Era ends as autocrats go out of business

 

Chief executive officers who find themselves described by employee wits as the "company God" - and it is unlikely that many will have escaped such a designation at one time or another - might do well to consider the matter.

If one is to be "God", however imperfectly, studies suggest that aiming for the inspirational leadership styles of, say, Buddha or Jesus, may be a wiser bet than the sterner approaches found among some of the old Greek deities or in the Old Testament.

That might sound counter-intuitive to some of the tougher bosses out there. But this is not a good time for autocrats.

Authoritarian leadership has never been so out of favour as at the end of the century that produced Hitler, Stalin and Mao-Tse Tung.

In the workplace as in politics, the psychological weaknesses and flaws lurking behind apparent strength are increasingly the subject of some tough-talking analysis.

"Authoritarianism denotes a personality syndrome characterised by rigidity of thinking, deep suspicion of out-groups, an excessively submissive attitude toward those in positions of authority, and a generally conservative or `old-fashioned' outlook on life," according to a study of CEOs in leading multinational companies in the US and Ireland.

The study aimed to discover the effects of various leadership styles on the performance of top management teams and was carried out as part of continuing management research projects by the University of Limerick and the University of Maryland which started in 1996.

Of four leadership styles discussed, authoritarian types came in for the greatest criticism. In the workplace, according to the study, "authoritarianism is associated with less cognitively complex information processing . . . decision-making is likely to be flawed as the authoritarian leader considers fewer alternatives".

In other words, the authoritarian person lacks the wisdom associated with a wider view. Or, as the writer Daniel Goleman might put it, the authoritarian type lacks "emotional intelligence".

The effects of an authoritarian CEO on the management team below can be dramatic, according to the study's principal authors, Prof Patrick Flood of the College of Business at University of Limerick and Ms Eithne Hannan of the University of Sheffield.

The most widely observed characteristic of failing top management teams and unsuccessful companies is the presence of dominant CEOs or autocrats, their study suggests. These "strong willed, dominating, often ego-maniacal chief executives" are likely, the report goes on, to "be wedded to the wisdom of their own views . . . they may greatly discount or blunt the potential contributions of subordinate team members, and drive able subordinates away in frustration".

"The presence of an autocratic CEO can be expected to impair the quality of information processed, since other team members tend to become weak `yes men'," the study says.

Of three other leadership approaches considered, only one - the "transformational style" was considered to improve team effectiveness.

The transformational leader is described as one who inspires followers to do more than originally expected and to work for goals that go beyond their own self-interests.

They do this by raising the awareness of the importance and value of designed outcomes, and by altering or expanding follower's needs.

Transformational leadership has been linked to the promotion of innovation in organisations. One writer says transformational leaders use intellectual stimulation to enhance followers' capacities to think on their own, develop new ideas and to question rules and systems that no longer serve the organisation's purpose or mission.

An egalitarian, participative approach is favoured by transformational leaders, said Ms Hannan in a recent follow-up analysis of the study.

A common but ultimately ineffective leadership approach is the transactional style, according to the authors. This type of CEO tries to influence others by appealing to their self-interest.

The relationship between the leader and the follower is seen as a series of rational exchanges that enable each to reach their true goal. This is the "you help me, and I'll help you" approach. Although this style can work well for a period, it has its drawbacks. One management theorist cited in the UL study reckoned that if CEOs limit themselves to transactional leadership, "with rewards of carrots for compliance, or punishments with a stick for failure to comply with agreed-on matters, the follower will eventually begin to feel like a jackass".

The final option, laissez-faire leadership, means avoiding decision-making and supervisory responsibility. This seems to amount to the CEO not actually doing the job, and not surprisingly it was found to have negative effects on consensus decision making and on reported team effectiveness.

Managers under a laissez-faire type leader are likely to hold opinions such as: "No one, including myself, is solving the problems of the job. No one, including myself, expects much of me in terms of performance. No one, including myself, is providing any vision for our organisation."

Presumably, such managers eventually conclude that no one in such an environment, including themselves, should continue to stick around.