July 11, 2002

The Leadership Hypothesis

by Lorne Hartman, Ph.D. | www.psybasenetwork.com | lorne.hartman@psybasenetwork.com


This article examines the relationship between personality characteristics and leadership style with particular reference to the impact of this relationship on the culture (values, beliefs and practices) of the organization. A new, empirical model of leadership is presented.


Proposition

Hypothesis #1: Leadership Matters

Hypothesis #2: Culture Matters

Hypothesis #3: Personality Matters

Leadership Model (warmth versus reserved and self versus other focus of attention)

Leadership Styles (Implementation GURU, Efficiency, ANALYST, Motivator COACH, Innovation CATALYST)

Summary

References

One of the main reasons I became a psychologist (a process that came to fruition over 25 years ago) was to be able to effectively apply scientific rigor and discipline to answering controversial questions about human behavior. Certainly all of us reflect on human behavior (our own as well as others); however, well-controlled inquiry (i.e., empirical research) is necessary in order to meaningfully understand and improve the human condition. In the field of management, this is probably most true when it comes to discussions of leadership.

No other category in the business literature captures as much attention as leadership. We have a huge appetite for the topic.

One can argue that the mind-share enjoyed by leadership is justified. Probably no other variable impacts organizational performance more than the quality and alignment of a firm’s leadership.

Notwithstanding the shelf-space devoted to leadership, the availability of good scientific research on this topic is surprisingly limited. Having played for many years as a psychologist in the sandbox of leadership, I came to believe in certain fundamental principles. I also had very relevant empirical data that allowed me to test the veracity of these beliefs about leadership. The beliefs are summarized in the proposition below.

Proposition: Organizations consist of people all of whom bring a personality (including an ego) with them to the job. The dynamics of our personality influence how we behave at work and conduct ourselves on the job. The impact of an individual’s personality on an organization increases with management level. At the top of the house, the personality of a leader significantly impacts the culture of the organization and its performance.

This issue of OnPoint provides a brief summary of recent research evidence testing three related hypotheses embedded within the above proposition. The three hypotheses are:

    1. The quality and alignment of a firm’s leadership impact company performance

    2. The characteristics of a firm’s culture impact company performance

    3. Personality characteristics impact leadership effectiveness

A new empirical model or framework is introduced. The focus is on two personality dimensions (Warmth and Self versus Other-Centered) that shape leadership practices, influence organizational culture and drive operating results of the business.

Hypothesis #1: LEADERSHIP MATTERS

The quality and alignment of a firm's leadership impact company performance

It is difficult to test the effects of leadership on company performance. For one thing, as illustrated in the first column of the table below, the effects of leadership on organization results or outcomes involve a causal chain of variables.

The farther along in the causal chain of events toward the end-result, the longer it takes for the effect to occur. For some end-result criteria at the end of the chain, the delay can be months or years before the effects of the leader’s actions are evident.

Moreover, extraneous events or contingency factors (e.g., the economy or market conditions) will also influence end-result criteria like sales and profit. When the delay is long and there is considerable "criterion contamination", end-result criteria like sales and profit are less useful than more immediate outcomes as an indicator of the leader’s contribution to the effectiveness of the organization.

In addition, making sense of the research literature is made more difficult since different research studies use different measures of effectiveness. The relationship between subjective and objective measures of leader effectiveness is a major methodological question. Subjective measures are usually based on ratings obtained from the leader’s superiors, peers or subordinates. Examples of objective measures of performance or goal attainment include profits, profit margin, sales increase, market share, sales related to targeted sales, return on investment, productivity, cost per unit of output, and so forth. With the advent of meta-analytic procedures and their application to personnel research, there is now empirical support for the belief that the use of so-called "subjective’ criteria is legitimate and will predict objective criteria.

Results from several studies attempting to clarify the effect of top-level leadership on economic aspects of organizational performance include the following:

  • Leadership training was found to result in significant effects on subordinates’ perceptions of leaders’ transformational leadership, subordinates own organizational commitment, and two aspects of branch-level financial performance (Barling, Weber & Kelloway, 1996).
  • CEOs with high "behavioral complexity" (the ability to play multiple, competing roles) produce the best firm performance, particularly with respect to business performance (growth and innovation) and organizational (stakeholder) effectiveness. Leadership had little to do with firms’ financial performance, however (Hart & Quinn, 1993).
  • Leadership measures are associated with personality characteristics (e.g., internal locus of control) and significantly and positively predict business-unit performance over a 1-year interval (Howell & Avolio, 1993).
  • Executive leadership was found to explain as much as 45% of an organization’s performance (Day and Lord, 1988).

There is now sufficient evidence to indicate that leadership does matter. In addition, there is solid empirical support for the use of others’ perceptions of leadership effectiveness as an empirical indicator or predictor of organizational performance. Finally, a number of studies point to organizational culture as the mediating variable that connects leadership practices with company results. This brings us to the second hypothesis.

Hypothesis #2: CULTURE MATTERS

The characteristics of a firm's culture impact company performance.

Kotter and Heskett (1992) studied organizational culture and its impact on organizational performance. They researched organizations to determine which characteristics of culture influenced organizational performance. Three categories of organizational characteristics were examined:

    1. Strong cultures,

    2. Strategically appropriate cultures, and

    3. Adaptive cultures.

The authors identified characteristics of each theory that influenced organizational performance, as measured by annual net income growth, average annual return on capital, and average annual growth of stock price.

They describe a strong culture as one in which "almost all managers share a set of relatively consistent values and methods of doing business … and employees tend to march to the same drummer." Strong cultures with shared values create an unusual level of motivation in employees. There is shared understanding of unwritten rules. Economic events had to threaten the existence of the company before managers would question the culture.

But Kotter and Heskett pose the objection to this theory with the question of causality. Do strong cultures create strong performance? Or does strong performance help create a strong culture? They found that organizations could have strong cultures and weak performance, weak cultures and strong performance, or strong cultures and strong performance! So strong cultures do not necessarily mean strong performance.

The second theory of culture Kotter and Heskett explored was strategically appropriate cultures. The key concept is that of fit of the culture to the context -- the industry, the market demands or the business strategy. For example, a culture characterized by rapid decision-making and no bureaucratic behavior will enhance performance in a highly competitive environment (e.g., deal making in an M&A advisory firm) but might hurt performance in a traditional (e.g., life insurance) company. The researchers found that mismatches between the environment and the culture are pervasive in lower-performing organizations. High-performance firms had corporate cultures that better fit their context than their competitor’s did. However, when increased competition changed the business environment, these cultures had difficulty adapting to changes, fit deteriorated, and performance declined. "An entrenched culture can make implementing new and different strategies very difficult."

The third theory of culture identified by Kotter and Heskett is one of adaptive cultures. "Only cultures that can help organizations anticipate and adapt to environmental change will be associated with superior performance over long periods of time." Non-adaptive cultures are bureaucratic and people are reactive, risk-averse, and uncreative. Top-down control dampens motivation and enthusiasm. Adaptive cultures support individual risk-taking and problem solving. Managers and employees are proactive about development and seek to make a contribution to the organization’s success. They are receptive to change and innovation.

Kotter and Heskett compared the core values and style of managers in adaptive versus non-adaptive corporate cultures. The one characteristic that differentiated managers in adaptive versus non-adaptive cultures (listed in the table above) was being self-centered versus other-centered. In their definition, self-centered managers care mostly about themselves, their immediate work group, or some product (or technology) associated with that work group. They value orderly and risk-reducing management processes much more than leadership initiatives. Other centered managers (more prevalent in adaptive cultures) care deeply about customers, stockholders, and employees. They also strongly value people and processes that can create useful change (e.g., leadership up and down the management hierarchy).

Kotter and Heskett’s research supports the conclusion that culture matters. In fact, not only do they identify a set of cultural characteristics (called "adaptive") that correlate strongly with company performance. They also implicate a set of personality characteristics (called "other centered") that are more prevalent in these adaptive cultures. This brings us to the final hypothesis – do personality characteristics of leaders matter?

Hypothesis #3: PERSONALITY MATTERS

Personality characteristics impact leadership effectiveness.

The research literature is overflowing with studies that have found different personality traits to be especially relevant for leadership effectiveness. The behavioral approach (e.g., Kouzes & Posner, 1987) compares the behaviors of effective and ineffective leaders, usually based on the reported perceptions of others. Finally, some researchers have employed a situational approach in which it is assumed that different behavior patterns (or trait patterns) will be effective in different situations, and that the same pattern is not optimal in all situations.

A LEADERSHIP MODEL

The line of research and development described here tracked into the leadership space from a situational approach. That is, my hypothesis was that no single personality characteristic would correlate with overall leadership effectiveness, but that certain personality factors would predict or correlate with certain leadership practices. I was wrong.

In the initial study, for example, one personality factor (called "Warmth") emerged as a robust and consistent predictor of leadership effectiveness (Hartman, 1999). This factor was significantly correlated with overall leadership effectiveness and with each of five leadership practices. One’s level of warmth determined whether any of the other personality characteristics that influenced leadership effectiveness (e.g., conscientious, shrewd, or controlling) would be an asset or a liability.

This study attempted to embrace a broader view by examining the relationship between leader traits and leadership behavior to determine leadership effectiveness. A key take-away from this analysis is that in order to be effective, a leader must be warm, out-going, kind, and trustworthy.

In a different context, self-attention and expectancies have also been identified as fundamental determinants of behavior (Hartman & Blankstein, 1986). The Kotter and Heskett study, reviewed earlier, also identified self versus other orientation as a cardinal characteristic differentiating managers in adaptive versus non-adaptive cultures. In a similar vein, a recent study has shown that various outcomes to a leader (e.g., personal sacrifice or benefit) influence not only how that leader is perceived but also the degree of influence that leader might subsequently obtain (Yorges, Weiss & Strickland, 1999). Attribution theory (Kelly, 1973) also provides an additional framework for understanding how a self-centered focus or orientation might affect leader influence and outcomes.

These two dimensions or axes, warmth versus reserved and self versus other focus of attention, create four quadrants representing four fundamental roles or orientations for top executives. Let’s explore the dimensions in more detail.

The horizontal axis ranges from a self-centered focus or orientation at one end to other-centered. This is a continuum or dimension along which leaders vary in terms of how they navigate their way through the politics of an organization. Organization politics include the complex maze of egos, constituencies and rivalries that either facilitate or hinder getting things done.

The self-serving bias goes from low to high. A person with high amounts of self-centeredness is concerned with how others perceive them and will behave in ways that work the political system of a firm in order to make themselves look good (frequently at the expense of their colleagues).

At the low end, other-centered leaders don’t work the map. They are direct and straight-forward, rejecting the necessity of "playing politics" and focus instead on getting results.

The second continuum is interpersonal warmth. People who score high on warmth are described as easygoing, adaptable, attentive to people, trustful and kind. They are ready to cooperate with others and like to participate in group activities. They are more relationship than task-focused.

People who are low in warmth are often seen as reserved, cautious, or impersonal. They are more likely to be distrustful and skeptical of others. They tend to be more oriented to things and ideas than to people. Individuals low in warmth report that they take a long time to calm down when they are upset. They are easily and frequently irritated by small things. They seem to be intolerant.

LEADERSHIP STYLES

Four leadership styles emerge from this model:

The Implementation GURU is low in warmth and low in self-serving bias. This leadership type is concerned with firm performance and results. They are focused on productivity and accomplishments. GURUs are hands-on leaders who like to influence decisions made at lower levels by contributing specific knowledge and opinions. They display a strong bias towards results – getting the job done today. They emphasize direction and goal clarity.

At a negative extreme, GURUs generally display:

  • A restricted ability to express warm and tender emotions
  • Perfectionism and a strong task orientation that interferes with the ability to grasp the "big picture"
  • Insistence that others submit to his or her way of doing things ("my way or the highway")
  • An excessive devotion to work and productivity to the exclusion of pleasure and relationships

The Efficiency ANALYST is low in warmth and high in self-serving bias. The focus of this leadership type is documentation and information management. Their strength is around the management of operations and the critical evaluation of alternative projects and programs. They strive to maintain stability and control.

At a negative extreme, the essential feature of the ANALYST is a suspiciousness and mistrust that results in:

  • Taking credit for success (or overstating what he or she knows or has done) rather than recognizing others and avoidance of accepting blame when warranted (and, accordingly, much finger-pointing)
  • Tendency to be easily slighted and quick to take offence
  • Readiness to counterattack when any threat is perceived
  • Seen by others as excessively political (manipulative and scheming), not trusted

The Motivator COACH is high in warmth and high in self-centeredness. They focus on the development and motivation of people and the maintenance of a distinctive identity and value system. Their strength is in translating the vision and economic strategy of the firm into a "cause worth fighting for" – a core set of concepts and priorities which infuse and mobilize the entire organization. Through their personal example and charisma, COACH leaders emphasize commitment and morale, trust and loyalty.

At a negative extreme, the COACH leader demonstrates:

  • An exaggerated sense of self-importance or uniqueness (abilities and achievements tend to be unrealistically overestimated)
  • Exhibitionism (the person requires a high level of attention and admiration)
  • Tendency to be more concerned with appearances than with substance
  • Interpersonal exploitativeness (taking advantage of others to indulge own desires or for self-aggrandizement)

Innovation CATALYSTS are high in warmth and low in self-serving bias. They focus on growth and emphasize the future positioning of the organization in terms of strategic direction, products, and service. They demand innovation and will keep moving the target in terms of the definition and articulation of the firm’s basic purpose and future direction.

To fulfill this mandate, they spend considerable time monitoring and studying emerging social, economic and technological trends. Innovation CATALYSTS utilize an extensive network of informal contacts, both external (customers, suppliers, competitors, consultants) and internal (functional managers, line workers) to sense emerging trends and pick up on signals in the marketplace.

Personality characteristics of CATALYSTS include the following:

  • Widely trusted, liked and respected (e.g., known to keep a confidence, willing to admit mistakes, don’t misrepresent themselves for personal gain)
  • Seen as direct and truthful; tough but in a "lovingly ruthless" way
  • Able to remain relaxed and composed, even when under pressure
  • More likely to share their feelings with others

On the negative side, CATALYSTS are prone to the following liabilities:

  • Relatively ineffective at administration and operational management
  • Easily swayed by the informal network ("last one in" or "last book read" syndrome)
  • Creating organizational whiplash (non-stop change)
  • Turnover of senior executives

The table below summarizes key features of the four different styles.

SUMMARY

This article examines the relationship between personality characteristics and leadership style with particular reference to the impact of this relationship on the culture (values, beliefs and practices) of the organization. A new, empirical model of leadership is presented.

Based on the model, a suite of tools and applications has been developed. For example, the Leadership Style Inventory (Self and Other) offers a framework for looking at a mixed group of leadership beliefs, values, skills, needs and aptitudes as a means to understanding self and others. A few principles or assumptions that form the basis for interpretation of the profile or graph of the Leadership Style Inventory are worth repeating here:

  • Each of the four styles is equally important, valuable and necessary.
  • Different profiles (i.e., patterns of scores across the four styles) may be more appropriate or effective in certain circumstances or situations.
  • Each individual demonstrates aspects of all four styles.
  • Most people show dominance in one of the four styles (dominance is defined as a difference of 3 points or more between the highest score and the next highest).
  • A difference score of 7 or more between the highest score and the next highest indicates a significant and likely problematic bias towards one of the four styles.

Practical applications derived from this line of research include both individual and group processes. For example, the model has been used to provide structure for succession planning discussions (i.e., profiling the job in terms of requirements for the four leadership styles and evaluating individual candidates against that profile). In another situation, the model and assessment tools were used to define the ideal profile for an executive team about to launch a large-scale change initiative and determine current strengths and weaknesses within the team against that profile. Applications at the individual level include, for example, coaching interventions where the model and assessment instruments offer a framework for reflection and development planning.

Attempting to develop leadership bench strength is neither quick nor easy. The conclusion of this line of research is that leadership does matter; improvements in leadership effectiveness will produce a significant ROI that can be measured financially. The cause-effect relationship, however, is not a direct one. Culture appears to be the mediating variable that links leadership with company performance. If this is the case, then personality characteristics, in particular "Warmth" and "Self versus Other-Centered", may prove to be the key attributes to focus on in leadership development efforts.

REFERENCES

Barling, J., Weber, T., & Kelloway, E.K. (1996) ‘Effects of transformational leadership training on attitudinal and financial outcomes: A field experiment’, Journal of Applied Psychology 81, 827-832.

Bass, B.M. (1980) Handbook of Leadership: A Survey of Theory and Research, Free Press, New York, NY.

Day, D.V. & Lord, R.G. (1988) ‘Executive leadership and organizational performance: Suggestions for a new theory and methodology’, Journal of Management 14, 453-464.

Hart, S.L. & Quinn, R.E. (1993) ‘Roles executives play: CEOs, behavioral complexity, and firm performance’, Human Relations 46, 543-574.

Hartman, L.M. (1999) ‘A psychological analysis of leader effectiveness’, Strategy & Leadership, 27, 30-32.

Hartman, L.M. & Blankstein, K.R. (1986) Perception of self in emotional disorder and psychotherapy. New York: Plenum Press.

Howell, J.M. & Avolio, B.J. (1993) ‘Transformational leadership, transactional leadership, locus of control, and support for innovation: Key predictors of consolidated-business-unit performance’, Journal of Applied Psychology, 78, 891-902

Kelly, J.J. (1973) ‘The process of causal attribution’, American Psychologist, 28, 107-128.

Kotter, J.P. & Heskett, J.L. (1992). Corporate Culture and Performance. New York: Free Press.

Kouzes, J.M. & Posner, B.Z. (1987) The Leadership Challenge. San Francisco: Jossey Bass.

Yorges, S.L., Weiss, H.M., & Strickland, O.J. (1999) ‘The effect of leader outcomes on influence, attributions and perceptions of charisma’, Journal of Applied Psychology, 84, 428-436.

Contact: lorne.hartman@psybasenetwork.com | Phone: 905.764.2696 | Toll Free: 866.854.5753