2 and Ethical Leadership Transformational, Charismatic, · 2017-12-14 · Section 2.1 Transformational Leadership CHAPTER 2 While traditional leadership theories are still in use

Transformational, Charismatic, and Ethical Leadership2

Chapter 2 Outline

2.1 Transformational LeadershipCharacteristics Of Transformational

LeadershipEffectiveness of Transformational

LeadershipLimitations of Transformational LeadershipThe Need for Transactional Leadership

2.2 The Leadership Challenge: A Model of Transformational Leadership

Model the WayInspire a Shared VisionChallenge the ProcessEnable Others to ActEncourage the Heart

2.3 Charismatic LeadershipBehavior of Charismatic LeadersThe Dark Side of Charismatic LeadershipTypes of Charismatic LeadersCan Charismatic Leadership Be Learned?

2.4 Ethical LeadershipCharacteristics of Ethical LeadershipResponsibilities of Ethical LeadershipPractical Principles of Ethical LeadershipSymptoms of Unethical Leadership

2.5 Two Ethical Leadership Styles: Stewardship and Servant Leaders

Ethics and Leadership: An Emerging Field

Summary

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CHAPTER 2Section 2.1 Transformational Leadership

While traditional leadership theories are still in use today, newer approaches have focused increasingly on leaders’ actions and behavior, particularly those of dynamic

leaders who are able to effect mass change. Recall that a critical component of leadership is influence. The theories presented in this chapter—transformational, charismatic, and ethical—explore the characteristics of leaders who can deeply influence followers and stakeholders of the organization. These three theories are sometimes interrelated; a trans-formational leader, for example, is likely to be charismatic as well. Ethical leadership is an evolving but increasingly important part of leadership studies because of the illegal and unethical corporate practices during the global financial meltdown and other crises. As you read, keep in mind that there is no single most effective leadership style, and consider what elements of each approach you would like to develop in your own leadership style or see in others. We will examine transformational leadership before discussing charis-matic and ethical leadership.

2.1 Transformational Leadership

New York City, the so-called Big Apple, was called the Rotten Apple when police chief Bill Bratton arrived in 1994. Crime was rampant, and the New York Police Depart-

ment’s 35,000 officers were underpaid and unmotivated. Two years after Bratton’s arrival, however, NYC became one of the safest cities in the United States: “Felony crime fell 39%; murders, 50%; and theft, 35%. Gallup polls reported that public confidence in the NYPD jumped from 37% to 73%, even as internal surveys showed job satisfaction in the police department reaching an all-time high” (Kim & Mauborgne, 2003).

How did Bratton succeed? He had a clear vision, goals, and methods for transforming and leading police departments. He ensured that officers led by example and were visible in the communities where they worked. “No one here can break the law in order to enforce it,” he was known to have said. Bratton consulted with influential city councilors, court officials, media personnel, and community leaders in order to support his mission. He installed a sophisticated information system that tracked all police-department data; sta-tistics from that system were used to track trends of individual and overall performance. He also set a moral example and professional tone at the top. Bratton’s success in New York—as well as in Boston and Los Angeles—was among the five organizational turn-arounds he led in his 20-year policing career.

In a Harvard Business Review article, Kim and Mauborgne (2003) termed Bratton’s style “tipping point leadership.” They reported that Bratton strategically overcame cogni-tive, political, motivational, and resource hurdles to achieve the department’s aggres-sive goals. “Perhaps most impressive,” these authors stated, “the changes have outlasted their instigator, implying a fundamental shift in the department’s organizational culture and strategy.” In 2002, several years after Bratton left his New York position, New York’s overall crime rate was the lowest among the 25 largest cities in the United States (Kim & Mauborgne, 2003).

Bratton is what leadership scholars would call a transformational leader. Transformational leaders influence, inspire, move, and literally transform followers to achieve organizational

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goals beyond their self-interests (Burns, 1978), thus initiating and bringing about positive change. These leaders introduce new business models, products, and services because of their ability to create new organizational visions, strategies, cul-tures, and structures through committed followers (Tucker & Russell, 2004). At the same time, they positively change followers’ lives, lifting spirits and even the commitment to ethics and moral-ity. Alan Keith of the drug-development company Genentech defined a central aspect of transfor-mational leadership when he said, “Leadership is ultimately about creating a way for people to con-tribute to making something extraordinary hap-pen” (Kouzes & Posner, 2007).

The increasingly competitive and demanding business environment of the early twenty-first century requires leaders to champion transfor-mational change. Turbulent changes—whether they be globalization, information-technology innovations, or corporate scandals and crises—challenge leaders to think and perform creatively and boldly: They must develop new competitive strategies, restructure organizations, and change cultures and business processes to meet the product and service demands of changing markets. A transformational leader is equipped to meet this challenge.

Can just anyone be a transformational leader? As we discuss in this chapter, transforma-tional leadership is not limited to a few great men and women. There are most likely such leaders in your organization; you may have transformational abilities and characteristics yourself. These qualities can be developed, but not everyone aspires or has the capacity to be exceptionally transformational. As with any skill presented in this book, different people will excel more with certain skills than others. Take Assessment 2.1 to get an idea of your capacity as a transformational leader.

CharacteristicsofTransformationalLeadership

The influencing process is central to the transformational leadership style. Transforma-tional leaders not only move followers to concrete action—and extraordinary results—but they also transform followers in the process (Sashkin & Sashkin, 2003). Bass (1985, 1990), Bass and Avolio (1993, 1994), and Kuhnert (1994) argued that transformational leaders are motivated by strong internal values and ideals that enable them to influence and motivate followers to higher moral levels to achieve organizational goals. Followers believe they will be enriched while working toward positive goals.

Bass offered one of the most comprehensive definitions of transformational leadership:

New York Police Chief Bill Bratton is a good example of a transformational leader because of the way he influ-enced, inspired, and moved followers to achieve New York Police Depart-ment organizational goals. Under him, citizen confidence in the police force rose markedly.

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Superior leadership performance—transformational leadership—occurs when leaders broaden and elevate the interests of their employees, when they generate awareness and acceptance of the purposes and mission of the group, and when they stir their employees to look beyond their own self-interest for the good of the group. Transformational leaders achieve these results in one or more ways: They may be charismatic to their followers and thus inspire them; they may meet the emotional needs of each employee; and/or they may intellectually stimulate employees. (1990, p. 21)

Assessment 2.1: Transformational Leadership

Instructions: Think about a situation in which you either assumed or were given a leadership role. Think about your own behaviors within this context. To what extent does each of the following state-ments characterize your leadership orientation?

Very Little A Moderate Amount Very Much

1. Have a clear understanding of where we are going. 1 2 3 4 5 6 7

2. Paint an interesting picture of the future for my group. 1 2 3 4 5 6 7

3. Am always seeking new opportunities for the organization/group. 1 2 3 4 5 6 7

4. Inspire others with my plans for the future. 1 2 3 4 5 6 7

5. Am able to get others to be committed to my dreams. 1 2 3 4 5 6 7

6. Lead by “doing,” rather than simply by “telling.” 1 2 3 4 5 6 7

7. Provide a good model for others to follow. 1 2 3 4 5 6 7

8. Lead by example. 1 2 3 4 5 6 7

9. Foster collaboration among group members. 1 2 3 4 5 6 7

10. Encourage employees to be “team players.” 1 2 3 4 5 6 7

11. Get the group to work together for the same goal. 1 2 3 4 5 6 7

12. Develop a team attitude and spirit among employees. 1 2 3 4 5 6 7

13. Show that I expect a lot from others. 1 2 3 4 5 6 7

14. Insist on only the best performance. 1 2 3 4 5 6 7

15. Will not settle for second best. 1 2 3 4 5 6 7

16. Act without considering the feelings of others. 1 2 3 4 5 6 7

17. Show respect for the personal feelings of others. 1 2 3 4 5 6 7

18. Behave in a manner thoughtful of the personal needs of others. 1 2 3 4 5 6 7

19. Treat others without considering their personal feelings. 1 2 3 4 5 6 7

20. Challenge others to think about old problems in new ways. 1 2 3 4 5 6 7

21. Ask questions that prompt others to think. 1 2 3 4 5 6 7

22. Stimulate others to rethink the way they do things. 1 2 3 4 5 6 7

23. Have ideas that challenge others to reexamine some of their basic assumptions about work.

1 2 3 4 5 6 7

24. Always give positive feedback when others perform well. 1 2 3 4 5 6 7

25. Give special recognition when others’ work is very good. 1 2 3 4 5 6 7

26. Commend others when they do a better-than-average job. 1 2 3 4 5 6 7

27. Personally compliment others when they do outstanding work. 1 2 3 4 5 6 7

28. Frequently do not acknowledge the good performance of others. 1 2 3 4 5 6 7

(continued)

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This definition can be refocused into the four I’s, or the behaviors that enable transfor-mational leaders to influence followers: idealized influence—also called charisma—inspirational motivation, intellectual stimulation, and individualized consideration (Bass, 1990). These characteristics, while useful in isolation, are most powerful when used in conjunction to build up followers and thus produce performance beyond expectations—a distinguishing quality of transformational leadership (Gellis, 2001; Hay, 2006).

IdealizedInfluenceIdealized influence, or charisma, is based on the leader’s personality, character, and behav-iors, which followers wish to emulate. Transformational leaders are trusted, admired, and respected because of idealized influence (Bass, Avolio, Jung, & Berson, 2003); they become strong role models whom followers take pride in. President Franklin D. Roosevelt pro-vides an example of a leader who used idealized influence. Despite his battle with a para-lytic illness, Roosevelt, or FDR, was able to inspire and rally Americans to his side dur-ing the dark times of the Great Depression. He initiated friendly “fireside chats” with the public via the radio and spearheaded economic recovery with creative policies and daring activities. His popularity resulted in his being elected president four times—before presi-dential term limits were in effect. “If the leadership is truly transformational, its charisma or idealized influence is characterized by high moral and ethical standards,” Bass wrote (1997). Notice that here, the focus is on the leader rather than the leader’s position power or other contextual factors.

Scoring: Subtract your responses to questions 16, 19, and 28 from 8. There are seven dimension scores to be computed. Articulate vision: Sum your responses to questions 1 through 5 and divide by 5. Provide appropriate model: Sum your responses to questions 6 through 8 and divide by 3. Foster acceptance of goals: Sum your responses to questions 9 through 12 and divide by 4. High-performance expectations: Sum your responses to questions 13 through 15 and divide by 3. Individual support: Sum your responses to questions 16 through 19 (using your adjusted responses for questions 16 and 19) and divide by 4. Intellectual stimulation: Sum your responses to questions 20 through 23 and divide by 4. Transactional leader behaviors: Sum your responses to questions 24 through 28 (using your adjusted response for question 28) and divide by 5.

My scores are: Articulate vision: ____ ; Provide appropriate model: ____ ; Foster acceptance of goals: ____ ; High-performance expectations: ____ ; Individual support: ____ ; Intellectual stimulation: ____ ; Transactional leader behaviors: ____ .

Interpretation: Six basic dimensions of the transformational leader are profiled by this self-assess-ment: articulate vision, provide appropriate model, foster acceptance of goals, high-performance expectations, individual support, and intellectual stimulation. A high score (6 or greater) reflects a high behavioral orientation to engage in each of these behaviors. The seventh leadership dimension profiled here reflects your tendency to engage in behaviors characteristic of the transactional leader. A high score (6 or greater) reflects a strong behavioral orientation to give something to your followers in exchange for their giving something to you that as a leader you want (expect).

Source: From “Transformational Leader Behaviors and Their Effects on Followers’ Trust in Leader, Satisfaction, and Organizational Citizenship Behaviors,” by P. M. Podsakoff, S. B. MacKenzie, R. H. Moorman, and R. Fetter, 1990, Leadership Quarterly, 1(2), pp. 107–42. Reprinted with permission.

Assessment 2.1: Transformational Leadership (continued)

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InspirationalMotivationInspirational motivation refers to how a leader is able to move followers toward a goal, or perhaps a new idea. Inspira-tional leaders are able to express impor-tant purposes in simple ways and present an appealing view of the future, which draws followers (Bass, 1990). These lead-ers also encourage followers to buy into and become part of the overall organiza-tional culture and environment; they also offer followers the opportunity to see meaning in their work and challenge them with high standards. To inspire followers, leaders encourage team spirit in rallies and meetings to reach goals of increased revenue and market growth for the orga-

nization; give speeches; engage followers in dialogue; and motivate by example. A classic example is Martin Luther King Jr.’s “I Have a Dream” speech—a defining moment for the civil-rights movement at that time. Contemporary technology executives offer more recent examples: Microsoft CEO Steve Ballmer is known for using his raucous but effectively engaging cheerleading style to lift expectations and competitive spirit among employees. Some of his speeches and appearances have even become viral videos, with several titled “Steve Ballmer Going Crazy.” Apple CEO Steve Jobs is also a master at inspiring and moti-vating not only Apple employees, but also customers, the media, and technology geeks who love his new products. One business writer noted:

Leave it to Apple Chief Executive Steve Jobs to create a frenzy that gripped every gadget fan in the country. The hype, however, started with what I consider Jobs’ best presentation to date—the introduction of the iPhone at the annual Macworld trade show in January. After watching and analyz-ing the presentation, I thought about five ways to distill Jobs’ speaking techniques to help anyone craft and deliver a persuasive pitch. 1. Build tension . . . 2. Stick to one theme per slide . . . 3. Add pizzazz to your deliv-ery . . . 4. Practice . . . and 5. Be honest and show enthusiasm. (Gallo, 2007)

IntellectualStimulationIntellectual stimulation moves and supports followers to think and innovate “outside the box.” Intellectual stimulation can include such leadership behaviors and practices as brainstorming, challenging the beliefs and norms of the group to innovate and be cre-ative, promoting critical thinking and problem solving to make the organization better, and persuading and proposing new and even controversial ideas to followers without fear of punishment or ridicule. As part of breaking through rigid and reactive mindsets, Bill Bratton used a unique but simple technique in his police work to awaken followers and stakeholders to current problems and the need for change—what Kim and Maubor-gne (2005) referred to as “break[ing] through the cognitive hurdle.” He forced his manag-ers to experience problems that cops on the beat and citizens in the city faced every day.

President Franklin D. Roosevelt used idealized influence to inspire and rally Americans to his side in the Great Depression and World War II with his series of “fireside chats” on the radio.

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His managers had to ride the New York City subway to and from work. For some it was their first experience being in the overcrowded underground system with the homeless, aggressive gangs, and youths jumping over the turnstiles without paying. Now, face to face with the reality that many of them had never encountered, the managers had a direct experience of the people whom they were paid to protect. It worked. They changed their lax way of leading and began connecting more with their subordinates to implement department goals.

IndividualizedConsiderationIndividualized consideration offers attention and concern to followers. Leaders exem-plify individualized consideration by offering individual coaching to followers, listening to their concerns, showing empathy to those who are demoralized or need uplifting, help-ing followers solve problems, providing counseling and emotional support when neces-sary, providing stimulation, and creating possibilities like higher-level assignments for talented followers. Herb Kelleher, chairman and CEO of Southwest Airlines from 1971 to 2008, remains one of the most personable and effective leaders in that industry and American business culture. He is known for the individual attention and concern he gave employees—as well as customers—regardless of their status or position in the company. Kelleher was known for constantly flying on Southwest’s planes so he could talk to cus-tomers and employees about how Southwest was performing in a number of areas. One passenger reportedly sat next to Kelleher three times in 10 years. “Profit is a by-product of customer service. It’s not an end in and of itself,” Kelleher was known to have said (McCo-nnell & Huba, 2001). He also joined employees and their family members in their homes, at company parties, and sometimes at hospitals. The husband of one employee recounted how, during that employee’s 5-hour high-risk surgery, “Herb was with me there, holding my hand through the entire operation” (Sashkin & Sashkin, 2003).

Take the LeadTransformational Leader: Leadership Balance and Focus

You have been with your organization for 5 years and have proven yourself as a future leader. You’ve worked hard, put in long hours, and shown that you are dedicated to doing whatever it takes to get the job done right. Your efforts have finally paid off: You’ve been promoted.

In your new role as team leader, you’ll oversee five team members. Your department is currently going through a reorganization, which will result in three of your previous peers working for you, as well as two team members coming from other areas of the department.

You envision a bright career path from here. However, you realize that this initial leadership role will set the tone for future assignments—either roles of increasing leadership responsibilities or nonlead-ership! How can you ensure that you will be transformational enough? Consider the following:

1. What characteristics of idealized influence will you position as paramount in your new role?2. How will you leverage your ability to project inspirational motivation with your new team?3. In what ways will you provide intellectual stimulation?4. How will you identify your new team’s unique individualized considerations?

See page 226 for possible answers.

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Not all transformational leaders show individual consideration to followers in the same way. Leaders also mentor followers by teaching and sharing knowledge and skills in addition to showing emotional concern and support. Leadership mentoring includes dis-cussing and sharing ideas to help followers and teams make the right strategic moves, developing communication methods and styles to ensure clear, effective, and constant communication, helping followers identify what makes them flourish, developing their capacity and resources for successful change, showing—again—empathetic support by listening to their concerns and facilitating processes designed for successful change (“Coaching Report #11,” 2009).

EffectivenessofTransformationalLeadership

In addition to transformational leadership’s effect on followers, studies have shown that it can often lead to organizational success and better performance, whether in public, private, large, or small organizations. Keller’s (2006) study of research-and-development firms found that high-scoring transformational project team leaders showed better-qual-ity products after 1 year and had higher profits 5 years later.

Researchers have attributed transformational leaders’ success to their ability to build con-sensus, motivate others, set goals, promote creativity, and take risks. Ling, Simsek, Lubat-kin, and Veiga (2008) found that firms with transformational leaders were more likely to be engaged in corporate entrepreneurship because the firms had more decentralized responsibility with managers who were more likely to take risks.

LimitationsofTransformationalLeadership

Transformational leadership is not effective in all organizational contexts. Much depends on the leader–follower dynamic, as well as the attitude of the follower. First, a transforma-tional leader must be able to interact directly with followers to be most effective—rather than having to report to an external board of directors (Robbins & Judge, 2011) or deal with a highly bureaucratic, complicated, and large organization. For example, Ling, Sim-sek, Lubatkin, and Veiga (2008) found that transformational leaders had a higher impact on performance in smaller, privately held firms. Followers are more easily influenced if they are exposed firsthand to a leader’s charisma and care for them. Second, followers must value group cohesiveness and be willing to cede authority for a transformational leader to be effective (Schaubroeck et al., 2007). Followers who possess more of a “lone wolf” mentality and prefer autonomy to teamwork will be less likely to listen to or be persuaded by a transformational leader.

The Competing Values Framework discussed at the end of Chapter 1 summarizes some of the roles and capabilities that transformational leaders perform in many of today’s open-system, flexible organizations: creative thinking, calculated risk taking, and high involvement with followers and stakeholders. However, transformational leaders’ work also involves strategic planning and comanaging complicated tasks, and this requires the ability to maintain a stable, running organization in addition to

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orchestrating change. Just as a leader must sometimes handle so-called managerial tasks, a transformational leader sometimes needs to adopt what leadership scholars call a transactional mind-set.

The Need for Transactional Leadership

Transactional leaders, in contrast to transformational leaders, perform more routine but essential leadership and managerial tasks. Like the traditional model of managers dis-cussed in Chapter 1, transactional leaders plan, schedule, control, and work with sub-ordinates on detailed tasks. Without these leaders’ contributions, organizational goals would not be implemented. Lussier and Achua wrote, “Transactional leadership seeks to maintain stability rather than promoting change within an organization through reg-ular economic and social exchanges that achieve specific goals for both the leaders and their followers” (2007). Transactional leaders focus on managing consistent, quality per-formance from followers to achieve organizational goals and objectives (Bryant, 2003). Their work is mostly transaction or exchange based; in other words, they respond to, reward, support, and structure followers’ contracted effort and performance (Jung & Avolio, 1999). Followers who perform well are rewarded, while followers who perform poorly are punished.

Characteristics of Transactional LeadershipSeveral studies have identified the following characteristics of transactional leaders. Not all transactional leaders embody these characteristics, but all of the characteristics are illustrative of the exchange-based nature of the style.

The contract reward (or contingent reward) is used to motivate followers to perform by promising rewards for good performance (Bryant, 2003). Rewards of this type include (1) exchange of rewards for effort contracted, (2) rewards for achieving goals promised, and (3) recognition for accomplishments (Hay, 2006). This type of exchange rela-tionship between leader and follower may be transitory, depending on the negoti-ated contracts and assignment (Lussier & Achua, 2007). Some researchers have suggested that contingent-reward leader-ship may not be only a characteristic of transactional leaders; transformational leaders also have to negotiate and broker significant contracts and can thus utilize contingent rewards to influence follow-ers. In fact, some suggest that the transfor-mational behavior in the 4-I model may not always be superior in effectiveness to some transactional behavior.

Transactional leaders focus on managing con-sistent, quality performances from followers to achieve organizational goals and objectives. Followers who perform well are rewarded.

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Management by exception has two types: active and passive. Active management by exception is when a leader observes and searches and takes corrective action. Bass, who identified these particular characteristics of transactional leaders, did not state what specific types of corrective action a manager takes—that is, whether or not punishment is offered, rewards withheld, and so on. Passive management by exception, accord-ing to Bass (1990), is when a manager intervenes only if standards are not met. Again, Bass (1990) did not specify what types of interventions are used or called for. Since he focused more on transformational leadership and stated that “transformational lead-ers have better relationships with their supervisors and make more of a contribution to the organization than do those who are only transactional,” perhaps we can assume that motivating followers with a transformational style of leadership may be advised whenever possible.

Laissez-faire leadership abdicates responsibilities and avoids observing, giving feedback, and making decisions. It is the least effective of all a leader’s characteristics (Bass, 1990). This approach differs from passive management by exception in that a manager may not even detect errors in subordinates’ work.

TransactionalandTransformationalLeadershipComparedWhile transformational and transactional styles are often seen as lying in opposition to one another, transactional characteristics complement transformational leadership. While transformational leadership contributes to developing and changing people, transactional leadership deals with what can be important but more routine functions

Figure 2.1 Characteristics of Transactional and Transformational Leaders

Source: From “From Transactional to Transformational Leadership: Learning to Share the Vision,” by B. Bass, 1990, Organizational Dynamics, Winter 1990, p. 22. Copyright 1990 by American Management Association. Reprinted with permission.

Transactional Leader

Contingent rewards: Contracts exchange of rewards for effort, promisesrewards for good performance.

Management by exception (active): Watches and searches fordeviations from rules and standards, takes corrective action.

Management by exception (passive): Intervenes only if standards arenot met.

Laissez-faire: Abdicates responsibilities, avoids making decisions.

Transformational Leader

Idealized influence: Provides vision and sense of mission, instills pride,gains respect and trust.

Inspirational motivation: Communicates high expectations, usessymbols to focus efforts, expresses important purposes in simple ways.

Intellectual stimulation: Promotes intelligence, rationality, and carefulproblem solving.

Individualized consideration: Gives personal attention, treats eachemployee individually, coaches, advises.

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(Sashkin & Sashkin, 2003). Bryant (2003) found that transformational leadership could be more effective in creating and sharing knowledge at the individual and group levels, whereas transactional lead-ership could be more useful at exploiting knowledge at the organizational level. Scholars generally agree that effective leaders use elements of both transforma-tional and transactional styles to achieve organizational goals, as situations require (Bass, Avolio, Jung, & Berson, 2003; Judge & Piccolo, 2004). However, it should be noted that while a leader can be solely transformational and effective, leaders who are competent but solely transac-tional in nature may be less strategic, less inclined and able to motivate large-scale organizational change, and more inclined to implement routine and predictable organizational tasks.

Are women more transformational as leaders than men? Does gender matter here? Not really; research has shown that women are as much transformational leaders as men are. One field of research found that women tend to utilize transformational styles more often than men (Eagly, Johannesen-Schmidt, & Engen, 2003). When women did turn to the trans-actional style, they preferred to use contingent rewards to influence behavior. Men, on the other hand, tended to use management by exception and laissez-faire leadership. A 1999 study concluded that “female students in a masters of business administration program viewed themselves higher in masculine characteristics than in feminine characteristics. Findings from that study indicate that masculine gender role characteristics, rather than biological sex, may be the crucial aspect of gender that is related to leader emergence” (Gedney, 1999, 7; Linda, 1997, 152). However, there is no biological evidence that gender is a determining factor of transformational leadership, and regardless of gender, effective leaders strategically use components of both styles to achieve organizational goals as situ-ations require.

TheTransactional–TransformationalLeadershipContinuumAnother way to think about transformational and transactional leadership is to consider their respective characteristics as lying on a continuum of passive to active and ineffective to effective leadership (Robbins & Judge, 2011). Figure 2.2 shows the full range of leader-ship characteristics a leader can use—individually or in combination—when relating to and influencing followers. The vertical axis ranges from ineffective to effective leadership. The horizontal axis moves from passive to active leadership. The three transactional char-acteristics (laissez-faire, management by exception, and contingent reward) are more pas-sive and ineffective and are thus in the lower part of the diagram, with laissez-faire being the most passive and ineffective leadership characteristic. Management by exception is slightly better than laissez-faire because leaders interact with their followers to observe

Transformational leadership can be more effec-tive in creating and sharing knowledge at the individual and group levels whereas transac-tional leadership can be more useful at exploit-ing knowledge at the organizational level.

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and correct errors, but it remains a less ideal management style since followers usually benefit from having more feedback. Contingent reward may be effective in motivating fol-lowers and ensures that they perform according to their contracted assignments and posi-tion requirements; however, it does not necessarily inspire followers to perform outside their comfort zone, and it limits the leader–follower relationship, as there is no emotional connection or concern for the follower.

The remaining four transformational characteristics inspire and influence followers to move beyond their interests to fulfill the organization’s goals. Each of these four I’s—or the four influencing characteristics of transformative leaders (idealized influence, inspira-tional motivation, intellectual stimulation, and individualized consideration)—has been empirically demonstrated, when used together or separately, to lower follower turnover and absenteeism while increasing productivity, morale, and satisfaction. Followers who are led by effective transformative leaders have also shown greater adaptability and exerted more effort in meeting organizational objectives. Moreover, leaders are more effective when they apply each and all of the four influencing characteristics on a regular basis (Robbins & Judge, 2011).

Figure2.2Transactional–TransformationalLeadershipContinuum

Source: From Organizational Behavior, 14th Edition, by S. Robbins and T. Judge, 2011, p. 392. Boston: Prentice Hall. Reprinted with permission.

Effective

Passive Active

Ineffective

Lasissez-Faire

Managementby Exception

ContingentReward

IndividualizedConsideration

IntellectualStimulation

InspirationalMotivation

IdealizedInfluence

Tran

sfor

mat

iona

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Tran

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CHAPTER 22.2 The Leadership Challenge: A Model of Transformational Leadership

2.2 The Leadership Challenge: A Model of Transformational Leadership

How does a leader who effectively blends transformational and transactional skills behave? In the mid-1980s, leadership researchers Kouzes and Posner began a project

that they hoped would answer that question. They interviewed over 1,300 middle and senior-level managers in both public- and private-sector organizations, asking them to identify their “personal best” leadership experiences. Based on their interviews, Kouzes and Posner determined that effective leaders engage in five leadership practices to accom-plish extraordinary things: They model the way, inspire a shared vision, challenge the process, enable others to act, and encourage the heart.

Kouzes and Posner’s five practices are available to anyone who accepts what they have termed as the leadership challenge. Their five practices have stood the test of time, and our most recent research confirms that these practices are as relevant today as they were when these authors first began their investigation over two decades ago (Brown, 2008).

We should note here that later research has shown that transformational leadership is not only about practices but also about personality, since personality and other factors influ-ence leadership behavior—which can be learned. As we discuss each of the five practices, observe how they embody Bass’s four I’s of transformational leadership.

Model the Way

From their interviews with leaders, Kouzes and Posner learned that leaders reported on experiences that demonstrated their “personal best” when leading others—when they stood up for their beliefs and modeled the way. To do this, leaders must first be clear about their own principles and values and then clearly articulate and communicate those principles and values to their followers. Kouzes and Posner quoted Lindsay Levin, chair-woman of the Whites Group in England: “You have to open up your heart and let people know what you really think and believe.”

Leaders, then, should model the behavior they expect of others and act consistently from their beliefs. They have to talk the talk and walk the talk. Or, put another way, action speaks louder than words. Kouzes and Posner (2011) stated that the personal-best projects that leaders wrote about repeated themes of relentless effort, steadfastness, competence, and attention to detail. Leading by example demonstrates that they are serious about their behavior and the organization’s beliefs and principles. The authors quoted an engineer from their interviews as saying, “One of the best ways to prove something is important is by doing it yourself and setting an example.” That leader noted that she didn’t ask her team to do anything she wasn’t willing to do herself. Consequently, the trust between her and the team was mutually edifying.

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CHAPTER 2Section 2.2 The Leadership Challenge: A Model of Transformational Leadership

While the leaders were engaged in designing larger operational and strategic plans, they always gave time to simple things with followers. The authors noted that the leaders they observed “were about the power of spending time with someone, of working side by side with colleagues, of tell-ing stories that made values come alive, of being highly visible during times of uncertainty, and of asking questions to get people to think about val-ues and priorities.”

InspireaSharedVision

Effective leaders dream and envision, then effec-tively translate those dreams and visions into plans, goals, and road maps for followers to imple-ment. When leaders described their personal-best leadership experiences to Kouzes and Posner, they related stories of times when they imagined excit-ing and attractive futures for their organization. They envisioned possibilities of what could be. They also believed and had absolute confidence that extraordinary things could happen from their dreams. Kouzes and Posner noted, “In some ways, leaders live their lives backward. They see

pictures in their mind’s eye of what the results will look like even before they’ve started their project, much as an architect draws a blueprint or an engineer builds a model.”

Effective leaders not only had inspirational dreams and visions of what their organizations could be, but they could clearly communicate these pictures in detail. To attract followers, leaders have to present a compelling common vision for others to believe. Inspiring a shared vision is a process: Leaders have to know and understand followers’ hopes, aspirations, dreams, and values as well as their own; leaders have to speak the language of their follow-ers; and followers have to also believe that their leaders understand them and their needs and interests. As Kouzes and Posner said, “Leadership is a dialogue, not a monologue.” A merchandise manager told the authors about sharing her vision: “If you don’t believe enough to share it, talk about it, and get others excited about it then it’s not much of a vision!”

Kouzes and Posner noted that the people in their study reported that they were very enthusiastic about their personal-best projects, and that their enthusiasm was contagious. Followers’ beliefs in and enthusiasm for the vision were “the sparks that ignited the flame of inspiration.”

Transformational leaders who can also be charismatic (which we discuss in a follow-ing section) communicate their visions with stories, metaphors, and passionate imagery. Martin Luther King Jr.’s vivid “I Have a Dream” address—delivered in Washington, DC,

Kouzes and Posner developed a simple test to determine whether a person could be a leader. During an interview, how often does the interviewee use the words “we” and “I”?

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on August 28, 1963—stands as one of the most compelling vision statements in history. King not only breathed life into the hopes and dreams of others, but he infused a pas-sionate desire for freedom in all who listened—and continue to listen—to that speech. His speech also reflected vision elements that charismatic leaders, in particular, use to rally followers: Leaders include purpose and often a moral appeal to the common good or to a cause that underlies a particular ideal end state; they seek commitment, devotion, and sometimes sacrifice in their appeal; and they appeal to the emotions and passions as well as logical levels of sentiment to forge unity of purpose among followers (Langbert & Friedman, 2003).

ChallengetheProcessThe key elements of challenging the process are (1) taking calculated risks and having a pioneer mind-set; (2) challenging the status quo in search of a better way of doing things or of making things better; (3) not relying on luck, chance, superstition, or someone else to bring change; (4) creating a supportive climate of experimentation and embracing failure as a process that leads to innovation; and (5) creating a learning organization where fol-lowers feel comfortable taking charge of their work and committing to change that sup-ports new ideas and processes (Kouzes & Posner, 1995).

A product-marketing manager told Kouzes and Posner, “Mediocrity and the status quo will never lead a company to success in the marketplace. Taking risks and believing that taking them is worthwhile.” He continued by saying that risk taking and believing in the risks “are the only way companies can ‘jump’ rather than simply climb the improvement ladder.” Challenge is at the heart of change, and taking risks to challenge the status quo is the beginning of innovation. Every leader in these authors’ study took some type of risk and challenge to move beyond the status quo in their organization, whether it was devel-oping a new product or “killer app,” introducing a new piece of legislation, creating a campaign to launch an environmental program, or launching a start-up plant or business.

Mahatma Gandhi was known to have said, “Be the change you seek.” Leaders are pio-neers; they step into the unknown, searching for opportunities to develop, improve, and create new ways of doing things. No leader in Kouzes and Posner’s study depended on luck or being in the right place at the right time for opportunities to come to them. One person at Intel stated that leaders should always be looking to improve their team, take initiative, network, stay current and competitive, take an interest in what is happening outside of their job or organization, and try new things.

The authors were quick to emphasize that innovation does not come from the leaders alone. Rather, product and service improvements, changes, and new creations come more from listening to others. Those who were doing the work and on the front lines—custom-ers, clients, vendors—were often the sources of innovation, Kouzes and Posner discovered. Consequently, “leaders must constantly look outside themselves and their organizations for new and innovative products, processes, and services.”

Initiating change that leads to innovation requires that leaders create a climate for experi-mentation and a learning organization: People should be able to sense a willingness to

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challenge the system and status quo in order to experiment with innovations that lead to new products, services, and pro-cesses. Furthermore, people should not be expected to get things right the first time; they can fail and try again. The authors noted, “Leaders must pay attention to the capacity of their constituents to take con-trol of challenging situations and become fully committed to change. You can’t exhort people to take risks if they don’t also feel safe.” Also, leaders are not expected to be inventors, but rather “patrons and adopt-ers of innovation.” Kouzes and Posner state that “life is the leader’s laboratory, and exemplary leaders use it to conduct as many experiments as possible. Try, fail, learn. Try, fail, learn. Try, fail, learn. That’s

the leader’s mantra. Leaders are learners. They learn from their failures as well as their successes, and they make it possible for others to do the same.”

EnableOtherstoAct

Leaders get things done through other people. Leading through other people requires building trust by exhibiting competence and confidence. It also requires collaborating with others while holding them accountable. In looking over thousands of personal-best cases, Kouzes and Posner noted how frequently interviewees used the word weand discovered that people used we more often than I in their personal-best leadership experiences.

“Leaders enable others to act not by hoarding the power they have but by giving it away. Exemplary leaders strengthen everyone’s capacity to deliver on the promises they make,” Kouzes and Posner wrote. Followers have to be involved, given feedback, updated, and kept in the information loop. The authors quoted a person in one of their workshops who worked with a communications department and said that “inclusion (not exclusion) ensures that everyone feels and thinks that they are owners and leaders—this makes work much easier.”

Since virtual organizations—companies that operate almost solely electronically—are as much the norm as the exception in today’s business environment, leaders must coop-erate with stakeholders and followers distributed across geographies and time zones. This includes all those who have a stake in the vision—peers, managers, employees, clients, suppliers, partners, citizens, and so on. Leaders must ensure that all complete their work and meet organizational goals, and motivate everyone to work with energy and produce quality results. This often requires leaders to engage their personal sense of power, ownership, and responsibility. Traditional command-and-control leader-ship techniques will not work, the authors stated, in the new dispersed organizational settings.

Charismatic leaders like President Barack Obama cause people to respond to the leader’s personality and behavior in a number of ways.

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Leaders must also take care that their styles do not intimidate, alienate, or distance, people, or make them feel weak, undeserving, dependent, or mediocre. Participants in Kouzes and Posner’s working sessions reportedly observed that when leaders empowered their followers (made them feel capable, strong, and trusted), followers gave efforts and results that exceeded even their own expectations. Through empowering relationships, followers become leaders themselves.

EncouragetheHeart

Effective leaders encourage, support, and recognize followers for their work throughout their relationship, which can be key when people are exhausted or frustrated. Kouzes and Posner acknowledged that encouragement is a “serious business.” An organizational climate where people feel valued, cared for, and appreciated by their leaders and peers is a highly effective motivator. Effective leaders often take the time to recognize individu-als and teams when a job or assignment is completed; as the authors noted, sometimes a thank-you note or e-mail can be elevating. Some leaders have created newsletters with success stories of employees; others have instituted public recognition programs that offer awards and simple appreciation notices for work well done.

Leaders who demonstrate their support for followers are in effect linking intrinsic as well as extrinsic rewards with performance. Authentically encouraging the heart also pro-motes unity and solidity: It develops a strong collective identity and community spirit and tells followers that their behaviors are aligned with the leader’s and organization’s values (Kouzes & Posner, 2011).

Taken together, these five leadership practices (Table 2.1) show everyone in the organiza-tion what effective leaders do and how they do it. They also provide guidance for aspiring leaders and reinvigorate effective leadership characteristics for those in such positions.

Table 2.1 The Leadership Challenge

LeadershipPractice LeadershipBehavior

Model the Way 1. Find your voice by clarifying your personal values2. Set the example by aligning actions with beliefs

Inspire a Shared Vision 3. Envision the future by imagining exciting possibilities4. Enlist others in a common vision by appealing to shared aspirations

Challenge the Process 5. Search for opportunities by seeking innovative ways to change, grow, and improve

6 Experiment and take risks by constantly generating small wins and learn-ing from mistakes

Enable Others to Act 7. Foster collaboration by promoting cooperative goals and building trust8. Strengthen others by sharing power and discretion

Encourage the Heart 9. Recognize contributions by showing appreciation for individual excellence10. Celebrate values and victories by creating a spirit of community

Note. Leadership behaviors from “Kouzes Posner Model,” retrieved from http://www.coachingcosmos.com/33.html

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http://www.coachingcosmos.com/33.html

CHAPTER 2Section 2.3 Charismatic Leadership

2.3 Charismatic Leadership

A charismatic leader is one who is able to draw and influence followers through the sheer force and magnetism of his or her personality, rather than through his or her

position or organization. The word charisma—the root of charismatic—was defined earlier in the chapter as another term for idealized influence, or one of the four I’s of transfor-mational leadership: the ability to inspire trust, conviction, and vision for change. Such leaders are admired as role models, generating pride, loyalty, confidence, and alignment around a shared purpose (Yukl, 1994). Charismatic leadership has been called “a fire that ignites followers’ energy and commitment, producing results above and beyond the call of duty” (Klein & House, 1995).

Sociologist Max Weber said more than six decades ago that a charismatic leader has

a certain quality of an individual personality, by virtue of which he or she is set apart from ordinary people and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities. These are not accessible to the ordinary person and are regarded as of divine origin or exemplary, and on the basis of them the individual concerned is treated as a leader. (Weber, 1947)

Weber’s words are in line with the notion that leaders are born, not made. Based on that description, it is not surprising that charisma originally meant “gift” in Greek.

Unlike transformational leadership, charismatic leadership is more about charm and less about change: Charismatic leaders have been called “impression managers” (Giacalone

& Rosenfield, 1991) and described as visionaries who have a strong desire for power. Avolio and Bass (1988) wrote that “the purely charismatic [leader] may want followers to adopt the charis-matic’s world view and go no further,” hinting at the “dark side” of charismatic leadership that has resulted in the formation of cults (1988).

However, it is quite likely that a charismatic leader will be transformational; some scholars have argued that the two are very similar (House & Shamir 1993; Hunt 1999), and that “charismatic leaders by nature are transformational” (Lussier & Achua, 2007). In contrast, transformational lead-ers are not all charismatic; they can influence and inspire followers in other ways. For example, they can address followers’ emotional needs through individualized consideration, intellectual stimu-lation, and reasoning about the need for change.

Regardless, charismatic leaders have “pro-found and unusual effects on followers” (Yukl, 1994). Some researchers have actually defined

Walt Disney is an example of a leader who was able to envision and articu-late compelling idealized goals that eventually came to fruition. He had a vision of “the happiest place on Earth” and convinced financiers to invest in it.

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charismatic leadership as “transformational leadership seen from the followers’ view-point” (Conger & Kanungo, 1992). Weber, in fact, did not claim that charismatic lead-ers’ influence was primarily based on or limited to personality traits, despite his glowing “divine” description. Although a leader’s character traits were important, he saw charis-matic authority mainly as a relationship between a leader and his or her followers.

According to Robert House, followers respond to the leader’s personality and behavior in a number of ways: They identify with the leader and feel more confident, emotionally involved, and inclined to obey the leader. They trust the leader’s ideology and raise their own goals.

For example, when Ronald Reagan ran for president in 1981, voters expressed the need for hope, optimism, and change. American hostages were still imprisoned in Iran, the economy was worsening, and there was a mood of helplessness in the country. Reagan, nicknamed “the Great Communicator,” offered a vision of recovering the United States’ status as a proud, confident, and strong world power. The voters accepted and endorsed his positive vision and vibrant style. Similar scenarios were repeated later in the elections of two other highly charismatic leaders, Bill Clinton and Barack Obama.

Simply stated, from a charismatic-leadership perspective, followers want and need lead-ers with whom they can identify and who can offer and clearly communicate a vision of a better future. They also want leaders who inspire, arouse, and excite them to achieve higher expectations and goals. House stated that charismatic leadership was more likely to be effective in distressing or crisis situations, in which followers need and desire help

Assessment2.2:DoYouHaveCharisma?

Instructions: This short quiz will help you determine whether you have characteristics that are associ-ated with charismatic leaders. Circle the answer that best describes you.

1. I am most comfortable thinking in a. Generalities b. Specifics

2. I worry most about a. Current competitive issues b. Future competitive issues

3. I tend to focus on a. The opportunities I’ve missed b. The opportunities I’ve seized

4. I prefer to a. Promote traditions and procedures that have led to success in the past

b. Suggest new and unique ways of doing things

5. I tend to ask a. How can we do this better? b. Why are we doing this?

6. I believe a. There’s always a way to minimize risk b. Some risks are too high

7. I tend to persuade people by using a. Emotion b. Logic

8. I prefer to a. Honor traditional values and ways of thinking

b. Promote unconventional beliefs and values

9. I would prefer to communicate via a. A written report b. A one-page chart

10. I think this quiz is a. Ridiculous b. Fascinating

Scoring and Interpretation: The following answers are associated with charismatic leadership: 1. a; 2. b; 3. a; 4. b; 5. b; 6. a; 7. a; 8, b; 9. b; 10. b

Source: Based on the quiz “Have You Got It?” in “What Exactly Is Charisma?” by Patricia Sellers, 1996, Fortune, January 15, pp. 68–75. The original quiz was devised with the assistance of leadership expert Jay Conger.

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from an extraordinary leader. Although this has not been entirely confirmed by studies, it is repeated as a plausible generalization.

We will spend the remainder of this section examining charismatic leaders themselves: their behavior and the different types scholars have identified.

BehaviorofCharismaticLeaders

Robert House described charismatic leaders as being dominant and self-confident as well as possessing a strong desire to influence and a strong sense of their own moral values. However, they face three fundamental challenges in terms of their followers and their vision, according to Conger and Kanungo (1998): Charismatic leaders must (1) ensure fol-lowers are extremely committed and perform accordingly; (2) instill in their followers the necessary values, beliefs, and behaviors to realize their vision; and (3) devise and execute strategic initiatives to further that vision. Conger and Kanungo (1987, 1998) identified five behaviors charismatic leaders use to influence their followers: vision and articulation, sensitivity to the environment, sensitivity to member needs, unconventional behavior, and personal risk-taking.

VisionandArticulationCharismatic leaders create and articulate compelling visions, called idealized goals, that offer a better future than the status quo. They present the positive aspects of this desired future state while painting an unattractive, undesirable picture of the present situation, thus emphasizing the discrepancy. They are also able to clarify and explain the impor-tance of the vision for everyone to understand and inspirationally communicate the vision using stories, metaphors, anecdotes, and analogies.

The more a leader is perceived and experienced as likeable, knowledgeable, and trust-worthy, the more likely it is that the leader’s advocacy and idealized vision will be accept-able to followers (Conger & Kanungo, 1987; Hovland & Kelley, 1953). Leaders target their audience for specific impact and make everyone feel as if they are being personally addressed, thus “increasing people’s feelings of worth and belonging” and motivating greater involvement and productivity (Dinkmeyer & Eckstein, 1996, p. 152).

Automobile manufacturer Henry Ford, British Prime Minister Winston Churchill, and Walt Disney offer examples of leaders who were able to envision and articulate compel-ling idealized goals that eventually came to fruition. In 1908, Henry Ford presented his vision of the first automobile in America:

I will build a motor car for the great multitude. . . . It will be so low in price that no man making a good salary will be unable to own one and enjoy with his family the blessing of hours of pleasure in God’s great open spaces. . . . When I’m through, everybody will be able to afford one, and everyone will have one. The horse will have disappeared from our highways, the auto-mobile will be taken for granted . . . [and we will] give a large number of men employment at good wages. (quoted in Collins & Porras, 1994)

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The fulfillment of Ford’s vision can be seen on our highways today. Churchill’s 1940 address to the British Parliament before entering World War II demonstrates how a leader can motivate and inspire while describing a bleak alternate future:

Hitler knows he will have to break us on this island or lose the war. If we can stand up to him, all Europe may be free, and the life of the world may move forward into broad, sun-lit uplands. But if we fail, the whole world, including the United States, including all we have known and cared for, will sink into the abyss of a new Dark Age, made more sinis-ter and perhaps more protracted by the lights of perverted science. Let us therefore brace ourselves to our duties and so bear ourselves that if the Brit-ish Empire and its Commonwealth last for a thousand years, men will still say, “This was their finest hour.” (quoted in Collins & Porras, 1994)

And finally, Walt Disney would originally pitch his idea of “the Happiest Place on Earth” in the early 1950s to potential financiers using the following glowing description:

The idea of Disneyland is a simple one. It will be a place for people to find happiness and knowledge. It will be a place for parents and children to spend pleasant times in one another’s company; a place for teachers and pupils to discover greater ways of understanding and education. Here the older generation can recapture the nostalgia of days gone by, and the younger generation can savor the challenge of the future. Here will be the wonders of Nature and Man for all to see and understand. Disneyland will be based upon and dedicated to the ideals, the dreams and hard facts that have created America. And it will be uniquely equipped to dramatize these dreams and facts and send them forth as a source of courage and inspiration to the entire world. Disneyland will be something of a fair, an exhibition, a playground, a community center, a museum of living facts, and a showplace of beauty and magic. It will be filled with the accomplishments, the joys and hopes of the world we live in. And it will remind us and show us how to make those wonders part of our lives. (quoted in Nanus, 1992, p. 288)

SensitivitytotheEnvironmentA charismatic leader scans and reads the environment to pick up concerns, moods, feel-ings, and issues of external stakeholders in order to tailor the vision and actions to relevant groups and individuals. Here the leaders’ knowledge, experience, and expertise are criti-cal. At a general level, most leaders—including noncharismatic leaders—generally identify and implement a strategy by first performing an environmental analysis using a SWOT

Former Global Crossing LTD. chairman Gary Winnick exemplifies the dark side of charismatic leadership. He bankrupted the company but saw to it that he enriched himself in the process.

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approach: they identify the strengths, weaknesses, opportunities, and threats regarding mar-kets, competitors, external groups, and resources. A SWOT analysis is done using existing data, surveys, and other information sources to discover if the company has any strategic advantages. Charismatic leaders also pick up on clues from others that help build a bond with those needed to adopt their vision and goals. This ability to pick up on clues in an inter-nal environment can also serve to uncover unethical or illegal activities. Former WorldCom vice president Cynthia Cooper, for example, noticed in 2002 that there were irregularities in the telecommunications company’s accounting (Lacayo & Ripley, 2002). Her subsequent investigatory work revealed that the company was indeed engaging in illegal accounting practices, posting inflated profit of nearly $4 billion while its competitors suffered losses. WorldCom eventually filed for bankruptcy in 2004 and was bought by Verizon. CEO Ber-nard Ebbers was indicted and sentenced to 25 years in prison (Lyke & Jickling, 2002).

SensitivitytoMemberNeedsA charismatic leader’s influence on followers often depends on their mutual relationship and interactions. A charismatic leader is perceptive and responsive to follower needs, emotions, and feelings, which in turn encourages follower loyalty: “Leaders gain follower commitment to a vision through finding a common denominator between themselves and follower motives” (Bass & Avolio, 1994). These leaders must be skilled at maintaining what we referred to in the last chapter as emotional intelligence and, in particular, rela-tionship management. Since charismatic leaders rely on personal power (based on respect and trust) to influence and lead, they strive to be responsive to followers.

UnconventionalBehaviorandPersonalRiskTakingFollowers attribute—that is, interpret, give meaning to, and project—charisma to lead-ers who behave differently from noncharismatic leaders. Conger and Kanungo wrote that charismatic leaders show “exemplary acts of heroism involving personal risks, and their self-sacrificing behaviors must be novel, unconventional, and out of the ordinary” (1987). Rather than seeking consensus, charismatic leaders actively innovate and strive for their “business as unusual” behaviors to be accepted. Charismatic leaders know that “prosper-ity breeds complacency and that experimentation and risk taking are as much a part of suc-cess as the acceptance of mistakes as a normal cost of progress” (Snyder & Clontz, 1997).

Engaging in unconventional behavior sometimes requires self-sacrifice and taking personal risks. All classic religions have charismatic leaders who, as prophets or sages, took great personal risks through unconventional behaviors to mobilize followers toward a vision. The Buddha left a privileged life of royalty, comfort, and prosperity to seek enlightenment by following a vision that led to depriving himself of material goods, even food. The prophet Moses, risking the wrath of the pharaoh, shared his vision that God had a plan for his peo-ple before leading them out of Egypt. The historical Jesus of Nazareth risked imprisonment and death and rode into Jerusalem on a donkey during the Jewish high holiday of Passover.

A contemporary risk-taking charismatic leader is media mogul Ted Turner, who raised eye-brows when he bought CNN in 1980. The purchase was an enormous risk because of the costs involved, and the channel Turner launched was reportedly expected to fail by almost all media experts. Turner was unfazed—in keeping with a sign on his desk that reads, “Lead,

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follow, or get out of the way.” Turner said, “We won’t be signing off until the world ends. We’ll be on, and we will cover the end of the world, live, and that will be our last event . . . and when the end of the world comes, we’ll play ‘Nearer, My God, to Thee’ before we sign off” (Bibb, 1996; see also Turner & Burke, 2008). He then went on to launch what became the Headline News channel, now also successful, in 1982 (Bibb, 1996). In 1986, CNN showed a profit. The Pew Research Center’s Project for Excellence in Journalism showed in its State of the News Media 2011 report that CNN was among the top cable news networks for 2010 in revenue projections (Pew Research Center’s Project for Excellence in Journalism, 2011).

TheDarkSideofCharismaticLeadership

Our focus thus far has been primarily on the transformational, inspirational side of charis-matic leaders. However, as has been suggested, charismatic leadership has a “dark side”: Such persuasive leaders can lure followers into negative, even harmful behavior. One scholar warned, “It can be foolish, futile and even dangerous to follow leaders just because they are charismatic. Be careful of hero worship” (Raelin, 2003). After all, Adolf Hitler and Benito Mussolini could be described as charismatic, able to inflame and persuade others to rally around their visions—which proved to be destructive. Several of the flamboyant CEOs from recent history were notoriously narcissistic and unethical, engaging in illegal activities. One example is Gary Winnick, who bankrupted the telecommunications com-pany Global Crossing. As chairman of Global Crossing, Winnick gave a top executive a Rolls-Royce as a gift, demanded that the company maintain a fleet of five jets (including a Boeing 737), and sold $730 million of his company stock while he was driving the com-pany into bankruptcy. As thousands of his employees were laid off, Winnick was renovat-ing a mansion in Bel Air, California, valued at $92 million (New York Observer Staff, 2002).

Winnick carried his own interests to dangerous extremes. But unethical, narcissistic, charismatic organizational leaders are by no means a relic of the past: The recent global

Take the LeadDoes Being Charismatic Count?

You’ve been in your role as a leader within the organization for several years, but are now interested in a new leadership position that has been posted. This new position will have greater visibility to senior leadership, provide you with a larger team to manage, and come with a significant increase in com-pensation and benefits.

You feel that you would be a true asset in such a capacity and can envision yourself in this new role. However, you are concerned about how you are currently perceived as a leader in the organization. You know that in the past you’ve always delivered results as promised, but you wonder if the people within your organization really like working with you. This new role’s increased exposure to leadership will require a charismatic leader, one who can not only deliver results but also attract and retain fol-lowers. Consider the characteristics of a charismatic leader with regards to the following:

1. In what ways have you shown that you are charismatic in your current capacity?2. Can you show that there are actual results from your being charismatic that will count towards

organizational goals?

See page 226 for possible answers.

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subprime-lending crisis and subsequent economic downturn is in part due to unethical corporate officers, traders, and lenders. Here we learn that we shouldn’t trust charming or flamboyant charismatic leaders without checking their back-grounds and motives—and that moral val-ues can be an essential leadership capacity and competency.

TypesofCharismaticLeaders

The behaviors of charismatic leaders—both positive and negative—demonstrate that charismatic leaders are not all one and the same. They may all possess charisma,

but their charisma may stem from different sources, or they may have distinct motivations for influencing their followers. Researchers have identified five types of charismatic lead-ers (Conger & Kanungo, 1998; Dubrin, 2010).

Socialized charismatic leaders are autonomous, responsible, and empowered. They develop goals to meet the needs of the organization and team members. They use power for the good of helping the organization and its members. These leaders align followers’ values with theirs and use intellectual stimulation to support followers.

Personalized charismatic leaders, unlike socialized charismatics, seek to fulfill their own interests and use unrestrained power to do so. They treat peers and followers as means to their own ends. Personalized charismatics impose self-serving goals on others. They offer consideration and support to group members only when helping others helps them to achieve their goals. Followers of personalized charismatics are generally dependent, obedient, and submissive. Global Crossing’s Winnick is an example of a personalized charismatic leader.

Officeholder charismatic leaders rely on their formal positions rather than personal char-acteristics to lead others. They have high status because of their role in the organization. When and if they lose their positions, they lose their charisma, which is attached more to their formal and enacted positions then to their personalities—contrary to classical charis-matic theory. For example, former Secretary of Defense Donald Rumsfeld’s charisma was in large part dependent on the positions he held. Many of his staff viewed him as charis-matic and even visionary at the beginning of the Iraq War. However, as that war waned and faltered, he was pressured to retire. Rumsfeld’s influence and office-holder charisma also diminished.

Personal charismatic leaders have traits, behaviors, and characteristics that identify them as charismatic. They influence others based on personal desirable traits and characteris-tics; specialized knowledge, competencies, and capabilities; and strong participation in the job (job involvement) (Halpert, 1990; Rao, 2010). Unlike office-holder charismatic lead-ers, personal charismatic leaders do not depend on roles or status to lead others.

Starbucks CEO Howard Schultz experienced growing up poor in a housing project and it left its mark. Schultz has developed a revolu-tionary benefits system for Starbucks employ-ees and has used his corporate success to help the less fortunate.

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CHAPTER 2Section 2.4 Ethical Leadership

Divine charismatic leaders are mystics, narcissists, and personally magnetic “saviors,” who rise to the occasion to lead others from impending crises (Weber, 1947). Many of the leaders of major world religions or social movements could be considered divine char-ismatic leaders, such as Gandhi, Jesus, Moses, and Muhammad. There are also negative examples of such leadership, although some scholars question whether individuals who commit evil, unethical, and illegal acts should even be called “leaders.” For example, Jim Jones—a self-styled charismatic founder and leader of a “religious” cult that he moved to Guyana, Africa—made international news in 1978 when he directed one of the largest mass murders in U.S. history by ordering the cyanide poisoning of over 900 cult mem-bers. The event was called the “revolutionary suicide” by Jones and some of his follow-ers beforehand. The event was precipitated by an investigation of and visit to the cult by Congressman Leo Ryan, who was murdered on his visit (Rapaport, 2003).

CanCharismaticLeadershipBeLearned?

Are charismatic leaders born or made? The answer is both. Some leaders are born with the traits that define charismatic leadership (extroversion, self-confidence, and achievement orientation) (House & Howell, 1992; Robbins & Judge, 2011); John F. Kennedy, Ronald Reagan, and a number of other U.S. presidents and historical leaders offer such examples. However, the majority of scholars agree that some charismatic leadership characteristics can be learned and trained (Conger & Kanungo, 1998). Those characteristics include the abilities to (1) articulate a vision and idealized goal that offers a future more attractive than the status quo; (2) communicate the vision to others in an understandable way; (3) take on high personal risk and self-sacrifice to achieve a vision; (4) assess environmental constraints and resources needed to bring about change; (5) be sensitive to and respond to follower needs, particularly their feelings and needs; and (6) act in unconventional ways in order awaken others to different, more novel and innovative ways of doing things.

Practical suggestions for developing behaviors to implement these characteristics include learning to be passionate and inspire enthusiasm in relationships and work assignments; engaging people in more strategic goals that are of interest to the organization; initiating meaningful dialogue; showing interest in others and their work; creating an emotional, authentic bond with people; communicating more actively and connecting with individu-als; and seeking to listen and not only be heard. This is a process that is not accomplished quickly; it requires being open and accepting of others.

2.4 Ethical Leadership

Ethical leadership involves acting with moral purpose and integrity to do what is right, just, and fair in service of the common good. Ethics is generally defined as motivations

or actions that are based on ideas of what is right and wrong, but it also encompasses the values and morals that an individual, society, or institution deems acceptable and desir-able. In revisiting our original definition of leadership—the ability to influence follow-ers to achieve common goals through shared purposes—we can see how ethics can be factored into every aspect of leadership. Leaders should be fair, rather than self-serving, when they influence followers, and should take the common good into consideration as

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they work toward common goals through shared purposes. This last section will examine the characteristics and responsibilities of ethical leadership as well as the symptoms of unethical leadership before delving into two types ethical leadership: stewardship and servant leadership.

CharacteristicsofEthicalLeadership

Much like the two other types of leadership discussed in this chapter, ethical leadership begins with the individual. A leader decides to act ethically due to personal values and convictions, and the leader’s behaviors are the starting point for cascading ethics through-out the organization. As has been mentioned, corporate scandals often start with the CEOs and their executive teams, whose illegal actions destroy or cripple several companies. Ethical leadership might conjure up numerous descriptions, but for the purposes of this text, it can be best defined in terms of authenticity and integrity.

AuthenticityLeaders who are ethical are first authentic. Authenticity plays a central role in ethical leader-ship. Authentic leaders genuinely desire to serve others, know themselves, and lead from their core values (George with Sims, 2007). In a study of 125 successful leaders, George (2003) found that authentic leaders (1) understand their purpose, (2) have strong values about doing the right thing in their work and lives, (3) establish trusting relationships with others, (4) show self-discipline while acting on their values, and (5) are passionate about their mission.

When asked in an interview to summarize what an authentic leader is, George, a veteran executive with decades of leadership experience, said,

They lead with their whole selves—their hearts as well as their heads. They don’t get pulled off course by seductions and pressures. Every leader who has failed, that I’ve seen, has not failed to lead other people, they’ve failed to lead themselves. . . . A lot of the inauthentic leaders got pulled off by trying to be something differ-ent than they were. . . . Leadership is a long journey into your own soul. (White, 2007)

George gave two examples of authentic leaders’ stories in his study: Howard Schultz, CEO of international coffeehouse chain Starbucks, and Andrea Jung, CEO of cosmetics company Avon Products. Schultz grew up poor in a housing

Ethical leaders’ authenticity and integ-rity must be translated into action and attitude toward others, including fol-lowers, external stakeholders, and the broader community.

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project in Brooklyn, New York, after his father lost his job and health benefits. The expe-rience left a lasting mark on Schultz, who has developed a revolutionary benefits system for Starbucks employees and has used his corporate success to help the less fortunate. Jung, on the other hand, was a rising star at a luxury-goods company before she walked out at age 35. When asked why she quit, since she was on track to become CEO, she answered, “That was the problem. I didn’t want to spend the rest of my life making luxury goods for upper-class women.” She left without another job offer and wound up at Avon Products, where the company’s practice of equipping the average woman to sell their products fueled her passion of “trying to help women achieve self-sufficiency” (White, 2007).

George also suggested that the five dimensions of authentic leadership could be viewed in terms of how they are revealed to others. The authentic leader possesses purpose, values, relationships, self-discipline, and heart. These dimensions can then manifest themselves respectively as passion, behaviors, connectedness, consistency, and compassion (George, 2003; Northouse, 2010). We will explore this further here.

Leaders in George’s interviews have a sense of purpose: They know who they are and where they are going. They thus have passion: They are interested in and care about what they do and their work.

George also found that authentic leaders understand their values, or principles (their “true north”), which guide their behaviors, or actions. Their values help define who they are, where they’re going, and what they should do. Authentic leaders do not compromise their values under pressure, but use them as a guide when faced with difficult situations. As Jung said, although she was on track to become CEO at a luxury-goods company, the com-pany and its industry did not reflect her values. As a result, she altered her behavior—she left the company. Interestingly, when her values and behaviors were aligned, so was her sense of purpose and passion.

When an authentic leader is able to create and build relationships, what results is connected-ness. Authentic leaders are able to be open with others and share their stories as well as listen to others’ stories. This sense of connectedness fosters trust, which leads to commit-ment, loyalty, and closer relationships with followers. This characteristic and dimension can be seen in how charismatic leaders bond with followers.

Self-discipline, another dimension of authentic leadership, is the ability and determina-tion to stay focused in order to achieve goals. Leaders can set objectives and standards of excellence and gain energy from doing so. Self-discipline also enables leaders to be calm and relaxed and therefore show consistency—predictability in their behavior and security in themselves, and therefore greater communication. When leaders act and communicate with consistency, followers know what to expect from the leader.

Finally, authentic leaders who have heart are able to show compassion; they are sensitive to others and willingness to help and support. Compassion can develop from being directly involved with people unlike yourself on the basis of national origin, ethnic background, socioeconomic class, leadership style, and so on. By knowing and sharing followers’ life stories, getting involved in community projects, and traveling to developing countries, leaders develop compassion and sensitivity to others’ cultures and living situations.

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IntegrityThe idea of individual integrity is interwoven with George’s authentic-leadership approach and is thus also a key component of ethical leadership. As another scholar stated, “Act-ing with integrity is the same as acting ethically or morally” (DeGeorge, 1993). Watson explained integrity in his book Managing With Integrity:

There is wholeness in what the person with integrity says and does. There is consistency between his actions and what he purports to honor. He pursues his aims along the high road and is uninterrupted and undiminished by temptations for quick or easy personal gain. He seems undisturbed by the opinions others hold or express about him and what he honors. His upright conduct is made possible through steadfast adherence to unbending princi-ples and standards, and his character is marked by an undaunted quest for important ends far larger than his own needs, comfort, and interests. (1991)

Another common meaning of integrity is consistency, an “alignment between what one does and what one says” (Brown, 2005). Brown added that “doing and saying should belong to the same whole” (2005). We can see that the ethical virtue of integrity actually encompasses several dimensions found in authentic leadership.

So, what is an ethical leader? Ethical leaders are authentic and possess integrity. They are genuine with themselves and with others; they remain true to who they are and what they stand for. They also (1) articulate and embody the purpose and values of the orga-nization; (2) focus on organizational success rather than on personal ego; (3) create a liv-ing conversation about ethics, values, and the creation of value for stakeholders; (4) raise awareness about questionable activities and practices in the organization; (5) make tough, responsible decisions while being imaginative; (6) see their leadership as a fully ethical task, not only as a required task; and (7) think in terms of integrating “the business” with “the ethics” (Freeman & Stewart, 2006).

ResponsibilitiesofEthicalLeadership

For ethical leaders, authenticity and integrity must be translated into action and attitude toward others, including followers, external stakeholders, and the broader com-munity. These leaders have a responsibility to show respect for others, treat all stakehold-ers equally, work for a common good, build community, and be honest. (Beauchamp & Bowie, 1988; Dalla Costa, 1998; Kitchener, 1984; Rawls, 1971; Rost, 1991).

ShowRespectforOthersRespecting others requires leaders to recognize the intrinsic worth of others, and forces them to treat people as ends in themselves—never as means to an end. In other words, people should be seen as valuable because of who they are, not because of what they can do for you or how they can help you advance. In our earlier discussion of charismatic leadership, we saw that personalized charismatic leaders tend to disregard others—or perhaps even use, manipulate, or lie to others—to implement their vision or secure more profit for themselves. (The opposite would be socialized charismatic leaders.)

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Assessment 2.3: How Ethical Are You?

Instructions: Circle the numbers to indicate how well each item describes your current attitudes and behavior or how you would behave in group situations. Response choices: 1 = not at all; 2 = some-what; 3 = very much; 4 = exactly.

1. I use other people’s mistakes to attack them personally. 1 2 3 4

2. I always get even. 1 2 3 4

3. As a leader, I would give special favors to my favorite employees. 1 2 3 4

4. I lie to group members if it fits my purposes. 1 2 3 4

5. I would let a group member take the blame to protect myself. 1 2 3 4

6. I would deliberately fuel conflict among group members. 1 2 3 4

7. People who know me well consider me to be ruthless. 1 2 3 4

8. I would use a performance evaluation to criticize an individual as a person. 1 2 3 4

9. I hold grudges against people. 1 2 3 4

10. I would allow coworkers to be blamed for my mistakes. 1 2 3 4

11. I would falsify records to help my work situation. 1 2 3 4

12. My morals are low. 1 2 3 4

13. I would make fun of someone’s mistakes rather than coach the person on how to do the job better.

1 2 3 4

14. I would exaggerate someone’s mistakes to make him or her look bad to my superiors. 1 2 3 4

15. I get revenge on people when possible. 1 2 3 4

16. I would blame a group member for my mistakes. 1 2 3 4

17. I would avoid coaching an employee so that he or she could fail. 1 2 3 4

18. A person’s ethnic group influences how I treat him or her. 1 2 3 4

19. I would deliberately distort what another person said to make me look good. 1 2 3 4

20. I would deliberately make employees angry with each other. 1 2 3 4

21. I am a hypocrite. 1 2 3 4

22. I would limit the training opportunities of others to prevent them from advancing. 1 2 3 4

23. I would blackmail an employee if I thought I could get away with it. 1 2 3 4

24. I enjoy turning down the requests of group members. 1 2 3 4

25. If an employee were to get on my bad side, I would make trouble for him or her. 1 2 3 4

26. I would take credit for the ideas of others. 1 2 3 4

27. I would steal from the organization. 1 2 3 4

28. I would engage in sabotage against the organization just to get even. 1 2 3 4

29. I would fire a person I did not like if I could get away with it. 1 2 3 4

30. I would do things that violate organizational policy and then expect employees to cover for me.

1 2 3 4

ScoringandInterpretation: Add up your responses to all 30 items. In interpreting your score, rec-ognize that people tend to overrate themselves on ethical behavior because it is painful to admit to being devious and unethical.

30–35: Very ethical. If you scored in this range, your self-image is that you are trustworthy and highly principled. If your answers are accurate, it could mean that your high ethics could be an asset to you as a leader. (continued)

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Showing respect for others includes toler-ating individual differences and affording followers the freedom to think indepen-dently, act as individuals, and pursue their own goals. When a leader shows respect for followers by providing them auton-omy, subordinates can feel more useful, valued, and confident. Such a situation often leads to greater loyalty and produc-tivity among subordinates.

TreatAllStakeholdersEquallyAn ethical leader strives to treat everyone his or her decisions may affect in a fair and

just manner. Equality is a top priority for ethical leaders, and needs to factor prominently into their decision making. Ethical leaders must refrain from offering special treatment to others; failure to do so creates winners and losers—in-groups and out-groups—and can breed resentment between those who receive special treatment and those who do not. The only exception occurs when an individual’s specific situation warrants special treatment in order for a just outcome to be realized.

Preventing winners and losers from emerging is not always easy. Some situations require the distribution of benefits and burdens, and such situations can test a leader’s ability to ensure that justice is achieved. Beauchamp and Bowie (1988) defined the common prin-ciples that guide leaders facing such dilemmas; their findings can help leaders allocate responsibilities fairly and justly. These principles stipulate that every person must receive an equal share or opportunity according to his or her needs, rights, effort, societal con-tributions, and performance. For example, when a manager is deciding how to allocate a limited number of shifts among her employees, she needs to consider which employees must help support their families (needs), which have the most seniority (rights), which work the hardest (effort), which are always available to cover for others (societal contribu-tions), and which have produced the greatest profits for the company (performance).

36–61: Moderately ethical. A score in this range means that your impression is that you sometimes engage in slightly unethical behavior. You might strive to be more consistently ethical.

62–120: Very unethical. This range describes leaders who may be perceived as engaging in practices that are unethical, dishonest, unfair, and unprincipled. Although many unethical leaders are successful for a while, your unethical attitudes and behavior could be career-limiting factors. It is time to reflect on your values and start taking corrective action. Studying ethics can also help.

Source: Adapted from “Perceived Leader Integrity Scale: An Instrument for Assessing Employee Perceptions of Leader Integrity,” by S. B. Craig and S. B. Gustafson, 1998, Leadership Quarterly, 9(2), pp. 127-145.

Assessment 2.3: How Ethical Are You? (continued)

Texas Instruments requires its chief executives to adhere to a code of ethics and any violation must be reported immediately to an ethics officer.

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WorkforaCommonGoodMahatma Gandhi offers an example of what striving toward a common good entails. Known for his commitment to nonviolent protests and mass civil disobedience, the Indian activist and ideological leader spent 20 years in South Africa opposing legislation that discriminated against Indians. He spent the remainder of his life in India fighting for inde-pendence from foreign rule and working to reduce poverty and taxation, liberate women, and end multiple forms of discrimination (“Mahatma Gandhi Biography,” 2011). He championed such causes not because he would personally benefit, but because a larger, more substantial population would. Gandhi devoted his life to furthering social causes he believed in and developed a personal sense of purpose and meaning that later translated into a societal then global ethic.

Ethical leaders strive to further social or institutional goals that are greater than the goals of the individual. This responsibility requires the ethical leader to serve a greater good by attending to the needs of others. This type of behavior is an example of altruism: a stead-fast devotion to improving the welfare of others. Altruistic behavior may manifest in a corporate setting through actions such as mentoring, empowerment behaviors (encour-aging and enabling others), team building, and citizenship behaviors (such as showing concern for others’ welfare), to name a few.

BuildCommunityWhole Foods Market is well known for its community outreach programs on both local and global scales. Every Whole Foods store donates to community food banks and shel-ters, and throughout the year hold “5% days” when 5% of the day’s net sales are donated to local nonprofit or educational organizations. Globally, the company established the Whole Planet Foundation to combat world hunger, and supports programs addressing issues such as animal welfare, nutrition, and environmentally friendly production methods (“Community Giving,” 2011).

The efforts of Whole Foods to strengthen its stores’ local and global neighborhoods are a perfect example of leaders building community. When an ethical leader focuses on the needs of others rather than the self, other people will often follow suit. This can lead to a strong contingent of followers working with the leader to achieve a com-mon goal that benefits everyone and builds communities. For such an outcome, leaders and followers must find a goal that is com-patible with the desires of all stakeholders. Furthering a common goal means that no one can place his or her needs ahead of the group’s goals, and an ethical leader cannot

Whole Foods is known for its community out-reach programs on both local and global scales and donates to community food banks and shelters.

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impose his or her will on others. A successful CEO who works with many charities or other individuals to feed the homeless exemplifies a leader building community.

BeHonestHonesty is considered desirable by practically everyone, but it is sometimes unclear what honesty actually demands of us. Being honest is not simply telling the truth and avoiding deceitful behaviors; it requires leaders to be as open as possible and to describe reality fully, accurately, and in sufficient detail. Telling the complete truth is not always the most desirable action, however. Leaders must be sensitive to the feelings and beliefs of others and must rec-ognize that the appropriate level of openness and candor varies depending on the situation.

Some corporations have adopted honesty guidelines their leaders must follow. Texas Instruments requires its CEO, chief financial officer, chief accounting officer, and controller to adhere to a code of ethics, which stipulates they must “act with honesty and integrity, avoiding actual or apparent conflicts of interest between personal and professional rela-tionships.” They are also required to “promote ethical behavior in the workplace,” and any dishonest actions are to be reported immediately to an ethics director, the CEO, or the chair-man of the audit committee for the company’s board of directors (“Code of Ethics,” 2011).

Dishonesty can be a disastrous practice for a leader. Dishonest leaders distort reality, which can lead to unfavorable outcomes for all stakeholders. Researchers Cialdini, Petrova, and Goldstein (2004) found that dishonest organizations suffer from tarnished reputations, decreased worker productivity, and various damages related to increased surveillance. They concluded that the costs of organizational dishonesty greatly outweigh any short-term gains from such behavior.

PracticalPrinciplesofEthicalLeadership

Ethical leaders’ responsibilities seem straightforward, but practicing them may be an entirely different matter altogether. The Center for Business Ethics at Bentley University created the following six questions, embedded in classical ethical principles, that offer leaders decision-making guidelines to assess the ethics of their planned actions in particu-lar situations (Bowditch & Buono, 2001; Weiss, 2009):

1. Is it right? This question asserts that the ethics of the means must be weighed just as heavily as the ethics of the ends. A leader must consider his or her duty to and respect for others as well as the outcomes of his or her decisions. This principle applies at the societal level as well as in organizations and with their stakeholders.

2. Is it fair? This question is based on the notion that certain actions are intrinsi-cally just or unjust. As we discussed, equality is a top priority for ethical leaders. Everyone must be given the same opportunity or advantage and held to the same standards. For example, it is unjust to hire an unqualified job applicant who is related to the company’s CEO in an attempt to curry favor with one’s superior instead of hiring a more qualified applicant.

3. Who will be hurt? This question favors choosing an action that will result in the greatest good for the largest number of people. In other words, whose utility (advantage) will increase or decrease the most? Unlike the question “Is it right?”,

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which examines the morality of the decision or actions itself, the question “Who will be hurt?” focuses on the end result.

4. How would you feel if the details of your actions became public? This question requires decision makers to anticipate how all others would be affected by a particular decision and empathize with them. This question draws on the Golden Rule: Do onto others as you would have them do unto you.

5. What would you tell a young person—such as your child or young relative—to do? Originating from the deontological principle of reversibility, this question evalu-ates the ethics of an action by reversing the role of the decision maker: How would your decision sound if someone else implemented it?

6. How does it smell? This question is based on an intuition ethic and requires deci-sion makers to pay attention to their common sense and gut feel of right and wrong. If an action does not “smell” right to a reasonable person, then there is a good chance that it is not ethical.

SymptomsofUnethicalLeadership

Unethical leadership can manifest itself in different ways, but scholars have noted that unethical leaders share certain characteristics. In a nod to the 1990 business best seller The 7 Habits of Highly Effective People, Finkelstein (2003) reviewed contemporary business fail-ures and identified “the seven habits of spectacularly unsuccessful people.” Three of the

Take the LeadPromoting Ethical Leadership

You are the division head for a Fortune 500 organization that operates on a multinational basis. You recently surveyed all 185,000 employees within your division to assess how they feel about their lead-ers. The results are mixed: While your leaders are very focused on doing things right, your employees report that leaders often fail to do the right things. The survey results do not surprise you. You have sometimes witnessed your leadership team focusing more on protocol and methodology than offering the customer a fantastic service experience, for example.

This frustrates you. You decide to hold a meeting with your key leadership to identify what those right things are so that you can put in place a series of modifications or corrections moving forward. You know that the solution lies in the tall task of ensuring that everyone has the right focus with the proper balance to carry out business missions.

Keep the characteristics of ethical leadership in mind as you consider the following:

1. How can your leaders behave more authentically in the workplace?2. In what ways can your leadership behave with greater integrity?3. When it comes to the responsibilities of ethical leadership, how will you show respect for others?4. When it comes to the responsibilities of ethical leadership, how will you show justice to all

stakeholders?5. When it comes to the responsibilities of ethical leadership, how will you work for a common good

greater than yourself?6. When it comes to the responsibilities of ethical leadership, how will you build community?7. When it comes to the responsibilities of ethical leadership, how will you be honest?See page 227 for possible answers.

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CHAPTER 22.5 Two Ethical Leadership Styles: Stewardship and Servant Leadership

habits he identified directly violate principles of ethical leadership: (1) putting personal interests ahead of company interests, (2) acting arrogantly and recklessly, and (3) eliminat-ing anyone who might challenge the leader’s decisions.

A related study by McCall and Lombardo (1983) focused on behaviors that derail execu-tives and lead to their downfall. Every derailed executive included in the study had rela-tionship problems. They were insensitive—the most frequent cause of failure—and cold with others. (Coldness included aloofness and arrogance.) Also, these executives often betrayed others’ trust.

Seven additional symptoms of unethical leadership provide more insight into why corpo-rate scandals and everyday unethical leadership behavior may occur (Weiss, 2009):

1. Ethical blindness: Not perceiving ethical issues due to lack of attention or ability.2. Ethical muteness: Not possessing or using ethical language or principles.3. Ethical incoherence: Not recognizing inconsistencies among values.4. Ethical paralysis: Not following personal values either due to lack of information

or out of fear of the consequences of actions.5. Ethical hypocrisy: Not following the same values others are expected to follow.6. Ethical schizophrenia: Not making the same ethical decisions in different situa-

tion due to an incoherent set of values—for example, acting one way at work and another way at home.

7. Ethical complacency: Not believing that one is vulnerable to unethical behavior or can do wrong.

2.5 Two Ethical Leadership Styles: Stewardship and Servant Leadership

Aaron Feuerstein, a third-generation owner of Malden Mills in Lawrence, Massachu-setts, suffered his factory burning to the ground on December 11, 1995. Feuerstein

had the option of using the insurance money to rebuild the plant, but he instead paid the salaries and complete benefits of all the 3,000 workers for 6 months while the factory was rebuilt. He later said that he had no other option than to help the employees. Based on his study of the Talmud, he told Parade Magazine:

I have a responsibility to the worker, both blue-collar and white-collar. I have an equal responsibility to the community. It would have been uncon-scionable to put 3,000 people on the streets and deliver a deathblow to the cities of Lawrence and Methuen. Maybe on paper our company is worth-less to Wall Street, but I can tell you it’s worth more (Ryan, 1996).

Feuerstein exemplifies the two ethical leadership styles of stewardship and servant lead-ership, which focus specifically on how leaders work with followers. (Ethical leadership as a whole concerns the leader’s characteristics and encompasses actions in both the inter-nal and external organizational environment.) Stewardship is concerned with empower-ing followers to make decisions and gain control over their work. Servant leadershipinvolves selflessly working with followers to achieve shared goals that improve collective, rather than individual, welfare. There is a wealth of information on both of these styles;

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CHAPTER 2Section 2.5 Two Ethical Leadership Styles: Stewardship and Servant Leadership

we will briefly address both here, as both involve treating followers with respect—a key component of ethical leadership—and endowing them with the ability to grow both personally and professionally.

The stewardship approach instructs lead-ers to lead without dominating followers. Leaders who practice stewardship sincerely care about their followers and help them develop and accomplish individual as well as organizational goals. Effective steward-ship breeds a team-oriented environment in which everyone works together. Organi-zations led by steward leaders are marked by decentralized decision making—that is, leadership is not centered in one person, group, department, or administrative unity; power is distributed among all stakehold-ers (Lussier & Achua, 2007). Former President Jimmy Carter is an example of a contemporary steward leader. His mission and hands-on help in sponsoring, funding, and helping build housing for the unfortunate has demonstrated this leadership style.

The servant-leadership approach was formulated by Robert K. Greenleaf, who believed that leadership is a natural corollary of service (1998). Servant leadership goes beyond stewardship by requiring leaders to eschew personal accolades and devote themselves entirely to a greater cause. Greenleaf stated, “The essential quality that separates servant-leaders from others is that they live by their conscience—the inward moral sense of what is right and wrong. That one quality is the difference between leadership that works and leadership—like servant leadership—that endures” (1977). The following aspects are cen-tral to servant leadership:

1. Placing service before self-interest. The servant leader’s primary concern is helping others, not receiving recognition or financial reward.

2. Listening to others. Servant leaders recognize the importance of listening to the ideas and concerns of stakeholders; they never attempt to impose their will on others. This aspect allows servant leaders to strengthen relationships, understand group needs and dynamics, and effectively allocate resources to improve the group’s welfare.

3. Inspiring through trust. As we discusser earlier, ethical leaders must be trustwor-thy. It does not take much effort for servant leaders to be truthful because they usually have strong moral convictions.

4. Working toward feasible goals. Servant leaders realize that many problems cannot be solved by one person. They also tackle the most pressing issues facing their groups.

5. Helping others whenever possible. Servant leaders lend a helping hand when the opportunity arises. An example is the district manager of a fast-food chain. She helps part-time employees flip burgers during a lunchtime rush hour. Another is the director of a business unit who observes that a team is short a member and needs help in meeting a deadline; the director joins the team for the afternoon to help meet the deadline.

Malden Mills owner Aaron Feuerstein receives thanks from his employees for continuing to pay them while his burned down plant was rebuilt. He is an excellent example of the stew-ardship style of leadership.

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These two leadership styles differ from the others discussed so far in this text in that the leaders’ mind-set is geared toward champi-oning their followers. These ethical lead-ers view no follower, regardless of his or her level of skill, readiness, or willingness, as someone who cannot be supported and helped. They also believe that followers perform higher and better when supported and cared for. This is not to say that such leaders are naive and can be gamed by cun-ning followers trying to get out of work. The mental model (or mind-set) of these leaders espouses Theory Y (from Chapter 1): It is based on a deeply felt belief that individuals and teams are inherently valued as human

beings who also happen to be employees. (This is a universalist, altruist ethic.) In some ways, steward and servant leaders demonstrate Kouzes and Posner’s five dimensions of transfor-mational leadership: They can ethically model the way, inspire a shared vision, challenge the process, enable others to act, and encourage the heart in a way that exceeds transactional, transformational, and even charismatic leaders.

Another way of understanding the distinguishing characteristics of servant leadership is offered by DeGraaf, Tilley, and Neal:

The main assumption is that true leadership should call us to serve a higher purpose, something beyond ourselves. One of the most important aspects of leadership is helping organizations and staff identify their higher pur-pose. The best test of the Servant-Leadership philosophy is whether or not customers and staff grow as persons! Do customers become healthier, wiser, freer, more autonomous, more likely themselves to become “ser-vants”? And, what is the effect on the least privileged in society? Will they benefit? Or, at least, not be further deprived? To achieve this higher pur-pose of public organizations, you, as a leader, must be passionate about your desire to improve your community and yourself! (2001)

EthicsandLeadership:AnEmergingField

Ethical leadership will remain relevant so long as questionable business practices endure, and it becomes a more significant matter when consumers and investors begin to increas-ingly value social responsibility. For example, some consumers seek out so-called fair-trade companies, which ensure that workers have been paid a living wage. Some financial advisors specialize in creating investment portfolios of socially responsible and ethical companies. For corporations, studies have shown that those with ethical leaders outper-form their peers financially. A 2-year study published in 2007 found that companies that

The ability to listen to others is an essential quality needed for servant leadership.

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Assessment 2.4: Your Servant-Leadership Orientation

Instructions: Think about situations in which you were in a formal or informal leadership role in a group or organization. Imagine using your personal approach as a leader. To what extent does each of the following statements characterize your leadership? Please answer whether each item is mostly false or mostly true for you.

Mostly False Mostly True

1. My actions meet the needs of others before my own. ____ ____

2. I explicitly enable others to feel ownership for their work. ____ ____

3. I like to consult with people when making a decision. ____ ____

4. I’m a perfectionist. ____ ____

5. I like to be of service to others. ____ ____

6. I try to learn the needs and perspectives of others. ____ ____

7. I consciously utilize the skills and talents of others. ____ ____

8. I am assertive about the right way to do things. ____ ____

9. I give away credit and recognition to others. ____ ____

10. I believe that others have good intentions. ____ ____

11. I quickly inform others of developments that affect their work. ____ ____

12. I tend to automatically take charge. ____ ____

13. I encourage the growth of others, expecting nothing in return. ____ ____

14. I value cooperation over competition as a way to energize people. ____ ____

15. I involve others in planning and goal setting. ____ ____

16. I put people under pressure when needed. ____ ____

ScoringandInterpretation: There are four subscale scores that represent four dimensions of leadership. For the dimension of authoritarian leadership, give yourself one point for each “mostly true” response to questions 4, 8, 12, and 16. For the dimension of participative leadership, give yourself one point for each “mostly true” response to questions 2, 6, 10, and 14. For the dimension of stewardship, give yourself one point for each “mostly true” response to questions 3, 7, 11, and 15. For the dimension of servant leader-ship, give yourself one point for each “mostly true” response to questions 1, 5, 9, and 13.

My leadership scores are: Authoritarian: ____; Participative: ___; Stewardship: ___; Servant: ___.

These scores represent four types of leadership—authoritarian, participative, stewardship, and ser-vant—as described in the text and illustrated in Exhibit 6.5. A score of 3–4 on any of these dimen-sions is considered above average, and a score of 0–1 is below average. Compare your four scores to each other to understand your approach to stewardship and servant leadership. On which of the four dimensions would you like to have the highest score? The lowest? Study the specific items you called mostly true or mostly false to analyze your pattern of strengths and weaknesses. It is not possible to display all four dimensions of leadership simultaneously, so you should think about the dimension you want to emphasize to reflect your leader ideal.

Source: From The Leadership Experience, 5th ed., by Richard L. Daft, 2011, Mason, OH: Cengage Learning. Copyright 2011 by Cengage Learning.

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went above and beyond the ethical requirements most firms adhered to returned more than 1,000% for investors over a 10-year period compared to a 122% return for the S&P 500 (Sisodia, Sheth, & Wolfe, 2007). These upstanding corporate citizens, termed “firms of endearment” (FoEs), are said to practice “stakeholder relationship management”: They endear themselves to stakeholders by integrating the stakeholder interests into the deci-sion-making process. Stakeholders are also able to contribute and benefit from gains in value. This kind of business model can provide the firm with a competitive advantage, as the firm can pull from a greater set of resources.

FoEs also possess a “humanistic soul”; they want to serve others. “These companies are imbued with the joy of service—to the community, to society, to the environment, to cus-tomers, to colleagues,” the researchers wrote (Sisodia, Sheth, & Wolfe, 2007). Above all, FoEs are led by ethical leaders who “facilitate, encourage, reward, recognize, and cel-ebrate their employees for being of service to their communities and the world at large, for no reason other than that it is the right thing to do.” Companies designated as FoEs are listed in Figure 2.3.

A similar study was conducted by Sandra A. Waddock and Samuel B. Graves (1997), who spent 2 years examining the relationship between corporate social responsibility and corporate financial performance, using data on 469 firms from 13 different industries. They concluded that the most profitable firms can more easily afford to devote resources to social-responsibility initiatives—such as helping to provide food and shelter for the homeless—which in turn can create goodwill and lead to greater profits. The researchers determined that the relationship between social and financial performance may be a vir-tuous circle, in which corporate social performance and financial performance fuel and reinforce each other. Studies such as these provide evidence that ethical leadership gener-ates important benefits for leaders and their organizations.

Still, more empirical and qualitative research must be completed before ethical leadership can be better understood. For example, prioritizing organizational ethics over financial per-formance has drawn criticism, and corporations that focus heavily on institutional ethics may have difficulties turning profits or attracting investors. FoEs may be exceptions to the rule rather than leaders of a growing model. Starbucks was discussed earlier as an example

of an ethical corporation, but like all organizations, it is pressured by investors to reduce costs by cutting employee benefits (“100 Best Companies,” 2011). Ethical-leadership models, like those dealing with authenticity, will continue to evolve as have theories of transformational and charismatic leadership. Certainly the popularity of and demand for these newer lead-ership approaches is evidenced by their demand in training and education sectors.

Figure2.3CorporationsDesignated“FirmsofEndearment”(FoEs)

AmazonBMWCarMaxCaterpillarCommerce BankContainer StoreCostcoeBayGoogleHarley-Davidson

HondaIDEOIKEAJetBlueJohnson & JohnsonJordan’s FurnitureLL BeanNew BalancePatagoniaREI

SouthwestStarbucksTimberlandToyotaTrader Joe’sUPSWegmansWhole Foods

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CHAPTER 2Summary

SummaryTransformational, charismatic, authentic, and ethical leadership involve a wide range of skills and capacities that are needed to influence and mobilize organizations toward responsible competitiveness. Transformational leadership involves inspiring, stimulat-ing, and motivating followers to change organizations in dramatic ways that they could not accomplish alone. Five particular leadership practices are modeling the way, inspir-ing a shared vision, challenging the process, enabling others to act, and encouraging the heart. Great political leaders have demonstrated such practices during crises and times of change, when masses of people needed to come together to protect themselves from invaders, rebuild infrastructures from natural disasters, and overcome mounting poverty. Organizational leaders have done so when their companies were threatened to become more competitive or close the doors, or when opportunities were presented to take an idea and build an industry around it. Leaders of organizational departments, divisions, small companies, and teams also show transformational characteristics and actions by taking risks to help grow, differentiate, add value, and remove obstacles for effective change.

Leaders who have charisma are also able to influence and move followers to identify with, align themselves with, and sign on to their personal energy, leadership examples, visions, missions, and initiatives. Many transformational leaders also demonstrate this type of attractive energy through personal characteristics—some in quiet ways, others more vocally, but all have a new or different end state (idealized vision) of where their organization, division, business, or team can go and excel. We also discussed the dark side of leadership charisma, when leaders attract others more to their own individual, egoistic or careerist interests over the organization’s.

Leaders who care for the common good of their followers, organizations, and societies are authentic and lead by principles that are ethical and legal as well as effective in the economic marketplace. We discussed steward and servant leaders as two examples of leaders who go beyond the call of duty to help others. All leaders who are entrusted with an organization’s assets, resources, and reputation must also serve by legal and ethical principles and practices. Recent scandals and illegal activities by CEOs, corporate presi-dents, and other leaders, many of whom are serving prison time—and many of whom are still practicing—demonstrated the need for ethical leadership. So transformational and charismatic leadership calls out for leaders to also be authentic, legal, and ethical in their intentions, actions, and outcomes.

Finally, leadership development—including transformational and charismatic styles—in general is an intentional learning process, regardless of what leadership style is desired. The first step is actually desiring and choosing to develop leadership characteristics. Some people have a belief and mind-set that they are not and cannot become leaders. Changing that mind-set is a first step in this process. Being an authentic leader means being who you are within whatever style you develop in order to be effective in different situations. Many transformational and charismatic leadership behaviors, again, are learned—for example, becoming more empathetic, outgoing, in charge, self-confident, passionate, and articulate; developing a personal vision; and helping others understand difficult concepts. Evolving leaders also can and should challenge their own ethics. Learning to value the means to get to an end is an ethical consideration, as is striving to reach an endpoint, whatever the

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CHAPTER 2Summary

cost. Questioning whose interests are being served by a particular vision and mission is an ethical undertaking. Asking what the principles and values are that underlie your actions is about ethics. The following chapters continue to build on these leadership concepts, frameworks, and practices.

WebLinks

TheFirstFollowerAn entrepreneur offers a humorous take on leaders and followers: http://www.youtube.com/watch?v=fW8amMCVAJQ

CarlyFiorinaon LeadershipThe former HP CEO discusses topics that are covered throughout this text: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1719

TransformationalLeadershipSummaryA business professor offers a summary of some of the key points of transformational lead-ership: http://www.youtube.com/watch?v=vI8GCfbdigI

TheLeadershipChallengeWebsiteThis website provides more details and background on Kouzes and Posner’s work: http://www.leadershipchallenge.com/WileyCDA/

BetweentheLinesWithJimKouzesJim Kouzes discusses the leadership challenge on the TV show Between the Lines: http://www.youtube.com/watch?v=lM5HeehxHQQ

HerbKelleheronPeopleThe Southwest CEO describes his philosophy on how the business of business is people: http://www.youtube.com/watch?v=oxTFA1kh1m8

KenBlanchardonServantLeadershipServant-leadership expert Ken Blanchard talks about how to spot a self-serving leader ver-sus a true servant leader: http://www.youtube.com/watch?v=o3piSk1j668&feature=related

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http://www.youtube.com/watch?v=fW8amMCVAJQ

http://www.youtube.com/watch?v=fW8amMCVAJQ

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1719

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1719

http://www.youtube.com/watch?v=vI8GCfbdigI

http://www.leadershipchallenge.com/WileyCDA/

http://www.leadershipchallenge.com/WileyCDA/

http://www.youtube.com/watch?v=lM5HeehxHQQ

http://www.youtube.com/watch?v=lM5HeehxHQQ

http://www.youtube.com/watch?v=oxTFA1kh1m8

http://www.youtube.com/watch?v=o3piSk1j668&feature=related

2 and Ethical Leadership Transformational, Charismatic, · 2017-12-14 · Section 2.1 Transformational Leadership CHAPTER 2 While traditional leadership theories are still in use

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