Do charismatic leaders increase profits? 

Asked and Answered: 5 questions for John Antonakis, organizational behaviorist
The Brief
Last week, we looked at the power of a CEO’s personality on the performance and health of his or her company. In one of the papers we cited, co-author John Antonakis, professor of organizational behavior at the University of Lausanne in Switzerland, wrote that in the absence of clear “performance signals” (strong evidence of past success or failure leading a business), CEO candidates with more charisma are more likely to be hired than those with less charisma. In an interview Professor Antonakis granted me over Skype, he spoke with us about his findings and what to keep mind when you’re choosing leaders, or vying to become one.
In your paper you say that people believe “charismatic leaders usually engender positive outcomes.” Why?
People intuitively think that charismatic leaders are able to exert their influence in very effective ways, and there is evidence to suggest that charismatic leaders can be more effective. Stock prices of companies headed by charismatic leaders tend to appreciate more in the medium-to-long term than companies headed by non-charismatic leaders, so there is evidence to suggest charismatic leaders affect how well a company is managed. Charismatic leaders can implement their policies more easily because they are better equipped to communicate their vision and because followers identify with them more than a non-charismatic leader. 

How can companies apply your findings to hiring?
It’s in the interest of companies to ensure they get the most effective leaders, and one of the components of leader effectiveness is charisma. Assuming we’re holding the competence of the leader constant, a competent, charismatic leader will be more effective than a comparable competent, non-charismatic leader. 

“Assuming we’re holding the competence of the leader constant, a competent, charismatic leader will be more effective than a comparable competent, non-charismatic leader.” 


Once a charismatic CEO has been hired, does his or her charisma afford an advantage?
There are many situations where a company may have lackluster performance—the company is not doing particularly well or particularly poorly—and our research suggests that if the leader is charismatic, it is much more likely that the leader will be retained as a CEO than in situations where the company has lackluster performance and the CEO is not charismatic. Research also shows that even when a company is not doing well, individuals will still have faith in the ability of the CEO to turn around the company if the CEO is charismatic. So even in the case of bad company performance, the charismatic CEO will get the benefit of the doubt.

“So even in the case of bad company performance, the charismatic CEO will get the benefit of the doubt.”


In your paper, you elude to the ongoing debate surrounding whether CEOs have an impact on organizational outcomes. To what degree do you believe CEOs are responsible for organizational outcomes?
I definitely think that CEOs can affect the performance of a company, and there is research that indicates that CEOs matter to the bottom line. The micro- and macro-economic environment also play a big part, but it’s extreme to say that leadership is merely a social construction and that repressed followers simply project their hopes and fears on leaders and are hopeless peons in a social construction game.  

Are leadership and charisma inextricably linked?
Certainly not. Leadership is a process of influence, and this influencing process can take many forms. Charisma is just one of many levers that leaders can pull to influence others. For a leader to have power, it can come in many forms: Power from holding a legitimate office; being able to reward others and to punish others; [power] to use one’s expertise. Charisma is just the lever that we reference in our study.

This interview has been edited and condensed. Philip Garrity is an associate editor of 914INC., a quarterly business-lifestyle publication serving Westchester County, New York.He is a frequent contributor to the RelSci blog. 

RelSci is a technology solutions company that helps create competitive advantage through a crucial yet vastly underutilized asset: relationship capital with influential decision makers. 

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