The key here is ensuring that the company’s workforce views senior management as worth having faith in and, in best-case scenarios, even magnanimous and generous of spirit. How the CEO’s character is communicated to others will determine the extent of people’s trust and commitment. Specifics to be examined in this article include: the importance of closing the emotional gap between leaders and followers to compensate for the financial gap between them, and how the emotions displayed on leaders’ faces reveal their core personality traits.
Fifteen years ago, I got my baptism into corporate life working as the Director of Executive Communications for a Fortune 200 company, working directly with a very hard-boiled CEO who was a straight-shooter but not naturally much given to communicating with employees. Naturally, the annual employee meeting and one of my responsibilities, was a great concern. How I turned an event generally panned into a great success showcases the lessons that this article will speak to in general terms, and which will be of use to everyone.
But first let me tell the story.
The CEO, Jim, was given to delivering nearly two-hour long speeches, followed by a supposed give-and-take Q & A session that actually involved questions being submitted in advance, on cue cards, from which Jim very obviously selected – from the podium – those he wished to address. Needless to say, the satisfaction ratings for the events were generously sitting at around percent.
How to turn the situation around became one of primary concerns. First up was shortening the CEO’s speech without offending him. How did I do it? By studying the length of the speeches given by foreign dignitaries in addressing both chambers of the United States Congress. Armed with proof that even a Nelson Mandela or Margaret Thatcher typically only spoke for half an hour, I got the CEO to whittle his speech down to 45 minutes.
Next, I suggested we add additional speakers to the agenda so the employees could hear not only multiple perspectives, but be relieved of the monotony of a single delivery style. Furthermore, displays were set up in the back of the hall so employees could see the results of the year past, leaving the speeches free to focus on the future.
Finally, to prim the Q & A we created a candid camera video of employees asking questions and making statements – as a prompt to a more candid give-and-take. No questions were allowed to be submitted in advance. Instead, questions really did come from the floor, spontaneously, aided by livelier speeches and the video. The meeting was a roaring success, with satisfaction ratings that increased almost 40 percent and a CEO so thrilled that he sent senior management out to do follow-up town hall meetings to further the dialogue begun at the annual meeting.
What are the take-away lessons from that experience? First, overcoming the status and pay disparities that separate a CEO from the employees requires face time and real interaction. Second, given a chance for true give-and-take, Jim’s credibility could shine through. Third, in a busy world projected emotions are rightly taken as inspirational substance. At our annual meeting, Jim’s ability to reveal a surprisingly good sense of humor led to gasps of surprise and pleasure.
The need to overcome the status gap disconnect
Whether it’s political, religious or corporate leadership, the emotional dynamics of being in charge don’t change very much. People will become ardent, true followers to the extent that they believe it’s safe to do so; that victory is possible, if not outright imminent; and that they will get to share in the accomplishment and the rewards that come with success. Then a “me” will join the “us” and do so willingly – without coercion, without doubt, without questioning – because that person has forged an emotional bond and made an emotional commitment.
Unfortunately, creating a top-down “us” in the business world has become harder than ever because of two major trends.
The first involves the spotlight CEOs occupy, and their related rise in pay. (See Fig. 1.) Until the wave of Enron-style scandals somewhat blunted this trend, the leadership type in ascendancy was the superstar CEO who, possessing the stature and political acumen to woo and wow Wall Street analysts, as well as the business media, could keep the all-important stock price from flagging. In contrast, the understated, behind-the-scenes leadership celebrated in Jim Collins’s best seller Good to Great had begun to seem old-fashioned.
The counter-response to the scandals and the whole celebrity CEO phenomenon has been a re-emphasis on the brass-tacks executive at the expense of “the golden child.” But either way, the dividend-focused business world has driven compensation to unprecedented levels, putting leaders on an economic plateau far removed from those they lead.
What has the general response been? With recent surveys showing that 90 percent of institutional investors believe that executives at most U.S. companies are overpaid, you can imagine how lower-ranking employees feel. Warren Buffett may not be speaking only for himself when he said: “Too often executive compensation in the U.S. is ridiculously out of line with performance.” Given the disparities in compensation, how can employees (and investors) not be inclined to feel suspicion and envy – even outrage – as the corner office continues to surpass the cubicle set by ever-widening margins?
Research indicates that in counties with pronounced income spreads, the inequality correlates to lower life expectancy rates, since such stark contrasts introduce stress into people’s lives. In other words, envy is divisive. What’s the risk being taken by CEOs who have economically distanced themselves too much from the pay scale their average employee can relate to or accept? They’ve put their ability to forge an internal, emotional “us” in jeopardy.
Even worse is the second trend, the ongoing wave of downsizing, outsourcing, and other “adjustments” like the demise of pension plans. In addition to widening the already-mentioned economic divide between top leaders and employees, these moves undermine employees’ sense of security and well-being. To cite one figure, it’s been estimated that over 10 percent of all the jobs in America are at risk of being outsourced.
Taken together, the two trends endanger the likelihood that employees will see their leaders as invested in a shared outcome and put additional pressure on the leadership to establish an emotionally solvent, personal connection with employees. In other words, the degree to which leaders are economically divorced from their workers places a premium on having the emotional savvy to offset the disconnect.
The value of emotional intelligence
To overcome perceptions of selfish indifference and get people to be emotionally onboard as followers, CEOs and senior leadership in general will have to add another dimension to the four leadership “E’s” spelled out by GE’s former CEO Jack Welch. What are Welch’s four “Es?” They consist of having a competitive Edge, being a good Executor, and being Energetic while Energizing others. What’s the new, fifth “E”? It’s Emotional intelligence, a competency that two studies by the training firm Hay/McBer have confirmed to be what successful leaders have most in common.
Aided by Emotional Intelligence author Daniel Goleman, Hay/McBer analyzed the key characteristics that distinguish adroit leaders. What did they find? First, in a study of executives at 15 global companies, only one cognitive, intellectual skill proved to be a good barometer of success: the ability to sift through the big picture for patterns. All of the other core competencies involved emotionally-based skills and characteristics like collaboration, political acumen and resiliency.
Meanwhile, in a related study that looked at executives at IBM, Coca-Cola and Pepsico, those people with a high degree of emotional competencies were in the top third of management, as reflected in salary bonuses for performance. So pervasive was the profile that it held true in more than 80 percent of the various divisions within those companies.
Maybe former IBM CEO Lou Gerstner was part of the second study. Even if he wasn’t, he clearly appreciates the value of emotions, given his remark that leadership isn’t “something you do writing memos, you’ve got to appeal to people’s emotions. They’ve got to buy in with their hearts and bellies, not just their minds.” Leadership starts with getting people emotionally on-board.
Trust is based on a leader’s honesty
What’s the message of the Hay/McBer research results? It’s that people skills matter. They’re not “soft,” though they’re definitely emotional. Instead, they help a leader to connect with others – not through using emotions to manipulate perceptions, but by using emotional intelligence to understand where people are “coming from.”
Corporate Board Member magazine has editorialized, based on Deep Throat’s famous advice to “Follow the money,” that CEOs should spend 40 percent of their time on investor relations. But the audience that will help make the company’s profitability actually possible is the internal “us” of managers and rank-and-file employees, who must be emotionally energized to care.
What specific kinds of emotion-based traits should CEO’s have? In perhaps the seminal study in this field, the leadership experts Kouzes and Posner engaged in research involving over 400 case studies and 75,000 people worldwide. What’s their conclusion? The key qualities people value in their leaders are, in order of importance: honesty, being forward-looking and inspiring.
Why is honesty the preeminent attribute employees wish to see in leaders? Employees naturally want to know where a leader stands. So they’ll ask themselves, “Can so-and-so be trusted to look out for my security?” This question emerges from survival instincts, because, as followers, they rely on a leader’s ability to enhance their odds of staying alive and thriving (thus avoiding alarm).
It seems then that a company seeking to hire a leader with whom employees will appropriately bond will look for, among other things, an honest, forward-looking and inspiring person. The large stakes involved in hiring the right person for leadership positions are more evident than ever given the litany of CEOs who have gone from pinstripes to prison stripes. For years now, Fortune 500 companies and other small firms have been relying on verbally-based methods, including the excellent but expensive Hogan Assessment Systems survey, to probe the inner emotions of candidates for the job in order to secure the best one.
Sensing the importance of a CEO’s emotional profile, but looking for a new approach to measure it, an investment firm approached Sensory Logic a couple of years ago with a theory: the personality of the CEO affects the corporate culture, which in turn drives stock performance. Based on this theory, the firm wished to use facial coding as a supplementary means of assessing which companies to invest in. In other words, they were banking on facial coding to help them gauge a CEO’s emotional make-up, thereby giving them an edge in identifying sound investing opportunities.
The investment firm had its own proprietary system of determining which leaders to support based on eight key traits, with honesty getting a double weight. Emphasizing honesty makes sense for investors assessing a leader, as well as for employees. For most of us in life, honesty comes first: if you don’t believe you will get something at least approaching your fair share, then the odds of your hanging in there – emotionally, and not just physically as merely another “warm body” at work – will decline severely.
Related to honesty, Sensory Logic also conducted another, separate study in which we looked at the responses of employees whose companies had recently undergone dramatic organizational changes, such as a merger or acquisition. In that case, we asked among other questions: did employees trust their leaders, and did they believe what their leaders had told them about the changes?
What did our results uncover?
When participants were asked the belief question, anxiety in the facial coding activity reached the highest level in the study: 22%. That’s illuminating, and here’s why. Anxiety signals fear and, along with surprise, fear makes up the alarm employees are likely to feel when confronted with reminders that their leaders are powerful enough to brush their concerns aside. In other words, change may bring with it concern, even suspicion, about whether one’s leader will be a faithful guide during the struggle ahead.
Emotionally-tinged perceptions equate with reality
As the British dramatist Oscar Wilde once quipped, “Only shallow people don’t judge others based on appearances.” In other words, perceptions really do drive our sense of reality, and rightly so. Thus the investment firm’s approach of wanting to analyze emotions through facial expressions was smart. And their emphasis on traits when assessing good leadership was astute.
After all, personality, traits and emotions are closely related concepts. Personality refers to the set of predictable behaviors by which others recognize us as ourselves. These specific behaviors are often called traits. Repeated, commonly shown emotions are, in turn, a means of assessing traits, which is why, for example, we say so-and-so is a “hot head” when he or she gets angry quickly and often. How do we know that person is angry? The answer is in no small part because of facial muscle activity that reflects and communicates our feelings.
What’s the bottom line here? Executives shouldn’t underestimate the value of facial expressions in helping them understand how audiences will respond to them. One CEO who understood this value had Sensory Logic review three of his public appearances: two consecutive annual meeting addresses to employees and a one-on-one interview at a business club function. (See Fig. 2.) Notable were three findings:
During the annual meetings, this CEO only showed code-able activity every other minute while on camera: a relatively low degree of expressiveness. In the more intimate club setting, however, the CEO opened up and was more expressive. The implication? The CEO was likely to make a stronger emotional connection with workers in venues like breakfast meetings or smaller, department-size sessions where he might convey his feelings more vividly.
Previous coaching to encourage this CEO to deliver his message in a more upbeat style was working. The latest employee meeting data was far more positive than the earlier one. The implication? Without undercutting a CEO’s integrity, it’s possible to train people to improve their body language and, thereby, convey more warmth and hope.
Overall, this CEO was sending mixed signals. The good news was that a complete absence of skepticism verified his authenticity (he never used a social smile to mask a negative comment). His expressions of frustration were also authentic and understandable due to slower than anticipated implementation of new initiatives. The bad news? He could be undercutting his goals by displaying contempt (dislike), an emotion that employees could interpret as an inability to please him. The implication? In situations where a positive outcome seems remote, human nature is to give up – thereby robbing companies of the effort they need from employees in order to cope with a changing, competitive marketplace.
In summary, leaders aren’t leaders just by title or power alone. They must have followers who pledge their loyalty, talent and energy based on the belief that they’ll get something back. Therefore, a CEO must protect his or her credibility above all else, because people expect to believe their leaders and want to feel that their leaders care about them. People follow people they like and, without being deemed trustworthy, the probability that people will truly like a leader and strive on behalf of achieving success for the greater good is close to zero.
Fig. 1: Average CEO Compensation
Fig. 2: Analysis of CEO’s Emotional Display
The left chart shows that the second annual meeting had the most positive result. The right chart shows the average emotions shown by the CEO across three public appearances and defines trouble spots: most of the positive emotion is from less lively forms of smiling, while dislike (including contempt) is prevalent enough to be possibly off-putting to employees.
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