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Thinking Out Loud

A Leadership Notebook: This Just in - Good People Make Great Leaders

by Michael Jinkins | Mar 20, 2015

Editor’s note: Periodically throughout the 2014-2015 academic year, “Thinking Out Loud” readers will receive blog posts that address the idea of leadership. Best practices, challenges, rewards and lessons learned from different models of leadership are the focus of these special blog posts. We’d love to hear what you have written in your “leadership notebook.” E-mail us!

TOLLeadership032015A major new study reported in the most recent issue of the Harvard Business Review (April, 2015)* provides an insight that may not be counter-intuitive, but it surely runs counter to conventional wisdom in much of the world of leadership. Researchers at KRW International, a leadership consulting firm in Minneapolis, have found that "CEOs whose employees gave them high marks for character had an average return on assets [for their businesses and non-profit organizations] of 9.35% over a two-year period. That's nearly five times as much as what those with low character ratings had." Those rated lowest in character had a return on assets averaging only 1.93%. Virtuous leadership is quantifiably better.

The CEOs were rated on a 100-point scale: 50 indicated that the leader displayed the given characteristic "about half the time" while 100 indicated "always." Four character traits were rated: integrity, responsibility, forgiveness and compassion. Eighty-four companies and nonprofit organizations were studied, with follow-up interviews and careful analysis of the data by KRW. In one of these interviews, Charles Sorenson, the president and CEO of Intermountain Healthcare (one of the highest scoring leaders in the study), said that he would add two additional character traits: "the pursuit of excellence" and "the courage to do the right thing even when it's difficult or painful." I would strongly agree with Sorenson, though the study itself only focused on the first four traits named.

Among the top-scoring leaders, like Sorenson, those termed "virtuoso" leaders in the study in contrast to "self-focused CEOs," employees described them as "standing up for what's right, expressing concern for the common good, letting go of mistakes (their own and others'), and showing empathy." As you might already anticipate, by contrast, the most self-focused leaders told the truth only "'slightly more than half the time,' couldn't be trusted to keep promises, often passed the blame to others, frequently punished well-intentioned people for making mistakes, and were especially bad at caring for people." In other words, these folks practiced what Barbara Wheeler, the former president of Auburn Seminary, once pointed out as the two rules of terrible management. "Rule Number 1: Hide. Rule Number 2: If they find you, lie." Great leaders, it turns out, neither hide nor lie. They take responsibility.

Among the many encouraging findings in the KRW study, there are two others I found especially interesting:

(1) The leaders who scored worst on character were "pretty deluded." They rated themselves relatively highly on all of the character traits, which should remind us that high among the characteristics of the clueless is the fact that they have no clue. Really.

(2) Conversely, leaders who scored highest consistently rated themselves lower than their employees rated them. As the HBR article said, this shows "a sign of their humility and further evidence of strong character."

The principal investigator of the study, KRW co-founder Fred Kiel, reflected personally on his own history of leadership, observing that when he was younger, while he probably would never have been guilty of the degree of self-centeredness exhibited among the worst scoring leaders in this study, nevertheless he is sure his co-workers would not have scored him among the virtuoso CEOs. Sometime along the way, well into middle age, however, he came to a realization that he felt morally and spiritually empty. This led him to inventory his attitudes and behaviors. In time, he learned to be more other-centered, more dedicated to the whole than to his own interests. He said it has taken him years to unlearn old habits and to set new ones, but he is greatly encouraged that we can indeed learn to be better.

According to classical wisdom, virtues can indeed be cultivated and inhabited. We aren't hardwired to be self-seeking. This is good news for individual leaders, for the organizations they lead, and for all of those people who are meant to benefit from the missions of those organizations. Goodness can be cultivated, and goodness multiplies its effects through well-led organizations. This insight flies in the face of all of those management fads that tell us that "good guys finish last," and the exercise of power depends on personal ruthlessness, and self-interested leaders build stronger organizations.

As someone who has written on what leaders can (and cannot) learn from the Renaissance master of political philosophy, Niccolo Machiavelli, I am often asked what is the most powerful force in the world of real-world leadership. The folks who ask me this question are often surprised when I tell them: The most powerful force in leadership is someone who will do the right things for the right reasons and who will tell the truth no matter the cost.

If you want to freak out the self-serving, try that strategy. I guarantee it will serve our organizations better than looking out for number one.

* "Leadership: Measuring the Return on Character," Harvard Business Review, April, 2015, pp. 20-21. The subheading of the article alone is enough to make you want to read it: "CEOs who are rated high on four moral principles deliver better financial results than those who aren't." Fred Kiel's new book Return on Character is published by Harvard Business Review Press, 2015.

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