Six Lessons on Leadership
from Bob Hogan
I am obsessed with the topic of leadership. Organizations need leaders to make key decisions, anticipate and manage changing market trends, and set strategic vision. When competent leadership prevails, people and companies prosper. Bad leadership almost always creates disengaged workers, corporate chicanery, and, eventually, business failure.
The problem with most leadership competency models is they fail to distinguish between successful managers—people who are rapidly promoted in their organizations, and effective managers—people whose subordinates are committed and whose organizational units perform well. If we distinguish between these groups and review of the leadership literature from the perspective of team effectiveness we find six useful generalizations.
1. What followers want from their leaders
The first concerns the characteristics that people want to see in their leaders. Kouzes and Posner (2010) devised a simple paradigm for studying this: ask people to describe the best and the worst managers they have ever had using a standardized format. This research reveals that people evaluate leaders in terms of four broad categories:
Integrity – Followers want to know that the people in charge won’t take advantage of their positions – won’t lie, steal, play favorites, or betray their subordinates.
Judgment – The success or failure of organizations depends on decision-making. Some leaders make better decisions than others.
Competence – Good leaders seem to know what they are talking about, to be competent in the team’s business. Subordinates see leaders who lack business acumen as empty suits, and are unwilling to follow them.
Vision – Good leaders can explain how their mission fits into the larger scheme of things. This vision clarifies roles, goals, and the way forward, thereby facilitating team performance.
These four themes emerge in descending order—integrity is the most important attribute and vision is the least important—but all four are crucial components of leaders’ reputations. Conversely, leaders who lack integrity, good judgment, competence, and vision will surely fail.
2. Personality predicts leadership
The second lesson concerns personality and leadership. The data are clear: personality is the best single predictor of leader performance that we have. For example, Jim Collins published a milestone study of 11 Fortune 1000 companies which had 15 years of below average performance, followed by a transition year, and then 15 years of performance substantially above their industry average. Collins found that, in each case, a new CEO had turned the company around and that these 11 highly effective CEOs combined extreme personal humility with a fierce and relentless drive to win. This contrasts with their high profile, publicity-seeking counterparts in poorer performing companies. Personality is important in both cases, and we can also say good-bye to the view that CEOs need charisma to be effective.
3. Leadership drives engagement; engagement drives performance
The third lesson concerns leadership and employee engagement. Engagement is “…a persistent psychological state associated with behaviors that are beneficial to an organization” (Macey & Schneider, 2008). In major separate studies, Huselid (1995) and Harter, Schmidt, and Hayes (2002) show that: (a) managers’ behavior predicts employee engagement; and (b) employee engagement predicts business-unit performance. Engagement is a function of how people are treated by managers. Specifically, the quality of the relationship between leaders and followers creates engagement.
4. Leaders drive financial performance
The fourth lesson concerns the financial consequences of good and bad leadership. Collins’ research shows that well-led companies are more profitable than those with average leadership. Although the estimates vary from 14% (Joyce, Nohria, & Roberson, 2003) to 29% (Mackey, 2008) to 38% (Hambrick & Quigley, 2013) to 40% (Day & Lord, 1989), several studies conclude that CEOs account for a significant proportion of the variance in the financial performance of large organizations.
5. There are more bad leaders than good ones
The fifth lesson concerns managerial incompetence. In another milestone paper, Bentz (1967; 1985) reported on a 30-year study of managers at Sears. He found that the failure rate for managers to be substantially higher than anyone expected. How many bad managers are there? Hogan, et al., (2011) identified 12 published estimates of the frequency of management failure, which range from 30% to 67%, with an average of about 50%. Note that these estimates concern the number of managers who are actually fired. I believe that about two-thirds of existing managers are ineffective, but fewer than half will be caught because they are good at internal politics. The misery that bad managers create for their staff has moral consequences; about 75% of working adults say the most stressful aspect of their jobs is their immediate boss (Hogan, 2007, p. 106).
6. Bad managers lead from the dark side
Finally, bad managerial behavior originates in the dark side of personality (Hogan & Hogan, 2001). As Bentz (1967) noted, most managers fail for the same reasons: emotional immaturity, arrogance, micro-management, dishonesty, indecisiveness, poor communications, etc. Hogan and Hogan (2001) proposed a taxonomy of the most common counter-productive managerial behaviors. Although the behavior patterns are different, they have the same effect on employees—they erode trust, increase stress, and degrade performance.
The foregoing discussion leads to the question, “What is the profile of an ideal leader?” I start with Peter Drucker’s observation that leadership is really about followership, that leadership should be understood in the context of what the followers expect from their leaders. The points presented above suggest that followers want to see six characteristics in their leaders – integrity, good judgment, competence, vision, humility, and fierce ambition for collective success, and those characteristics provide a guide to an optimal assessment profile.