Leaders Are Made Not Born

Confident, charismatic and tough are some traits that you would expect to find in a successful leader. That is why it is widely believed that all leaders have similar personality types, meaning there is an archetypal personality for leaders. A good leader is thought of as someone who has such a strong personality that people just follow them because of their forceful ideologies and values. Those who have sufficient character are likely to triumph over whatever reality they confront.

A new picture of leadership has emerged however, which focuses on how a persons ability to lead is largely dependent on their understanding of their followers, not by how charismatic they can be. It explains that leadership is the ability to shape what followers want to do instead of enforcing compliance; leadership is dependent on constituent co-operation and support rather than punishment and fear. To gain any form of credibility amongst followers, leaders must try to position themselves among the group and never above it.

Recent literature identifies that a good leader does not have any fixed set of personality traits. Instead a leader is often a choice by the group being led, in fact leaders can even select the traits they want to project to followers to increase their standing amongst the group. A leader shares in the same identity as their followers, they are a representation of their group. The most influential presidents, captains and chief executives adopt the values and identity of the group then try to shape that identity for their own ends.

No accident that George. W. Bush, has often presented himself to Americans as a regular guy rather than the next in line from an elite East Coast Yale University dynasty!

From Charisma to Consensus

100 years ago, the dominant theory of leadership was that all leaders have the ideal personality. There was a romanticised view of leaders, with many people seeing them as heroes and saviours. However, post WW2, and following the rise of fascism and Nazism many turned against the notion that character alone determined the effectiveness of leaders. To believe that entire nations could be lead by one charismatic person into carrying out some of the Nazi atrocities was hard to stomach, so psychologists began to look for other explanations of leadership.

Scholars began to favour ‘contingency models’ which focus on the context which leaders operate, as opposed to the leader alone. Influential social psychologist Fred Fiedler suggested that the secret to good leadership lies in finding and settling in the ‘perfect match’. By this Fiedler meant that there is an ideal leader for every group, basically, every would be leader has an ideal leadership context. Strong leadership comes out of a symbiotic relationship between leaders and followers within a social group, it requires an intimate understanding of group psychology.

The study of how groups can restructure individual psychology provides the first clues into the secrets of effective leadership. Henri Tajfel and John. C. Turner’s research into social identity in the 1970s may provide some answers. Social identity refers to the part of a person’s self that is defined by a group. Turner pointed out, social identity allows people to identify and act together as group members. Social identities thus make group behaviour possible; enabling us to reach a consensus on what matters to us to co-ordinate our actions with others and to strive for shared goals.

This viewpoint does not appeal to leadership directly, but clarifies why leadership requires a common ‘us’ to represent a group. Leaders are at their most effective when they can induce followers to see themselves as a group member and to see the group’s interest as their own interest. An example of this comes from Bernard Bass from the American Binghamton University when he showed that leaders are best when they ensure that followers see the group’s identity as their personal identity, and therefore they can lead them to do certain things because it is in the best interest of everyone.

A prime of example of how it is integral for a leader to share similar identities as followers comes from the European monarchs. Before national identities emerged, many monarchs ruled by force, using power rather than understanding. Once people identified with nations, effective monarchs needed to rule as patriots who were able to lead the people because of a shared national identity. Monarchs such as Louis XVI of France misunderstood or ignored this transition and litterally lost their heads.

One of the Gang

When shared social identity exists, leaders can best represent the identity that will have the most influence over the group members. The best leaders are usually prototypical of the group that they are leading. George. W. Bush is a prime example in the way he connected with Middle America – intentionally or otherwise – when he littered his speeches with verbal gaffes, something that columnist Kevin Drum suggested in the Washington monthly worked in Bush’s favour during the 2004 election. Indeed, those who scoffed at Bush’s awkward utterances suffered, because their criticisms cast them as the alien elite, out of touch with most ordinary Americans.

Even the way Bush dressed helped him to appear as representative of the group’s he was leading. His leather jackets and cowboy clothes create an image of him as a regular guy. In the same vein the late Palestinian leader Yasser Arafat adopted the headscarf of the peasantry to identify with his people. Such examples counter the idea that leadership requires a particular set of personality traits, the only desired traits and actions necessary have to fit in with the culture of the group being led.

This may explain why young people have become so disinterested in politics in recent years. They may not relate to the politicians today, and therefore feel indifferent about voting any one group in.

If fitting in is important for gaining influence and control, then anything that sets leaders apart from the group can compromise their effectiveness. Acting superior or failing to treat followers respectfully or listen to them will undermine a leaders credibility. That is why paying CEOs disproportionately large wages often results in unrest within a company, because those who are being led find it hard to relate to those who are leading, because of the differences in salary.

Wielding words – The Skill of lincoln
“Four scores and seven years ago our fathers brought forth upon this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal”
– Abraham Lincoln
Leadership is not just conforming to group norms! The best leaders define their groups social identity to fit with policies they plan to promote, enabling them to position those policies as expressions of what their constituents already believe. In Lincoln’s Gettysburg address, Abaraham Lincoln strongly emphasised the principle of equality to rally people around his key policy objectives: unification of the states and emancipation of the slaves
Lincoln elevated equality to a position of supreme importance and made it the touchstone of American identity. After Lincoln’s address, Americans interpreted the constitution in a new way. This reshaping of American identity as centred on equality allowed Lincoln to unite and mobilise Americans around freeing slaves.

No matter how skilled a person may be a leader’s effectiveness is highly dependent on two things: Do followers see their leaders as one of them? Do followers find their leader’s vision of identity compelling? Psychological analysis tells us that for leadership to function well, leaders and followers must be bound by a shared identity and by the quest to use that identity as a blueprint for action. The division of responsibility in leadership can vary. In more authoritarian cases, leaders can claim sole jurisdiction over identity and punish anyone who dissents. In more democratic cases leaders can engage the population in a dialogue over their shared identity and goals. Either way, the development of a shared social identity is the basis of influential and creative leadership. If you can control the definition of identity, you can change the world.

Musa Clarke

Money Motivated

Statistics from the non-partisan Economic policy institute show that chief executive pay jumped more than 725 percent in 2013 in comparison to a 5.7 percent rise in the wages of average workers, this disparity between the highest earners and others seems to be widening

In the aftermath of the economic downturn, senior executives and bankers have been scrutinised and often branded as ‘fat cats’ because of their high salaries and substantial reward packages. This has led to outcries from various constituent groups to examine the pay of senior executives, bankers and CEOs more closely. From a psychological perspective paying more to those in charge may not actually be the most effective way of motivating them.

Does more money mean more motivation?

Ever since people started to appreciate management as a science it has been common belief that the most effective way of motivating employees is through the use of wage incentives. More money = more motivation; is the mantra followed by most firms. The psychological explanation is that an individual is most motivated through the use of external rewards like increases in salary and bonuses; this method is often referred to as extrinsic motivation. The reasoning is that human behaviour is goal orientated. So bankers and senior executives are motivated to increase their efficiency in order to increase the incentives they receive, in theory.

In 1972 Edward Deci argued that there is another way to motivate. There are certain behaviours that people will do and do well, not for any tangible rewards but instead for their own inherent rewards. These behaviours are intrinsically motivated. Deci wondered whether these two types of motivation could coincide with each other. What he found was that the more tangible  rewards one received the less intrinsically motivated one was. Basically if you are motivated by money, that is likely to be the only thing you’re motivated by. Bankers are rewarded with huge bonuses and rises in annual salary so you can say they are extrinsically motivated. But how does this tangible motivation affect how well senior executives and bankers work?

Are the bonuses related to firm performance?

What does the data tell us? If senior executives are being paid more and their firms are benefitting from this increased motivation then surely large salaries are justified? Well data into the relationship between senior executive pay and firm performance is contradictory and inconclusive. Some studies show that the more they pay out the higher the firm performance is, others find no relationship between the two. Some senior executives may argue that firm performance is a poor indicator of individual performance though. Some firms have good senior executives but perform poorly others have poor ones and perform well. It seems like firm performance is influenced by a whole bunch of different factors.

Excess pay – creativity and company morale

Psychologist Dan Pink recently argued that over incentivising actually dulls thinking and creativity. A study by the Federal Reserve Bank into different tasks unearthed some interesting truths about how different types of motivation can impact our cognition. They found that the more money you paid individuals the poorer their performance was in certain tasks. Anything involving mechanical skill, bonuses worked as expected, the higher the pay the better the performance. Once the task involved creativity, thinking outside of the box or even ‘rudimentary cognitive skill’, a larger reward led to a drop in ability.

One step further, do these big wages effect team morale and chemistry within organisations? Yes, negatively. There is evidence to prove that paying senior executives too much money can lead to unrest amongst those that are underpaid. The more income equality in an organisation leads to more emotional distress in employees who are paid less. This is because relative wealth is just as important as absolute wealth. Business psychologists refer to this as the equity theory. An individual considers that they are treated fairly if they perceive the ratio of their input to their outcomes equivalent to those who are around them. Businesses may find that those lower down in the organisation will not work as hard because they see the disparity in wages as being unfair.

Why do we keep paying our bankers and senior executives these large sums?

Many people refer to the tournament theory. This happens when wage differences are based not on marginal productivity but instead on relative differences between the individuals. Basically companies pay huge sums of money to senior bankers to motivate those below them to work harder for promotions. By encouraging this type of competition within the company they believe it means everyone will work harder. But since the majority of incentives are offered in the form of immediate tangible rewards it has been argued that this has led to increased risk-taking. Large incentives mean they deliberately ignore long-term risks in pursuit of short-term goals. 

What actually works then?

Well from a psychological perspective it is obviously abit more complex than just paying more. Just paying more decreases intrinsic motivation, encourages risk-taking and discourages those in the company working at the base. What businesses should focus on instead is not simply just rewarding CEOs, bankers and executives with more money but instead try to intrinsically motivate them.  One way of doing this is by rewarding them with stocks. By doing this you give them a higher shareholding which means they become more dependent on the companies wellbeing. Every move they make will directly affect them. It means they become one with the company in a sense. This type of intrinsic motivation has been proven to encourage creativity and innovation.

Questions may be raised when offering those at the top higher share holdings. It’s basically giving more power to those who have the majority of it already. People suggest that this means they have less people to answer to and can distribute large contracts to themselves. However, if you create a board independent of any senior executives, a board tasked to manage salaries and compensation/rewards in order to review and control remuneration thereby ensuring wages and bonuses stay at the desired level.

It’s definitely a business model that works. Companies such as John Lewis and Ben & Jerry’s, have followed a business plan of rewarding executives with share holdings as opposed to monetary rewards. These companies have proven that it is a successful and sustainable model. It is not just a case of increasing motivation, but with less monetary incentives wage disparity between the highest and lowest incomes within the company shorten. Less differences between wages results in higher work satisfaction right the way through an organisation.

Maybe these large bonuses are more of a hindrance than help. There is still a difference between what science knows and what business does. Science has proven that the extrinsic methods used to reward executives only works in a rare set of circumstances. The secret to high performance is not found in rewards and punishments but instead as a result of unseen intrinsic drive, the drive to do things for their own sake and benefit.

Musa Clarke