Business Leadership: A Jossey-Bass Reader

By Joan V. Gallos

The second edition of best-selling Business Leadership contains the best thinking on leadership from the biggest names in the business. It offers leaders everything they need to know to prepare for today’s—and tomorrow’s—leadership challenges: how to understand the leadership process, identify opportunities, get things started right, avoid predictable pitfalls, and maximize success. Effective leaders use mind, heart, and spirit in their work, and this volume is designed to guide and support leaders in their efforts. With an introduction by Joan V. Gallos—editor of the highly praised Organization Development: A Jossey-Bass Reader—the author list for this invaluable resource reads like the who's who of business leadership.

• Language: English
• Publisher: Wiley
• Release date: Mar 31, 2014
• ISBN: 9781118930885

Book preview

Part One

Framing the Issues: What Is Leadership?

The chapters in Part One offer answers to the basic question, What is leadership? They remind us that leadership is a complex social process, rooted in the values, skills, knowledge, and ways of thinking of both leaders and followers. Leadership always involves adaptive change, as Ronald Heifetz notes in the Foreword to this volume, and we think too simply when we equate leadership with the search for a simple answer to a current problem. Leaders help us understand our current reality and forge a brighter future from it. They see new opportunities, and manage a complex interactive process that supports individual and collective growth. In the process of this work, leaders face critical choices based on their reading of the circumstances, the individuals involved, and the possibilities that they see. And although there is widespread agreement that leadership is important and that effective leadership is vital, there is less clarity about what that really means or how that translates into effective action.

The word leadership has become an incantation, cautions John Gardner (1993), and its meaning has risen above common workplace usage. There seems to be a feeling that if we invoke it often enough with sufficient ardor we can ease our sense of having lost our way, our sense of things unaccomplished, of duties unfulfilled (p. 1). This kind of thinking clouds our perspectives toward everyday leaders and leadership—and makes it hard to understand how ordinary people can successfully wear the mantle. It also keeps us from looking below the surface—beyond leadership’s aura—so that we fail to fully appreciate what leadership is and how it works.

The chapters in this section decompose leadership. They distinguish leadership from other forms of influence, like power, authority, and dominance; identify essential elements and skills; and correct common myths about leading. Together they offer the basis for a grounded framework and help us see that success requires

A simple, not simplistic, definition of the leadership process

Insight into one’s purpose for leading

Understanding of the organizational context in which one leads

Appreciation for the unique challenges and opportunities inherent in each situation

Clarity about what one brings to the leadership table

Savvy leaders develop their own conceptual framework about all this, a repertoire of skills to call upon, capacities for self-reflection and learning from experience, and a healthy respect for the difficulties and risks. The authors in this section provide rich opportunities to think more systematically about leadership basics, applications, and competencies for success.

Part One begins with a classic article from the Harvard Business Review by John P. Kotter, What Leaders Really Do. This chapter explores the seminal distinction between leadership and management, identifying the two as complementary functions that contribute significantly and in their own ways to organizational effectiveness. Managers, says Kotter, bring order from chaos through planning, organizing, and controlling. Leaders, in contrast, help organizations cope with change and opportunity by focusing on vision, network building, and the relationships needed for a strong organizational future.

Good leadership is emotionally compelling. Effective leaders inspire and motivate, and those who know how to bring out the best in themselves and others help their organizations to thrive and grow. In fact, say Daniel Goleman, Richard Boyatzis, and Annie McKee, the core of leadership lies in leaders’ abilities to manage their own and others’ emotional responses to each situation. The three authors explore the foundational role of emotional intelligence in leadership in Chapter Two, Primal Leadership: The Hidden Power of Emotional Intelligence.

Leadership is about the ongoing process of building and sustaining a relationship between those who aspire to lead and those willing to follow. In Chapter Three, The Five Practices of Exemplary Leadership, an excerpt from their best-selling book The Leadership Challenge: How to Keep Getting Extraordinary Things Done in Organizations, James M. Kouzes and Barry Z. Posner explore common patterns of action at the core of effective leadership. Authenticity, initiative, courage, and inspiration, as well as the abilities to frame engaging opportunities, foster collaboration, and empower others—qualities available to all no matter where they sit in the hierarchy—can enable groups of ordinary individuals to accomplish extraordinary things.

Leadership is multidimensional in skill and orientation. Successful leaders need to understand people and organizations, tasks and processes, self and others. They must attend to current realities while envisioning future possibilities, and need confidence and strategies for working competently across a wide range of diverse issues—from fostering the organizational clarity that comes from sound structures and policies to unleashing energy and creativity through bold visions, from creating learning organizations where workers mature and develop as everyday leaders to managing the conflict inevitable in a world of enduring differences. Leaders use mind, heart, and spirit in their work and require a map to guide and direct their shuttling among multiple organizational levels, processes, issues, and domains.

In Chapter Four, Reframing Leadership, Lee G. Bolman and Terrence E. Deal propose four sets of common organizational issues or frames—structure, people, politics, and symbols—as a way to sort the myriad activities and concerns that compete for a leader’s attention. Organizations are simultaneously sets of structural arrangements and practices, opportunities for human contribution, political arenas for negotiating differences, and creative outlets for individual passion and collective purpose. Successful leaders realize this, consciously balance their attention across all four sets of issues, and reframe—discipline themselves to deliberately view a situation or challenge from multiple perspectives.

Leadership is a human invention and process, and it is tempting to equate successful business leadership with a powerful CEO or charismatic senior executive. Although these individuals may indeed bring leadership to their organizations, James O’Toole reminds us in Chapter Five, When Leadership Is an Organizational Trait, that overreliance on a single heroic figure distorts appreciation of leadership as an organizational function. High-performing companies, O’Toole has found, institutionalize the central tasks and responsibilities of leadership by incorporating them into their organizational cultures, systems, policies, and practices. In the process they avoid overreliance on one individual, compensate for weakness and leadership gaps at the top, and build organizational systems and structures of shared accountability that withstand the test of time, shifting markets, and succession plans.

Reference

Gardner, J. (1993). On leadership. New York: Free Press.

Chapter One

What Leaders Really Do

John P. Kotter

Leadership is different from management, but not for the reasons most people think. Leadership isn’t mystical and mysterious. It has nothing to do with having charisma or other exotic personality traits. It is not the province of a chosen few. Nor is leadership necessarily better than management or a replacement for it. Rather, leadership and management are two distinctive and complementary systems of action. Each has its own function and characteristic activities. Both are necessary for success in an increasingly complex and volatile business environment.

Most U.S. corporations today are overmanaged and underled. They need to develop their capacity to exercise leadership. Successful corporations don’t wait for leaders to come along. They actively seek out people with leadership potential and expose them to career experiences designed to develop that potential. Indeed, with careful selection, nurturing, and encouragement, dozens of people can play important leadership roles in a business organization.

But while improving their ability to lead, companies should remember that strong leadership with weak management is no better, and is sometimes actually worse, than the reverse. The real challenge is to combine strong leadership and strong management and use each to balance the other.

Of course, not everyone can be good at both leading and managing. Some people have the capacity to become excellent managers but not strong leaders. Others have great leadership potential but, for a variety of reasons, have great difficulty becoming strong managers. Smart companies value both kinds of people and work hard to make them a part of the team.

But when it comes to preparing people for executive jobs, such companies rightly ignore the recent literature that says people cannot manage and lead. They try to develop leader-managers. Once companies understand the fundamental difference between leadership and management, they can begin to groom their top people to provide both.

THE DIFFERENCE BETWEEN MANAGEMENT AND LEADERSHIP

Management is about coping with complexity. Its practices and procedures are largely a response to one of the most significant developments of the twentieth century: the emergence of large organizations. Without good management, complex enterprises tend to become chaotic in ways that threaten their very existence. Good management brings a degree of order and consistency to key dimensions like the quality and profitability of products.

Leadership, by contrast, is about coping with change. Part of the reason it has become so important in recent years is that the business world has become more competitive and more volatile. Faster technological change, greater international competition, the deregulation of markets, overcapacity in capital-intensive industries, an unstable oil cartel, raiders with junk bonds, and the changing demographics of the work force are among the many factors that have contributed to this shift. The net result is that doing what was done yesterday, or doing it 5% better, is no longer a formula for success. Major changes are more and more necessary to survive and compete effectively in this new environment. More change always demands more leadership.

Consider a simple military analogy: a peacetime army can usually survive with good administration and management up and down the hierarchy, coupled with good leadership concentrated at the very top. A wartime army, however, needs competent leadership at all levels. No one yet has figured out how to manage people effectively into battle; they must be led.

These different functions—coping with complexity and coping with change—shape the characteristic activities of management and leadership. Each system of action involves deciding what needs to be done, creating networks of people and relationships that can accomplish an agenda, and then trying to ensure that those people actually do the job. But each accomplishes these three tasks in different ways.

Companies manage complexity first by planning and budgeting—setting targets or goals for the future (typically for the next month or year), establishing detailed steps for achieving those targets, and then allocating resources to accomplish those plans. By contrast, leading an organization to constructive change begins by setting a direction—developing a vision of the future (often the distant future) along with strategies for producing the changes needed to achieve that vision.

Management develops the capacity to achieve its plan by organizing and staffing—creating an organizational structure and set of jobs for accomplishing plan requirements, staffing the jobs with qualified individuals, communicating the plan to those people, delegating responsibility for carrying out the plan, and devising systems to monitor implementation. The equivalent leadership activity, however, is aligning people. This means communicating the new direction to those who can create coalitions that understand the vision and are committed to its achievement.

Finally, management ensures plan accomplishment by controlling and problem solving—monitoring results versus the plan in some detail, both formally and informally, by means of reports, meetings, and other tools; identifying deviations; and then planning and organizing to solve the problems. But for leadership, achieving a vision requires motivating and inspiring—keeping people moving in the right direction, despite major obstacles to change, by appealing to basic but often untapped human needs, values, and emotions.

A closer examination of each of these activities will help clarify the skills leaders need.

Setting a Direction vs. Planning and Budgeting

Since the function of leadership is to produce change, setting the direction of that change is fundamental to leadership.

Setting direction is never the same as planning or even long-term planning, although people often confuse the two. Planning is a management process, deductive in nature and designed to produce orderly results, not change. Setting a direction is more inductive. Leaders gather a broad range of data and look for patterns, relationships, and linkages that help explain things. What’s more, the direction-setting aspect of leadership does not produce plans; it creates vision and strategies. These describe a business, technology, or corporate culture in terms of what it should become over the long term and articulate a feasible way of achieving this goal.

Most discussions of vision have a tendency to degenerate into the mystical. The implication is that a vision is something mysterious that mere mortals, even talented ones, could never hope to have. But developing good business direction isn’t magic. It is a tough, sometimes exhausting process of gathering and analyzing information. People who articulate such visions aren’t magicians but broad-based strategic thinkers who are willing to take risks.

Nor do visions and strategies have to be brilliantly innovative; in fact, some of the best are not. Effective business visions regularly have an almost mundane quality, usually consisting of ideas that are already well known. The particular combination or patterning of the ideas may be new, but sometimes even that is not the case.

For example, when CEO Jan Carlzon articulated his vision to make Scandinavian Airlines System (SAS) the best airline in the world for the frequent business traveler, he was not saying anything that everyone in the airline industry didn’t already know. Business travelers fly more consistently than other market segments and are generally willing to pay higher fares. Thus focusing on business customers offers an airline the possibility of high margins, steady business, and considerable growth. But in an industry known more for bureaucracy than vision, no company had ever put these simple ideas together and dedicated itself to implementing them. SAS did, and it worked.

What’s crucial about a vision is not its originality but how well it serves the interests of important constituencies—customers, stockholders, employees—and how easily it can be translated into a realistic competitive strategy. Bad visions tend to ignore the legitimate needs and rights of important constituencies—favoring, say, employees over customers or stockholders. Or they are strategically unsound. When a company that has never been better than a weak competitor in an industry suddenly starts talking about becoming number one, that is a pipe dream, not a vision.

One of the most frequent mistakes that overmanaged and underled corporations make is to embrace long-term planning as a panacea for their lack of direction and inability to adapt to an increasingly competitive and dynamic business environment. But such an approach misinterprets the nature of direction setting and can never work.

Long-term planning is always time consuming. Whenever something unexpected happens, plans have to be redone. In a dynamic business environment, the unexpected often becomes the norm, and long-term planning can become an extraordinarily burdensome activity. This is why most successful corporations limit the time frame of their planning activities. Indeed, some even consider long-term planning a contradiction in terms.

In a company without direction, even short-term planning can become a black hole capable of absorbing an infinite amount of time and energy. With no vision and strategy to provide constraints around the planning process or to guide it, every eventuality deserves a plan. Under these circumstances, contingency planning can go on forever, draining time and attention from far more essential activities, yet without ever providing the clear sense of direction that a company desperately needs. After awhile, managers inevitably become cynical about all this, and the planning process can degenerate into a highly politicized game.

Planning works best not as a substitute for direction setting but as a complement to it. A competent planning process serves as a useful reality check on direction-setting activities. Likewise, a competent direction-setting process provides a focus in which planning can then be realistically carried out. It helps clarify what kind of planning is essential and what kind is irrelevant.

Aligning People vs. Organizing and Staffing

A central feature of modern organizations is interdependence, where no one has complete autonomy, where most employees are tied to many others by their work, technology, management systems, and hierarchy. These linkages present a special challenge when organizations attempt to change. Unless many individuals line up and move together in the same direction, people will tend to fall all over one another. To executives who are overeducated in management and undereducated in leadership, the idea of getting people moving in the same direction appears to be an organizational problem. What executives need to do, however, is not organize people but align them.

Managers organize to create human systems that can implement plans as precisely and efficiently as possible. Typically, this requires a number of potentially complex decisions. A company must choose a structure of jobs and reporting relationships, staff it with individuals suited to the jobs, provide training for those who need it, communicate plans to the work force, and decide how much authority to delegate and to whom. Economic incentives also need to be constructed to accomplish the plan, as well as systems to monitor its implementation. These organizational judgments are much like architectural decisions. It’s a question of fit within a particular context.

Aligning is different. It is more of a communications challenge than a design problem. First, aligning invariably involves talking to many more individuals than organizing does. The target population can involve not only a manager’s subordinates but also bosses, peers, staff in other parts of the organization, as well as suppliers, governmental officials, or even customers. Anyone who can help implement the vision and strategies or who can block implementation is relevant.

Trying to get people to comprehend a vision of an alternative future is also a communications challenge of a completely different magnitude from organizing them to fulfill a short-term plan. It’s much like the difference between a football quarterback attempting to describe to his team the next two or three plays versus his trying to explain to them a totally new approach to the game to be used in the second half of the season.

Whether delivered with many words or a few carefully chosen symbols, such messages are not necessarily accepted just because they are understood. Another big challenge in leadership efforts is credibility—getting people to believe the message. Many things contribute to credibility: the track record of the person delivering the message, the content of the message itself, the communicator’s reputation for integrity and trustworthiness, and the consistency between words and deeds.

Finally, aligning leads to empowerment in a way that organizing rarely does. One of the reasons some organizations have difficulty adjusting to rapid changes in markets or technology is that so many people in those companies feel relatively powerless. They have learned from experience that even if they correctly perceive important external changes and then initiate appropriate actions, they are vulnerable to someone higher up who does not like what they have done. Reprimands can take many different forms: That’s against policy or We can’t afford it or Shut up and do as you’re told.

Alignment helps overcome this problem by empowering people in at least two ways. First, when a clear sense of direction has been communicated throughout an organization, lower level employees can initiate actions without the same degree of vulnerability. As long as their behavior is consistent with the vision, superiors will have more difficulty reprimanding them. Second, because everyone is aiming at the same target, the probability is less that one person’s initiative will be stalled when it comes into conflict with someone else’s.

Motivating People vs. Controlling and Problem Solving

Since change is the function of leadership, being able to generate highly energized behavior is important for coping with the inevitable barriers to change. Just as direction setting identifies an appropriate path for movement and just as effective alignment gets people moving down that path, successful motivation ensures that they will have the energy to overcome obstacles.

According to the logic of management, control mechanisms compare system behavior with the plan and take action when a deviation is detected. In a well-managed factory, for example, this means the planning process establishes sensible quality targets, the organizing process builds an organization that can achieve those targets, and a control process makes sure that quality lapses are spotted immediately, not in 30 or 60 days, and corrected.

For some of the same reasons that control is so central to management, highly motivated or inspired behavior is almost irrelevant. Managerial processes must be as close as possible to fail-safe and risk-free. That means they cannot be dependent on the unusual or hard to obtain. The whole purpose of systems and structures is to help normal people who behave in normal ways to complete routine jobs successfully, day after day. It’s not exciting or glamorous. But that’s management.

Leadership is different. Achieving grand visions always requires an occasional burst of energy. Motivation and inspiration energize people, not by pushing them in the right direction as control mechanisms do but by satisfying basic human needs for achievement, a sense of belonging, recognition, self-esteem, a feeling of control over one’s life, and the ability to live up to one’s ideals. Such feelings touch us deeply and elicit a powerful response.

Good leaders motivate people in a variety of ways. First, they always articulate the organization’s vision in a manner that stresses the values of the audience they are addressing. This makes the work important to those individuals. Leaders also regularly involve people in deciding how to achieve the organization’s vision (or the part most relevant to a particular individual). This gives people a sense of control. Another important motivational technique is to support employee efforts to realize the vision by providing coaching, feedback, and role modeling, thereby helping people grow professionally and enhancing their self-esteem. Finally, good leaders recognize and reward success, which not only gives people a sense of accomplishment but also makes them feel like they belong to an organization that cares about them. When all this is done, the work itself becomes intrinsically motivating.

The more that change characterizes the business environment, the more leaders must motivate people to provide leadership as well. When this works, it tends to reproduce leadership across the entire organization, with people occupying multiple leadership roles throughout the hierarchy. This is highly valuable, because coping with change in any complex business demands initiatives from a multitude of people. Nothing less will work.

Of course, leadership from many sources does not necessarily converge. To the contrary, it can easily conflict. For multiple leadership roles to work together, people’s actions must be carefully coordinated by mechanisms that differ from those coordinating traditional management roles.

Strong networks of informal relationships—the kind found in companies with healthy cultures—help coordinate leadership activities in much the same way that formal structure coordinates managerial activities. The key difference is that informal networks can deal with the greater demands for coordination associated with nonroutine activities and change. The multitude of communication channels and the trust among the individuals connected by those channels allow for an ongoing process of accommodation and adaptation. When conflicts rise among roles, those same relationships help resolve the conflicts. Perhaps most important, this process of dialogue and accommodation can produce visions that are linked and compatible instead of remote and competitive. All this requires a great deal more communication than is needed to coordinate managerial roles, but unlike formal structure, strong informal networks can handle it.

Of course, informal relations of some sort exist in all corporations. But too often these networks are either very weak—some people are well connected but most are not—or they are highly fragmented—a strong network exists inside the marketing group and inside R&D but not across the two departments. Such networks do not support multiple leadership initiatives well. In fact, extensive informal networks are so important that if they do not exist, creating them has to be the focus of activity early in a major leadership initiative.

CREATING A CULTURE OF LEADERSHIP

Despite the increasing importance of leadership to business success, the on-the-job experiences of most people actually seem to undermine the development of attributes needed for leadership. Nevertheless, some companies have consistently demonstrated an ability to develop people into outstanding leader-managers. Recruiting people with leadership potential is only the first step. Equally important is managing their career patterns. Individuals who are effective in large leadership roles often share a number of career experiences.

Perhaps the most typical and most important is significant challenge early in a career. Leaders almost always have had opportunities during their twenties and thirties to actually try to lead, to take a risk, and to learn from both triumphs and failures. Such learning seems essential in developing a wide range of leadership skills and perspectives. It also teaches people something about both the difficulty of leadership and its potential for producing change.

Later in their careers, something equally important happens that has to do with broadening. People who provide effective leadership in important jobs always have a chance, before they get into those jobs, to grow beyond the narrow base that characterizes most managerial careers. This is usually the result of lateral career moves or of early promotions to unusually broad job assignments. Sometimes other vehicles help, like special task-force assignments or a lengthy general management course. Whatever the path, the breadth of knowledge developed is helpful in all aspects of leadership. So is the network of relationships that is often acquired both inside and outside the company. When enough people get opportunities like this, the relationships that are built also create the strong informal networks needed to support multiple leadership initiatives.

Corporations that do a better-than-average job of developing leaders put an emphasis on creating challenging opportunities for relatively young employees. In many businesses, decentralization is the key. By definition, it pushes responsibility lower in an organization and in the process creates more challenging jobs at lower levels. Johnson & Johnson, 3M, Hewlett-Packard, General Electric, and many other well-known companies have used that approach quite successfully. Some of those same companies also create as many small units as possible so there are a lot of challenging lower level general management jobs available.

Sometimes these businesses develop additional challenging opportunities by stressing growth through new products or services. Over the years, 3M has had a policy that at least 25% of its revenue should come from products introduced within the last five years. That encourages small new ventures, which in turn offer hundreds of opportunities to test and stretch young people with leadership potential.

Such practices can, almost by themselves, prepare people for small- and medium-sized leadership jobs. But developing people for important leadership positions requires more work on the part of senior executives, often over a long period of time. That work begins with efforts to spot people with great leadership potential early in their careers and to identify what will be needed to stretch and develop them.

Again, there is nothing magic about this process. The methods successful companies use are surprisingly straightforward. They go out of their way to make young employees and people at lower levels in their organizations visible to senior management. Senior managers then judge for themselves who has potential and what the development needs of those people are. Executives also discuss their tentative conclusions among themselves to draw more accurate judgments.

Armed with a clear sense of who has considerable leadership potential and what skills they need to develop, executives in these companies then spend time planning for that development. Sometimes that is done as part of a formal succession planning or high-potential development process; often it is more informal. In either case, the key ingredient appears to be an intelligent assessment of what feasible development opportunities fit each candidate’s needs.

To encourage managers to participate in these activities, well-led businesses tend to recognize and reward people who successfully develop leaders. This is rarely done as part of a formal compensation or bonus formula, simply because it is so difficult to measure such achievements with precision. But it does become a factor in decisions about promotion, especially at the most senior levels, and that seems to make a big difference. When told that future promotions will depend to some degree on their ability to nurture leaders, even people who say that leadership cannot be developed somehow find ways to do it.

Such strategies help create a corporate culture where people value strong leadership and strive to create it. Just as we need more people to provide leadership; in the complex organizations that dominate our world today, we also need more people to develop the cultures that will create that leadership. Institutionalizing a leadership-centered culture is the ultimate act of leadership.

John P. Kotter is the Konosuke Matsushita Professor of Leadership emeritus at Harvard Business School and the author of multiple, best-selling books on organizational leadership and change.

Chapter Two

Primal Leadership

The Hidden Power of Emotional Intelligence

Daniel Goleman

Richard Boyatzis

Annie McKee

Great leaders move us. They ignite our passion and inspire the best in us. When we try to explain why they are so effective, we speak of strategy, vision, or powerful ideas. But the reality is much more primal: Great leadership works through the emotions.

No matter what leaders set out to do—whether it’s creating strategy or mobilizing teams to action—their success depends on how they do it. Even if they get everything else just right, if leaders fail in this primal task of driving emotions in the right direction, nothing they do will work as well as it could or should.

Consider, for example, a pivotal moment in a news division at the BBC, the British media giant. The division had been set up as an experiment, and while its 200 or so journalists and editors felt they had given their best, management had decided the division would have to close.1

It didn’t help that the executive sent to deliver the decision to the assembled staff started off with a glowing account of how well rival operations were doing, and that he had just returned from a wonderful trip to Cannes. The news itself was bad enough, but the brusque, even contentious manner of the executive incited something beyond the expected frustration. People became enraged—not just at the management decision, but also at the bearer of the news himself. The atmosphere became so threatening, in fact, that it looked as though the executive might have to call security to usher him safely from the room.

The next day, another executive visited the same staff. He took a very different approach. He spoke from his heart about the crucial importance of journalism to the vibrancy of a society, and of the calling that had drawn them all to the field in the first place. He reminded them that no one goes into journalism to get rich—as a profession its finances have always been marginal, with job security ebbing and flowing with larger economic tides. And he invoked the passion, even the dedication, the journalists had for the service they offered. Finally, he wished them all well in getting on with their careers. When this leader finished speaking, the staff cheered.

The difference between the leaders lay in the mood and tone with which they delivered their messages: One drove the group toward antagonism and hostility, the other toward optimism, even inspiration, in the face of difficulty. These two moments point to a hidden, but crucial, dimension in leadership—the emotional impact of what a leader says and does.

While most people recognize that a leader’s mood—and how he or she impacts the mood of others—plays a significant role in any organization, emotions are often seen as too personal or unquantifiable to talk about in a meaningful way. But research in the field of emotion has yielded keen insights into not only how to measure the impact of a leader’s emotions but also how the best leaders have found effective ways to understand and improve the way they handle their own and other people’s emotions. Understanding the powerful role of emotions in the workplace sets the best leaders apart from the rest—not just in tangibles such as better business results and the retention of talent, but also in the all-important intangibles, such as higher morale, motivation, and commitment.

THE PRIMAL DIMENSION

This emotional task of the leader is primal—that is, first—in two senses: It is both the original and the most important act of leadership.

Leaders have always played a primordial emotional role. No doubt humankind’s original leaders—whether tribal chieftains or shamanesses—earned their place in large part because their leadership was emotionally compelling. Throughout history and in cultures everywhere, the leader in any human group has been the one to whom others look for assurance and clarity when facing uncertainty or threat, or when there’s a job to be done. The leader acts as the group’s emotional guide.

In the modern organization, this primordial emotional task—though by now largely invisible—remains foremost among the many jobs of leadership: driving the collective emotions in a positive direction and clearing the smog created by toxic emotions. This task applies to leadership everywhere, from the boardroom to the shop floor.

Quite simply, in any human group the leader has maximal power to sway everyone’s emotions. If people’s emotions are pushed toward the range of enthusiasm, performance can soar; if people are driven toward rancor and anxiety, they will be thrown off stride. This indicates another important aspect of primal leadership: Its effects extend beyond ensuring that a job is well done. Followers also look to a leader for supportive emotional connection—for empathy. All leadership includes this primal dimension, for better or for worse. When leaders drive emotions positively, as was the case with the second executive at the BBC, they bring out everyone’s best. We call this effect resonance. When they drive emotions negatively, as with the first executive, leaders spawn dissonance, undermining the emotional foundations that let people shine. Whether an organization withers or flourishes depends to a remarkable extent on the leaders’ effectiveness in this primal emotional dimension.

The key, of course, to making primal leadership work to everyone’s advantage lies in the leadership competencies of emotional intelligence: how leaders handle themselves and their relationships. Leaders who maximize the benefits of primal leadership drive the emotions of those they lead in the right direction.

How does all of this work? Recent studies of the brain reveal the neurological mechanisms of primal leadership and make clear just why emotional intelligence abilities are so crucial.

THE OPEN LOOP

The reason a leader’s manner—not just what he does, but how he does it—matters so much lies in the design of the human brain: what scientists have begun to call the open-loop nature of the limbic system, our emotional centers. A closed-loop system such as the circulatory system is self-regulating; what’s happening in the circulatory system of others around us does not impact our own system. An open-loop system depends largely on external sources to manage itself.

In other words, we rely on connections with other people for our own emotional stability. The open-loop limbic system was a winning design in evolution, no doubt, because it allows people to come to one another’s emotional rescue—enabling, for example, a mother to soothe her crying infant, or a lookout in a primate band to signal an instant alarm when he perceives a threat.

Scientists describe the open loop as interpersonal limbic regulation, whereby one person transmits signals that can alter hormone levels, cardiovascular function, sleep rhythms, and even immune function inside the body of another.2 That’s how couples who are in love are able to trigger in one another’s brains surges of oxytocin, which creates a pleasant, affectionate feeling. But in all aspects of social life, not just love relationships, our physiologies intermingle, our emotions automatically shifting into the register of the person we’re with. The open-loop design of the limbic system means that other people can change our very physiology—and so our emotions.

Even though the open loop is so much a part of our lives, we usually don’t notice the process itself. Scientists have captured this attunement of emotions in the laboratory by measuring the physiology—such as heart rate—of two people as they have a good conversation. As the conversation begins, their bodies each operate at different rhythms. But by the end of a simple fifteen-minute conversation, their physiological profiles look remarkably similar—a phenomenon called mirroring. This entrainment occurs strongly during the downward spiral of a conflict, when anger and hurt reverberate, but also goes on more subtly during pleasant interactions.3

In seventy work teams across diverse industries, for instance, members who sat in meetings together ended up sharing moods—either good or bad—within two hours.4 Nurses, and even accountants, who monitored their moods over weeks or every few hours as they worked together showed emotions that tracked together—and the group’s shared moods were largely independent of the hassles they shared.5 Studies of professional sports teams reveal similar results: Quite apart from the ups and downs of a team’s standing, its players tend to synchronize their moods over a period of days and weeks.6

CONTAGION AND LEADERSHIP

The continual interplay of limbic open loops among members of a group creates a kind of emotional soup, with everyone adding his or her own flavor to the mix. But it is the leader who adds the strongest seasoning. Why? Because of that enduring reality of business: Everyone watches the boss. People take their emotional cues from the top. Even when the boss isn’t highly visible—for example, the CEO who works behind closed doors on an upper floor—his attitude affects the moods of his direct reports, and a domino effect ripples throughout the company’s emotional climate.7

Careful observations of working groups in action revealed several ways the leader plays such a pivotal role in determining the shared emotions.8 Leaders typically talked more than anyone else, and what they said was listened to more carefully. Leaders were also usually the first to speak out on a subject, and when others made comments, their remarks most often referred to what the leader had said than to anyone else’s comments. Because the leaders’ way of seeing things has special weight, leaders manage meaning for a group, offering a way to interpret, and so react emotionally to, a given situation.9

But the impact on emotions goes beyond what a leader says. In these studies, even when leaders were not talking, they were watched more carefully than anyone else in the group. When people raised a question for the group as a whole, they would keep their eyes on the leader to see his or her response. Indeed, group members generally see the leader’s emotional reaction as the most valid response, and so model their own on it—particularly in an ambiguous situation, where various members react differently. In a sense, the leader sets the emotional standard.

Still, not all official leaders in a group are necessarily the emotional leaders. When the designated leader lacks credibility for some reason, people may turn for emotional guidance to someone else whom they trust and respect. This de facto leader then becomes the one who molds others’ emotional reactions. For instance, a well-known jazz group that was named for its formal leader and founder actually took its emotional cues from a different musician. The founder continued to manage bookings and logistics, but when it came time to decide what tune the group would play next or how the sound system should be adjusted, all eyes turned to the dominant member—the emotional leader.10

HOW MOODS IMPACT RESULTS

Emotions are highly intense, fleeting, and sometimes disruptive to work; moods tend to be less intense, longer-lasting feelings that typically don’t interfere with the job at hand. And an emotional episode usually leaves a corresponding lingering mood: a low-key, continual flow of feeling throughout the group.

Although emotions and moods may seem trivial from a business point of view, they have real consequences for getting work done. A leader’s mild anxiety can act as a signal that something needs more attention and careful thought. In fact, a sober mood can help immensely when considering a risky situation—and too much optimism can lead to ignoring dangers.11 A sudden flood of anger can rivet a leader’s attention on an urgent problem—such as the revelation that a senior executive has engaged in sexual harassment—redirecting the leader’s energies from the normal round of concerns toward finding a solution, such as improving the organization’s efforts to eliminate harassment.12

While mild anxiety (such as over a looming deadline) can focus attention and energy, prolonged distress can sabotage a leader’s relationships and can also hamper work performance by diminishing the brain’s ability to process information and respond effectively. A good laugh or an upbeat mood, on the other hand, more often enhances the neural abilities crucial for doing good work.

Both good and bad moods tend to perpetuate themselves, in part because they skew perceptions and memories: When people feel upbeat, they see the positive light in a situation and recall the good things about it, and when they feel bad, they focus on the downside.13 Beyond this perceptual skew, the stew of stress hormones secreted when a person is upset takes hours to become reabsorbed in the body and fade away. That’s why a sour relationship with a boss can leave a person a captive of that distress, with a mind preoccupied and a body unable to calm itself: He got me so upset during that meeting I couldn’t go to sleep for hours last night. As a result, we naturally prefer being with people who are emotionally positive, in part because they make us feel good.

EMOTIONAL HIJACKING

Negative emotions—especially chronic anger, anxiety, or a sense of futility—powerfully disrupt work, hijacking attention from the task at hand.14 For instance, in a Yale study of moods and their contagion, the performance of groups making executive decisions about how best to allocate yearly bonuses was measurably boosted by positive feelings and was impaired by negative ones. Significantly, the group members themselves did not realize the influence of their own moods.15

For instance, of all the interactions at an international hotel chain that pitched employees into bad moods, the most frequent was talking to someone in management. Interactions with bosses led to bad feelings—frustration, disappointment, anger, sadness, disgust, or hurt—about nine out of ten times. These interactions were the cause of distress more often than customers, work pressure, company policies, or personal problems.16 Not that leaders need to be overly nice; the emotional art of leadership includes pressing the reality of work demands without unduly upsetting people. One of the oldest laws in psychology holds that beyond a moderate level, increases in anxiety and worry erode mental abilities.

Distress not only erodes mental abilities, but also makes people less emotionally intelligent. People who are upset have trouble reading emotions accurately in other people—decreasing the most basic skill needed for empathy and, as a result, impairing their social skills.17

Another consideration is that the emotions people feel while they work, according to new findings on job satisfaction, reflect most directly the true quality of work life.18 The percentage of time people feel positive emotions at work turns out to be one of the strongest predictors of satisfaction, and therefore, for instance, of how likely employees are to quit.19 In this sense, leaders who spread bad moods are simply bad for business—and those who pass along good moods help drive a business’s success.

GOOD MOODS, GOOD WORK

When people feel good, they work at their best. Feeling good lubricates mental efficiency, making people better at understanding information and using decision rules in complex judgments, as well as more flexible in their thinking.20 Upbeat moods, research verifies, make people view others—or events—in a more positive light. That in turn helps people feel more optimistic about their ability to achieve a goal, enhances creativity and decision-making skills, and predisposes people to be helpful.21 Insurance agents with a glass-is-half-full outlook, for instance, are far more able than their more pessimistic peers to persist despite rejections, and so they make more sales.22 Moreover, research on humor at work reveals that a well-timed joke or playful laugher can stimulate creativity, open lines of communication, enhance a sense of connection and trust, and, of course, make work more fun.23 Playful joking increases the likelihood of financial concessions during a negotiation. Small wonder that playfulness holds a prominent place in the tool kit of emotionally intelligent leaders.

Good moods prove especially important when it comes to teams: The ability of a leader to pitch a group into an enthusiastic, cooperative mood can determine its success. On the other hand, whenever emotional conflicts in a group bleed attention and energy from their shared tasks, a group’s performance will suffer.

Consider the results of a study of sixty-two CEOs and their top management teams.24 The CEOs represented some of the Fortune 500, as well as leading U.S. service companies (such as consulting and accounting firms), not-for-profit organizations, and government agencies. The CEOs and their management team members were assessed on how upbeat—energetic, enthusiastic, determined—they were. They were also asked how much conflict and tumult the top team experienced, that is, personality clashes, anger and friction in meetings, and emotional conflicts (in contrast to disagreement about ideas).

The study found that the more positive the overall moods of people in the top management team, the more cooperatively they worked together—and the better the company’s business results. Put differently, the longer a company was run by a management team that did not get along, the poorer that company’s market return.

The group IQ, then—the sum total of every person’s best talents contributed at full force—depends on the group’s emotional intelligence, as shown in its harmony. A leader skilled in collaboration can keep cooperation high and thus ensure that the group’s decisions will be worth the effort of meeting. Such leaders know how to balance the group’s focus on the task at hand with its attention to the quality of members’ relationships. They naturally create a friendly but effective climate that lifts everyone’s spirits.

QUANTIFYING THE FEEL OF A COMPANY

Common wisdom, of course, holds that employees who feel upbeat will likely go the extra mile to please customers and therefore improve the bottom line. But there’s actually a logarithm that predicts that relationship: For every 1 percent improvement in the service climate, there’s a 2 percent increase in revenue.25

Benjamin Schneider, a professor at the University of Maryland, found in operations as diverse as bank branches, insurance company regional offices, credit card call centers, and hospitals that employees’ ratings of service climate predicted customer satisfaction, which drove business results. Likewise, poor morale among frontline customer service reps at a given point in time predicts high turnover—and declining customer satisfaction—up to three years later. This low customer satisfaction, in turn, drives declining revenues.26

So what’s the antidote? Besides the obvious relationships between climate and working conditions or salary, resonant leaders play a key role. In general, the more emotionally demanding the work, the more empathic and supportive the leader needs to be. Leaders drive the service climate and thus the predisposition of employees to satisfy customers. At an insurance company, for instance, Schneider found that effective leadership influenced service climate among agents to account for a 3 to 4 percent difference in insurance renewals—a seemingly small margin that made a big difference to the business.

Organizational consultants have long assumed a positive link of some kind between a business unit’s human climate and its performance. But data connecting the two have been sparse—and so, in practice, leaders could more easily ignore their personal style and its effects on the people they led, focusing instead on harder business objectives. But now we have results from a range of industries that link leadership to climate and to business performance, making it possible to quantify the hard difference for business performance made by something as soft as the feel of a company.

For instance, at a global food and beverage company, positive climate readings predicted higher yearly earnings at major divisions. And in a study of nineteen insurance companies, the climate created by the CEOs among their direct reports predicted the business performance of the entire organization: In 75 percent of cases, climate alone accurately sorted companies into high versus low profits and growth.27

Climate in itself does not determine performance. The factors deciding which companies prove most fit in any given quarter are notoriously complex. But our analyses suggest that, overall, the climate—how people feel about working at a company—can account for 20 to 30 percent of business performance. Getting the best out of people pays off in hard results.

If climate drives business results, what drives climate? Roughly 50 to 70 percent of how employees perceive their organization’s climate can be traced to the actions of one person: the leader. More than anyone else, the boss creates the conditions that directly determine people’s ability to work well.28

In short, leaders’ emotional states and actions do affect how the people they lead will feel and therefore perform. How well leaders manage their moods and affect everyone else’s moods, then, becomes not just a private matter, but a factor in how well a business will do.29

And that gets us to how the brain drives primal leadership, for better or for worse.

Daniel Goleman is codirector of the Consortium for Research on Emotional Intelligence in Organizations at Rutgers University and the best-selling author of multiple books on emotional and social intelligence. See also www.danielgoleman.info/blog.

Richard Boyatzis is professor in the departments of organizational behavior, psychology, and cognitive science at Case Western Reserve University and in the department of human resources at ESADE. His research includes adult development, leadership, and emotional intelligence.

Annie McKee is founder of the Teleos Leadership Institute, an international consulting firm providing services to senior leaders in the private sector and developing world. She teaches at the University of Pennsylvania’s Graduate School of Education and the Wharton School’s Aresty Institute of Executive Education.

NOTES

1. This incident was recounted by one of the people we interviewed who was an eyewitness to these events.

2. Thomas Lewis, Fari Amini, and Richard Lannon, A General Theory of Love (New York: Random House, 2000).

3. Robert Levenson, University of California at Berkeley, personal communication.

4. C. Bartel and R. Saavedra, The Collective Construction of Work Group Moods, Administrative Science Quarterly, 2000, 45, 187–231.

5. Peter Totterdell and others, Evidence of Mood Linkage in Work Groups, Journal of Personality and Social Psychology, 1998, 74, 1504–1515.

6. Peter Totterdell, Catching Moods and Hitting Runs: Mood Linkage and Subjective Performance in Professional Sports Teams, Journal of Applied Psychology, 2000, 85, 848–859.

7. See Wallace Bachman, Nice Guys Finish First: A SYMLOG Analysis of U.S. Naval Commands, in Richard Brian Polley, A. Paul Hare, and Philip J. Stone (eds.), The SYMLOG Practitioner: Applications of Small Group Research (New York: Praeger, 1988).

8. Anthony T. Pescosolido, Emotional Intensity in Groups, doctoral dissertation, Department of Organizational Behavior, Case Western Reserve University, 2000.

9. Howard Gardner, Leading Minds: An Anatomy of Leadership (New York: Basic Books, 1995).

10. V. U. Druskat and A. T. Pascosolido, Leading Self-Managing Work Teams from the Inside: Informal Leader Behavior and Team Outcomes, unpublished manuscript, 2001.

11. R. C. Sinclair, Mood, Categorization Breadth, and Performance Appraisal, Organizational Behavior and Human Decision Processes, 1988, 42, 22–46.

12. Jennifer M. George, Emotions and Leadership: The Role of Emotional Intelligence, Human Relations, 2000, 53, 1027–1055.

13. See, for example, Gordon H. Bower, Mood Congruity of Social Judgments, in Joseph Forgas (ed.), Emotion and Social Judgments (Oxford: Pergamon Press, 1991).

14. See, for example, Jacqueline Wood, Andrew Matthews, and Tim Dalgleish, Anxiety and Cognitive Inhibition, Emotion, 2001, 1, 166–181.

15. Sigal G. Barsade, The Ripple Effect: Emotional Contagion in Groups, working paper no. 98, Yale School of Management, New Haven, Conn., 2000.

16. John Basch and Cynthia D. Fisher, Affective Events-Emotions Matrix: A Classification of Work Events and Associated Emotions, in Neal M. Ashkanasy, Charmine E. J. Härtel, and Wilfred J. Zerbe (eds.), Emotions in the Workplace: Research, Theory, and Practice (Westport, Conn.: Quorum Books, 2000).

17. Jeffrey B. Henriques and Richard J. Davidson, Brain Electrical Asymmetries During Cognitive Task Performance in Depressed and Nondepressed Subjects, Biological Psychiatry, 1997, 42, 1039–1050.

18. Cynthia D. Fisher and Christopher S. Noble, Affect and Performance: A Within-Persons Analysis, paper presented at the annual meeting of the Academy of Management, Toronto, 2000.

19. Cynthia D. Fisher, Mood and Emotions While Working: Missing Pieces of Job Satisfaction? Journal of Organizational Behavior, 2000, 21, 185–202. See also Howard Weiss, Jeffrey Nicholas, and Catherine Daus, An Examination of the Joint Effects of Affective Experiences and Job Beliefs on Job Satisfaction and Variations in Affective Experiences over Time, Organizational Behavior and Human Decision Processes, 1999, 78, 1–24.

20. See A. M. Isen, Positive Affect, in Tim Dalgleish and Mick J. Power (eds.), Handbook of Cognition and Emotion (Hoboken, N.J.: Wiley, 1999).

21. See Cynthia D. Fisher and Christopher S. Noble, Emotion and the Illusory Correlation Between Job Satisfaction and Job Performance, paper presented at the Second Conference on Emotions in Organizational Life, Toronto, August 2000.

22. Martin E. Seligman and Peter Schulman, The People Make the Place, Personnel Psychology, 1987, 40, 437–453.

23. R. W. Clouse and K. L. Spurgeon, Corporate Analysis of Humor, Psychology, 1995, 32, 1–24.

24. Sigal G. Barsade and others, To Your Heart’s Content: A Mode of Affective Diversity in Top Management Teams, Administrative Science Quarterly, 2000, 45, 802–836.

25. Lyle Spencer, paper presented at the meeting of the Consortium for Research on Emotional Intelligence in Organizations, Cambridge, Mass., April 19, 2001.

26. Benjamin Schneider and D. E. Bowen, Winning the Service Game (Boston: Harvard Business School Press, 1995).

27. David McClelland, Identifying Competencies with Behavioral-Event Interviews, Psychological Science, 1998, 9, 331–339; Daniel Williams, Leadership for the 21st Century: Life Insurance Leadership Study (Boston: LOMA/Hay Group, 1995).

28. More technically, the styles were found to