George Washington. Winston Churchill. Jeffrey Skilling.
Don't laugh. Until the past year, many management consultants,
executives and business journalists lionized Enron's former CEO
as a paragon of leadership similar to our first president or
Britain's WWII icon.
Today, Skilling is more often compared to Ivan Boesky or Charles
Ponzi, and investors, creditors and politicians are screaming for
his head. But management experts say the vociferous anger over
Enron, Tyco and other corporate implosions masks a subtler yet more
serious concern. Simply put, does this series of scandals indicate
that corporate America--both small businesses and large
corporations--has forgotten how to define and discover outstanding
leaders? More broadly, have Americans in general lost sight of the
qualities that make up the finest leaders?
Only
16%
of parents want their children to become CEOs.
Source: Harris Interactive
|
Answering this question will help determine the fate of the
small and large business worlds, which have lost the trust of many
Americans. Discovering answers is not an impossible task; in fact,
some management experts believe the scandals and economic downturn
have provided a rare opportunity for America to redefine its views
on leadership.
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Turning on the
Charm
Many executives believe businesses' current problems can be
linked to one fatal flaw: the idea that charismatic leaders are
best able to manage companies from Fortune 500 firms to mom-and-pop
stores. Rakesh Khurana, an assistant professor at Harvard Business School
who researches corporate leadership, believes Americans have always
had a soft spot for charismatic leaders, a consequence of our
founding ideology as a nation of rugged individuals. And he does
not deny that charisma is a vital component of some leaders'
personas, especially in professions like politics where public
speaking is important.
A whopping
87%
of all adults believe that most top company managers are paid more
than they deserve.
Source: Harris Interactive
|
"The aftermath of September 11 has shown that a president
still has to be able to rally people," says Daniel Pink,
author of Free Agent Nation (Warner Books) and
former speechwriter for Al Gore. Pink notes that though President
Bush is not considered a polished public speaker, many people
nonetheless looked to him to deliver rousing oratory in the wake of
the terrorist attacks.
Though charisma can be important, over the past decade too many
businesses have sought out ultra-charismatic "superstar"
leaders to the exclusion of other types of personalities. In fact,
the rate at which U.S. companies replace their top leaders has
skyrocketed since 1990, as firms search for supposed miracle
workers from outside their organizations. In the early 1980s,
several self-promoting saviors did rescue companies--Lee Iacocca at
Chrysler, for example--and their successes led corporate boards and
family businesses to overrate charisma. What's more Khurana
says, some boards believed charismatic leaders were better-equipped
to communicate the company's vision to impatient investors and
the increasingly voracious business media. Meanwhile, small and
large companies began relying on executive search firms, a change
that made it harder for leaders to advance from within
companies.
Yet many leadership experts believe these supposed superstars
often deliver poor leadership and weak long-term results. In a
study of 1,435 companies' performance over four decades for
Good to Great (HarperBusiness), author
Jim Collins found none of the firms that did best changed
leadership frequently or relied on charismatic saviors. Anecdotal
evidence supports Collins' research. Michael Armstrong arrived
as AT&T's chief executive in 1997 and quickly nabbed the
covers of many business magazines before leaving his post in 2002.
But despite making several high-profile acquisitions, Armstrong
failed to improve AT&T's financial results during his
tenure as CEO. At Enron and Tyco, charismatic leaders were able to
use employees' reverence to amass enormous amounts of power,
which they used primarily to enrich themselves.
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