Today financial capital is no longer in short supply. The actual bottleneck is
related to ideas, knowledge, entrepreneurship and human capital. And this strategic
resource will become even scarcer in the next 50 years. It is the people that provide
the biggest gain in value for the company, which means employees, who have
primarily been considered cost factors, now become investors.
In addition to intellectual capital people contribute two more key factors that
will be crucial in the competition between companies in the future: social capital,
i.e., the ability to form long-term relationships with others based on trust and
reciprocity, and what Ghoshal referred to as emotional capital, the power to turn
ideas into actions. Intelligence and knowledge, the building and maintaining of
relationships and true drive to act – these are the new important elements that
leaders need to understand and master according to Ghoshal (see Ghoshal 2004).
The market value of a company depends on its employees: in German manage-
ment theory and practice it is commonly accepted that companies can only be
as good as their employees. In the year 2005 leadership was defined as the ability
to find, to guide, to motivate, and to keep employees. The basis of successful
leadership is sensitivity to and for people, situations and processes between the
lines. “Leading by giving orders – even if they are given politely – and monitoring
procedures and result has become a thing of the past” (Rosential 2003). Emotions
are not only allowed, but are necessary for effective leadership. Apodictic manage-
ment tools following the “is X, then Y” approach are less important and often do
more harm than good.
The term “internal relationship management” describes the effort of a leader to
use the interpersonal structures of an organization to achieve its goals and optimize
its structures. Hence, interpersonal matters are discussed: communication, team
leading, project management, moderation, feedback, and coaching. That covers the
theory. But what does this look liken in practice?
A survey conducted by the Academy in 2001 underlines the change of paradigms
in the self-understanding of managers but at the same time indicates the gap
between requirements and reality: only one third of the managers interviewed
were happy with the management of relationships within their companies. Nearly
half claimed they spent less than 3 h a week on building relationships with their
employees. Many spent most of their time travelling. But leaders need to use every
minute they can to be close to costumers, products, and markets. Accordingly less
time is left for leading teams, training new employees and giving feedback.
Despite these constraints it can also be assumed that many of the respondents
simply wanted to meet social expectations by claiming they simply had “no time.”
Lack of time is still seen as a status symbol of successful people, as an expression of
vigor and creativity – and not as proof of poor time management. This is especially
true for male leaders. Women in leading positions rely much more on teamwork
than men in order to meet the company’s goals. They also count much more on the
positive transformation of conflict energy than do males.
The more people who work at an organization and who have responsibility for
each other, the more important interpersonal communication becomes. Cooperative
relations between all levels, connecting cultures and interests are needed. Beyond
3.2 Leading with Your Head and Heart 123