People & Strategy Winter 2015 Vol. 38 Issue 1 - 9

perspectives - point
Judgment. The success or failure of organizations depends on decision-making. Some
leaders make better decisions than others.
Competence. To be competent in the team's
business, good leaders seem to know what
they are talking about. Subordinates see leaders who lack business acumen as empty suits,
and are unwilling to follow them.
Vision. Good leaders can explain how their
mission fits into the larger scheme of things.
This vision clarifies roles, goals, and the way
forward, thereby facilitating team performance.
These four themes emerge in descending
order-with integrity being the most important attribute and vision the least important-but all four are crucial components of
leaders' reputations. Conversely, leaders who
lack integrity, good judgment, competence,
and vision will surely fail.

2. Personality Predicts Leadership
The second lesson concerns personality and
leadership. The data are clear: Personality is
the best single predictor of leader performance that we have. For example, Jim Collins
published a milestone study of 11 Fortune
1000 companies that had 15 years of below
average performance, followed by a transition year, and then 15 years of performance
substantially above their industry average.

Harter, Schmidt, and Hayes (2002) show
that: a) managers' behavior predicts employee engagement; and b) employee engagement
predicts business-unit performance. Engagement is a function of how people are treated
by managers. Specifically, the quality of the
relationship between leaders and followers
creates engagement.

4. Leaders Drive Financial
Performance

Collins found that in each case a new CEO
had turned the company around and that
these 11 highly effective CEOs combined
extreme personal humility with a fierce and
relentless drive to win. This contrasts with
their high-profile, publicity-seeking counterparts in poorer performing companies. While
personality is important in both cases, we can
also reject the view that CEOs need charisma
to be effective.

The fourth lesson concerns the financial consequences of good and bad leadership performance. Collins' research shows that well-led
companies are more profitable than those
with average leadership. Although the estimates vary from 14 percent to 40 percent,
several studies conclude that CEOs account
for a significant proportion of variance in the
financial performance of large organizations.

3. Leadership Drives Engagement;
Engagement Drives Performance

5. There Are More Bad Leaders
than Good Ones

The third lesson concerns leadership and
employee engagement. Engagement is
"...a persistent psychological state associated
with behaviors that are beneficial to an
organization" (Macey & Schneider, 2008).
In major separate studies, Huselid (1995) and

The fifth lesson concerns managerial incompetence. In another milestone paper, Bentz
(1967; 1985) reported on a 30-year study of
managers at Sears. His research showed that
the failure rate for managers in American
business is substantially higher than expect-

ed. How many bad managers are there? We
identified 12 published estimates of the frequency of management failure, which range
from 30 percent to 67 percent, with an average of about 50 percent. Note that these estimates concern the number of managers who
are actually fired. I believe that about twothirds of existing managers are ineffective,
but fewer than half will be caught because
they are good at internal politics. The misery
that bad managers create for their staff has
consequences on morale. About 75 percent of
working adults say the most stressful aspect
of their jobs is their immediate boss.

6. Bad Managers Lead from the
Dark Side
Finally, bad managerial behavior originates in
the dark side of personality. As Bentz (1967)
noted, most managers fail for the same reasons: emotional immaturity, arrogance, micromanagement, dishonesty, indecisiveness, poor
communication skills, and so forth. Hogan
and Hogan (2001) proposed a taxonomy of
the most common counterproductive managerial behaviors. Although the behavior patterns
are different, they have the same effect on
employees: They erode trust, increase stress,
and degrade performance.
VOLUME 38/ISSUE 1 - 2015

People & Strategy Winter 2015 Vol. 38 Issue 1

Table of Contents for the Digital Edition of People & Strategy Winter 2015 Vol. 38 Issue 1