The Measuring Criteria of the Leadership Capital Index

    Jeevan Sivasubramaniam Posted by Jeevan Sivasubramaniam, Managing Director, Editorial, Berrett-Koehler Publishers Inc.

    The Measuring Criteria of the Leadership Capital Index

    In Dave Ulrich's new book, he explores a new methodology to gauge the skills and efficacy of leaders. In short, the challenge for investors is how can you measure leadership? Unlike ratings and standards for stock or share performance, there is no way to assess a leader's bankability.

    So, after extensive research and measurement, Ulrich and his colleagues established the Leadership Capital Index--an index for measuring a leader's presence and impact in two vital domains: the individual domain and the organizational domain.


    A. In the individual domain, there are five factors to be measured:

    1. Personal qualities: the leader's values, manner, and style

    2.  Strategic prowess: how well the leader can develop and apply strategy

    3. Execution proficiency: how effectively does the leader put strategies and processes into practical usage.

    4. Interpersonal skills: how does the leader communicate and relate to his or her people and stakeholders.

    5. Fit between organizational values and individual style: how symbiotic or in synch are the leader's beliefs and values with the organization's?


    B. In the organizational domain, there are five more factors to be measured:

    1. Creating customer-focused cultures: the ability to have organizational commitment to meeting customer expectations.

    2. Talent management: The ability to acquire and develop new leaders.

    3. Accountability: what is the leader's capacity for demanding accountability at all levels?

    4. Effective use of information: the best leaders know how to use information towards gaining competitive marketplace advantage.

    5. Ability to take the organization through change: All organizations confront change and the best leaders are those who establish the necessary processes and procedures to allow for change to happen most effectively.


    By using these ten total factors, it is possible to establish an actual index with numerical representation to reflect the presence or lack of good leadership in any organization.