Myths about what constitutes successful CEOs in America persist—reinforced by the media, corporate boards and some business experts—despite considerable research that shows what leads to high performance.
The chief executive role is a challenging one to fulfill. From 2000 to 2013, about a quarter of the CEO departures in the Fortune 500 were involuntary, according to the Conference Board. The fallout from these dismissals has been staggering: Forced turnover of CEOs has cost shareholders an estimated $112 billion in lost market value annually, a 2014 PwC study of the world’s 2,500 largest companies showed. Add to this cost the loss of trust and confidence in CEO leaders by employees and the public, as multiple Gallup Polls have shown.
The Pervasive Stereotype
There is a pervasive stereotype shaped by the bios of Fortune 500 leaders—the successful CEO is charismatic, 6-foot-tall (plus) white man with a degree from a top university who is a extraverted, charismatic, strategic visionary who makes perfect decisions under pressure. This stereotype has reached celebrity status since Lee Iaccoca developed a cult-like following.
Rakesh Khurana, writing in the Harvard Business Review about “superstars CEOs” argues, “charismatic leaders can stabilize organizations in dangerous ways…the misguided assumption that CEOs are all-powerful is the main reason that the tenure of business leaders has grown shorter and shorter.” He concludes by saying: “Our trust in the power of the charismatic CEO resembles less a mature faith than it does a belief in magic. If, however, we are willing to begin rethinking our ideas about leadership, the age of faith can be followed by an era of reason.”
The myth of the great man who sits in the CEO’s chair has been reinforced by business schools. Khurana says that the way leadership is taught at B-schools, it’s as if “a leader has the power to do whatever he or she chooses simply by holding a formal office”. One might add that alternative ways of looking at leadership don’t quite get the importance they should—for instance, the idea that leaders may come and go, but the institution goes on. Or that leadership can be exercised at all levels of an organization, not just at the top.
It’s partly because a whole cult has been built around the office of the CEO that boards have been weakened, according to T.T. Ram Mohan. Once it’s accepted that some heroic leader—a person with a halo around his head—is going to deliver, it becomes difficult for the board to act as a check on him. We end up having boards that cower before domineering CEOs. Risk is concentrated in one person. There’s lack of dissent within the company. Since nobody’s infallible, we shouldn’t be surprised at the wrecks that domineering CEOs leave behind.
Today, this heroic, charismatic style of CEO leadership has resulted in the idolatry of admittedly financially successful leaders (if that is the sole measure) who can be toxic and abusive to those who work with them. And this style of leadership spreads throughout the organization and is emulated widely.
How did we get here? Why has American culture become obsessed with being an extraverted and, more despairingly, why does it automatically associate extraversion with leadership and success? By and large, America is an extraverted society and Americans are generally viewed as outgoing, people-oriented, boisterous, friendly, and gregarious. While you could argue this is a stereotype, in other European and Asian countries, introversion is seen as quite normal.
American job descriptions favor extraverts. If a company is looking for a computer scientist or a salesman, the job description can look like this: “Enthusiastic go-getter wanted to serve up their skills and cheerlead a small team to stratospheric success.” Job descriptions reflect corporate culture and society in general. The United States promotes what cultural historian Warren Susman calls a “Culture of Personality.” The American emphasis on personality explains why so many of our politicians and book authors are celebrities first. Americans love the loud ones, even if they have nothing of substance or value to say.
Not Just the Loud Ones, but Sometimes the Bullies
Ronald Riggio, writing in Psychology Today, argues that although Steve Jobs was a visionary leader, a master marketer and presenter, he “could also be a tyrant. He was obsessively controlling, and given to fits of rage, throwing tantrums…took credit for others’ ideas…and fell short of the qualities possessed by the very best leaders.”
Robert Sutton, a management professor at Stanford University, examined the behavior of abusive bosses, published in his book, The No-Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t. In his research, he ran across many examples of Silicon Valley and high-tech leaders who extolled the virtues of Jobs abusive behavior as being necessary to build a successful company. Sutton contended “it is troubling that there’s this notion in our culture that if you’re a winner, it’s okay to be an asshole.” Sutton argues that despite Jobs’ and Apple’s success, his research shows that abusive bosses are bad for the bottom line, and there are far more successful companies—such as Google, Virgin Atlantic, Procter & Gamble and Southwest Airlines, for example—that are not led by abusive bosses.
Many tech CEOs are guilty of creating bad behavior culture in their workplaces. Krister Ungerboeck, who was the CEO of a 3,000% growth software company, says that many tech CEOs are guilty of creating a similar culture in their workplaces, himself included. He says, “Like today’s young tech CEOs, Bill Gates, Larry Ellison, et al were my business idols. And, like the young CEOs today, I sought to adopt their leadership style. I was an entrepreneurial leader who – like Steve Jobs and Bill Gates – frequently criticized team members in front of their peers for less than perfect work. I was a leader who reserved praise for only superhuman efforts. In any given year, the number of times I gave positive encouragement or praise could often be counted on one hand.”
With That as a Preamble, Here Are Some Myths and Truths About Successful CEOs.
The evidence for these myths and truths come from several massive studies on leadership, including one by Elena Lytkina Botelho, a partner at ghSMART and founder of the CEO Genome Project, partnering with economists at the University of Chicago and Copenhagen Business School and with analysts at SAS Inc. They completed a 10-year study that examined 17,000 assessments of C-suite executives, including 2,000 CEOs to determine what makes a successful leader. Another study was Harvard Business School’s annual HBR’s ranking of the best-performing CEOs in the world. And finally McKinsey conducted a study that differentiated the best CEOs from average ones.
Myth 1: The most successful are extraverted charismatic leaders.
Charismatic leaders are often described as visionaries who have a strong desire for power; leaders have been called impression managers who have a keen ability to motivate others and set an example for others to follow. The very notion that CEOs should be celebrity-style leaders who exude executive presence is nothing but a myth. Charisma is overrated. Unfortunately, we’ve assumed the success (real or apparent) of a few well known extraverted charismatic leaders such as Lee Iacocca, Steve Jobs or Larry Ellison can be used as a template for all CEOs.
Recent perspectives indicate that leaders have begun to take a certain widespread notoriety, having gained a charismatic-like appeal and a significant increase in social status much in the same way that Hollywood stars or professional athletes have become icons in the cult of celebrity that surrounds them, according to J. Andrew Morris, Céleste M. Brotheridge and John C. Urbanski. Leaders have been referred to as idols, saviors, warriors, magicians, and omnipotent and omniscient demi-gods. Leaders have become imbued with a savior-like essence in a world that constantly needs saving. This glorification of leaders has continued and even increased despite continuing evidence that the actions of many leaders are far from heroic.
As argued by Choa Chen and James R. Meindl , these images feed and expand our appetites for leadership products, appealing not only to our collective commitments to the concept but fixating us in particular on the personas and characteristics of leaders themselves. Leaders began to be treated as heroes not necessarily because of anything that they did, but simply because they were leaders. The visibility of leaders, in essence, their charismatic appeal, and their subsequent willingness to search for and bask in the glow of public adulation was what mattered, not necessarily the outcomes of their behavior which may be significantly overstated in value, or even detrimental to the organization or its members.
Matthew Hayward and Violina Rindova argue, in their research study, that the concept of CEO celebrity is consistent with America’s infatuation with celebrities and the empirical finding that journalists tend to over-attribute organizational action and performance to its leader. Journalists who celebrate CEOs’ triumphs and tribulations lead the public to equate the CEO with the firm, instead of providing a richer potential set of explanations for firm performance.
Journalists create CEO celebrity by over-attributing a firm’s actions and performance to its CEO. In addition, celebrity CEOs and stakeholders tend to believe their own press and internalize the CEO celebrity, increasing perceptions of the CEO’s responsibility for past firm performance and enhancing the CEO’s actual influence on future firm performance. In the process, a CEO is likely to become more overconfident about his own abilities and more committed to the strategies that made him a celebrity.
Truth 1: Overall, introverted and humble leaders perform better.
We’re living in the golden age of introverts. Nobody would ever mistake the likes of Larry Page, Bill Gates, Warren Buffett, or Charles Schwab for extraverts. When Botelho looked at what kinds of CEO exceeded their boards’ expectations, introverts did slightly better than extraverts. “Being more likeable and confident makes you more likely to be hired in that role, but it has no relationship to performance,” says Botelho.
One study by psychologist Peter Samuelson, along with psychologist Sam Handy at Brigham Young University in The Journal of Positive Psychology described the need for humble leaders. They found two clusters of traits people used to explain humility: The first from the social realm—sincerity, honesty, unselfishness, thoughtfulness. The second was learning—curiosity, logic, awareness, open-mindedness.
Humble leaders are more effective and better liked, according to a study published in the Academy of Management Journal says Bradley Owens, assistant professor of organization and human resources at the University at Buffalo School of Management and author of the study. He says leadership humility is a powerful predictor of their own as well as the organization’s growth. The researchers found that such leaders model how to be effectively human rather than superhuman and legitimize “becoming” rather than “pretending.”
A follow-up study published in Organization Science using data from more than 700 employees and 218 leaders confirmed that leader humility is associated with more learning-oriented teams, more engaged employees and lower voluntary employee turnover. And the more honesty and humility a leader may have, the higher their job performance. That’s the new finding from a Baylor University study published in the journal Personality and Individual Differences that found the honesty-humility personality trait was a unique predictor of job performance.
Amy Y. Ou and her colleagues at Arizona State University published a study in Administrative Science Quarterly that examined leadership traits including self-awareness, openness to feedback, and a focus on the greater good and others’ welfare, as opposed to dwelling on oneself. The study’s conclusion: The humbler the CEO, the more top- and mid-level managers said they felt their jobs were more meaningful; they wanted to participate more in decision-making; they felt more confident about doing their work; and they had a greater sense of autonomy. They also were more motivated to collaborate, to make decisions jointly and to share information.
Amy Y. Ou and her colleagues argue that humble CEOs are more likely to establish a communal power base by having integrative organizational strategies and reducing pay disparity between themselves and other members of their management group. They conclude that humble CEOs have a strong motivation to improve firm performance. Their willingness towards accurate self-knowledge helps them recognize their own weaknesses and avoid egoism, enabling them to engage in more cautious information processing and likely adopt more effective strategic orientations for firm performance. With appreciation of others, humble CEOs recognize that firm performance cannot be achieved alone, and they select and empower capable employees at all levels. Indeed, Collins found that highly performing firms had humble CEOs who had ambitions for the firms, not for themselves; focused on strategies that best suited the firms; and enabled self-motivated followers.
Rob Nielsen, co-author of Leading with Humility, argues that some narcissistic business leaders are treated like rock stars but leaders who are humble and admit mistakes outshine them all. Elizabeth Salib takes up on this theme in her article in the Harvard Business Review, contending the best leaders are humble leaders. She cites Google’s SVP of People Operations, Lazlo Bock, who says humility is one of the traits he’s looking for in new hires. A Catalyst study backs this up, showing that humility is one of four critical leadership factors for creating an environment where employees from different demographic backgrounds feel included. In a survey of more than 1500 workers from Australia, China, Germany, India, Mexico, and the U.S., Catalyst found that when employees observed altruistic or selfless behavior in their managers—a style characterized by acts of humility, such as learning from criticism and admitting mistakes they were more positive and committed to their work teams.
Myth 2: Leaders need to be autocratic or authoritarian to get results.
Most large organizations are still highly structured bureaucratic ones, where management’s role is primarily to direct and supervise the work of employees. This is perhaps the most damaging myth of all. There has been a revitalization of the stereotypic authoritarian leader as evidenced in politics, and increasing potential and actual military and policing activities. Recently there has been a flurry of articles which promote the idea that employees want to receive “constructive criticism,” or “negative feedback,” and that employees prefer “tough love” by managers. Such claims are retrograde and ignore recent neuroscience and motivation research that clearly show positive feedback and encouragement improve performance. According to a 2010 survey conducted by the Workplace Bullying Institute, 35% of the American workforce (or 53.5 million people) has directly experienced bullying–or “repeated mistreatment by one or more employees that takes the form of verbal abuse, threats, intimidation, humiliation or sabotage of work performance”–while an additional 15% said they have witnessed bullying at work. Approximately 72% of those bullies are bosses.
Truth 2: Leadership is not about the exercise of power itself or a demonstration of individual power; rather it is the empowerment of others.
Leaders can translate intentions and visions into reality by aligning the energies in the organization behind an attractive goal. Leaders lead by inspiring rather than insisting, and by encouraging the team to use their own initiative and experiences toward the mission. There is data-based evidence that the Level 5 CEOs described in Jim Collins’s book Good to Great that they often obtain the best ideas based largely on how they work with others in a collaborative way. Herminia Ibarra and Morten T. Hansen writing in the Harvard Business Review contend “As part of our research on top-performing, we’ve examined what it means to be a collaborative leader. We’ve discovered that it requires strong skills in four areas: playing the role of connector, attracting diverse talent, modeling collaboration at the top, and showing a strong hand to keep teams from getting mired in debate. The good news is, our research also suggests that these skills can be learned—and can help executives generate exceptional long-term performance.”
Myth 3: Leaders should have a top-tier education.
Of course, we are familiar with the fact that Bill Gates and Mark Zuckerberg attended Harvard and Steve Jobs went to Stanford, and other singular examples. So, the conclusion is reached that this is requirement for success. Boards and those responsible for hiring are still using this educational criterion as a basis for hiring CEOs despite the evidence that the clear majority of successful leaders don’t come from the top tier schools.
Truth 3: Many successful leaders did not attend the top universities and some not at all.
Botelho found in her study that educational pedigree (or lack thereof) in no way correlated to performance: Only 7% of the high-performing CEOs she studied had an undergraduate Ivy League education, and 8% of them didn’t graduate from college at all. Examples are Sir Richard Branson, Michael Dell, Larry Ellison and Dave Thomas. And Bill Gates, Steve Jobs and Mark Zuckerberg dropped out of university. Jill Wight, a principal at private equity company The Carlyle Group, has hired many CEOs for the companies her firm invests in and agrees that a degree from a top school doesn’t by itself determine performance. “Strong intellectual horsepower” is a pre-requisite for success, she says, not the school you came from. “The presence of a degree is positive, but the absence of one isn’t by itself a negative,” she says.
Myth 4: The Leader needs to have all the answers and always be right.
Many CEOs have trouble owning up to a terrible mistake. Some see failure as a sign of weakness; others worry about how shareholders or board members might react. The perspective that CEOs always must have the answers, and can’t make mistakes persists, and drives many longevity decisions boards make with CEOs. Add to that the public perception that CEOs must be impervious to mistakes or errors in judgment and it discourages leaders from taking personal responsibility for organizational errors when they occur, opting instead for scapegoating and blaming others.
Truth 4: Successful CEOs have made mistakes, sometimes big ones.
Botelho found that nearly all CEOs had made significant mistakes, with 45% of them messing up so badly that it cost them their job or it was a major detriment to the business. Among candidates that either derailed their career or nearly ruined their business, 78% ended up landing a top job. The ones who could own up to their mistakes, and learn from them, were also the ones who had the strongest performance. “These are the people who can say ‘this didn’t go well, it was a disaster, but in hindsight I can tell you why,’” she says. “Weaker candidates tend to blame others or explain things away and that makes it harder for them to learn.” And when she compared the qualities that boards respond well to in candidate interviews with those that help leaders perform better, the overlap was vanishingly small. For example, high confidence more than doubles a candidate’s chances of being chosen as CEO but provides no advantage in performance on the job. In other words, what makes candidates look good to boards has little connection to what makes them succeed in the role.
Myth 5: Great leaders generally don’t read books and when they do it’s related to business.
There are some famous leaders who don’t read books of any kind, including Donald Trump, and Intel CEO Brian Krzanich and the impression that the public has is that for those who do read books, they are probably business related non-fiction.
Truth 5: Successful CEOs read a lot of books and mostly fiction.
All great leaders have one thing in common: They read voraciously. The average American only reads one book a year? Worse than this is the fact that 60% of average Americans only get through the first chapter. Contrast this with the fact that CEOs of Fortune 500 companies read an average of four to five books a month. Even more impressive is that some of the most successful leaders throughout history were known to read one book every single day. Most are well-read but don’t read the popular self-help-style books that are all the rage these days. They’re just as likely to be consumers of classic literature, science fiction, philosophy, and accounts of historic figures and companies as anything resembling modern business books.
Warren Buffet claims to read 500 pages every day. Bill Gates reads about 50 books per year, which breaks down to 1 per week; Mark Cuban reads more than 3 hours every day; Elon Musk is an avid reader and when asked how he learned to build rockets, he said “I read books.”; Mark Zuckerberg resolved to read a book every 2 weeks. And these aren’t just isolated examples. A study of 1,200 wealthy people found that they all have reading as a pastime in common.
Over the past decade, academic researchers such as Keith Oatley and Raymond Mar from York University have gathered data indicating that fiction-reading activates neuronal pathways in the brain that measurably help the reader better understand real human emotion — improving his or her overall social skillfulness. For instance, in fMRI studies of people reading fiction, neuroscientists detect activity in the pre-frontal cortex — a part of the brain involved with setting goals — when the participants read about characters setting a new goal. It turns out that when Henry James, more than a century ago, defended the value of fiction by saying that “a novel is a direct impression of life.”
Myth 6: CEOs need to be experienced in a particular industry or sector.
We are are familiar with the technical education backgrounds of Bill Gates, Mark Zuckerberg and Steve Jobs, and the many others whose education and training may have been directly related to the industries they ended up leading. Yet, it would be an error to assume this was the case for all successful CEOs. Because someone hasn’t worked in a certain industry doesn’t mean they can be the leader in that industry. In many cases, people from outside of a sector can bring a fresh perspective, new skills or different ideas to a company
Truth 6: Industry expertise can be learned and an education outside the industry can be valuable.
Having a range of experiences and strong soft skills, like managing staff well, and having solid problem solving skills, can go a longer way than knowing the intimate details of a sector. For example, the following CEOs had Liberal Arts Degrees unrelated to their industries: Lloyd Blankfein, the head of Goldman Sachs; Robert Marcus, CEO of Time Warner; John Mackey CEO of Whole Foods; Denise Morrison, CEO of Campbell Soup; Richard Anderson of Delta Airlines and Kenneth Chenault, the head of American Express.
Myth 7: How you behave outside of work and online does not affect your ability to lead.
Diane Chandler, writing in the International Journal of Leadership Studies argues “We can and do condemn the actions of leaders who decide to lie, belittle followers, and enrich themselves at the expense of the less fortunate.” Likening unethical behavior to a cancer, Sims (2003) identified the eroding quality of unethical behavior by leaders. Unethical behavior, whether it is a CEO’s professional or personal life is a matter of character. Character is not circumstantial and integrity is not issue-based.
Truth 7: Whoever you are as a person will be reflected in your professional and personal life.
Your behavior outside of work absolutely affects your success as a leader. A reputation can be short lived, and particularly damaged quickly by social media.
What’s the cost of a bad reputation? For United Airlines, one incident rang up at about $180 million.
After the airline damaged his guitar and refused to pay for it — even though he witnessed them manhandling it — musician David Caroll wrote a song, United Breaks Guitars. It was a runaway hit, and has more than 15 million views. The cost of this video? $180 million, as United’s stock fell by 10% in the weeks following the video’s release. When a company, which is usually identified with the CEO of that company, has a bad reputation, whether it’s earned by a corporate scandal, poor customer service, or unhappy employees, business is simply more difficult to conduct, increasing the cost of doing business. Often, it’s more difficult to retain customers and employees, shareholders, and other important stakeholders, making the costs of doing business significantly higher.
This truth is a controversial and contradictory one, as on the one hand we’ve seen the high profile scandals and unethical/illegal behavior of CEOs such as Kenneth Lay, Bernie Ebbers, Mark Hurd, Martha Stewart and John Browne, and their subsequent demise. On the other hand, we are currently witnessing a string of unethical practices by Silicon Valley leaders and highly placed political leaders, where their behavior is increasingly normalized. Add to that the absence of personal responsibility and accountabilty for leaders as a result of the financial disasters of 2008-2009.
Summary: It’s important for the general public and media to exercise discretion in the perpetuation of these myths and accept the truths of CEO behaviors so that expectations and who we select as our leaders occurs on a more rational basis.
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