When we talk about leadership it is very easy to get sucked into the notion that the leadership traits which we espouse result purely in a relationship between the leader and employees. So we give examples of best practices in modelling the way, in inspiring a vision or in enabling others to act.
But there is another side to leadership, and that is taking responsibility for the outward face of the business; the one which turns towards customers, investors and suppliers. This relationship ultimately governs the reputation of the business and its long term profitability. And when we look outwards then one act can have reputational consequences which reach far beyond the immediate sphere.
Take relationships with suppliers for example. A number of well known companies have hit the headlines this year for the way in which they have extended payment terms with suppliers or demanded a discount for prompt settlement. Practices such as these effectively use the supply chain as a quasi-finance option but the long term consequences for those at the bottom of the chain can be catastrophic.
The government is looking to legislate to require companies to report on their payment practices and to take other measures to force organisations towards a more prompt payment model. But perhaps it is time for leaders to step up and change the practice. When payment terms are extended, organisations hit the headlines in a negative way and that impacts on the way in which customers, suppliers and investors are likely to view the business. But more than that, can those at the top of organisations truly say that they are promoting strong values when they preside over practices which potentially harm others? Exceptional leaders would say not. Exceptional leaders should be setting an example