Value-based leadership – not orders

Five years ago, the Danish Ministry of Foreign Affairs did not care to educate its employees to be good leaders. But today it does. And this is not a unique example. Being increasingly staffed with highly skilled and specialised professionals, knowledge-intensive organisations focus considerably more on management practices.   

There is a good reason for the increased attention, says Professor Flemming Poulfelt, one of the authors of the newly published book Managing the Knowledge-Intensive Firm. He believes that many organisations have reached a size that requires a more professional leadership style.

“The need for qualified management becomes much more pronounced,” he says. “Businesses need common ground and shared values that will encourage employee identification with the organisation and inspire development of the professionals.”

Poulfelt is keen to point out that it is a wise decision on behalf of companies to focus more openly on professional leadership:

”For businesses, it is ultimately about retaining good employees and facilitating their professional and personal development. And this goal can only be achieved with a visionary leadership that inspires, acknowledges and constantly challenges the staff.”

Also applies to the public sector

Management of knowledge-intensive firms is not a new topic and there are several books on the subject. But this is the first time that the research also focuses on the knowledge-intensive organisations within the public sector. Researchers recognise that many public companies and organisations are faced with the same management problems as the private sector.

“A majority of books deal with law, engineering and architecture firms. But the challenge to manage the highly skilled professionals is not limited to private sector. Hospitals, universities and ministries – to name a few – face the same management challenges, argues Poulfelt.

Are professional managers good leaders?

Common to many private and public knowledge-intensive firms is that they have failed to prioritise proper leadership. The managerial positions have often been occupied by professionals within particular field, and not by professional leaders. If you take a look at the traditional leadership in hospitals, it has often been doctors who were recruited as leaders.

According to Poulfelt, this has clearly had implications on the quality of the management practiced. The doctor may well be trained and skilled as a professional, but it does not mean that he or she also has solid leadership skills.

He believes this problem is the hallmark of both the private and public knowledge-intensive businesses. He mentions the larger law firms as examples of companies that also suffered from a lack of professional management.

”Many of these enterprises have not been particularly well managed, simply because management has not been particularly high on the agenda. Such companies have mainly been driven by their professional expertise. Now many of them have become so large that they have had to adapt to the new situation and equip their staff with leadership mandate and competencies. In short, they have to transform to a more professional management style.”

There is especially one area where knowledge-intensive organisations are particularly vulnerable if management is not perceived as professional and qualified: the recruitment and retention of employees.

Both processes require leaders who understand how to manage organisations staffed with highly specialised professionals. Specifically, it is about facilitating development of managers, launching performance appraisal interviews with employees and establishing leadership development programmes – which is what many companies have neglected to do.

Highly skilled professionals do care about management policies

The question is whether the highly trained specialists want to be properly managed. There are opposing views on this. Some believe that professionals such as engineers and professors do not care much for being managed, so why waste resources on managing these employees?

However, Poulfelt and his co-authors of the book do not share this view. On the contrary, they are convinced that the knowledge-intensive employees are glad to be managed – but they have additional requirements for management methods:

“It is in our view a common misconception that knowledge-intensive professionals are not willing to be managed. They want a leadership that promotes their productivity and which inspires, recognises and supports them when things are not working out as planned. It is when the crisis hits, for instance, that the management is expected to take charge and prove its value to the employee,” explains Poulfelt.

Furthermore, he argues, the management must also be able to handle highly skilled professionals who individually are very diverse.

The key is value-based management in the shape of guidelines on how to behave. Employees need common values that will create identification and promote their professional and personal development. The days of controlling and conformist management style are gone.
Indeed, the highly educated professionals do not reject leadership – but they do require leadership that is inspiring and supportive of employee development.

And there is a good reason for the knowledge-intensive firms to increase their focus on leadership issues:

”In the long run, it is simply not sustainable for companies to fail to address this specific area,” argues Flemming Poulfelt.