WHARTON LEADERSHIP DIGEST 

December, 2006, Volume 11, Number 3

CONTENTS 

Where are the Women in Top Management?  New Research Raises Troubling Questions 

Teamwork in the Mountain and Beyond:  An Interview with Rodrigo Jordan 

Loyalty:  Virtue or Vice? 

Eyes Wide Open:  A Review of Day and Schoemaker’s Peripheral Vision 

Editor’s Picks:  Bob Woodward’s State of Denial; Arlene Blum’s Breaking Trail; and Wikinews and a Wiki book

WHERE ARE THE WOMEN IN TOP MANAGEMENT? New Research Raises Troubling Questions 

By Peter Cappelli 

Until recently, a generation of advocacy to increase the number of women in corporate leadership appeared to be paying off.   

High profile female leaders at Xerox, Lucent, Hewlett-Packard, and EBay suggested women were finally getting through the “glass ceiling,” that rigid but difficult-to-identify barrier to the top corporate jobs. Women have been enrolling in record numbers in business and law schools and moving into elite fields like investment banking and consulting.  Prominent companies like Deloitte and organizations like Catalyst started programs to mentor and develop women from entry-level positions into the executive ranks.   

The reason there were not more women executives, the argument went, was there were not enough women in the career pipeline.  But the pipeline of talent appeared to be filling with women, and it would only be a matter of time before they advanced into the executive ranks at rates equal to those of men.   

Now it appears this optimism was premature. A new study appearing this month in the Academy of Management’s Perspectives suggests the pipeline, in fact, is pretty empty.  Authors Constance Helfat, Dawn Harris and Paul Wolfson looked at the top executives of Fortune 1000 companies – people who would be expected to fill the highest positions in the corporate world.  They found eight percent of top executives were women, a figure lower than most estimates. The study, titled “The Pipeline to the Top: Women and Men Executives in U.S. Corporations,” also found half these companies had no women at all in the executive ranks and only 23 percent had more than one woman in the executive hierarchy.  In other words, while a few companies had women executives in numbers proportionate to the share of women in lower-level positions, the vast majority – big companies as well as small ones – had a glass ceiling firmly in place. 

Women in executive roles were substantially younger than their male counterparts and also had less tenure in their positions, the study found.  These facts suggest women were advancing faster than men – good news if one is interested in increasing the distribution of women at the top.  The other piece of good news was the women were not concentrated at the bottom of the executive hierarchy; overall, their distribution across positions reflected that of men.  

But the study also made the troubling discovery that those executive women were half as likely as male colleagues to be in line positions.  Women executives were concentrated in staff jobs, especially in public relations and human resources.  Line jobs or general management positions, where leaders have profit-and-loss responsibility, represent the most important stepping stones to the very top corporate jobs.   

The authors estimate the percentage of female CEOs in 2016 will not be much higher than it is now because so few women are currently CFOs or in other line positions.  This estimate assumes women executives will move across companies to advance and that the probability of advancing is not dependent on the company where she is currently employed. In other words, the companies are assumed to be gender-blind.  If, on the other hand, one assumed the companies that have no women executives would be less likely to appoint a woman CEO – arguably a much more likely scenario – the projected proportion of women CEOs in the future would be even lower. 

What is going on here? Getting women into the executive suite appears to be next to impossible in many companies, and when some women do get there, they are in the wrong positions for further advancement. Some evidence from the study is also consistent with the cynical view that women sometimes get to executive positions because of tokenism: The proportion of women executives was lower in larger companies, a result, one would expect, if the goal was simply to have a woman somewhere in the executive ranks. 

For those who work in organizations with an executive hierarchy, the question to ask is: Where in the organizational hierarchy does the proportion of women begin to drop off? In virtually all companies it is someplace in middle management.  The question to ask at an executive meeting, then, is: Why is this happening? The answers are sure to be enlightening.    

Note: Peter Cappelli is George W. Taylor Professor of Management and Director of the Center for Human Resources at the Wharton School. He is also Editor of Academy of Management Perspectives. He can be reached at cappelli@wharton.upenn.edu.  This article first appeared as a column in Human Resource Executive, and for an abstract of the article, click here.

 
TEAMWORK IN THE MOUNTAINS AND BEYOND:  An Interview with Rodrigo Jordan

Rodrigo Jordan is Chile’s Renaissance Man. A management professor in the MBA program at the Pontifical Catholic University of Chile, Jordan is also a world-class mountaineer. He has led successful Chilean expeditions to Mount Everest, K2 and Antarctica – and chronicled these adventures through popular books and films.   

Combining his background in management and mountaineering, Jordan is the founding director of Vertical S.A., which uses outdoor education to teach leadership, teamwork, and entrepreneurship. The related Fundación Vertical offers similar adventure learning for underprivileged children. In addition to being a former television executive and nationally known TV personality, Jordan was recently appointed chair of Chile’s National Poverty Foundation, the country’s most important NGO dedicated to social development.

Wharton Leadership Digest called Jordan this month in Santiago to ask about his varied leadership experiences, as well as his successful climb earlier this year of Lhotse, the world’s fourth-highest summit.

Wharton Leadership Digest: What first led you to mountain-climbing?

Rodrigo Jordan: I was always drawn to nature. When my family went for vacations, they would spend their time on the beach, while I would be climbing in the hills. Back in Santiago, our house was at the foot of San Cristobal hill, where I used to run around playing Cowboys and Indians. The first serious mountain I climbed, in the late 1970s, was a volcano in Chile called Guallatire. I took a mountaineering class at college, and that was our final exam.

WLD: Did you enjoy that first climb?

JORDAN: The funny thing is I felt awful on summit day. I had a headache, stomach ache, I was vomiting – this was probably caused by high altitude. I remember the climbing instructor handing me a bag of chocolates to give me energy. I finally did make it to the summit, and I still felt terrible. But on the way down to the lower camps, with the view spread out in front of me, the experience seemed good – that sense of achievement, of overcoming difficulty.

WLD: Years later, you were standing on the summit of Mount Everest. How did that feel?

JORDAN:  We reached Everest in 1992. Thirteen years had passed since I climbed that first volcano in Chile. Many things happened in that time – I got married, I had children – and my perspective had changed. When I reached the summit of Guallatire, I was young, and I thought, “I’ve done it.” It’s not the right word, but it was a selfish way of thinking. By time I got to Everest – and we had two expeditions that failed before we finally succeeded in 1992 – I realized it was not just me on the summit. Yes, I was lucky to be on the team of three climbers who reached the top, but really it was the effort of so many people who made that possible.

It sounds like a very simple insight, but it’s true: You can’t accomplish anything on your own. Nothing. It always takes a team. If you think of an individual athletic star, like a tennis champion, he is also part of a team that includes his doctor and his coach. Even solitary artists, like Edgar Allen Poe – yes, he worked alone, but someone had to publish his books.

WLD: Can you teach teamwork? 

JORDAN:  I was just meeting with our Minister of Education about this. Our schools – primary schools, colleges – teach technical skills like biology, Spanish and math. We don’t teach the social skills you need to work in a team. Of course, those experiences exist; students play on sports teams or join drama clubs. But after producing a play, no one takes the opportunity to ask, “How did we resolve our conflicts? Where did we succeed or fail?” It’s a simple thing, really. You don’t necessarily need to create new experiences. You just need to consciously focus on teamwork skills.

In soccer teams in our country, the captain of the team is the best player: He may be captain for many years. Why not have the captaincy rotate among players? Yes, maybe the captain will be someone who doesn’t have the best technical skills. But at the end of the game or the season, the team can sit with the captain and ask, “Did the captain listen to our perspectives? How did he lead us towards our goal?”

When our group was hiking down from Everest in 1992, we said to one another, “Look what we did, working together.” “There may be have things that bothered me, but I tolerated them, because I didn’t want to diminish our relationship.” It was a classic debriefing, something we do now with every group at Vertical. After Everest, we just did it intuitively.

WLD: What social skills do people need to work well in a team?

JORDAN:  One scenario is very common. On any team, there’s always somebody who is shyer than the rest. If this happens among a group of kids at school, the quiet one will be teased. We have an expression in Chile, “to take someone up the swing.” That means in a tense situation, people take out the pressure on someone who seems weaker; they “push him up the swing.” The poor person on the swing, he or she can have a pretty hard time but they won’t be able to talk about it. Meanwhile, the group doesn’t know how much suffering that person is taking.  

That dynamic can be exacerbated in a mountaineering expedition or a competitive business setting: You’re tense, you’re uncomfortable, and you push that negative feeling on someone else. It’s a subtle, unconscious process.  

WLD: What’s the solution?  

JORDAN: Everybody feels they are on the swing at one point or another. Whether that true or untrue, it doesn’t matter: that’s how the person feels. So when you’re on the swing, you have to speak up.  

On our expeditions, we have a meeting at the end of each day. It’s after supper, over coffee. We talk about what we’ve done, what we’ll do tomorrow. That’s when you can speak up and say, “Everything’s fine, but I’m a little tired. Can you get me out of the swing for tomorrow?”  

If the group is really working like the team, they won’t say, “Come on, it was just a couple of jokes.” No, they will say, “Okay, that’s how you feel. We respect that.” 

WLD:   It takes a lot of courage to stand up and say, “I’ve been having a hard time. Can you give me a break?”  How do you open those channels of communication in a group? 

JORDAN: You need time together. When we’re forming a team for an expedition, we go out climbing together months in advance. We are not only training physically and technically but also training as a team.  When situations come up, the leader can say, “Guys, do you realize this is happening? How can we deal with it?” The team can come up with a system for dealing with conflicts. Because on the expedition we’re going to face avalanches, we’re going to face hardships – and we’re also going to face conflicts.  

Usually nobody is thinking about human relations on a mountaineering expedition – people are concentrating on logistics and supplies and technical skills. But it’s one of the bullet points you need to deal with before the expedition starts.    

WLD:  Do businesses put enough time into thinking about human relations? 

JORDAN:  I don’t know about the U.S., because my main work is here in Latin America. But I can say in Latin America, nobody considers it an issue. My view is: Just as you have strategic plans for development, innovation, finance and marketing, you also need a strategic plan for your human resources. 

WLD: What can businesses do to strengthen their teams?         

JORDAN:  At Vertical, we take people on retreats and put them in a totally different situation, away from their work setting. To deal with a new issue, it helps to be in a new environment.   

Camping outdoors offers neutral ground in terms of the organization. No one is boss, no one is secretary. Whatever prejudices are built into the group because of the organization they work in are forgotten. Confronting camping is the same for everybody.   

You can analyze issues as they come up because they’re happening in an entertaining way when you’re in the outdoors. Then comes the serious part:  How are you going to apply what you learned here into your daily work? The answers come easily in that setting, because everyone has been involved.   

WLD:  How do you bring these experiences from mountaineering into the completely different challenge of tackling poverty in Chile? 

JORDAN:  The immediate image that comes to your mind when you talk about poor people is their material situation: They don’t have housing or access to medical care or financial resources. 

The National Poverty Foundation deals with capabilities. Rather than just providing food programs or housing programs, we help people grow capabilities so they can step out of their condition. We run large programs in very rural, very remote places, like in Patagonia. If you’re thinking about installing capabilities more than satisfying material needs, you approach the operation in a different way than the classical top-down way, where you say, “I know what needs to be done, so I’ll hand it to you.”  

This other way of thinking asks for a more level relationship: I have knowledge as an outsider coming in, and the community has its own knowledge. By respecting that knowledge on both sides, we increase the human capital that will allow the community to develop itself. In that relationship, social skills and teamwork are essential.  

WLD:  Why is teamwork important in this case? 

JORDAN:  It’s just like when we sit with Sherpas on a Himalayan expedition. There’s a cultural difference, an economic and social difference between us. But we have to work as a team if we want to get up the mountain. We the outsiders, you the insiders, we’re going to work as a team to install capabilities.  And working as a team needs conflict resolution, negotiation and effective communications. 

If I have technical knowledge, and I say, “I’m going to build you a house,” then I don’t need social skills. But if I’m going to help organize the community to think of a housing plan they can develop on their own – that’s something totally different. 

WLD: Before we go, could you tell us about your expedition this year to climb Lhotse, the peak next to Mt. Everest?     

Rodrigo Jordan on his May 2006 expedition to Lhotse, the world's 4th highest peak

JORDAN:  We reached the summit on May 11. To me, it was an incredible expedition because we changed a paradigm.  

We’ve always worked with the idea that a team of nine or ten climbers, with help from Sherpas in this case, will help to build the camps up the mountain. However, of these ten only a select group of three or four will reach the summit. Leaving Santiago, we’re all capable of climbing the peak, but you never know what’s going to happen – you might get ill or lose interest or not be chosen for whatever reason. Typically, a small group is chosen to make the summit. 

But in this case as we confronted that final decision – we had established all the camps, we were ready for the summit push – everyone was in good shape, all 11 of us. I said, “Guys, it’s very hard for me to decide who’s going go. There are experienced climbers, for whom this would be their third or fourth 8,000-meter peak; there are younger guys, this would be their first one.”    

We started discussing it, and someone said, “Why don’t we all go?” The initial reaction was “that’s impossible”. But we thought of a way: breaking up into two teams that would summit on consecutive days. That has been done before, but our group had never done it. It would require very high levels of tolerance because we’d have to share our gear. The first group would leave their sleeping bags in the high camp for the second group to use, and the other sleeping bags would be at the lower camp. We had slept in our bags for 60 days without taking a shower, so the idea of sleeping in someone else’s bag was not a pleasant one.  

Then we had four Sherpas who really wanted to go. So now there were 15 of us – “This is crazy,” we said, “but let’s give it a shot.”  

We split the team - seven in the first group and eight in the second group. And it worked. 

It was a real experience for me. I led the first group, so I was on the summit on May 11^th. But after I came down, I couldn’t relax. I had been to the summit – yes, marvelous – but it wouldn’t be over until the other group was successful. When the second group finally went up and came down, it was excellent.  

WLD:  What lesson did you take out of that experience? 

JORDAN:  The impossible is possible, provided the team is united behind it. Everyone must be willing to jump in and sacrifice and take the risk.

Note:  Andrea Useem conducted the interview for the Wharton Leadership Digest.


LOYALTY:  Virtue or Vice?

By John Baldoni 

The drama of President George W. Bush’s long-running support for his embattled Secretary of Defense– which culminated last month in Donald Rumsfeld’s resignation – was a parable on the dangers of loyalty writ large.  

On the surface, Bush’s support for a member of his own cabinet was understandable; Rumsfeld was the president’s pick. On a more symbolic level, however, the president’s unwavering support came to represent a governance style that valued consistency over consensus and, some would say, loyalty over good leadership. 

Loyalty is usually a cherished attribute. Leaders who demonstrate this quality toward their followers earn respect. “Semper fi” – “always faithful” – is the Marine Corps motto, and best-loved military heroes like Chesty Puller and Dwight Eisenhower were known for their fierce commitment to the men they led.  

We like to see our leaders stick by their people; it is a manifestation of character. But when leaders who benefit from loyalty harm their organization more than they help it, then such loyalty loses virtue and becomes its opposite, vice.  

Loyalty as a Shield: Hank Greenberg ran the company he built from the ground up, AIG, like a personal fiefdom. As Fortune and the Wall Street Journal reported, he surrounded himself with executives and directors who were loyal to him, often to the point of being derelict in their corporate responsibilities. Greenberg rewarded their loyalty with lavish perks; when anyone questioned his decisions or left his employ, he berated them.  When AIG came under scrutiny for financial irregularities, Greenberg and his allies were forced out, chiefly because a few directors acted on a different form of loyalty – to the shareholders. Greenberg used loyalty to shield himself from critical opinion. His followers, in turn, were only loyal to their own proximity to power and resources.  

Loyalty as a Bargaining Tool: Senior executives are fond of asking their people to “suck it up” by forgoing raises or taking pay cuts when times are bad; they play on the employee’s loyalty to the institution. However, when good times return, the same employees may be rewarded only with a pat on the back and a “nice job,” while the senior executives rake in huge pay packages. Employees would naturally feel cheated. In such instances loyalty is a one-way street, serving only the folks at the top.   

Loyalty as an Instrument of Personal Gain:  Richard “Dick” Grasso devoted his life to the New York Stock Exchange, starting out as a young floor clerk and rising to become chairman and CEO. He earned acclaim for working hard to reopen the Exchange in the wake of September 11. He demonstrated loyalty to the institution and its employees – but there is another side to his story. Grasso packed the board of directors with friends who awarded him a huge compensation package – totaling nearly $140 million – that was not disclosed publicly until his retirement. The Exchange as an institution was betrayed by its senior-most leader, who milked it for personal gain. Grasso was forced by the courts to surrender some of his windfall but he fought hard to retain as much as he could, and in the process, proved his highest loyalty was to himself and not the people or the institution for whom he had worked a lifetime. 

Loyalty for the Common Good 

Loyalty should not be about a leader exploiting his or her power over others. In its most ethical and effective manifestation, loyalty is the fulfillment of mutual need.   

Professional associations are a good demonstration of loyalty’s positive power. Members meet regularly to share ideas, best practices, and one another’s good company. Sometimes they refer business to one another, but more often they pool good ideas, sharing what they do best with others who can put it to good use. Skeptics might fault them for “giving away business,” but this view is a limited one. Professionals in a network are teaching others in exchange for learning themselves. Their loyalty extends to the improvement of their profession – a larger collective goal that will further the individual goals of their own business.   

Loyalty is a force for good when it serves the organization rather than a single individual. For leaders to embody true loyalty, they need to put the needs of their organization ahead of personal gain. And leaders and followers alike must be on the lookout for moments when loyalty is manipulated to serve narrow ends.  

Harnessing the power of loyalty for organizational betterment is a tough but noble challenge. A section from the Cadet’s Prayer, recited at the U.S. Military Academy at West Point, serves as a reminder: 

“Make us to choose the harder right instead of the easier wrong, and never to be content with a half truth when the whole truth can be won. Endow us with courage that is born of loyalty to all that is noble and worthy, that scorns to compromise with vice and injustice and knows no fear when truth and right are in jeopardy.” 

Note:  John Baldoni is a leadership and communications consultant and speaker, and author of the book, How Great Leaders Get Great Results (McGraw-Hill, December 2005).  He can be reached at john@johnbaldoni.com or through his website.
 

EYES WIDE OPEN: A Review of Day and Schoemaker’s Peripheral Vision

By Mark Hanna 

Vigilance is a leadership quality most valued in its absence. The words that no board wants to hear are: “They were asleep at the wheel,” or “They missed the boat.”  Everyone can come up with their own memorable stories of faulty vigilance, either from personal experience or from the daily papers.  It may have been signals missed over a shift in market trends, or an advance in information technology that was not noticed, or a shift in regulatory policies or investor sentiments. The stories might differ, but they would all share a common element: a bounded awareness. 

Vigilance is a state of watchfulness and alertness. What one “sees” in the most literal sense is linked to focal and peripheral vision.  Focal vision includes what is directly in one’s line of vision, just as you read the words in a book. Peripheral vision is directed at things happening at the edges of a 180 degree field, whether it be a stalking tiger on the left or a careening yellow Hummer on the right.  To be effective, vigilance must utilize both focal and peripheral signals. 

The new book by Wharton professors George S. Day and Paul J.H. Schoemaker puts a spotlight on the importance of vigilance.  The key message is: Pay more attention to weak signals at the periphery of strategic consciousness because they just might affect a firm’s survival.  

Foundational Influences   

Peripheral Vision represents the fruitful confluence of many foundational works of business literature.  Marketing people may connect this book with the classic Theodore Levitt article “Marketing Myopia,” published in the Harvard Business Review in 1960.  Strategy scholars may see the influence of F.J. Aguilar’s book, Scanning the Business Environment, a primarily descriptive work about strategic scanning published in 1967, or strategic management pioneer H. Igor Ansoff’s article “Managing strategic response by response to weak signals,” published in the winter 1975 issue of the California Management Review. Other foundational works are carefully referenced at the end of the book.  

How Can the Book Help Practitioners and Academics? 

Using an extended metaphor of peripheral vision, Day and Schoemaker have expanded the basic lessons of internal monitoring and environmental scanning into a seven-step iterative process: 

Scoping: Using guiding questions to know where to look,

Scanning:  Knowing how to look at selected areas of interest,

Interpreting: Making sense of what is found,

Probing: Exploring the implications of what is found,

Acting: Knowing what to do with one’s insights,

Organizing: Developing organizational capacity for vigilance,

Leading: Building leadership for supporting peripheral vision. 

For practitioners, this book is an essential guide, full of useful frameworks for how to evaluate and process weak signals that are crucial to personal or business success. The vivid, real-life narratives include the stories of Mattel, maker of the iconic Barbie doll, which was startled by the success of the Bratz dolls, and Vince Melchiorre, chief marketing officer of Philadelphia-based Tasty Baking who shrewdly figured out that low-sugar snacks were more appealing than low-carbohydrate ones. The “Vigilance Gap” questionnaire in the appendix is practical and thought-provoking.   

For academics, Peripheral Vision raises new research questions about the idea of vigilant leadership. According to Day and Schoemaker, vigilant leaders have an active and curious external focus. Their market orientation is outside-in. They constantly scan the environment and listen to others. They have broad social and professional networks. In terms of conceptual ability, they are highly imaginative and endowed with good instincts. They probe for second-order and even third-order effects. They embrace uncertainty with mindfulness and are open to new thinking. In their organizational relationships, they are inclusive and often take on the roles of enabler, coach, and visionary.  Their time horizon extends deep into the lessons of the past and far into the challenges of the future.  

The numbers of articles in the marketing and management literature on the functions of internal monitoring and environmental scanning are legion; the numbers of academic business articles that discuss vigilance are almost non-existent.  Scan the massive four-volume Encyclopedia of Leadership by Goethals, Sorenson, and Burns (2004), and one will find the word “vigilance” occurs only once, and that is to say people with a “depressive” dysfunctional leadership style lack vigilance. Type the words “vigilance” or “vigilant” into the search engine of the highly prestigious Leadership Quarterly, and one will come up with zero hits.   

Final Thoughts 

Peripheral Vision is not a book one reads once and puts down.  It is a book to be picked up again and again to help one see the world with new eyes. Like the great classical pianist Vladimir Horowitz who practiced his scales on a daily ba