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Leadership is prime: How do youmeasure Leadership Excellence?Gopal K. Kanji aa Kanji Quality Culture Ltd, Sheffield Technology Parks, ArundelStreet, Sheffield, UKPublished online: 01 Apr 2008.

To cite this article: Gopal K. Kanji (2008) Leadership is prime: How do you measureLeadership Excellence?, Total Quality Management & Business Excellence, 19:4, 417-427, DOI:10.1080/14783360802002834

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Leadership is prime: How do you measureLeadership Excellence?

Gopal K. Kanji�

Kanji Quality Culture Ltd, Sheffield Technology Parks, Arundel Street, Sheffield, UK

Leadership has, for a long time, been a topic that attracts the attention of both academics andpractitioners. In spite of the extensive literature on this matter, there is almost a complete absenceof models to explain how leadership works and how to measure Leadership Excellence. It is inthe Business Excellence Model that the importance of leadership becomes very clear; however,leadership is not just one more criterion, it is the prime aspect of the Business Excellence Model(Kanji, 2002), showing that leadership is responsible for driving the organisation in every areatowards quality and excellence. In this paper, the author will present a structural model ofleadership using the critical successes factors that provide a measurement of LeadershipExcellence Index. In turn, this will reflect, in quantitative terms and through a single andintegrated measure, the simultaneous performance of leaders in the roles of establishing andsharing the values, developing and communicating the vision, defining the mission, selecting andimplementing a strategy and managing other operational key issues within the organisation. Thissound and robust methodology leads to leadership measures that are innovative and it helps theidentification of leadership areas that need to be addressed more carefully if the overallexcellence index is to be increased.

Keywords: leadership behaviour; participative leadership; management style; LeadershipExcellence Model (LEM); Leadership Excellence in Portuguese municipalities

Introduction

Leading, planning, controlling and organising are the four interrelated areas of activity that

collectively constitute the systematic process which is known as management. Leadership is

the behaviour associated with the activity of leading and, in some ways, represents one of the

great problem areas both for the student of management and for the practising manager.

A voluminous literature has emerged concerned with those who led the organisations of

yesterday, who lead them today and what is required of the leaders of the future. When it

comes to such a group of leaders, what characteristics are possessed and what is inevitably

seen in them to be uniquely elite that enables its members to distinguish themselves from the

largely undifferentiated many and to be recognised by others as distinctive and holding authority

Total Quality Management

Vol. 19, No. 4, April 2008, 417–427

�Email: quality@gopal-kanji.com

1478-3363 print/1478-3371 online# 2008 Taylor & FrancisDOI: 10.1080/14783360802002834http://www.informaworld.com

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over them? Much of management literature has been concerned with finding an answer to such

questions and, given the complexity of the subject matter to which the questions relate, more

than one answer has predictably been offered. The earliest studies of leadership were those

which sought to provide an answer by discerning the traits that all leaders held in common.

Leadership traits

This approach was primarily the realm in which psychologists sought to identify the personal

traits of leaders based upon the assumption that leaders were not born but made. The task

then became one of discovering measurable leadership traits which, once discovered, could

be compared with the traits that characterised those who never advanced beyond the role of fol-

lower and, moreover, of comparing the traits exhibited by effective and ineffective leaders.

It was the failure of this approach to make any meaningful statements about leadership that

prompted researchers to try to isolate the behaviour that made leaders effective. So instead of

trying to ascertain what makes effective leaders, the task became one of trying to discover

what effective leaders did to achieve success.

Leadership behaviour

Here the focus was upon two aspects of leadership behaviour, namely leadership function and

leadership styles. As far as the former was concerned, attention was directed towards task-related

and group-maintenance activities, whilst the latter was focused towards task and employee

orientations.

Tannenbaum and Schmidt (1973) have suggested that the way in which leadership is affected

is through the choice of a management style; the particular form that a leadership style takes

being dependent upon a number of interrelated forces (see Figure 1). To choose the most appro-

priate managerial style, the leader must consider the following.

Forces within the manager. Background, knowledge, values and experience.Forces within the subordinates. Autonomy, responsibility, knowledge, experience.Forces within the situation. Organisational, climate, nature of work group, nature of tasks,pressures of time.

While the insights provided by Tannenbaum and Schmidt have been developed and somewhat

superseded in the course of the continuing debate that leadership has attracted, their work

provides an important lesson for those with interests in quality management.

Participative style of leadership

Earlier it was noted that a complete consensus was lacking among the prescriptions offered by

the gurus. However, there is a discernible consensus to be found in their writings on the concept

of leadership in the form of top management; they all emphasise that commitment to a quality

management initiative is essential. The reason is that, without this commitment, a quality

initiative will be under-resourced and virtually impossible to sustain.

Tannenbaum and Schmidt do not restrict leadership to senior management but leave leader-

ship as an organisation-wide concept influenced by a common set of forces irrespective of where

it is employed. Leadership, therefore, has to be all pervasive and not the particular preserve of

those at the apex of the organisation pyramid but a concept manifested through behaviour at all

organisational levels.

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What is not being claimed here is that identical sets of tasks have to be carried out in identical

ways by those exhibiting leadership at different organisational levels. The form that leadership

will take will be different at different levels at the same time but the same at the same level at all

times. Thus, the style of leadership will become contingent upon the nature of the forces noted

by Tannenbaum and Schmidt and the nature of the relationship between those forces; both

factors will themselves be subject to change.

TQM recognises not only continuous quality improvement but also the assertion that people

make quality. This tends to ensure that the style of leadership best suited to the introduction and

sustainability of TQM is a participative style of leadership and, in consequence, encourages the

involvement of those most closely linked to a process in the determination of that process. Poten-

tial benefits of the participative leadership suggested by Tannenbaum and Schmidt are:

. people’s involvement in decision-making improves the understanding of the issues involved;

. people are more committed to action where they have involved in the relevant decision-

making;

. people are less competitive and more collaborative when they are working on joint goals;

. when people make decisions together, the social commitment to one another is greater and

thus increases their commitment to the decision;

. several people deciding together make better decisions than one person alone.

A participative style of leadership can be seen to be essential in the building of a corporate

vision. Yet all too often a vision is simply ‘handed down’ from the few who occupy the

higher echelons of the organisational structure and the expected, ready compliance to its

Figure 1. Management style and interrelated forces.

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exhortations from the many who occupy the lower rings of the organisational ladder. Hence, the

need to build a sustainable and sustaining organisational context is imperative and the creation of

a vision is a crucial element in that building process.

The need for a vision

A sustainable and sustaining vision is not something that can be built by one person or a small

group of persons in an organisation. It is something that depicts the corporate future, which is

something that cannot be achieved by the few but can only be accomplished with the synergy

that emanates from the active participation of the many. The attainment of an organisational

vision is dependent upon the mobilisation of bias and the pursuit that mobilisation must be of

the many not of the few. This reflects the necessity for an organisation to recognise that it

can fulfil its role only if all staff work together on tasks that are beyond the capacity of one

or two working alone.

The characteristics of a vision

. It indicates a change from the past and present to a new, dynamic future.

. It is a comprehensive view of the future.

. It holds out the real prospect of the vision being changed and adapted.

. It serves as a means to align corporate activities.

. It provides a rationale for action.

. It creates a context for individuals to locate their work schedules within a collective

framework.

. It acts as a guide when dealing with uncertainty and complex events.

. It presents a standard against which to judge and make choices.

. It affords a means for overcoming employee inertia.

. It draws people together in pursuit of a superordinate goal.

While all visions should encompass the characteristics shown above, were they to do so it would

not necessarily guarantee that the visions would be effective. For a vision to be effective, it must

possess the following further characteristics.

The characteristic of an effective vision

. It unites and inspires people to make an extra effort in pursuit of collective and individual

goals.

. It focuses energy on the outcome of collective effort and not simply upon the outcome of indi-

vidual effort.

. It creates a positive attitude that people can expand in their own immediate work

environments.

. It depicts a whole, a totality, into which people can place themselves, their feelings and their

attitudes.

. It meets the needs of the new, educated worker to be engaged in making a valued, individual

contribution to a large, corporate effort.

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The combined characteristics of an effective vision afford a context that gives both a role and

shape to effective leadership behaviour.

Integrated approach to leadership

Despite the important role that TQM assigns to vision, it does not leave that vision isolated but

seeks to integrate it with other important contextual elements in order to ensure the sustainability

of quality initiative. The other contextual elements that are fully interrelated with vision are

mission, strategy, values and key issues (see Figure 2). It is the task of leaders and the role of

leadership at all levels of the organisational hierarchy to work actively to secure the fullest inte-

gration of the contextual elements. Collectively, they provide the macro dimension of TQM

whilst other elements, which will be considered later, provide the micro, operational dimension.

It is in Kanji’s Business Excellence Model (Kanji, 1998, 2000, 2002) that the importance of

leadership becomes very clear. Leadership is not just one more criterion; it is the prime aspect of

the model, showing that leadership is responsible for driving the organisation in every area

towards quality and excellence.

Considering the literature review (Kanji & Sa, 2001) on leadership in the context of organis-

ations in general and, in particular, organisations committed to organisational excellence, the

critical success factors that are believed to be necessary for Leadership Excellence were ident-

ified. These are the following.

. The existence of strong and shared organisational values (which provide the foundation for

the identity of the organisation and are reflected in its mission, vision, strategy and manage-

ment practices).

. The development and communication of an inspiring vision.

. The definition of a mission that states what the organisation represents.

. The development of a strategy aligned to the mission and vision and able to create a sustain-

able competitive advantage over the competitors.

Figure 2. Contextual element of Total Quality Management (TQM).

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. The establishment of an organisational structure and operational mechanisms that facilitate

the implementation of the mission, vision and strategy.

Leadership Excellence is thus the result of an outstanding performance of leaders in all these and

other key issues, which, as the definition of critical success factors suggests, have the greatest

impact on the competitive success of an organisation.

The Leadership Excellence Model (LEM)

The Leadership Excellence Model will reflect, in quantitative terms and through a single and

integrated measure, the simultaneous performance of leaders in the roles of establishing and

sharing the values, developing and communicating the vision, defining the mission, selecting

and implementing a strategy and managing other operational key issues.

In 2002, Kanji’s book, Measuring Business Excellence, provided evidence of why leadership

is the prime aspect for achieving Organisational Excellence. Here is a similar model that incor-

porates the critical success factors of leadership, showing how they are attracted to Leadership

Excellence through the core values of the organisation.

In this leadership model (see Figure 3) the organisational values provide the foundation for the

vision, mission, strategy and other key issues. The way these are developed and implemented

will determine the quality of the leadership in an organisation, as measured by the respective

Leadership Excellence Index.

The model emphasises the role of leadership in creating (and communicating) a vision, clar-

ifying the mission and objectives of the organisation, defining the corporate strategy to achieve

these, and dealing with other key issues. As stated earlier, this view is consistent with the recent

theories on leadership and is strongly based on the literature review.

The assumption that leadership a set of behaviours that can actually be observed, measured

and developed is critical in the development of structural equation modelling (SEM). Such a

model includes many latent variables, each of which is translated into a manifest variable,

which corresponds to an item in a questionnaire.

As discussed above, the Leadership Excellence Model includes organisational values, vision,

mission, strategy, key issues and Leadership Excellence, which cannot be measured directly.

Figure 3. Leadership Excellence Model (LEM).Source: Kanji & Sa, 2001.

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Rather, a set of manifest variables (indicators) must be associated with each of these constructs

and then measured through the development and administration of an appropriate questionnaire.

The critical success factors for Leadership Excellence require:

. the existence of strong and shared organisational values;

. the development and communication of an inspiring vision;

. the definition of a mission that states what the organisation stands for;

. the development of a strategy aligned to the mission and vision;

. the structure and operational mechanisms to facilitate the implementation of the model.

Leadership Excellence in the Portuguese Municipalities

The leadership model was tested and validated using data collected from the Portuguese Muni-

cipalities (see Sa, 2002; Sa & Kanji, 2003). According to the approach followed, the validity of

the measurement model was checked first and then the structural model results were interpreted.

Kanji & Sa (2006) have pointed out that Local Government currently faces many challenges,

most of which are related to the general trends observed in Public Sector Leadership, especially

those that concern the introduction of business-like management practice. In their study of the

Portuguese Local Government, leadership was found to be the most critical factor, confirming its

key role in the success of any institution. Hence, to achieve excellence, the role of leadership in

the Local Government is to:

. communicate the organisation’s values;

. create a sense of urgency for changing the environment;

. work across traditional boundaries and build networks;

. develop an organisation-wide culture that solicits and values everyone’s opinions;

. trust subordinates and empower the staff;

. ensure that important information is available to the decision-makers;

. act as leaders, motivating employees and getting things done;

. show appreciation and recognition for employees’ achievements and contributions;

. be an agent for learning and develop a culture of continuous improvement.

Data collection and analysis in the Portuguese municipalities

In May 2000, the leadership questionnaires were sent to the 308 municipalities, and 85 success-

fully completed the questionnaires returned, i.e. a response rate of 28%. The questionnaires were

either directly sent to the mayor or to the specified contact person. The study had shown that the

questionnaires were, in the vast majority of the cases, completed by a mayor or a councillor and,

in some instance, by the head of the general administration division. Therefore, it is possible to

conclude that the information received was the leaders’ perspective and, in particular, the view

of the political leadership.

The Path coefficients represent the causal links from one construct to another (see Figure 4)

and indicate the amount of influence a change in one latent variable would have on the next.

Therefore, they give important indications about possible improvement strategies.

The parameters or path coefficients are calculated using partial least squares (PLS) and show

the strength of the relationship between independent and dependent variables of the model.

All the parameters have positive values, indicating that the path coefficients in the model

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have causal relationships. The result shows that organisational values (prime) have a strong

causal connection with the four critical success factors. Moreover, it is important to keep in

mind that the indices are all related because the values of the path coefficients from which

they derived are computed by simultaneous equations.

Leadership Excellence Measurement (LEM) software

The statistical reasoning behind the LEMmodel is relatively complex; however, the user will not

need to have any particular mathematical expertise, although some basic skills and statistical

knowledge will be useful.

To support the implementation of LEM, Kanji’s Leadership Excellence Index measurement

(KLEIM) software package calculates all the associated indices and produces some standard

graphics. As mentioned before, LEM is based on a structural equation modelling technique

that combines aspects of multiple regression and factor analysis to estimate simultaneously a

series of interrelated dependence relationships.

The Kanji’s software, which essentially uses the Partial Least Squares (PLS) method in the

simultaneous estimation of the weights of the constructs of the model, calculates these

weights in a way that maximises the goodness of fit of the model and thus has the ability to

explain Leadership Excellence as the ultimate endogenous variable.

It is not necessary to have any particular expertise to work with the software package. Anyone

who feels comfortable working with Windows usual software programs will soon become fam-

iliar with this package.

The details of the Leadership Excellence measurements are given in Figure 5. This shows the

indices of critical success factors and Leadership Excellence for Portuguese municipalities. If we

assume that an excellence index of 75 or more is regarded as excellent, then the leadership

Figure 4. Leadership path diagram for Portuguese municipalities.Source: Sa & Kanji, 2003.

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excellence for the municipalities of 69.8 must be considered as reasonably good, but indicating

that there is still considerable scope for improvement.

The values of critical success factors for Leadership Excellence can help top management

make decisions concerning improvement plans and resources allocation. Critical success

factors with low index scores are natural candidates for improvement. Knowing the relationship

between critical success factors and the leadership index is vital to determine which critical

success factors need greater improvement in order to increase Leadership Excellence.

The excellence seeker’s approach (see Kanji, 2002) involves the use of an optimisation algor-

ithm for determining which indices are to be increased and by how much in order to achieve a

given target level of excellence. Since organisations usually face some constraints, the algorithm

allows the introduction of upper limits of improvement for one or more critical success factors.

Further study

In the earlier study, the institutions’ responses are essentially given by their top political leaders;

therefore, some bias is expected. Not only is it important to know how leaders assess themselves

but it is essential to understand how other organisational members regard their leaders’

Figure 5. Indices of critical success factors for Leadership Excellence.Source: Sa & Kanji, 2003.

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performances. Major perception gaps must be carefully addressed as they may indicate

communication and image problems. Therefore, three municipalities’ measurement of Leader-

ship Excellence was collected from staff members. Figure 6 displays the resulting scores for the

various critical factors and Leadership Excellence.

According to staff assessment, the Leadership Excellence Index for the three municipalities

that participated in this study is just over 50 points. A direct comparison with the indices

obtained in the earlier results for the 85 municipalities is not possible. However, this small

sample represent some of the characteristics of the larger set of Portuguese municipalities;

thus, one can easily argue that leaders’ perceptions are in fact inflated. In any case, mission

and vision consistently emerge as major strengths. On the other hand, the key issues score in

both data sets is low, indicating that leaders need to concentrate their efforts on empowering

their employees and crating a more collaborative environment.

Conclusions

Based on the finding in Figure 4, it is possible to draw several conclusions about the municipa-

lities’ performances on the five key areas of Leadership Excellence.

. Overall, Leadership Excellence in the Portuguese municipalities is relatively good, since the

scores for all critical success factors range from 64% to 71%, resulting in a Leadership Excel-

lence Index close to 70%.

Figure 6. Indices of critical success factors for leaders and staff.

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. Organisational values are strongly related to the remaining model constructs, demonstrating

how crucial is the leader’s role in the development and communication of sharing meanings

and interpretation of reality.

. It seems that there is in place a compelling and challenging vision.

. The score achieved in the mission dimensions is particularly high, showing the leader’s ability

to identify the municipality’s overall purpose and enunciate its main projects.

. Leaders consider they have an appropriate strategy, anticipating and guiding change, although

some problems are reported in monitoring performance and using the feedback to review the

strategic choices.

. The key issues dimension is pushing down the Leadership Excellence score. Leaders recog-

nise that staff empowerment is not very high and that partnerships are not always conveniently

developed.

Figure 5 indicates that there are significant difference in the indices given by leaders and other

staff to each of the critical success dimensions of leadership. As expected, leaders’ self-

assessment is much higher than the evaluation made by their staff. Leaders’ and staff views

differ essentially in the dimension of key issues and organisation values. Regarding the

vision, the difference is considerably smaller.

When comparing leaders’ and staff answers for each particular question interesting findings

emerge.

. Lack of trust is demonstrated in several aspects. Staff members are not totally confident that

leaders use the organisational principle and values to make their decisions. In addition, they

agree with their leaders that vision is challenging, but they do not think leaders inspire con-

fidence in it by the way they act. A credibility problem is thus visible.

. Concerning strategic issues, leaders’ and followers’ views do not differ much.

. Operational management practices (the key issues) apparently are not in line with the vision,

mission, strategy and organisational values. In particular, staff members give scores under

50% to the way leaders are delegating authority and power and to their ability to develop

partnerships.

It is also interesting to notice that, in spite of the score difference, the strongest and weakest areas

are identified.

References

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Kanji, G.K. (2000). Measuring Kanji’s business excellence index. The 44th EOQCongress, Budapest, Vol. 2, pp. 163–170.

Kanji, G.K. (2002).Measuring Business Excellence, Routledge Advances in Management and Business Studies. London:

Routledge.

Kanji, G.K., & Sa, P.M. (2001). Measuring leadership excellence. Total Quality Management, 12(6), 701–718.

Kanji, G.K., & Sa, P.M. (2006). Performance Measurement: The Path to Excellence. Leeds: Wisdom House.

Sa, P.M. (2002). Organisational excellence in the public sector: with special reference to the Portuguese Local Govern-

ment. PhD Thesis, Sheffield Hallam University, UK.

Sa, P.M., & Kanji, G.K. (2003). Leadership for excellence in the Portuguese municipalities: critical success factors,

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