Scratch the surface of a true leader, or look beneath his or her personality, and you’ll find character. The traits and values that make up the character of a good business leader are, for the most part, similar to those that make up the character of an outstanding citizen. These authors describe the traits and values that make up the character of leadership.
Speech on steps of Lincoln Memorial
Civil Rights March, 23 August 1963
Character has come in from the cold. Once the poor cousin of clinical psychology and behavioural studies, character is once again recognized as a critically important component of personality and therefore, of what makes people tick. Its importance to leadership is considerable.
Character in leadership
Not surprisingly, the importance of the character of leadership is making inroads in the business world, Johnson & Johnson (J&J), the major manufacturer of health care products in the United States, views character as a leadership essential. Former Chairman Ralph Larsen believes that people with character can give a company a significant competitive advantage. The company actively seeks to recruit and be represented by people of exceptional character. Johnson & Johnson’s stance is supported by research which suggests that in leadership, good character counts. According to Frances Hesselbein, the author and chairman of the Drucker Foundation, leadership that achieves results goes beyond how to be, and becomes how to do; this type of leadership is all about character. So in other words, in order to get things done personally and organizationally, one first needs to get in touch with his or her character.
Leaders with character achieve results that transcend everyday organizational imperatives and outcomes. A study of world leaders over the past 150 years asserts that managers who possess strong character will create a better world for everyone, while leadership generally is vital to the social, moral, economic, and political fabrics of society.
For example, Theresa Gattung is the CEO of Telecom NZ, a New Zealand telecommunications company. Her candour about her vulnerabilities, as well as her philosophy on leadership, has won her the admiration of her male colleagues. She recognizes that good leadership consists more of character than personality:
“When I went to management school 20 years ago, I thought it was about personality, desire, determination, and a little bit of technique. I didn’t actually realise it was about character, and that struck me more as I have gone along . . . The leaders whom people respect and will follow have the characteristics of being themselves, of being passionate about what they are doing, communicating that in a heartfelt way that touches hearts.”
However, we often take the character of leadership for granted. We expect good leaders to be strong in character, that is, to have a moral imperative underwrite their actions. These leaders with character have been identified as authentic leaders: They are what they believe in; show consistency between their values, ethical reasoning and actions; develop positive psychological states such as confidence, optimism, hope, and resilience in themselves and their associates; and are widely known and respected for their integrity.
Nonetheless, the key attributes of authentic leaders, or leaders with character, remain problematic. To identify these attributes and better understand them, we undertook a study. This paper is based on that study and in it we identify the three underlying dimensions of leadership character – universalism, transformation, and benevolence. We also suggest ways of further enhancing these dimensions and their constituent attributes.
Universalism represents an understanding, appreciation, and tolerance for the welfare of people generally, and is a macro perspective approach to work and life. The character attributes of respectfulness, fairness, cooperativeness, and compassion in particular fit best with this definition of universalism.
Transformation is consistent with the concept of transformational leadership as an activity that inspires others in the achievement of long-term, visionary goals. The character attributes of courage and passion best represent this factor. Transformation is a situation-specific process that relies on the competence and self-reliance of the incumbent in their delivery of inspired and values-driven strategic direction for the enterprise.
Benevolence is a micro approach to work, and focuses on concern for the welfare of others through one’s daily interactions. Selflessness, integrity, and organization loyalty best represent the characteristics of benevolence.
Universalism is the outward expression of leadership character and is made manifest by respectfulness for others, fairness, cooperativeness, compassion, spiritual respect, and humility.
Former Chrysler CEO Lee Iacocca was known to say that if you talk to people in their own language and you do it well, they’ll say, “God, he said exactly what I was thinking.” And when your people begin to respect you, Iacocca claimed “they’ll follow you to the death,” metaphorically speaking.
Merck, a leading pharmaceutical products and services company in the U.S., lists its recognition of its employees’ diversity and teamwork capacities as one its core values. It promotes teamwork by providing employees with work that is meaningful in a safe and dynamic workplace. Therefore, building cooperation as an attribute of character requires commitment, possible corporate redesign, and consciousness of client needs, both internal and external.
Linda Nicholls, chairperson of Australia Post, argues that recent terrorist activities and the spate of corporate collapses around the globe have given rise to widespread social concerns for safety, security, and certainty. Nicholls argues that leaders need to show compassion because of the fears such events have generated, and to balance the drive for innovation, risk and growth with the human need for safety and security.
Peter Sommers, managing director of Merck’s Australian division, provides an anecdote that that exhibits how compassion for employees takes precedence to work demands:
We’ve got stock-take this Thursday. The mother of one of the women who works in our factory, died a few days ago and the funeral is going to be on stock-take day. We only do stock-take once a year; it’s a very, very big day. The employee’s manager and I have both said, “Well, if the funeral is on stock-take day, then stock-take will have to stop for an hour.” It’s a very important day, it’s a full day, I work a 12-hour day and I’m usually exhausted. But, we will go to our employee’s mother’s funeral to give support, because we care for our people. They’re not just numbers here. Each person is treated as an individual, we know their needs, and we try to cater to some of their wants.
Respect for individual beliefs and customs has a long history. In Athenian society, Plato viewed leadership as “an activity with utility for the polis, the activity of giving direction to the community of citizens in the management of their common affairs, especially with a view to the training and improvement of their souls.” The reference to soul suggests that leaders engage the full person and help make him or her a productive and morally strong member of society through their contributions in the workplace.
In recent years, the Track-Type Tractors Division of Caterpillar Inc. has experienced unprecedented improvement across the board by establishing workplace values and making employees feel important in the organization. Jim Despain, vice president of this division, acknowledges that leadership is “about others and not about self. It is about trust and not about power. It is about producing results by creating cultures where people know it’s okay to be unique and different, so they willingly take off their masks, express themselves, and do great things.” This approach confirms the view that workers can achieve great things with the right type of encouragement and respect.
Despite broad acknowledgement of its importance, being humble does not sit comfortably with the healthy egos of many executives. Some CEOs operate under the mistaken beliefs that they are infallible, and that to admit error or concede a superior point of argument is a weakness. Sometimes a leader becomes a boss to get the job done, and there’s not much room for humility when the job demands action.
A recent study of over 2,000 Australian executives revealed that often executives were democratic and collegial at the beginning of the working week, but often resorted to authoritarian direction giving at week’s end in order to meet deadlines. There was no room for humility in those situations. Humility may be an anachronism in a world recognized by the combat of commerce rather than by cooperative and collegial workplaces. For instance, when managers are asked to apply Benjamin Franklin’s (1784) “Moral Virtues” to contemporary society, there is a predictable resistance to Franklin’s virtue of humility, which is to “imitate Jesus and Socrates.” Today’s executives see themselves as more worldly and upbeat than that, regardless of the valuable lessons implicit in the statement.
When we examine humility across cultures, there are compelling differences. For example, Japanese CEOs have been known to resign when their projected company profits fell short of the mark. These businessmen blamed themselves for their company’s poor performance. When the world’s largest bank, Mizuho Holdings, experienced severe computer breakdowns that delayed business transactions, CEO Terunobu Maeda took swift action. He cut the pay of the employees directly involved in the computer system integration, as well as taking a personal pay cut of 50% for six months. Leaders who shift responsibility back to themselves in good times as well as bad have strength of character that goes beyond standard leadership constructs. These leaders possess the attributes commonly referred to as servant leadership. One of the key elements of this leadership philosophy is humility, or the capacity to commit to your workers as much as you do to the bottom line. The guiding principle of servant leadership is to serve rather than to lead. Serving your workers, being a steward of their efforts, takes a considerable dose of humility and rests on a strong sense of self-identity.
Many western business leaders may reject humility as a desirable or useful attribute in today’s fast moving, competitive world. Nonetheless, the common characteristics of company leaders who have achieved outstanding and sustainable financial performance in this dynamic environment include modesty, humility, quietness, and self-effacing behavior. These attributes are indicators of leaders quietly aware of their roles in the overall scheme of things. Humility therefore appears to be about a realistic sense of perspective, an acceptance of one’s strengths and weaknesses.
Transformation is how leaders achieve universal and benevolent outcomes, and is the second main factor of leadership character. Transformational leaders with character have courage, passion, wisdom, competency, and self-discipline in their leadership repertoire.
Managerial courage includes the willingness to do what is right in the face of risk. With “risk” there is a possibility of failure or loss and no guarantee that everything will turn out fine. Acting with courage may result in unpleasant experiences, yet it is a fundamental ingredient of leadership.
Corporate courage manifests itself in many ways. General Electric (GE) requires law firms on its panels to compete for projects through online, eBay-style auctions which force competing bids to a financial bottom line that allows for comparability across all contenders who are promoting their wares. This innovative and courageous approach coaxes the best out of competitors. From this perspective, courage is immediate and localized.
Michelle Peluso, the chief executive of Travelocity, a US travel company, exemplifies courage. She knows that being innovative requires risk and facing the possibility of failure. Peluso proposed an innovative business model which she believed would assist Travelocity regain ground lost to the company’s key competitors. Peluso’s business model, “seamless connectivity”, focuses on customer and supplier satisfaction. Implementing the model required an investment in technology and training. Investors expressed concern about the time it would take to implement Peluso’s strategy and questioned whether it was the right approach. Peluso was unwavering in the face of mounting ambivalence. She believed that her business model was compatible with the company’s philosophy of doing things differently and having a long-term view.
Peluso did not yield to these pressures. Instead, she worked hard to influence investors by developing a strong rapport with employees and encouraging them to be innovative and passionate about their work. She introduced a weekly prize for outstanding and innovative work by staff. She also mentors twenty-five “exceptional” Travelocity employees.
Peluso’s courage and conviction appear to have paid off handsomely. Travelocity has recently been certified as an official third-party distributor for the Intercontinental Hotels Group because of its supplier-friendly policies.
John McFarlane (2003), the CEO of the ANZ bank in Australia, believes that leadership is about choosing to make a difference and that when you reflect on making a difference it must be in areas about which one is passionate. A leader’s passion can make a significant difference in the degree to which she inspires others or provides focus and motivation for the organisation.
Leadership guru Warren Bennis thinks passion is inherent in effective leadership: “We are productive when we do what we love to do”. For example, toward the end of his seventh year as president of the University of Cincinnati, Bennis was giving a talk at the Harvard School of Education. During question time the dean asked Bennis not if he “enjoyed”, but whether if he “loved” being president of the University of Cincinnati. Bennis acknowledged that he didn’t know, but on reflection realized that he did not love the job of president. For Bennis, this realization was a major turning point in his life, as it made him realize that his passion lie in teaching and writing. If passion or love of your work or vocation is missing, then choose another vocation.
Wisdom underpins major decisions. Former BP CEO John Browne was the first CEO in the oil industry to openly acknowledge the impact the industry was having on the environment, and to highlight the ways of reducing green-house gas emissions. Browne advocated a responsible approach to limiting the energy industry’s impact on the environment through BP’s “Beyond Petroleum” campaign. This approach could have impacted on the company’s bottom line, but the wisdom of the decision was that it tapped into the moral conscience of society at the time.
Compare Browne to Lee Raymond, his counterpart at Exxon Mobil. Raymond initially was skeptical about global warming. Consequently, Raymond is said to have become the “energy executive everyone loves to blame for the industry’s PR problems”. Exxon became the target of a boycott in Europe, which encouraged Raymond to change his stance. Recognizing the positive impact Browne’s approach had on BP’s corporate image, Exxon Mobil subsequently launched its own green ad campaign.
The first and most important ingredient of leadership seems to me to be to possess a rounded and comprehensive knowledge of the subject matter with which you are dealing and about which you want others to act in a particular way.
FedEx’s founder and CEO, Fred Smith, exemplifies the power of competence. Awarded Chief Executive Magazine’s 2004 CEO of the Year prize, Smith was recognised for his ability to take FedEx from being “just an idea to being a great company”.
Smith says that his vision for creating FedEx was the result of studying a mathematical discipline called topology. Through this study he realized that if you connected all points on a network through a central hub, the resulting efficiencies could be huge.
For Smith, competence does matter. When asked what it takes to be a leader who creates a company and then builds it up to a $25 billion-a-year business, employing 240,000 employees and contractors, Smith advocates “continual learning and education and the discipline to apply those lessons to your operation.” He also advises others to make the time and effort to benchmark and learn the lessons of history.
Author and former CEO of international medical technology company, Medtronics, Bill George (2004) argues that self-discipline is the attribute that converts values into consistent action. George describes his successor at Medtronics, CEO Art Collins, as a highly self-disciplined leader as his ego and emotions don’t get in the way of taking appropriate action. Collin’s consistency in his disposition, behaviours and decisions lets employees know where he stands on important issues.
Self-discipline requires the maturity to do what is needed, not always what is desired in the present moment. Amy Brinkley, Chief Risk Officer, Bank of America, exhibits such maturity. Brinkley (2003) includes self-discipline as a key component of her personal equation for success and in order to maintain the right balance between her roles as bank executive, wife, mother and as a member of her church and community: “I try very hard to be fully in the zone I am in at the moment. I give everything I have at that moment to what I am focusing on. I also abide by my own operating principles like staying away from voice mails and e-mails when I am with my kids and my husband.”
As a means of maintaining a balance between professional and personal roles, self-discipline is an important component of effective leadership.
The third major dimension of leadership character is benevolence, and is associated with loyalty, selflessness, integrity, and honesty.
Take Anne Mulcahy, the CEO of Xerox, as a case in point. Mulcahy has exhibited a deep loyalty to her organisation. When she was asked by the board to take on the role of CEO, Xerox was in financial crises, with a $17.1 billion debt and $154 million in cash. In 2000 the stock fell from $63.69 a share to $4.43.
While Mulcahy had an excellent reputation within Xerox, she had no prior CEO experience. Despite the dire financial position of the company, the board recognized Mulcahy was straightforward, hard-working, disciplined, and fiercely loyal to the company. Mulcahy accepted the CEO role based on a sense of duty and loyalty.
When Xerox’s external financial advisors suggested Mulcahy consider filing for bankruptcy, the easier way out, she refused to do so. According to Joe Mancini, Xerox’s Director of Corporate Financial Analysis, the company’s financial advisors didn’t think Mulcahy had the courage to make the painful but necessary changes to save Xerox. But Mulcahy indeed did have what it takes.
In her efforts to achieve what can only be described as an extraordinary corporate turnaround, it is claimed that Mulcahy did not take a single weekend off in two years. Timothy R. Coleman, a senior managing director at the private equity firm, Blackstone, said of Mulcahy at the time: “She was leading by example. Everybody at Xerox knew she was working hard, and that she was working hard for them.”
Organizational loyalty, as a component of character, means commitment to the idea and ideals of the company as much as it does to the nature of its business.
Ping Fu, a founding member of Raindrop Geomagic, a North Carolina-based innovative software company, is a leader who demonstrates a capacity for selflessness. Fu took on the role of CEO in 2001 when the company’s viability was threatened. The company was running out of money and the venture capital markets were drying up.
Under Fu’s leadership, several cost-cutting initiatives were implemented, which included laying off almost half the company’s employees. Those who remained took pay cuts. In her efforts to save the business, Fu loaned the company money in order to pay its workers. She also declined to take a pay check until the company straightened out its financial situation.
Raindrop Geomagic board member Peter Fuss acknowledges Fu’s personal sacrifices. He says she invested considerable time and was tenacious in her efforts to rebuild the company.
Integrity is the most often cited element of corporate mission statements. In most cases, integrity refers to honest representation of a company’s values and operating protocols. Texas Instruments (TI) refers to “representing ourselves and our intentions truthfully” as evidence of their integrity. General Electric (GE) identifies integrity as a “worldwide reputation for honest and reliable business conduct.” The Gillette Company highlights “mutual respect and ethical behavior” as hallmarks of integrity.
Roger Corbett (2004), the CEO and Managing Director of Woolworths, Australia’s largest supermarket chain, consisting of more than 150,000 employees and 1,500 stores, believes integrity is the glue that holds his values and the organization’s success together: “The closer you can get the business towards integrity and the further away from cynicism, then that really is a good measure of the effectiveness of your business … integrity of purpose and example, of lifestyle and attitude, are probably the most important cultural contributions a leader can make to the business.”
Netball Australia receives public funds and is involved with over a million people nationally. Cane (2004) believes her ability to win the confidence of others is critical to the success of the organization, and relies on her capacity to be honest and direct:
I think it’s really important I be seen as a very sound, honest person with high integrity and I need people to want to do business with me. The capacity to build relationships which relates to trust and listening and respect and empathy, those are very important things because they absolutely affect sponsorship outcomes, business financial outcomes, what money we get from the government, from corporate Australia, what money we might get in the future from our members.
Successful leaders are open and honest with others, but they also understand that maintaining trust requires them to exercise discretion in how they use and disclose information. They take care to avoid violating confidences and do not carelessly divulge potentially harmful information.
Greg Dooley, the Australian General Manager of international financial services and technology company Computershare, rates honesty as the most important character attribute of leadership: “If you’re dishonest as a leader then you’ve got no chance. As soon as you lose trust you may as well give up the ghost.” Dooley differentiates between withholding information and deceiving someone. He acknowledges that being open and honest with people may at times be difficult when you have commercially sensitive information that you can’t disclose. However, Dooley argues that appropriately withholding information is critical to Computershare’s business: “Clients need to know that they can trust us,that we’ll be able to handle that information and deal with it on a needs-to-know basis.”
A leader’s capacity for honesty can help followers work constructively on solving issues and problems. American leadership development consultant Joan Lloyd (2001) says: “I think most employees today are hungry for some good old-fashioned honesty.” Employees prefer to work for leaders who they trust can be honest with them about the reality of their circumstances. Lloyd argues that the best leaders are respected, in part, because they level with people and tell it like it is.
Future of leadership with character
Our study identified three underlying dimensions or factors of leadership character. Universalism represents an understanding, appreciation, and tolerance for the welfare of people generally, and is a macro perspective approach to work. Transformation is consistent with the concept of transformational leadership as an activity that inspires others in the achievement of long-term, visionary goals. Transformation is a situation-specific process that relies on the competence and self-reliance of the incumbent in their delivery of inspired and values-driven strategic direction for the enterprise. The third dimension, Benevolence, is a micro approach to work, and focuses on concern for the welfare of others through one’s daily interactions. As a process, Transformation can be seen as the link between Universalism as the externally-focused manifestation of leadership character and internally-focused Benevolent intentions. We propose that leaders who manifest courage (setting a long-term direction and taking people along without fear) with passion (energy and enthusiasm) are more often associated with outcomes that have external as well as internal benefits, and are typical of character-led organizations.
The study on which this article is based was made possible through the generous support of the Australian Institute of Management (Queensland division).
We appreciate the contributions of Dr. Anne Hartican, research assistant, Monash University, to this study.