Organizational Leadership

Is Organizational Purpose Just a Buzzword?

Over the last few years, there has been a growing interest in organizational purpose, which can be partially attributed to the increasing emphasis on sustainable business practices and efforts to curb climate change, declining trust in organizations, as well as younger workers searching for meaningfulness at work. With this increased focus on purpose, some organizations have been quick to incorporate it into their tagline or mission statements. But is purpose just a buzzword? And what is the difference between the seemingly similar terms of purpose, vision, or mission?

We know that purpose is important at both employee and organizational levels. On average, people spend over 90,000 hours at work over the course of their life, so it’s not a surprise that many are searching for meaning in their work. Consequently, purpose has been found to have a tangible impact on key employee outcomes. Research finds that those who perceive their work as higher in significance (job purpose) also tend to demonstrate higher performance. At the organizational level, having a clearly defined purpose can lead to a stronger firm financial performance, specifically in shareholder returns over a 10 year period, or in venture growth.

So, what exactly defines organizational purpose?

Organizational purpose has many definitions, including being “a concrete goal or objective for the firm that reaches beyond profit maximization”, or simply as “a company’s core reason for being.” However, all of the definitions point to an emphasis on the creation of value for all stakeholders, including shareholders, customers, and society in general. While some use the terms mission or vision somewhat interchangeably with organizational purpose, there is a distinct difference. Organizational purpose helps to guide and inform a company’s mission or vision. In other words, while a company’s mission statement or vision might shed light on what the organization is trying to accomplish, its organizational purpose explains the why.

If you are looking for a starting point for fostering organizational purpose, a recent article in Harvard Business Review has a few tips for how you can build in purpose to align your organization. First, consider your employees; with modern workplaces having unique compositions of full-time and part-time employees and contractors, it’s important to think of how each employee experiences their work. Second, consider how your organizational purpose is communicated and embodied in actions throughout the organization. Finally, consider the bigger picture when thinking of a purpose. In the modern workplace, broader societal impacts and sustainability are things that need to be considered.


Author

Viewpoint Research Team

Good Governance or a Coup D’état? What Ghosn’s Board Can Teach Us About Corruption

Carlos Ghosn was once a legend of the automotive world, pulling Nissan back from the grave to become one of the world’s most iconic brands. In an economically battered 1990s Japan, Ghosn became a kind of folk hero, a symbol of hope and restoration. With his brash personality and stylish character combined with his skill for streamlining business operations, he quickly rose to celebrity status, even being drawn into Japanese comic books. In-step with his larger-than-life presence, he was the chairman for Renault, Nissan, and Mitsubishi Motors simultaneously.

That all came crashing down when it was discovered he’d been underreporting $44 million in income and misappropriating company funds from Nissan. Although it has been debated that the publicity of the scandal could be part of an internal coup d’état to separate Nissan from Renault, Ghosn has been lambasted by Nissan’s CEO (who Ghosn himself hand-picked), calling on the board to remove him as chairman.

Scandals like this aren’t uncommon – but what is surprising is how Nissan’s CEO and board of directors reacted to his crimes by immediately, and publicly, turning on him.
Contrast this with Steve Jobs’ options backdating scandal, where Apple’s General Council took the fall for Jobs, or Elon Musk promoting a fraudulent $420-per-share private sale with minimal backlash from Tesla, or the absence of charges against any executives of Kobe Steel when they lied to customers about their quality data. What makes Ghosn so different that his board would immediately oust him? Could be this be an example of ethics and good governance on behalf of the board?

Although this could be a case of good governance in action, it may be difficult for critics to imagine that an active, engaged board would not be aware of Ghosn’s illegal activities, which were taking place since at least 2010. However, the problem may lie with boards themselves. It has been suggested by researchers that boards are ineffective at their monitoring duties due to the principal-agent problem, knowledge barriers, management tactics, time demands of their other jobs, firm complexity, and a culture of deference. Echoing the ideas of our founder, Mac Van Wielingen, there is an imperative need fordirectors to become more active and more assertive with corporate governance, or we can expect to see more cases like Ghosn’s and corruption continue to thrive.


Author

Viewpoint Research Team

Power, Politics, and the Dangers of a Narcissistic Leader

The beauty of me is that I’m very rich”1

“My IQ is one of the highest – and you all know it! Please don’t feel so stupid or insecure; it’s not your fault.”2

“I think I am actually humble. I think I’m much more humble than you would understand.”3

- President Donald Trump


Hearing these statements made by President Donald Trump, one might wonder how such a person was elected as the leader of the United States? Donald Trump has elicited concerns due to his comments on TV programs, his behavior at political debates and press conferences, and impulsive tweets. This has prompted some psychologists to attribute his behavior to the personality trait narcissism.4​

Narcissism ranges in severity from being an undesirable trait to a clinical disorder. Those who are highly narcissistic tend to have a grandiose sense of self and have an impaired ability to understand reality. Researchers have found that those who are high in narcissism take credit for the success of others while blaming others for failure,5 and are openly and publicly abrasive in interpersonal interactions with people that they dislike.6 Though high narcissism may be an undesirable personal trait, this blog explores if it has an impact on the effectiveness of leadership.

Research has found that high narcissism interferes with the ability to be supportive and facilitative of followers, which are core components of effective leadership. Leaders high in narcissism tend to possess a strong sense of entitlement and exploitiveness,7 which may lead to the manipulation of followers and impede the effectiveness of leadership.

In a study of 500 CEOs, narcissistic CEOs were also found to be more likely to engage in fraud and other negative behaviors.7 This increased tendency to engage in unethical behavior may be problematic in all leadership positions, but we would argue that even more so when that leader is in a government agency where high ethical standards and integrity are fundamental.

Knowing that narcissism relates to negative outcomes, how does a narcissistic leader gain support in the first place? 

Those high in narcissism typically have high self-worth and self-sufficiency. They tend to possess a strong sense of ego, which enables them to be viewed in a leadership position.8 Furthermore, studies have found that in a crisis, people may gravitate towards candidates with strong policies towards reducing the crisis.9 This is called terror management theory,10 which is a motivational driving force that causes humans to minimize risks to increase survivability. The central focus is on self-preservation, and thus all other needs are pushed aside to focus on this main motive. This may explain why voters felt compelled by the radical points of President Trump’s platform to protect U.S. citizens from external threats, such as his promises for “extreme vetting” to screen out potential threats.

SO, WHAT MAKES A GOOD LEADER?

In contrast to narcissism, humility has been regarded as a “critical strength for leaders and organizations possessing it, and a dangerous weakness for those lacking it.”11 There are three main traits of humility. First, leaders high in humility have self-awareness of their strengths and weaknesses. They also are open to new ideas and to sharing personal limitations. Finally, they can see the larger perspective and transcend goals of personal gain for those that benefit others. These traits allow humble leaders to empower their followers to focus on growth and learning, which has been shown to result in longer periods of sustained organizational performance relative to organizations with leaders who are low on humility.11

​Humble leaders are also likely to engage in transformational leadership, which is an effective leadership style centered on inspiring and motivating followers through a shared common goal. Transformational leadership has been related to a host of positive outcomes, such as follower satisfaction and increased organizational performance.12 Using power to help others is at the core of transformational leadership. If a leader is only interested in leadership for personal power, they may appear to be transformational, but fail to elicit the benefits of transformational leadership because they are engaging in self-promoting behaviors to exploit others.13

Humble leaders may excel in another effective form of leadership - ethical leadership.

Ethical leadership involves role modeling integrity, and setting the cultural norms and behaviors that trickle down to all levels of the organization. This trickledown effect was evidenced in a study involving 63 CEOs, 327 top management members, and 645 middle managers. 

The study showed that humble CEOs were effective at empowering the top management members, which subsequently influenced the organizational climate. The positive environment then empowered middle management and bolstered their performance.14 

Moreover, in a study involving 105 small to medium sized firms, humble CEOs were found to positively impact organizational performance15. Firms with humble CEOs were more likely to have effective communication processes, a strong shared vision, and better strategic planning. Such processes not only contribute to an overall stronger bottom line, but also often result in a positive experience for employees.16

 These findings suggest that for effective leadership, a leader should demonstrate high humility, such that they act with integrity and role model ethical behavior to the organization. Though leaders could be selected based on high humility as a personal trait, some actionable changes that any leader can engage in to practice humble leadership, include increasing communication with employees, empowering them in their day-to-day tasks, and involving them to some degree in the decision-making process. Humble leaders lead by focusing on the improvement of others, while narcissistic leaders focus on the improvement of themselves. By shifting the focus to the needs of the organization, leaders can practice more effective leadership.


Author

Stephanie Law, Viewpoint Research Team


References
1) King, N., Jr. (2011). Wall Street Journal.
2) CBS News. (2017). 
3) Stahl, L. (2016). The Washington Post.
4) Hosie, R. (2017). Malignant Narcissism: Donald Trump Displays classic traits of mental illness, claim psychologists. Independent. Retrieved from http://www.independent.co.uk/life-style/health-and-families/donald-trump-mental-illness-narcisissm-us-president-psychologists-inauguration-crowd-size-paranoia-a7552661.html
5) Gosling, S.D., John, O.P., Craik, K.H., & Robins, R.W. Do people know how they behave? Self-reported act frequencies compared with on-line coding by observers. Journal of Personality and Social Psychology, 1998, 74, 1337–49.
6) Kernis, M.H. & Sun, C.-R. Narcissism and reactions to interpersonal feedback. Journal of Research in Personality, 1994, 28, 4–13.
7) Vera, D., & Rodriguez-Lopez, A. (2004). Strategic Virtues: Humility as a Source of Competitive Advantage. Organizational Dynamics33(4), 393-408.
8) Paunonen, S. V., Lonnqvist, J., Verkasalo, M., Leikas, S., & Nissinen, V. (2006). Narcissism and emergent leadership in military cadets. The Leadership Quarterly, 17, 475 – 486.
9) Landau, M. J., Solomon, S., Greenberg, J., Cohen, F., Pyszczynski, T., Arndt, J., & Cook, A. (2004). Deliver us from evil: The effects of mortality salience and reminders of 9/11 on support for President George W. Bush. Personality and Social Psychology Bulletin30(9), 1136-1150.
10) Greenberg, J., Solomon, S., & Pyszczynski, T. (1997). Terror management theory of self-esteem and cultural worldviews: Empirical assessments and conceptual refinements. Advances in experimental social psychology29, 61-139.
11) Morris, J. A., Brotheridge, C. M., & Urbanski, J. C. (2005). Bringing humility to leadership: Antecedents and consequences of leader humility. Human relations58(10), 1323-1350.
12) Wang, G., Oh, I., Courtright, S. H., & Colbert, A. E. (2011). Transformational leadership and performance across criteria and levels: A meta-analytic review of 25 years of research”. Group & Organizational Management, 36, 223-270.
13) Chatterjee, A., & Hambrick, D. C. (2007). It's all about me: Narcissistic chief executive officers and their effects on company strategy and performance. Administrative science quarterly52(3), 351-386.
14) Ou, A. Y., Tsui, A. S., Kinicki, A. J., Waldman, D. A., Xiao, Z., & Song, L. J. (2014). Humble chief executive officers’ connections to top management team integration and middle managers’ responses. Administrative Science Quarterly59(1), 34-72.
15) Ou, A. Y., Waldman, D. A., & Peterson, S. J. (2015). Do humble CEOs matter? An examination of CEO humility and firm outcomes. Journal of Management, 0149206315604187.
16) Pettit, Jr, J. D., Goris, J. R., & Vaught, B. C. (1997). An examination of organizational communication as a moderator of the relationship between job performance and job satisfaction. The Journal of Business, 34, 81-98

Success: Ethical Failure in Leadership

The topic of success’s dark-side was recently brought up, and the more that it was explored, the more facets it seemed to have. Facets such as, in-fighting among top executives or family members in successful companies, the never ending battle to find the next big talent, and the loss of ethics that lead to scandal, all of which deserve to be explored fully in their own posts.

The recent scandals that have been dominating news feeds this past year, along with the questions of how and why leaders with well-established integrity and leadership track records come to engage in unethical practices.

ETHICS (OR LACK THEREOF) AND LEADERSHIP ACROSS SECTORS

Reports that detail ethical violations by managers and executives continue to occur despite ethics being considered pivotal to organizational success, and receiving increased attention by firms and business schools. Trust in corporations and how they are run has never before been subjected to the level of public scrutiny that it is now. Advances in technology, the internet, and social media make it increasingly easy to check up on businesses and their practices.

Leaders at all levels can talk the talk of ethics all they want, but unless they are also walking that ethics walk it becomes meaningless.

This is not only seen in business, but in other arenas where ethics and honour are held in high esteem such as sports. The scandals surrounding FIFA, the Olympics, and other elite athletic competitions such as the Tour De France, are but a few examples of where the ethics talk certainly does not match up with the walk.

Spectators and athletes who compete fairly are becoming increasingly disillusioned with the competitive culture of sports and how it is getting out of hand. It is more and more common for those who win at any cost through corruption, and monetary advantages to be met with public derision and harsh penalties.

Politics is another area where ethics is ideally a key piece of the foundation on which individual politicians and their platforms run. However as the news so continuously, and delightedly informs us, this is often not the case. This seemingly endless American federal election has provided countless examples of this.

And while America’s larger-than-life presence often dominates, this is a world-wide phenomenon and Canada has had its fair share of ethical failures.

HOW SUCCESS AND ETHICAL FAILURE ARE CONNECTED

Ludwig and Longenecker suggest that competitive pressure can certainly be a factor behind why some leaders abandon their principles and commit ethical violations. This notion that the ethical failure of leaders – in all sectors – is largely due to lack of personal principles, or the state of the climate of the market, is argued to be only half of the story.

“The media, politicians, and the general public frequently characterize these leaders as bad people, even calling them evil. Simplistic notions of good and bad only cloud our understanding of why good leaders lose their way, and how this could happen to any of us.”— George, 2011

Success and lack of preparedness in dealing with personal and organizational success is actually the issue. Our society places a high priority on being successful, yet there is little attention placed on preparing people to deal with the aftermath of success once it is achieved.

There were a number of reasons discussed in the literature that outline why success can lead to ethical failure:

  • Success can lead to complacency and loss of focus

    • Attention is diverted away from the management of their business, and teams are left unchecked

  • Personal and organizational success can lead to privileged access to information, people, or objects

    • Information can be used to the leaders advantage (i.e. insider trading)

  • Success often includes increasing control over organizational resources

    • Resources can be diverted to areas more focused on personal interests rather than to what is best for the organization

  • Success can lead to an inflation of a manager’s belief in their personal ability to manipulate outcomes

    • External factors that may also be influencing the organization’s performance are discounted (See previous post on bias)

  • Leaders who are successful can lose their ability to gain satisfaction from what they have already achieved, and what they have becomes not enough

    • This can translate into greed which can lead to a loss in perspective and unethical behaviours being rationalized

    • Not initially getting caught in this cycle can increase the feeling of invincibility and the likelihood of additional unethical choices being made in the future

  • Personal isolation and a lack of intimacy with family, friends, and colleagues can become an issue

    • Not being able to discuss problems, and long hours spent away from home can cause a loss in a valuable source of personal balance

While none of these reasons should be looked at as excuses for those who experience ethical failure, the issue is not as simple as labelling someone good or bad. Anyone can fall into the trap of success if they are not properly prepared for all of the stresses that are associated with said success.

MITIGATING THIS RISK

There are a number of ways in which you can prepare yourself, your leadership team, and your organization for success.

The first and most obvious should be that ethics must be an ingrained characteristic in those that you hire. Building a team who is ethical helps to inspire those around them to lead by example.

Your company’s board should also be actively aware of your management team’s personal and psychological balance. Before anyone is appointed to a leadership role they need to understand and express why it is that they want to lead, as well as what the purpose of their leadership is, and what it will achieve for the company, and for themselves personally. If the answers to these questions honestly revolve around concepts such as money, power, and prestige, then these candidates run the risk of primarily considering external gratification as their measure of fulfillment, and are most at risk of ethical failure.

While there is nothing wrong with placing value on these visible external symbols of success, they must be “combined with a deeper desire to serve something greater than oneself” (George, 2011) in order to maintain a firm grip on the high standard of ethics that most leaders start out with.

Regularly scheduled audits of critical organizational decisions, processes and resources, clearly established ethical codes of conduct, and a strictly enforced policy that protects employees who report unethical behaviour heighten both awareness and compliance.

In both the VW and Wells Fargo examples that were linked to at the beginning of this post, there was evidence that employees who tried to go against the grain of established unethical practice were fired for either not meeting the excessively unrealistic criteria, or, for bringing unsavoury information to light – to either leaders, or the public.

If we are able to reframe our perception of leaders from hero to servant of the people they lead, the psychological challenges listed above may be easier to mitigate due to fact that these expectations that people often have of what they deserve once success is achieved will not be as prevalent. 

No matter what sector you are looking at – sports, politics, or business – an organization whose leadership team is entirely composed of members who are the physical embodiment of ethics and fully capable of wise decision-making, can still become a victim of the temptations that are offered to – or seen to be deserved by – the powerful and successful.

The dichotomy of good versus bad in our current portrayal of scandals in the media is not representative of the underlying issues. If this continues, and the root of the problem is not addressed, then no matter how much effort, time, and money, business schools and firms put towards ethics education, scandals will continue to happen.

The negative aspects of success are not always obvious, but they are nevertheless present. It is how well we understand ourselves, and are able to see these dangers to effectively diminish them that count.


Author

Viewpoint Research Team


Sources used for this post:

Brimmer, S. (2007). The Role of Ethics in 21st Century Organizations - Leadership Advance Online, School of Business & Leadership, Regent University, Virginia Beach, VirginiaRegent.edu. Retrieved 21 November 2016, fromhttp://www.regent.edu/acad/global/publications/lao/issue_11/brimmer.htm

de Botton, A. (2013). Business and PhilosophyThe Huffington Post. Retrieved 28 October 2016, from http://www.huffingtonpost.com/alain-de-botton/business-and-philosophy_b_4170623.html

George, B. (2011). Why Leaders Lose Their WayHBS Working Knowledge. Retrieved 17 October 2016, from http://hbswk.hbs.edu/item/why-leaders-lose-their-way

Ludwig, D. C., & Longenecker, C. O. (1993). The Bathsheba syndrome: The ethical failure of successful leaders. Journal of Business Ethics12(4), 265-273.

Mellahi, K., Jackson, P., & Sparks, L. (2002). An exploratory study into failure in successful organizations: The case of Marks & Spencer. British Journal of Management13(1), 15-29.

Poulsen, A. (2015). Why Future Business Leaders Need PhilosophyBig Think. Retrieved 26 October 2016, from http://bigthink.com/experts-corner/why-future-business-leaders-need-philosophy