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Leadership lessons from the former CEO of The Cleveland Clinic

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(Editor’s note, June 13, 2015: Dr. Loop died June 11. Learn more about his life by clicking on the link)

Dr. Floyd Loop is the former CEO of The Cleveland Clinic, and under his stewardship from 1989 to 2004, the Clinic grew from an outstanding Northeast Ohio hospital into a world-renowned health care, teaching and research organization.

Since then, Dr. Loop has served on the boards of several companies, and wrote a book, “Leadership and Medicine,” in which he cites “the capacity to absorb and integrate information from many sources” and being alert to the signals and warnings of a brewing crisis as part of the characteristics and qualities of an effective leader. I spoke with Loop recently and asked him about the qualities of effective leaders that make them better able to listen and respond effectively to warnings, as well as achieve overall success as managers. His three critical recommendations are part of a blueprint for successful management, including one surprisingly simple idea for leadership success.

Loop shared his thoughts on an individual’s ability to be organized as a trait that allows an effective leader to assimilate vast amounts of information to effectively respond to warnings: “If you have a great doctor, politician or salesman, but they’re not organized in their business life, they’ll fall short. The organized person can assimilate vast amounts of information, cull it and decide what’s important.”

Loop indicated that experience in leadership makes an individual better organized: “Basic managers have to be leaders. They need to realize that they have a constituency to guide. The more leadership experience that an individual can get at any level such as a department head, the better able the individual will be prepared for large leadership.”

Joyce E.A. Russell, the vice dean of the University of Maryland’s Robert H. Smith School of Business and an organizational psychologist, has touted the importance of “soft skills” such as include time management, communication and leadership skills that are needed in today’s workplaces: “It’s time we stop undervaluing soft skills, and provide the necessary training for them — in our schools and our organizations. Only then will we truly have a workforce that can do the technical work that is needed, and will also demonstrate outstanding collaboration and performance.”

Second, Loop discussed the impenetrable hierarchy of poor-communicating organizations as a characteristic of companies that don’t respond effectively to warnings: “People down in the trenches have a fear of sounding an alarm which might be false. They’re concerned about their career or money and couldn’t get their manager’s attention. They didn’t have the courage to stand up and scream.”

He emphasized that a company needs a communication chain in which people are not worried about “sounding an alarm” and are not penalized for speaking up. Dr. Loop also spoke of a “clean desk syndrome” in which CEOs that are not involved with day-to-day management, but instead rely on a chain of managers below them. Dr. Loop and recommended that companies refine their communication channels to ensure that critical information reach CEOs when necessary.

Beyond the ability to effectively respond to warnings, effective communication can be rewarding to the bottom line. A 2010 Towers Watson study (PDF) concluded that companies with highly effective communication practices enjoy 47% higher total returns to shareholders as compared to firms that are least effective at communicating. In my work as a compliance adviser to companies of all sizes, the organizations that not only welcome employee reporting of concerns but are also dogged about investigating those reports are the companies that are most successful in addressing issues before they turn disastrous.

And the surprisingly simple recommendation that Loop has to improve leadership? It’s the lost art of reading. He bemoans the lack of importance assigned to reading: “People’s eyes glaze over and they don’t understand the importance of it. Read all you can about an area that you have to govern and understand the industry you’re working in. Be a reader and a scholar to go along with common sense.”

To Loop’s point, a 2014 report by the Pew Research Center indicated that nearly a quarter of American adults had not read a single book in the past year, which is a dramatic increase from 8% cited in a similar 1978 Gallup poll. Along with gaining knowledge on a particular industry, reading encourages strategic thinking by improving an individual’s ability to “think out loud” and see the possible outcomes from actions or decisions.

While there are many characteristics of a successful business leader, Loop’s points speak to 3 essential skills for effective leadership and responding to warnings: (1) organizational and time management skills, (2) a corporate chain of command that facilitates effective communication, and (3) reading about your industry. As a health care pioneer and visionary leader, Loop’s recommendations ring true in any industry.

Dave Yarin is a compliance and risk management consultant to senior management and directors of large and mid-size companies, and author of the soon to be published book “Fair Warning — The Information Within.” Yarin follows and researches news stories regarding ignored warnings that lead to bad business outcomes, along with the social psychology theories that explain why these warnings were ignored. He lives near Boston with his fiancée and two children. For more information, visit his website, follow him on Twitter, or subscribe to his FlipBoard magazine, Fair Warning

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