The Leadership Capital Index: Realizing the Market Value of Leadership

by Dave Ulrich

Investors are increasingly focusing on leadership as a key differentiator in their investment decisions. But they've been forced to rely on instinctive, subjective, and unreliable ways to measure its impact—until now. In this book, leadership scholar, author, and consultant Dave Ulrich proposes a “leadership capital index”—a Moody's or Standard and Poor's rating for leadership.

Drawing on research from investors and business leaders, and synthesizing the work of dozens of consulting firms and leadership experts, Ulrich offers a leadership index with two domains, each comprising five factors. The individual domain includes personal qualities, strategic prowess, execution proficiency, interpersonal skills, and fit between the leader's style and the organization's values. The organizational domain encompasses a leader's ability to create customer-focused cultures, manage talent, demand accountability, use information to gain competitive advantage, and set up work processes to deal with change.

In successive chapters, Ulrich details rigorous metrics and methods for evaluating leaders on each of these factors. The result is a groundbreaking book that will be of vital interest not only to investors but also to boards of directors, executive teams, human resource and leadership development professionals, government and ratings agencies, and of course leaders themselves.

Genres: Leadership, Business

288 pages, Hardcover

First published October 19, 2015

About the author

David Olson Ulrich is a university professor, author, speaker, management coach, and management consultant. Ulrich is a professor of business at the Ross School of Business, University of Michigan and co-founder of The RBL Group

Reviews

[Jeffrey Meese · Rating 5 out of 5]

One of the more tactically significant books on intentional and structured talent management practices that I have read.

[Sumit Singla · Rating 4 out of 5]

It's an interesting idea, to boil down the intangibles of leadership into a numeric rating called The Leadership Capital Index. The financial data and other indicators such as market ratings largely give the present value of a company. But, Dave Ulrich argues that by measuring the intangibles associated with leadership, it is possible to derive the future value as well.

Also, his premise is that simply evaluating the CEO and the rest of the C-suite is not enough. Leadership has to be looked at in terms of culture and people and business processes.

There are some very interesting and futuristic ideas in this book. The only criticism is that to create such an index would still be largely intuitive and not as 'simple' as an S&P or a Moody's rating. However, it's still a great start and visionary thinking.

Strongly recommended for anyone who wants to evaluate their own company or other companies as an external consultant.