Category Archives: Business

The Dangers of Charismatic Leaders

[NOTE: This post was updated September 2017]

In a post called, “Lend Me Your Wallets:” Research on the Link Between Charismatic CEOs and Stock Price, Featuring Steve Jobs, Professor Robert Sutton asked his readers about the virtues and dangers of charismatic leaders.

According to Professor Gary Yukl (2010), charismatic leaders are self-confident and possess a strong conviction in his/her own beliefs and ideals. Charismatic leaders are able to influence their followers by (i.e., their virtues):

  1. Articulating a vision, one that’s appealing and optimistic,
  2. Using strong, expressive forms of communication when talking about the vision,
  3. Taking personal risks and making self-sacrifices to attain the vision,
  4. Communicating high expectations,
  5. Expressing optimism and confidence in followers,
  6. Modeling behaviors consistent with the vision,
  7. Managing follower impressions of the leader,
  8. Building identification with the group or organization, and
  9. Empowering followers.

On the flip side, Dr. Yukl (2010) also listed some negative consequences of charismatic leaders (i.e., the dangers/downsides):

(1) Excessive confidence and optimism blind the leader to real dangers.

For instance, as a charismatic leader, I don’t think Steve Jobs (Apple’s founder and current CEO, but was one time fired from Apple) ever saw himself being forced out of the company he founded. But that’s exactly what happened on September 16, 1985 when he left Apple. His feud with John Sculley, the co-CEO who Jobs himself had lured away from Pepsi (with the now famous line, “Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?”) resulted in the Apple board’s decision that he was just too volatile to lead as CEO and so Jobs quit.

(2) Dependence on the leader inhibits development of competent successors.

According to a story in the Los Angeles Times, during the period surrounding Steve Jobs’ health scare (which started in mid-2004 and lasted until his successful liver transplant in 2009), Apple stocks dropped. “One reason for the market’s anxiety — Apple shares shed more than 56% in 2008 — is that the company has been silent about its succession plan” (Hiltzik, 2009).

“Selecting Jobs’s successor will be challenging, given the degree to which he is tied to Apple’s identity.” (Knowledge@Wharton)

(3) Failure to develop successor creates an eventual leadership crisis.

“No American CEO is more intimately identified with his company’s success. Jobs is deeply involved in every facet of Apple development and design, and he’s justly admired for his instinct for the human-factor engineering of Apple products” (Hiltzik, 2009).

“What remains to be seen is whether a post-Jobs Apple will retain the corporate traits that made the company successful with its iconic leader at the helm.” (Knowledge@Wharton, 2009)

“Ultimately, some leaders are so irreplaceable that no amount of succession planning will ensure a seamless power transition. ‘In some sense, with the charismatic person, it’s difficult to prepare a successor, because they are bigger than life,’ says John Larrere, general manager at the management consultant Hay Group.” (Ante & McGregor, 2009)

(4) Denial of problems and failures reduces organizational learning.

One of the biggest drawbacks for charismatic leaders is their failure to sometimes learn. Perhaps, they too fall prey to their own charms and charisma.

This lesson can be illustrated with Apple’s handling of the iPhone 4’s infamous antenna issue (which, when gripped a certain way near the antenna, would often drop calls). Apple never admitted any mistakes on its part and instead said that other phones (by competing carriers) also dropped calls when gripped a certain way near the antenna. Rather than redesigning or offering a permanent solution, Apple decided to offer free cases which would cover the sensitive area to lessen the dropped calls. Consumer Reports, an independent, non-profit organization that test products, refused to recommend the iPhone 4 contending that “putting the onus on any owners of a product to obtain a remedy to a design flaw is not acceptable to us. We therefore continue not to recommend the iPhone 4, and to call on Apple to provide a permanent fix for the phone’s reception issues.”

Interestingly, in 2009 an Apple senior antenna engineer told Steve Jobs the iPhone 4’s external antenna could cause reception problems. Even though Apple engineers knew there could be problems with the iPhone 4’s antenna design, their concerns were dismissed because Jobs liked the design. In addition, a Wall Street Journal article stated, “For at least two years, multiple iPhone carriers lodged complaints with the company that its phone doesn’t work well in making calls and doesn’t hold a wireless signal for a voice call as well as other devices.”

Despite all these warnings, Apple (under Steve Jobs’ charismatic leadership) launched the iPhone 4, flaws included.

Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor

References

Ante, S.E., & McGregor, J. (January 2009). Apple Succession Plan: Nobody’s Business? BusinessWeek. Retrieved from http://www.businessweek.com/technology/content/jan2009/tc20090115_863327.htm

Burrows, P., & Guglielmo, C. (July 2010). Apple Engineer Told Jobs IPhone Antenna Might Cut Calls. Bloomberg. Retrieved from http://www.bloomberg.com/news/2010-07-15/apple-engineer-said-to-have-told-jobs-last-year-about-iphone-antenna-flaw.html

Consumer Reports — Lab tests: Why Consumer Reports can’t recommend the iPhone 4
Retrieved from http://blogs.consumerreports.org/electronics/2010/07/apple-iphone-4-antenna-issue-iphone4-problems-dropped-calls-lab-test-confirmed-problem-issues-signal-strength-att-network-gsm.html

Consumer Reports — Apple curtails its free case program for the iPhone 4
Retrieved from http://blogs.consumerreports.org/electronics/2010/09/apple-iphone4-free-bumper-cases-program-ending-finishing-dropped-calls-antenna-design-issue-problem-iphone-4-cases-giveaway.html

Hiltzik, M. (Jan 2009). Apple’s condition linked to Steve Jobs’ health. Los Angeles Times. Retrieved from http://articles.latimes.com/2009/jan/05/business/fi-hiltzik5

Kahney, L. (October 2010). John Sculley: The Secrets of Steve Jobs’ Success. Cult of Mac. Retrieved from http://www.cultofmac.com/john-sculley-the-secrets-of-steve-jobs-success-exclusive-interview/21572

Kane, Y.I., & Sheth, N. (July 2010). Apple Knew of iPhone Issue. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052748704682604575369311876558240.html

Knowledge@Wharton (Jan 2009). Job-less: Steve Jobs’s Succession Plan Should Be a Top Priority for Apple. Retrieved from http://knowledge.wharton.upenn.edu/article.cfm?articleid=2134

Yukl, G. (2010). Leadership in organizations (7th Ed.). Upper Saddle River, NJ: Prentice Hall.

The Changing Consumer Behavior in Japan

Unlike consumers in the U.S. and Europe, consumers in Japan are particularly selective and prefer to pay for premium goods and services. This was evident when I visited my wife’s family in Tokyo on several occasions.

Touring the local supermarkets and outdoor fruit stands, I came across the most amazing displays of fruits I had ever seen. But, these highly prized fruits did indeed cost a premium. For instance, I saw cantaloupes (in photo above) for ¥4,000 (Japanese yen) or $44.20 (USD; exchange rate on 3/21/2010) each in Tokyo, Japan compared to $1.50 each at the local supermarket here in Dallas, TX. While I don’t claim to understand why fruits cost so much in Tokyo, I do know this much — those cantaloupes (noticed how each was individually wrapped and showcased in its own box) were the best-looking, highest-quality cantaloupes I have ever seen!

That photo of the cantaloupes was taken in July of 2007 and I would venture to guess that fruit prices haven’t changed too much since then.

Though fruits, like those gorgeous cantaloupes, may still command premium prices and Japanese consumers willing to pay for them, it appears that in other areas, consumers in Japan—who had previously ignored discount and online stores—are now flocking to them (Salsberg, 2010).

A change in consumer attitudes and behavior has arrived and, it seems, is here to stay. This change “stems not just from the recent downturn but also from deep-seated factors ranging from the digital revolution to the emergence of a less materialistic younger generation” (Salsberg, 2010, para. 2).

Salsberg (2010) stated that three factors helped led to this new consumer trend. First (like elsewhere in the world), the economic downturn. The Japanese economy has been weak for almost two decades. A recent J. Walter Thompson AnxietyIndex suggested that “90 percent of Japanese consumers feel anxious or nervous, the highest rate of any country in the world” (Salsberg, 2010, para. 14).

japanese-economy

“A Gallup Poll conducted in early December 2008 shows just 5% of Japanese rated economic conditions as ‘good’ [and] the percentage of Japanese reporting that economic conditions were getting worse climbed every quarter in 2008, finishing the year at 90%” (Bogart, 2009).

A second factor is that a new generation of Japanese (those in their 20’s) has emerged with very different attitudes. Nicknamed hodo-hodo zoku, or “so-so folks”, many avoid corporate life and material possession. “As the CEO of a leading sports-apparel company in Japan recently said, ‘For the first time, we have a generation of consumers that aren’t at all persuaded by what the professional athletes are wearing. We need a fundamental rethink of how to approach this next generation’” (Salsberg, 2010, para. 16).

The third and final factor contributing to this new trend in consumer behavior is government regulatory actions. For example, the Japanese government reduced freeway toll on weekends which provided more incentives to travel to discount stores outside Tokyo (Salsberg, 2010). On the health prevention front, “regulations [has permitted] the wide sale of over-the-counter drugs…[and]…the Japanese government has also pushed to increase awareness of and access to health remedies, in part to address the challenge of paying to treat these conditions [such as diabetes and high blood pressure]” (Salsberg, 2010, para. 18).

Consumer behavior looks at the processes involved when individuals or groups choose, buy, use, or dispose of products, services, ideas or experiences to satisfy needs and desires (Solomon, 2004). Consumer behavior includes characteristics such as social class and income.

Naturally, the economic situation affecting shoppers in the U.S., Europe, and now Japan play a critical role in altering consumer behavior. When the economy combines with other contributing factors, as in the case of the Japanese consumers, consumer behavior responds accordingly.

References

Bogart, P. (2009, April 27). Japan’s stimulus aims to reverse economic negativity. Gallup. Retrieved from http://www.gallup.com/poll/117877/Japan-Stimulus-Aims-Reverse-Economic-Negativity.aspx

Salsberg, B. (2010, March). The new Japanese consumer. McKinsey Quarterly. Retrieved from https://www.mckinseyquarterly.com/The_new_Japanese_consumer_2548

Solomon, M.R. (2004). Consumer behavior: Buying, having and being (6th ed.). New Jersey: Prentice Hall.

Implementing Change and Overcoming Resistance

[NOTE: This post was updated November 2016]

In “Leading Change” (1996), Kotter outlined an 8-Stage Process to Creating Major Change:

  1. Establish a Sense of Urgency: Examine market and competitive realities; identify and discuss crises, potential crises, or major opportunities
  2. Create the Guiding Coalition: Assemble a group with enough power to lead the change; get group to work together as a team
  3. Develop a Vision & Strategy: Create a vision to help direct the change effort; Develop strategies for achieving that vision
  4. Communicate the Vision: Use every vehicle possible to communicate the new vision and strategies; have Guiding Coalition role model the behavior expected of employees
  5. Empowering Action: Get rid of obstacles to change; change systems or structures that undermine the vision; encourage risk-taking and nontraditional ideas, activities, and actions
  6. Generating Short-Term Wins: Plan for visible performance improvements or “wins”; create those “wins”; recognize and reward employees who made “wins” possible
  7. Consolidate Gains and Produce More Change: Use increased credibility to change systems, structures, and policies that don’t fit the vision; hire, promote, and develop employees who can implement the change vision; reinvigorate the process with new projects, themes, and change agents
  8. Anchor New Approaches in the Corporate Culture: Create better performance via customer- and productivity-oriented behavior, more and better leadership, and more effective management; articulate the connections between the new behaviors and organizational success; develop the means to ensure leadership development and succession.

Professor Kotter (1996) shared about a time he consulted with an intelligent and competent executive who struggled trying to implement a reorganization. Problem was many of his managers were against it. Kotter went through the 8-stage process. He asked the executive whether there was a sense of urgency (Stage #1) among the employees to change. The executive said, “Some do. But many probably do not.” (Kotter, 1996, p. 22). When asked about a compelling vision and strategy to implement (Stage #3), the executive replied, I think so [about the vision]…although I’m not sure how clear it [the strategy] is” (Kotter, 1996, p. 22). Finally, when Kotter inquired whether the managers understood and believed in the vision, the executive responded, “I wouldn’t be surprised if many [people] either don’t understand the concept or don’t entirely believe in it [the vision]” (Kotter, 1996, p. 22).

Kotter (1996) states that when Stages #1-4 of the Kotter model are skipped it’s inevitable that one will face resistance. The executive ran into resistance because he went directly to Stage #5. Kotter states that in attempting to implement change, many will rush through the process “without ever finishing the job” (Kotter, 1996, p. 22) or they’ll skip stages and either jump to or only do Stages 5, 6, and 7.

Schermerhorn, Hunt, and Osborn (2005) maintain that when employees resist change they are protecting/defending something they value and which seems threatened by the attempt at change.

Eight Reasons for Resisting Change (Schermerhorn, Hunt, & Osborn, 2005):

  1. Fear of the unknown
  2. Lack of good information
  3. Fear of loss of security
  4. No reasons to change
  5. Fear of loss of power
  6. Lack of resources
  7. Bad timing
  8. Habit

To overcome resistance to change, make sure that the following criteria are met (Schermerhorn, Hunt, & Osborn, 2005):

  • Benefit: Whatever it is that is changing, that change should have a clear relative advantage for those being asked to change; it should be seen as “a better way.”
  • Compatibility: The change should be as compatible as possible with the existing values and experiences of the people being asked to change.
  • Complexity: The change should be no more complex than necessary; it must be as easy as possible for people to understand and use.
  • Triability: The change should be something that people can try on a step-by-step basis and make adjustments as things progress.

There are 6 methods for dealing with resistance to change (and their advantages & drawbacks)*** (Schermerhorn, Hunt, & Osborn, 2005; Kotter & Schlesinger, 1979 & 2008):

Methods for dealing with resistance to change | Source: Kotter and Schlesinger's 2008 article "Choosing Strategies for Change"
Methods for dealing with resistance to change | Source: Kotter and Schlesinger’s 2008 article “Choosing Strategies for Change”

  1. Education & Communication: educate people about a change before it is implemented; help them understand the logic behind the change.
  2. Participation & Involvement: allow people to help design and implement the changes (e.g., ideas, task forces, committees).
  3. Facilitation & Support: provide help (emotional & material resources) for people having trouble adjusting to the change.
  4. Negotiation & Agreement: offers incentives to those who resist change.
  5. Manipulation & Cooptation: attempts to influence others.
  6. Explicit & Implicit Coercion: use of authority to get people to accept change.

***For additional (and quite valuable) information related to the six methods for dealing with resistance to change outlined by Schermerhorn and colleagues, there is a Harvard Business Review article by Kotter and Schlesinger (1979 & 2008). The 2008 article, “Choosing Strategies for Change” is a reprint of the same 1979 article. For better layout and graphics, I’ve referred to the 2008 article. I believe the six methods for dealing with resistance to change outlined by Schermerhorn and colleagues (2005) is based on or came directly from Kotter and Schlesinger’s 1979 article.

***In Kotter and Schlesinger’s 1979 HBR article (and in the 2008 HBR reprint) the six methods for dealing with resistance to change included the six approaches (e.g., education + communication, negotiation + agreement, etc.) as well as three more columns (commonly used in situations; advantages; and drawbacks). I found this to be especially useful and have posted a screenshot (above) of the graphic used in Kotter and Schlesinger’s 2008 HBR article. I would encourage readers to read Kotter and Schlesinger’s HBR article.

Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor

References

Kotter, J. P. & Schlesinger, L. A. (1979). Choosing strategies for change. Harvard Business Review, 57(2), 106-114.

Kotter, J. P. & Schlesinger, L. A. (2008). Choosing strategies for change. Harvard Business Review, 86(7/8), 130-139. Also retrieved from https://hbr.org/2008/07/choosing-strategies-for-change

Kotter, J.P. (1996). Leading change. Boston, MA: Harvard Business School Press.

Schermerhorn, J.R., Hunt, J.G., & Osborn, R.N. (2005). Organizational Behavior (9th ed.). New York: John Wiley & Sons, Inc.

Being Attractive Helps Get You Hired

[NOTE: This post was updated October 2017]

When making decisions about whether or not to hire prospective job applicants, interviewers are influenced by an applicant’s attractiveness (Shahani-Denning, 2003, citing Watkins & Johnston, 2000; Jawahar & Mattsson, 2005). There is a great deal of evidence that being good-looking positively impacts the hiring decisions of employers (Shahani-Denning, 2003, citing Watkins & Johnston). This is known as the “what is beautiful is good” stereotype (Shahani-Denning, 2003, citing Dion, Berscheid & Walster, 1972).

Kassin, Fein, & Markus (2008, citing Hosoda, Stone-Romero, & Coats, 2003) found that as a society, we tend to favor those who are good-looking. And while this isn’t fair, research has found it to be true (Watkins & Johnston, 2000).

“Research shows that not only are good-looking applicants more likely to be hired, but they are likely to be hired at a higher starting salary. Attractiveness makes a difference with promotions, too. People ascribe more positive characteristics to attractive people” (Eichinger, Lombardo, & Ulrich, 2004, p. 124).

Whether researchers studied business school students or real-life HR professionals, the results were almost identical. The majority of the candidates hired were more attractive (Jawahar & Mattsson, 2005). “[A]ttractive applicants are preferred over less attractive applicants” (Jawahar & Mattsson, 2005, p. 571). While not surprising that attractive applicants tend to be hired more than less attractive applicants, what is surprising is that attractive applicants are also offered higher starting salaries compared to those considered less attractive (Toledano, 2013).

There is research suggesting that experienced managers do not seem to fall prey to this attractiveness/beautyism bias compared to managers who are not as experienced (Jawahar & Mattsson, 2005).

However, this quote from a Cornell HR Review article is quite clear:

“In short, attractive individuals will receive more job offers, better advancement opportunities, and higher salaries than their less attractive peers—despite numerous findings that they are no more intelligent or capable” (Toledano, 2013, para. 5).

So, given this unfair reality, what are applicants (who aren’t as attractive) to do? Jawahar & Mattsson (2005) assert that because good-looking people are believed to have better social skills, the bias against those who aren’t as good-looking might have more to do with the belief that the “less attractive” are less socially skilled. The researchers recommended that people who aren’t good-looking can help themselves by “demonstrating their social skills and directing the interviewer’s attention to other strengths” (Jawahar & Mattsson, 2005, p. 572).

Written By: Steve Nguyen, Ph.D.
Leadership Advisor & Talent Development Consultant

References

Dion, K. K., Berscheid, E., & Walster, E. (1972). What is beautiful is what is good. Journal of Personality and Social Psychology, 24, 285-290.

Eichinger, R. W., Lombardo, M. M., & Ulrich, D. (2004). 100 things you need to know: Best people practices for managers & HR. Minneapolis, MN: Lominger Limited.

Hosoda, M., Stone-Romero, E. F., & Coats, G. (2003). The effects of physical attractiveness on job-related outcomes: A meta-analysis of experimental studies. Personnel Psychology, 56, 431-462.

Jawahar, I. M., & Mattsson, J. (2005). Sexism and beautyism effects in selection as a function of self-monitoring level of decision maker. Journal of Applied Psychology, 90(3), 563-573.

Kassin, S., Fein, S., & Markus, H. R. (2008). Social Psychology (7th ed.). Boston, MA: Houghton Mifflin.

Shahani-Denning, C. (2003). Physical attractiveness bias in hiring: What is beautiful is good. Hofstra Horizons, Spring 2003, 15-18. Retrieved from http://www.hofstra.edu/pdf/orsp_shahani-denning_spring03.pdf

Toledano, E. (2013, February 14). May the Best (Looking) Man Win: the Unconscious Role of Attractiveness in Employment Decisions. Cornell HR Review. Retrieved from http://www.cornellhrreview.org/may-the-best-looking-man-win-the-unconscious-role-of-attractiveness-in-employment-decisions/

Watkins, L. M., & Johnston, L. (2000). Screening job applicants: The impact of physical attractiveness and application quality. International Journal of Selection and Assessment, 8, 76-84.

People with a Situational Value System

rude-customers

“A person who is nice to you but rude to the waiter, or to others, is not a nice person” (Barry, 1998, p. 185).

[NOTE: This post was updated January 2015]

Many years ago, while waiting for a show at a nice hotel in Dallas, my wife and I were standing in line to order some coffee. As we were in line waiting (we were second in line) at a busy one-person coffee stand, the woman waiting behind us (she was third in line) yelled out, “Can I go ahead and pay for this?” It didn’t matter to her that two other people (the first lady in line and us) were ahead of her in this ordering process.

I forgot what this was. It might have been a bottle of water or something small. But pretty much everyone else waiting patiently in line was ordering something small. After she interrupted and cut in line, she made some disparaging remarks about the single employee working there.

My wife and I both used to work as a waiter (me) and waitstaff trainer (wife) and thus we’re especially sensitive to and aware of how we and others treat waiters, waitresses, or anyone in a people service profession (e.g., hotel maids, bellmen, etc.). When I see behaviors like this woman’s, it brings me back to the time, more than 20 years ago, when I worked as a waiter for a restaurant in Austin, Texas.

I didn’t know it at first but was quickly informed by the other waitstaff that I was waiting on a baseball celebrity and his family. “Ok, not a big deal,” I thought. I’ll just make sure that I’m at my best and take care of them as I always do with all of my customers.

Because the family was busy visiting and chatting loudly, I stepped back to give them time to decide what they wanted to order. Not long afterwards, the wife snapped her fingers at me (like a rich person does when she beckons her servants). After the family ordered, she dismissed me, like “I’m done with you now leave my sight” type of attitude.

William H. Swanson, Chairman and Former CEO of Raytheon, cautioned:

“Watch out for people who have a situational value system, who can turn the charm on and off depending on the status of the person they are interacting with . . . Be especially wary of those who are rude to people perceived to be in subordinate roles.” [Cited in USA Today “CEOs say how you treat a waiter can predict a lot about character”]

I think this advice should be taken very seriously, especially by those in a supervisory or management role. In a USA Today article, Siki Giunta (CEO of Managed Objects, but who previously worked as a bartender) summed this up well when she said this type of situational behavior is a good predictor of a person’s character because it’s not something you can learn or unlearn easily but instead it shows how you were raised.

The woman who cut in line to place her order felt that she was special and deserved special treatment and gave herself permission to cut in front of others and then displayed contempt by mumbling unkind comments about the person preparing the coffee.

Takeaway: Whether it’s ordering coffee on a Saturday night or interacting with employees at work on a Monday morning, each of us—whether you’re a CEO, manager, or employee—needs to treat everyone, both in and outside the office (regardless of their status or title in the social or corporate ladder) with kindness, dignity, and respect.

Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor

References

Barry, D. (1998). Dave Barry Turns 50. New York, NY: Ballantine Publishing Group.

Jones, D. (2006, April 17). CEOs say how you treat a waiter can predict a lot about character. USA Today. Retrieved from http://www.usatoday.com/money/companies/management/2006-04-14-ceos-waiter-rule_x.htm