MCom I Semester Contemporary Issues Leadership Study Material Notes
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MCom I Semester Contemporary Issues Leadership Study Material Notes: Trust and Leadership the foundation of Leadership What is Trust Three Types of Trust basic Principles of Trust using words Shape meaning Inspire others inspirational Approaches to leadership Most Important Notes for MCom I Semester Students :
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Trust: The Foundation of Leadership
Trust, or lack of trust, is an increasingly important leadership issue in today’s organizations. In this section, we define trust and provide you with some guidelines for helping build credibility and trust.
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What Is Trust?
Trust is a positive expectation that another will not through words, actions, or decisions-act opportunistically. The two most important elements of our definition are that it implies familiarity and risk.
The phrase positive expectation in our definition assumes knowledge and familiarity about the other party. Trust is a history-dependent process based on relevant but limited samples of experience. It takes time to form, building incrementally and accumulating. Most of us find it hard, if not impossible, to trust someone immediately if we don’t know anything about them. At the extreme, in the case of total ignorance, we can gamble but we can’t trust. But as we get to know someone, and the relationship matures, we gain confidence in our ability to have a positive expectation.
The term opportunistically refers to the inherent risk and vulnerability in any trusting relationship. Trust involves making oneself vulnerable, as when, for example, we disclose intimate information or A rely on another promise. By its very nature, trust provides the opportunity for EXHIBIT 12-1 Trust Dimensions disappointment or to be taken advantage of. But trust is not taking risk per se:
Consistency relates to an individual’s reliability, predictability, and good judgment in handling situations. “Inconsistencies between words and action decrease trust. 15 This dimension is particularly relevant for managers. “Nothing is noticed more quickly…than a discrepancy between what executives preach and what they expect their associates to practice.
Loyalty is the willingness to protect and save face for another person. Trust requires that you can depend on someone not to act opportunistically.
The final dimension of trust is openness. Can you rely on the person to give you the full truth?
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Trust and Leadership
Trust is a primary attribute associated with leadership: and when this trust is broken, it can have serious adverse effects on a group’s performance. We saw this, for example, in our discussion of traits in Chapter 11: Honesty and integrity were among the six traits found to be consistently associated with leadership. And Don Carty, at American Airlines, found you can’t lead people who don’t trust you.
As one author noted: “Part of the leader’s task has been, and continues to be working with peo ple to find and solve problems, but whether leaders gain access to the knowledge and creative thinking they need to solve problems depends on how much people trust them. Trust and trustworthiness modulate the leader’s access to knowledge and cooperation.”
Is Trust in Our Leaders in Decline?
A strong case can be made that today, more than ever, organizational leadership requires trust. Events of recent years have certainly brought the issue of trust into the headlines: WorldCom fakes nearly $4 billion in operating cash flow. Enron executives manipulate their financial statements. Tyco International’s CEO is charged with cheating on sales taxes. Merrill Lynch pays $100 million in fines for misleading investors. Stanley Works tries to evade taxes by setting up sham headquarters in Bermuda. Martha Stewart is accused of insider trading and obstructing justice. Hundreds of priests in the Roman Catholic Church are charged with sexual abuse. In addition, reengineering, downsizing, and the increased use of temporary employees have undermined a lot of employees’ trust in management. These events, then, prompt the question: Is trust on the decline?
A number of recent studies have been conducted in the United States looking at this question. On a positive note, Americans seem to have faith in each other. For instance, in 2000, 35 percent of Americans said “most people” could be trusted. In 2002, that number was up to 41 percent. But when it comes to trusting big business and executives, the results differ depending on whether you ask employees or the general public. The general public holds corporate leaders in pretty low regard. The public’s confidence in them as a group peaked in 2000 at only 28 percent. By 2003, that number had dropped to a dismal 13 percent. To put this in perspective, firefighters are considered seven times more trustworthy than CEOs and Americans say they trust CEOs even less than they trust lawyers. But this distrust seems to be directed at executives at large companies. The same polls show that 75 percent of the general public have strong trust in small business owners.
Corporate employees, however, show considerably more trust in their own senior management. From 1995 to 1999, the percentage of workers who said they believe in the senior management at their companies held steady at about 36 percent. By 2003, it had increased to 43 percent (see Exhibit
Exactly why these numbers are significantly higher than those of the general public or why they have recently increased is not clear. Part of the answer may be explained in terms of cognitive dissonance: Employees want to believe that their own bosses are more trustworthy than senior executives in general. And in a time when jobs are hard to get, as they were between 2001 and 2003, employees may be more willing to give their bosses the benefit of the doubt. In addition, the public
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Deterrence-Based Trust The most fragile relationships are contained in the deterrence-based trust. One violation or inconsistency can destroy the relationship. This form of trust is based on fear of reprisal if the trust is violated. Individuals who are in this type of relationship do what they say because they fear the consequences of not following through on their obligations.
Deterrence-based trust will work only to the degree that punishment is possible, consequences are clear, and the punishment is actually imposed if the trust is violated. To be sustained, the potential loss of future interaction with the other party must outweigh the profit potential that comes from violating expectations. Moreover, the potentially harmed party must be willing to introduce harm (for example, I have no qualms about speaking badly of you if you betray my trust) to the person acting distrustingly.
Most new relationships begin on a base of deterrence. Take, as an illustration, a situation in which you’re selling your car to a friend of a friend. You don’t know the buyer. You might be motivated to refrain from telling this buyer all the problems with the car that you know about. Such behavior would increase your chances of selling the car and securing the highest price. But you don’t withhold information. You openly share the car’s flaws. Why? Probably because of fear of reprisal. If the buyer later thinks you deceived him, he is likely to share this with your mutual friend. If you knew that the buyer would never say anything to the mutual friend, you might be tempted to take advantage of the opportunity. If it’s clear that the buyer would tell and that your mutual friend would think considerably less of you for taking advantage of this buyer friend, your honesty could be explained in deterrence terms.
Another example of deterrence-based trust is a new manager-employee rela tionship. As an employee, you typically trust a new boss even though there is little experience to base that trust on. The bond that creates this trust lies in the author ity held by the boss and the punishment he or she can impose if you fail to fulfill your job-related obligations.
Knowledge-Based Trust Most organizational relationships are rooted in knowledge-based trust. That is, trust is based on the behavioral predictability that comes from a history of interaction. It exists when you have adequate information about someone to understand them well enough to be able to predict their behavior accurately.
Knowledge-based trust relies on information rather than deterrence. Knowledge of the other party and predictability of his or her behavior replaces the con tracts, penalties, and legal arrangements more typical of deterrence-based trust. This knowledge develops over time, largely as a function of experience that builds the confidence of trustworthiness and predictability. The better you know someone, the more accurately you can predict what he or she will do.
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Predictability enhances trust-even if the other is predictably untrustworthy-because the ways that the other will violate the trust can be predicted! The more communication and regular interaction you have with someone else, the more this form of trust can be devel Azim Premji took on the mantle of oped and depended on leadership of Wipro at the age of Interestingly, at the knowledge-based level, trust is not necessarily broken by 21, with the simple vision of inconsistent behavior. If you believe you can adequately explain or understand building up an organization on the foundation of values.
In an organizational context, most manager-employee relationships are knowl edge-based. Both parties have enough experience working with each other that they know what to expect. A long history of consistently open and honest interactions, for instance, is not likely to be permanently destroyed by a single violation.
Identification-Based Trust The highest level of trust is achieved when there is an emotional connection between the parties. It allows one party to act as an agent for the other and substitute for that person in interpersonal transactions. This is called identification-based trust. Trust exists because the par ties understand each other’s intentions and appreciate the other’s wants and desires. This mutual understanding is developed to the point that each can effectively act for the other.
Controls are minimal at this level. You don’t need to monitor the other party because there exists unquestioned loyalty.
The best example of identification-based trust is a long-term, happily married couple. A husband comes to learn what’s important to his wife and anticipates those actions. She, in turn, trusts that he will anticipate what’s important to her without having to ask. Increased identification enables each to think like the other, feel like the other, and respond like the other.
You see identification-based trust occasionally in organizations among people who have worked together for long periods of time and have a depth of experience that allows them to know each other inside and out. This is also the type of trust that managers ideally seek in teams. Team members are so comfortable and trusting of each other that they can anticipate each other and act freely in each other’s absence. In the current work world, it’s probably accurate to say that most large corporations have broken the bonds of identification trust that were built with long-term employees
Broken promises have led to a breakdown in what was, at one time, a bond of unquestioned loyalty, It’s likely to have been replaced with knowledge-based trust.
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Basic Principles of Trust
Research allows us to offer some principles for better understanding the creating of both trust and mistrust.
Mistrust drives out trust. People who are trusting demonstrate their trust by increasing their openness to others, disclosing relevant information, and expressing their true intentions. People who mistrust do not reciprocate. They conceal information and act opportunistically to take advantage of others. To defend against repeated exploitation, trusting people are driven to mistrust. A few m trusting people can poison an entire organization.
Trust brgets trust. In the same way that mistrust drives out trust, exhibiting trust in others tends to encourage reciprocity. Effective leaders increase trust in small increments and allow others to respond in kind. By offering trust in only small increments, leaders limit penalties or losses that might occur if their trust is exploited.
Growth often masks mistrust. Growth gives leaders opportunities for rapid promotion, and for increased power and responsibility. In this environment, leaders tend to solve problems with quick fixes that elude immediate detection by higher management and leave the problems arising from mistrust to their successors. Leaders can take a short-term perspective because they are not likely to be around to have to deal with the long-term consequences of their decisions. The lingering effects of mistrust become apparent to the successors when the growth slows.
Decline or downsizing tests the highest levels of trust. The corollary to the previous growth principle is that decline or downsizing tends to undermine even the most trusting environment. Layoffs are threatening. Even after layoffs have been completed, those who survive feel less secure in their jobs. When employers break the loyalty bond by laying off employees, there is less willingness among workers to trust what management says.
Trust increases cohesion. Trust holds people together. Trust means people have confidence that they can rely on each other. If one person needs help or falters, that person knows that the others will be there to fill in. When faced with adversity, group members who display trust in each other will work together and exert high levels of effort to achieve the group’s goals.
Mistrusting groups self-destruct. The corollary to the previous principle is that when group members mistrust each other, they repel and separate. They pursue their own interests rather than the group’s. Members of mistrusting groups tend to be suspicious of each other, are constantly on guard against exploitation, and restrict communication with others in the group. These actions tend to undermine and eventually destroy the group.
Mistrust generally reduces productivity. Although we cannot say that trust necessarily increases productivity, though it usually does, mistrust almost always reduces productivity. Mistrust focuses attention on the differences in member interests, making it difficult for people to visualize common goals. People respond by concealing information and secretly pursuing their own interests. When employees encounter problems, they avoid calling on others, fearing that those others will take advantage of them. A climate of mistrust tends to stimulate dysfunctional forms of conflict and retard cooperation
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Framing: Using Words to Shape Meaning and Inspire Others
Martin Luther King, Jr.’s, “I have a dream” speech largely shaped the civil rights movement. His words created an imagery of what a country would be like where racial prejudice no longer existed. What King did was frame the civil rights movement in a way so that others would see it the way he saw
Framing is a way to use language to manage meaning. It’s a way for leaders to influence how events are seen and understood. It involves the selection and highlighting of one or more aspects of a subject while excluding others.
Framing is analogous to what a photographer does. The visual world that exista is essentially ambiguous. When the photographer aims her camera and focuses on a specific shot, she frames her photo. Others then see what she wanted them to see They see her point of view. That is precisely what leaders do when they frame an issue. They choose which aspects or portion of the subject they want others to focus on and which portions they want to be excluded.
Trial lawyers make their living by framing issues. Defense attomess, for instance shape their arguments so as to get the jury to see their client in the most favorable terms. They include “facts” that might help the jury find their client “not guilty They exclude facts that might reflect unfavorably on their client. And they try to provide alternative interpretations to the facts” that the prosecution argues make their client guilty.
Lobbying groups also provide rich illustrations of the framing concept. The leadership of the National Rifle Association (NRA) has historically been very successful in limiting gun controls in the United States. They’ve done this not by focusing on shootings, deaths, or even self defense. They’ve succeeded by framing gun control as a second amendment “freedom” issue. To the degree that the NRA can shape public opinion to think of gun controls as taking away a citizen’s right to bear arms, they have been able to minimize gun control regulations.
In India, political parties resort to lobbying to win places in the government, both at the central and the state levels. There have also been instances when parties come together to lobby against a particular party to defeat it.
So why is framing relevant to leadership today? Because in the complex and chaotic environment in which an increasing number of leaders work, there is typically considerable maneuverability with respect to the facts.” What is real is often what the leader says is real. What’s important is what he or she chooses to say is important. Leaders can use language to influence followers’ perceptions of the world, the meaning of events, beliefs about causes and consequences, and visions of the future. It’s through framing that leaders determine whether people notice problems, how they understand and remember problems, and how they act on those problems. Thus, framning is a powerful tool by which leaders influence how others see and interpret reality
Inspirational Approaches to Leadership
In this section, we present two contemporary leadership theories with a common theme. They view leaders as individuals who inspire followers through their words, ideas, and behaviors. These theories are charismatic leadership and transformational leadership.
Charismatic Leadership John F. Kennedy, Martin Luther King Jr., Bill Clinton. Indira Gandhi, Atal Behari Vajpayee, Mary Kay Ash (founder of Mary Kay Cosmetics). Steve Jobs (co-founder of Apple Computer), and former New York mayor Rudy Giuliani are individuals frequently cited as being charismatic leaders. What do they have in common?
What is Charismatic Leadership? According to charismatic leadership theory, followers make attributions of heroic or extraordinary leadership abilities when they observe certain behaviors. Although there have been a number of studies that have attempted to identify personal characteristics of the charismatic leader, the best documented has isolated five such characteristics that differ entiate charismatic leaders from noncharismatic ones–they have a vision, are willing to take risks to achieve that vision, are sensitive to both environmental constraints and follower needs, and exhibit behaviors that are out of the ordinary,26 These characteristics are described in Exhibit 12-3.
How Charismatic Leaders Influence Followers How do charismatic leaders actually influence followers? The evidence suggests a four-step process. 27 It begins by the leader articulating an appealing vision. This vision provides a sense of continuity for followers by linking the present with a better future for the organization. The leader then communicates high performance expectations and expresses confidence that followers can attain them. This enhances follower self-esteem and self-confidence. Next, the leader conveys, through words and actions, a new set of values and, by his or her behavior, sets an example for followers to imitate. Finally, the charismatic leader makes self-sacrifices and engages in unconventional behavior to demonstrate courage and convictions about the vision.
Since the vision is such a critical component of charismatic leadership, we should clarify exactly what we mean by the term, identify specific qualities of an effective vision, and offer some examples
A review of various definitions finds that a vision differs from other forms of direction setting in several ways: “A vision has clear and compelling imagery that offers an innovative way to improve, which recognizes and draws on traditions, and connects to actions that people can take to realize change. Vision taps people’s emotions and energy. Properly articulated, a vision creates the enthusiasm that people have for sporting events and other leisure time activities, bringing this energy and commitment to the workplace
The key properties of a vision seem to be inspirational possibilities that are value-centered, realizable, with superior imagery and articulation. Visions should be able to create possibilities that are inspirational, unique, and offer a new order that can produce an organizational distinction. A visioni likely to fail if it doesn’t offer a view of the future that is clearly and demonstrably better for the organization and its members. Desirable visions fit the times and circumstances and reflect the uniqueness of the organization. People in the organization must also believe that the vision is attainable. In should be perceived as challenging yet doable. Also, visions that have clear articulation and powerful imagery are more easily grasped and accepted.
Munjal of Hero Honda had a clear and focused vision of what he wanted to do in his life, career. and in business. Inspite of other business options coming Hero Honda’s way even within the engineering industry, their focus has been first on bicycles and then on motorcycles. Similarly. D S Brar of Ranbaxy had clearly delineated the scope of his business. Ranbaxy chose to operate in the pharmaceutical business in the international market and develop its distinctive character and identified as an international company, inspite of heavy odds and high risks. One of Brar’s greatest leadership challenges was to sell the concept of Ranbaxy as an international company to all the employees in the organization. This was the company’s focus between 1993 to 1996 and was drummed out at every possible occassion, like an anthem until each and every Ranbaxy employee started to believe in it.
First, an individual needs to develop the aura of charisma by maintaining an optimistic view; using passion as a catalyst for generating enthusiasm; and communicating with the whole body, not just with words. Second, an individual draws others in by creating a bond that inspires others to follow. And third, the individual brings out the potential in followers by tapping into their emotions. This approach seems to work, as evidenced by researchers who’ve succeeded in actually scripting undergraduate business students to “play” charismatic. The students were taught to articulate an overarching goal, communicate high performance expectations, exhibit confidence in the ability of followers to meet these expectations, and empathize with the needs of their followers; they learned to project a powerful, confident, and dynamic presence, and they practiced using a captivating and engaging voice tone. To further capture the dynamics and energy of charisma, the leaders were trained to evoke charismatic nonverbal characteristics. They alternated between pacing and sitting on the edges of their desks, leaned toward the subjects, maintained direct eye contact, and had relaxed postures and animated facial expressions. These researchers found that these students could learn how to project charisma. Moreover, followers of these leaders had higher task performance, task adjustment, and adjustment to the leader and to the group than did followers who worked under groups led by noncharismatic leaders.
The Case For and Against Charismatic Leadership On a positive note, there is an increasing body of research that shows impressive correlations between charismatic leadership and high performance and satisfaction among followers. People working for charismatic leaders are motivated to exert extra work effort and, because they like and respect their leader, express greater satisfaction.
Charismatic leadership may not always be needed to achieve high levels of employee performance. Charisma appears to be most appropriate, when the follower’s task has an ideological component or when the environment involves a high degree of stress and uncertainty, 36 This may explain why, when charismatic leaders surface, it’s more likely to be in politics, religion, wartime; or when a business firm is in its infancy or facing a life-threatening crisis. In the 1930s, Franklin D. Roosevelt offered a vision to get Americans out of the Great Depression. In the early 1970s, when Chrysler Corp. was on the brink of bankruptcy, it needed a charismatic leader with unconventional ideas, like Lee Iacocca, to reinvent the company In 1997, when Apple Computer was floundering and lacking direction, the board persuaded charis matic co-founder Steve Jobs to return as interim CEO to inspire the company to return to its inno vative roots.
In addition to ideology and environmental uncertainty, another situational factor limiting charisma appears to be level in the organization. Remember, the creation of a vision is a key compo nent of charisma. But visions typically apply to entire organizations or major divisions. They tend to be created by top executives. As such, charisma probably has more direct relevance to explaining the success and failures of chief executives than of first-line supervisors. So even though an individual may have an inspiring personality, it’s more difficult to use his or her charismatic leadership qualities in lower-level management jobs. Lower-level managers can create visions to lead their units. It’s just harder to define such visions and align them with the larger goals of the organization as a whole.
The public and the media’s fascination with charismatic leadership reached its peak in the late 1990s. Charismatic CEOs like Enron’s Jeffrey Skilling, GE’s Jack Welch, Tyco’s Dennis Kozlowski, Southwest Air’s Herb Kelleher, Mattel’s Jill Barad, ABB’s Percy Barnevik, Disney’s Michael Eisner, WorldCom’s Bernie Ebbers, and Health South’s Richard Scrushy became no less celebrities than Shaquille O’Neal or Madonna. Every company wanted a charismatic CEO. And to hire these people, they were given unprecedented autonomy and resources. They had private jets at their beck and call, use of $30 million penthouses, interest-free loans to buy beach homes and ar staff provided by their companies, and similar benefits befitting royalty. Unfortunately, charismatic leaders who are larger than life don’t necessarily act in the best interests of their organizations.97 Many of these leaders used their power to remake their companies in their own image. These leaders often completely blurred the boundary separating their personal interests from their organization’s interests. At its worst, the perils of this ego-driven charisma are leaders who allow their selfinterest and personal goals to override the goals of the organization. Intolerant of criticism, they surround themselves with yes people who are rewarded for pleasing the leader and create a climate in which people are afraid to question or challenge the “king” or “queen” when they think he or she is making a mistake. The results at companies such as Enron, Tyco, WorldCom, and Health South were leaders who recklessly used organizational resources for their personal benefit and executives who broke laws and crossed ethical lines in order to generate financial numbers that temporarily inflated stock prices and allowed leaders to cash in millions of dollars in stock options.
A recent study of 29 companies that went from good to great (their cumulative stock returns were all at least three times better than the general stock market over 15 years) found an absence of ego-driven charismatic leaders. Although the leaders of these firms were fiercely ambitious and driven, their ambition was directed toward their company rather than themselves. They generated extraordinary results, but with little fanfare or hoopla. They took responsibility for mistakes and poor results but gave credit for successes to other people. And they prided themselves on developing strong leaders inside the firm who could direct the company to greater heights after they were gone. These individuals have been called level 5 leaders because they have four basic leadership qualities-individual capability, team skills, managerial competence, and the ability to stimulate others to high performance-plus a fifth dimension: a paradoxical blend of personal humility and professional will. Level 5 leaders channel their ego needs away from themselves and into the goal of building a great company. So while level 5 leaders are highly effective, they tend to be people you’ve never heard of and who get little notoriety in the business press-people like Orin Smith at Starbucks, Kristine McDiviti of Patagonia, John Whitehead of Goldman Sachs, and Jack Brennan of Vanguard. This study is impor tant because it confirms that leaders don’t necessarily need to be charismatic to be effective, espe cially where charisma is enmeshed with an outsized ego.
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Transformational Leadership
Another stream of research has been focused on differentiating transformational leaders from transactional leaders. Because transformational leaders are also charismatic, there is some overlap between this topic and our previous discussion of charismatic leadership
Most of the leadership theories presented in the previous chapter for instance, the Ohio State studies, Fiedler’s model, path-goal theory, and the leader-participation model-have concerned transactional leaders. These kinds of leaders guide or motivate their followers in the direction of established goals by clarifying role and task requirements. There is also another type of leader who inspires followers to transcend their own self-interests for the good of the organization, and who is capable of having a profound and extraordinary effect on his or her followers. These are transformational leaders like Andrea Jung at Avon and Richard Branson of the Virgin Group. They pay attention to the concerns and developmental needs of individual followers: they change followers’ awareness of issues by helping them to look at old problems in new ways; and they are able to excite, arouse, and inspire followers to put out extra effort to achieve group goals. A study of five corporate leaders highlighted the role of a transformational leader as a father figure. These leaders were known for growth in their organizations, bringing about mammoth acquisitions, diversifications, takeovers, mergers, and vibrant operations. Seven characteristics were found to be common in all five leaders: a) sincerity of the leader; b) bonding-effort to develop the organization as a family-by developing personalized relationships: showing concern about the growth of individuals, remaining accessible, and encouraging social relationships; c) consultation and participation; d) collectivization and team-work; e) empowerment and support; f) serving as a role model: g) bringing in changes continuously while maintaining continuity and being innovative. 10
Thought processes, implicit assumptions, beliefs, and attitudes of leaders can be meaningfully studied if they are interwoven into a composite whole by the cultural thread from which they emanate. Indian philosophy provides a framework to help understand a person’s mental make-up. It offers the Guna theory, also called the tri-dimensional personality theory, to explain differences across individuals. Vedic texts also outline concepts like karma (cause-effect chain or the basic law governing all actions) and maya (existing bundle of inexplicable contradictions of the world), which help in comprehending a person’s worldview. Only through a clear understanding of the leader’s worldview can we unravel the secrets of transformational leadership and try to enhance it.
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There are three gunast sattua (awareness) rajas (dynamism), and tamas (inertness). Gunas are fundamental ingredients or constituents in every being and each being is composed of all the three gunas. When one of the three gunas is dominant in a person that person is characterized by that guna. The gunas were manipulated by portraying a political leader as being high on one or two of the gunas. The Vedic worldview (operationalized as an understanding of maya and belief in karma) was manipulated by portraying the leader as having or not having such a worldview.
A study conducted to analyse transformational leadership identified charisma, idealized influence, inspirational leadership, intellectual stimulation, and individualized consideration as the five ideal qualities that a leader should have. Il
The results revealed that satu and tredic worldview separately enhance transformational leadership, whereas tamas reduces it. The saltvarajas combination also enhances transformational leadership but the effect is not more than the effect of sattua alone. Similar is the case with the sattua-vedic worldview.
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Exhibit 12-4 briefly identifies and defines the four characteristics that differentiate transactional and transformational leaders.
Transactional leadership and transformational leadership shouldn’t be viewed as opposing approaches to getting things done. Transformational leadership is built on top of transactional leadership-it produces levels of follower effort and performance that go beyond what would occur with a transactional approach alone. Moreover, transformational leadership is more than charisma. “The purely charismatic leader may want followers to adopt the charismatic’s world view and go no fur ther; the transformational leader will attempt to instill in followers the ability to question not only established views but eventually those established by the leader43
The evidence supporting the superiority of transformational leadership over the transactional variety is overwhelmingly impressive. For instance, a number of studies with U.S., Canadian, and German military officers found, at every level, that transformational leaders were evaluated as more effective than their transactional counterparts. And managers at FedEx who were rated by their followers as exhibiting more transformational leadership were evaluated by their immediate supervisors as higher performers and more promotable. In summary, the overall evidence indicates that transformational leadership is more strongly correlated than transactional leadership with lower
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Emotional Intelligence and Leadership Effectiveness
We introduced emotional intelligence (EI) in our discussion of emotions in Chapter 4. We revisit the topic here because of recent studies indicating that EL more than IQ expertise, or any other single factor–is the best predictor of who will emerge as a leader!
10 and technical skills are “threshold capabilities.” They’re necessary but not suf ficient requirements for leadership. It’s the possession of the five components of emotional intelligence-self-awareness, self-management, self-motivation, empathy. and social skills–that allows an individual to become a star performer. Without El, a person can have outstanding training, a highly analytical mind, a long-term vision. and an endless supply of terrific ideas, but still not make a great leader. This is espe cially true as individuals move up in an organization. The evidence indicates tha higher the rank of a person considered to be a star performer, the more El capabili ties surface as the reason for his or her effectiveness. Specifically, when star performers were compared with average ones in senior management positions, nearly 90 percent of the difference in their effectiveness was attributable to El factors rather than basic intelligence.
Examples of leaders with strong emotional intelligence would include U.S. Secre tary of State Colin Powell, Oprah Winfrey, and Rudy Giuliani. Powell’s intuitive abil ity to connect with others makes him a superior diplomat. Winfrey’s capacity to listen relate, and communicate the pain and resolve of millions has given her enormous influence.
