Level 5 leadership: what it asks of an agency leader

What Level 5 leadership means

Level 5 leadership comes from Jim Collins's research for the book Good to Great. In his words, Level 5 leaders "display a powerful mixture of personal humility and indomitable will." Their ambition is "first and foremost for the cause, for the organization and its purpose, not themselves."

Collins says every good-to-great transition in that research began with a Level 5 leader. Of 1,435 companies on the Fortune 500 in the study's first candidate list, only eleven made the cut, and all eleven had Level 5 leadership in key positions, the CEO included, at the time of the transition.

The name matters less than the finding. The leaders who built great companies weren't the loudest people in the room. They were often, as Collins puts it, "self-effacing, quiet, reserved, and even shy," and they motivated people "more with inspired standards than inspiring personality."

The five levels, in an agency

Collins describes Level 5 as the top of a hierarchy. Level 1 is individual capability, Level 2 team skills, Level 3 managerial competence and Level 4 leadership "as traditionally conceived." A Level 5 leader has the skills of all four, plus what Collins calls an "extra dimension."

Here's what each level looks like in an advisory agency:

Most agency leaders got the job by being excellent at Level 1. Producing well earns the promotion. The jump to Level 3 and Level 4 is where most of the hard learning happens, and our guide to strategic vs tactical leadership covers that step.

Humility and will: the two halves

Collins lists Level 5 as a set of paired traits, each with an "on the one hand" and a "yet on the other hand." Grouped into the two halves:

Neither half works alone. Humility without will produces a pleasant agency that never makes hard calls: the underperforming manager stays, the plan drifts. Will without humility produces an agency built around one person, which tends to stall when that person stops producing.

The window and the mirror

The most practical idea in Collins's description is a habit you can watch yourself doing. He writes that a Level 5 leader "looks in the mirror, not out the window, to apportion responsibility for poor results, never blaming other people, external factors, or bad luck." And when things go well, they look "out the window, not in the mirror, to apportion credit for the success of the company": to other people, external factors and good luck.

In an agency, the test comes twice a month:

• After a bad production month, the out-the-window answer is the market, the product changes or the new advisors. The mirror answer starts with the leader: what didn't I see, what did I let slide, what did I not decide?
• After a record month, the mirror answer is the leader's own push. The out-the-window answer names the managers, the advisors and the clients who referred.

Notice which way you look in your next managers' meeting. The habit shows in a single sentence.

Where agency leaders get stuck

A few patterns keep good leaders at Level 4 in an advisory agency, and none of them come down to talent.

• Staying the top producer. The leader keeps the biggest clients and the biggest numbers, so the managers measure themselves against the leader and never feel they own anything.
• Being the answer to every case question. It feels helpful. It also means nobody else learns to decide. The leader becomes the bottleneck the agency grows around.
• Owning the stage. Every recognition night, every recruiting seminar, every big presentation runs through one person. Advisors join the leader and barely know the agency.
• No successor. Collins says Level 5 leaders set up successors for even greater success. An agency where no manager could run the Monday meeting has a single point of failure.

If two of these describe your agency, the work isn't to become humbler in general. It's to hand specific things over, one at a time, and let someone else get the credit for them.

Can you grow into Level 5?

Collins was asked this directly by a newly appointed chief executive, and his answer is honest. His hypothesis is that there are two kinds of people: those who don't have the seed of Level 5 and those who do. For the first group, in his words, work "will always be first and foremost about what they get" rather than what they build.

He suspects the second group is the larger one: people with the potential to grow into it. He says the capability may be "buried or ignored," and that it can come out under the right conditions, which he lists as "self-reflection, conscious personal development, a mentor, a great teacher, loving parents, a significant life experience," among others.

For an agency leader, the useful part is the list. Most of it is within reach: time to reflect each week, a coach or mentor who will tell you the truth, and a deliberate plan to develop the managers who will one day run the agency.

Habits that move a leader toward Level 5

Collins's description turns into a few habits you can practise this quarter:

1. Look for results nobody claimed. Collins's own tip for spotting Level 5 potential is to look for "situations where extraordinary results exist, but where no individual steps forth to claim excess credit." Find those people in your agency and give them more.
2. Give credit in public, take responsibility in private. At the next recognition moment, name the managers and advisors behind the result. At the next miss, start the review with what you'd do differently.
3. Lead with written standards. Write down the three or four standards the agency runs on: how fast new leads get a call, what a good client review covers, how new advisors are coached. Then hold everyone to them, starting with yourself.
4. Develop a successor on purpose. Pick the manager most likely to run the agency one day. Hand them the Monday meeting, then a recruiting decision, then a planning day. Our guide to roles and responsibilities shows how to write down who owns what.
5. Make the hard call. Humility isn't avoiding conflict. Collins's Level 5 leaders do "whatever must be done to produce the best long-term results, no matter how difficult." If a manager has missed the same standard for two quarters, the kind thing is to act.

The rhythm that keeps these habits going is a regular one: a weekly leaders' meeting, a quarterly planning day and a yearly reset. Our meeting cadence guide lays it out.

What Level 5 doesn't mean

Level 5 is easy to misread, so a few clarifications:

• It isn't being quiet for the sake of it. Collins says Level 5 leaders "come in many personality packages." What matters is where the ambition goes.
• It isn't soft. Half of the description is will: unwavering resolve, superb results and a great organization.
• It isn't a title. Collins found Level 5 leadership "in key positions, including the CEO." A unit manager can lead this way long before running the agency.