Deloitte CEO Barry Salzberg on Leadership as 'the Norm, Not the Exception'

Barry Salzberg has spent his entire 34-year career in one place, climbing the corporate ladder at Deloitte. From his first unsupportive manager at the New York-based professional services firm to the mentors who helped pull him up through the ranks, Salzberg learned to lead and be led, eventually becoming CEO of Deloitte LLP in the United States in 2007. Now poised to take over as global chief executive officer of Deloitte Touche Tohmatsu Limited on June 1, he has a message for the next generation of leaders: The old leadership hierarchy no longer works.

"Gone is the day of the old command-and-control environment, the climb-the-ladder model, in which the employee kept quiet and didn't say too much, certainly not much beyond what was asked and tasked," Salzberg told his audience at a recent Wharton Leadership Lecture. "Gone, too, is the densely layered organizational hierarchy [and] dinosaur-like structures that are too slow and lumbering for today's environment."

Instead, Salzberg said, leadership needs to be "flat" today. It needs to be transparent. And to thrive in an ever-changing world, companies must actively commit to cultivating younger leaders throughout the organization, encouraging older leaders to pass on what they know. "Leadership now needs to be the norm, not the exception," he noted. "No longer is leadership about a few exceptional leaders at the top of the organization. Rather, the future is about exceptional teams and the leaders within those teams who can out-maneuver, out-manage and out-innovate their competition."

Salzberg grew up in Brooklyn, New York, the youngest of five children and the second in his family after his older sister to go to college. His father died while he was in high school, so he worked to help the family make ends meet, and later lived at home to work his way through college. He got his accounting degree from Brooklyn College and a law degree from Brooklyn Law School. Upon graduation in 1977, he immediately went to work in Manhattan for Haskins & Sells, a Deloitte predecessor. Deloitte is now a global network of 53 member firms with more than 170,000 employees who provide tax, audit, consulting and financial advisory services in more than 150 countries. Salzberg's specialty is tax.

"In those days, [Deloitte] was a fancy, formal place," Salzberg recalled, "so formal that you would get bawled out -- and I did -- if you were caught in the hallway without your jacket, especially if you arrived speaking a foreign language like Brooklynese." His first leadership lesson came on his third day. "Bosszilla," as he calls his first boss, asked him for a photocopy of a tax ruling. Eager to please and show off his legal savvy, Salzberg included his own two-page interpretation. "Mr. Salzberg," Bosszilla hissed, "I asked you for a copy of the ruling, notyour interpretation. One copy, stapled."

"Well, I will tell you that right then I knew the kind of leader I never want to be," Salzberg said, "the kind who gives orders, not encouragement, who expects people to speak only when spoken to. I knew then, and I've proved it over and over during my career, that you never know where the best ideas will come from. If you build a supportive environment where everyone is expected to contribute, you'll get synergies and creative ideas you never imagined were possible."

Up the 'Lattice'

That, Salzberg noted, is why leadership needs to be flat. In a global world, leaders are required at all levels of the organization, not just at the top. In fact, he said, Deloitte has "kicked away the ladder. In my organization, we talk now about the lattice, not the ladder," where people can move not just up and down but also sideways. If employees need to ease up on the intensity of work to take care of a child or an aging parent, the lattice structure allows them to do that without destroying their career. "The corporate lattice metaphor signals a shift in mindset. It's better reflective of today's employees, who want variety and flexibility and reject a one-size-fits-all approach."

Another leadership relic, according to Salzberg: the idea of a "ruling elite in the clouds of some bureaucratic Mount Olympus." In the past, it would have been unthinkable for the average employee to have direct contact with the CEO, he pointed out. Today, CEOs regularly host employee town halls, in which people are encouraged to ask and say anything. "Our people have to see if that if they disagree [with their boss], nothing will happen -- that there are no [negative] consequences to promotion or compensation."

Salzberg also frequently holds lunches with small groups of people to find out what is really going on in different parts of the organization. "What I do is get out and talk to people to give them the opportunity to share. And then what you have to do is act on it, so people understand that you can change your mind." As head of Deloitte's U.S. operations, Salzberg visits as many as 25 to 35 offices every year, sitting down with partners to hear their concerns. When he becomes global CEO, he plans to travel more, he said. "There's nothing that can replace face-to-face interaction. Getting the rubber on the shoes worn out is how to do it."

No Ostriches, No Elephants

Leaders today must also be transparent, especially in today's socially networked world, said Salzberg. "In today's social media environment, it's fascinating to see how in 10 seconds what you say is spread throughout the organization. There are few hiding places."

Yet Salzberg's first lesson in transparency came many years before Facebook and Twitter. As a young partner working with a very important client, he failed to share an important piece of information with the senior advisory partner in charge. "The irony was that it was good news. I had done something good for the client." But the senior partner was in the dark when the client mentioned the news at lunch the next day. "When the client told him how pleased he was with the work I and my team had done, my boss was blindsided -- caught totally off guard," Salzberg said. "Leaders do not like surprises, even good surprises. This may seem like an elementary lesson, but it was actually a really, really big one for me."

The experience helped him develop what he calls his "no ostriches, no elephants" principle. "No burying your head in the sand if there's a problem, and no ignoring the elephant in the room. Much better to name and tame an issue, no matter how difficult it is," than to ignore it or pretend it isn't there, he said. "Making sure the truth is told and discussed with all is the foundation of leadership. Without that, you can't build trust."

As Salzberg grew and matured in the organization, he took on many leadership roles and began to reflect on leadership itself. He became a partner in 1985. "Then, as now, you need an advocate to make partner. You need a mentor," he pointed out. "While mentoring was naturally a part of the process, it was not a hard-and-fast requirement. Rather, it was something you did if you kind of felt like it. It was optional, and nobody really monitored it. As I look back on it, the old model left too much to chance as far as developing leaders."

Since then, Salzberg has sought a new approach to developing leadership at Deloitte. His goal: to establish a stand-alone, bricks-and-mortar university where Deloitte professionals could go to teach and learn. He took plans to the board in 2007. "I was passionate and excited about the idea, and the board said, 'Slow down,' and made me come back multiple times over a year," he recalled. "And I learned another valuable leadership lesson: patience.... You need to take people on the journey, and that takes time." The board eventually approved the $300 million initiative, and Deloitte University is now slated to open in Westlake, Tex., later this year. The 100-plus acre campus is dedicated to the idea that leaders learn best from other leaders. "Call it 'apprenticeship' if you will. It's an age-old model for turning the young into talented, experienced professionals and leaders."

The university will give Deloitte professionals a chance share their experience and wisdom with the next generation -- a trait Salzberg believes comes naturally to good leaders. "The best leaders are ... generous with their experience, time and understanding that leadership is a life-long journey that is best made with trusted companions," he said. "If you have became a leader, the likelihood is that someone mentored you. Someone helped you, someone championed your career."

Salzberg knows first-hand how important that mentoring can be. In fact, in the beginning -- the days of Bosszilla -- he never planned on becoming CEO of Deloitte. "I really did not have a longer-term vision of rising in the hierarchy of Deloitte. My goal was just to be smart, to be successful and to enjoy what I was doing. And only as I got closer and closer, and people whispered in my ear -- or championed me into believing -- that I could be a successful leader, did I then set my sights on that kind of role."

Knowledge@Wharton