Professor of Leadership at the International Institute for Management Development, Lausanne, Switzerland), tells the story of when he was asked by his eight year old daughter's teacher to address her class on leadership. "How do you talk to a class of eight year olds on leadership?" he asked.

So, being an inventive professor, he asked the class the obvious question, "Who can tell me what a leader is?"

Straight away a boy in the front row put up his hand. "A leader does things first" he said.

His response was quickly followed by an equally enthusiastic girl who said "Leaders have followers".

Could the experts give any better definitions of a leader than those? "Leaders do things first" and "leaders have followers". The first is a clear leadership behaviour, whilst the second describes the outcome of successfully leading. Under these conditions the manager's hat, given by the organisation, now turns into a badge of honour given by the people.

Returning to Greece and Italy, what will it take for these two technocrats to make the jump from being an appointed manager to becoming a recognised and respected leader?

Our research across many varied organisations and cultures over the last twenty years suggests there are four conditions that enable managers to make the jump to leaders. Leaders create the conditions which enable their followers to gain:

• A shared understanding of the environment – "We know what we face"
• A shared vision of where we are going – "We know what we have to do"
• A shared set of organisational (or country, regional) values – "We are in this together"
• A shared feeling of power – "We can do this"

You'll notice the emphasis on "shared". For managers to emerge as true leaders, it's not merely enough to describe the four conditions, they must garner their people's support to understand and embrace them. This is the challenge of leadership.

Are the new "managers" of Italy and Greece up to the task? Only time will tell. As the Financial Times concludes in their editorial, "the new leaders must also recognise that nothing will be achieved without popular support. They could struggle to get reforms through parliament. The answer will be to show real leadership. Managerial competence will simply not suffice."