Northouse (2013) wrote that leadership and management are similar in many ways. Both involve influencing, achieving goals, and working with people. However, while they may share some similarities, there are distinct and important differences. Northouse said the study of leadership goes as far back as the times of Aristotle, while the concept of management came about “around the turn of the 20th century with the advent of our industrialized society” (2013, p. 12).
In this article, I will first include quotes in support of the notion that leadership and management are similar. I will then follow with quotes and passages in support of the notion that leadership and management are different.
Manager And Leader – One And The Same
Mintzberg (1990) defined a manager and a leader as one and the same. Mintzberg considered a manager “the person in charge of the organization or one of its subunits” (1990, p. 164). In his HBR article (which originally appeared in Harvard Business Review in 1975), he referred to CEOs as managers. Managers include “foremen, factory supervisors, staff managers, field sales managers, hospital administrators, presidents of companies and nations…” (p. 164). Mintzberg maintained that managers are vested with authority over an organizational unit and from this authority comes status, which then leads to interpersonal relations and access to information. And, it is information that allows a manager to make decisions and develop strategies.
Manager And Leader – Not Synonymous
“Leaders manage and managers lead, but the two activities are not synonymous . . . [M]anagement functions can potentially provide leadership; [L]eadership activities can contribute to managing. Nevertheless, some managers do not lead, and some leaders do not manage” (Bass, 1990, p. 383).
“Leadership is path-finding; management is path-following. Leaders do the right things; managers do things right. Leaders develop; managers maintain. Leaders ask what and why; managers ask how and when. Leaders originate; managers imitate. Leaders challenge the status quo; managers accept it . . . Leadership is concerned with constructive or adaptive change, establishing and changing direction, aligning people, and inspiring and motivating people . . . They set the direction for organizations. They articulate a collective vision . . . They sacrifice and take risks to further the vision” (Bass, 2008, p. 654).
“Managers plan, organize, and arrange systems of administration and control. They hold positions of formal authority. Their position provides them with reward, disciplinary, or coercive power to influence and obtain compliance from subordinates. The subordinates follow directions from the manager and accept the manager’s authority as long as the manager has the legitimate power to maintain compliance—or the subordinates follow out of habit or deference to other powers of the leader. Management is concerned with consistency and order, details, timetables, and the marshaling of resources to achieve results. It plans, budgets, and allocates staff to fulfill plans” (Bass, 2008, p. 654).
Good Leader ≠ Good Manager, Good Manager ≠ Good Leader
Here’s an example that illustrates the difference:
A good leader (e.g., CEO of a software company) may not be someone technically proficient in guiding a software developer through a complex job. That job belongs to a competent manager. And, a good manager may be good at managing the day-to-day duties in the factory or office, but lacks the vision required of a great leader to strategically guide an organization.
Different Concepts That Overlap
Northouse (2013) said:
“Although there are clear differences between management and leadership, the two constructs overlap. When managers are involved in influencing a group to meet its goals, they are involved in leadership. When leaders are involved in planning, organizing, staffing, and controlling, they are involved in management. Both processes involve influencing a group of individuals toward goal attainment.” (p. 14)
Bass, B. M. (1990). Bass & Stogdill’s handbook of leadership: Theory, research, and managerial applications (3rd ed.). New York: The Free Press.
Bass, B. M. (2008). The Bass handbook of leadership: Theory, research, and managerial applications (4th ed.). New York: Free Press.
Mintzberg, H. (1990). The manager’s job: Folklore and fact. Harvard Business Review, 68(2), 163-176.
Northouse, P. G. (2013). Leadership: Theory and practice (6th ed.). Thousand Oaks, CA: Sage.
Diversity initiatives usually sound great on paper and on an organization’s website. However, upon closer inspection, it is easy to see that there often exists a huge gap between rhetoric and practice.
Jayne and Dipboye (2004) stated that simply having a diverse workforce “does not . . . produce the positive outcomes that are often claimed” (pp. 411-412). Increasing diversity, in and of itself, will not improve the talent pool. It will not build commitment, improve motivation, or reduce conflict. Nor will it increase group or organizational performance.
One of the first challenge in managing a diversity initiative is to understand that the concept of diversity is difficult to operationalize, with different organizations defining the term “diversity” differently (Jayne & Dipboye, 2004).
Second, a diversity “training” program on its own is not a panacea. A company with only a diversity training program should never think of itself as having a diversity initiative. For example, in reviewing the components of a diversity initiative at one organization (I’ll called it Company DIYDI for “Do It Yourself Diversity Initiative”), it became evident that the diversity training program was just one part of a much larger, more comprehensive diversity initiative. The other pieces of a diversity initiative, in addition to training, MUST also include: recruiting, retention, development, external partnership, communication, and staffing and infrastructure (Jayne & Dipboye, 2004).
Due to the absence of many of the parts listed above, the diversity initiative at Company DIYDI was ineffective. Unfortunately, the diversity programs that were in place played a very minor role in shaping the diversity initiatives at this particular organization. Among some of the major omissions, there were no leadership development programs, no community outreach, and no employee benefits with a diversity component integrated into the larger framework. For instance, at Company DIYDI there were no domestic partner benefits for employees.
To succeed in properly instituting a diversity initiative, it is essential to integrate diversity priorities with the overall mission of the organization. For instance, to achieve diversity success for a college or university, Wade-Golden and Matlock (2007) suggested creating a well-crafted, well-articulated and integrated strategic plan that engages each level of the institution and one that reflects a commitment to action.
When there is a lack of consistency between what’s written or advertised at the organizational level from the reality of what employees (and/or students if it’s at a university) perceive, feel, and/or experience, tensions (sometimes subtle and other times more visible and vocal) can surface.
Jayne and Dipboye (2004) listed some steps that organizations can take to manage diversity more effectively:
There must be commitment and accountability from upper management.
A comprehensive needs assessment must be conducted.
Tie the diversity strategy to business results in a realistic way.
Emphasize team-building and group process training.
Set up metrics and evaluate the effectiveness of diversity initiatives.
Takeaway: Effective organizational diversity initiatives are difficult, comprehensive, and time-consuming. There’s no doubt that it is a challenging, laborious undertaking. However, if it is done correctly, organizations and its employees will benefit.
Jayne, M. E. A., & Dipboye, R. L. (2004). Leveraging diversity to improve business performance: Research findings and recommendations for organizations. Human Resource Management, 43(4), 409-424.
Wade-Golden, K., & Matlock, J. (2007). Ten Core Ingredients for Fostering Campus Diversity Success. Diversity Factor, 15(1), 41-48.
In this post, I want to talk about the importance of providing timely responses to customer questions/inquiries and keeping your clients informed, and how failure to do either one or both will hurt your business.
Two instances come to mind when I think about consultants who lost clients because they either ignored their clients’ emails or neglected to keep their clients updated about the status of a project.
The first example involved a skilled consultant who was hired to provide technical services for a client. Although highly talented, the consultant neglected answering client emails, a key to maintaining good relationship with the customer. Multiple questions from one client went unanswered, and by the time this consultant responded, the client either had already come up with a solution or the opportunity to address the issue had already passed.
The second example involved another experienced consultant who failed to keep clients informed about problems or issues that might delay delivery of services. After the first missed deadline, inquiries from a client were met with excuses for why the deadline was missed, and instead of taking ownership and responsibility for the missed deadline, the consultant blamed others for the delay.
In both examples, highly skilled consultants lost clients.
A health professional once told me that in health care, providers will sometimes make a mistake because, let’s face it, no one is perfect and as hard as professionals try, they’re still human and can and do mess up. However, this health professional told me that he learned a very important lesson in running his own healthcare practice. He said if you have a great relationship with your clients, even if you screw up, you’ll have a much better chance of retaining your client than if you have a shoddy relationship. He told me that even if you are highly skilled, if your relationship with your clients are second-rate, the chances of losing them are much greater than if you are moderately skilled but provide excellent customer service.
“Many times . . . consumers do not complain . . . but instead take actions such as switching brands [or companies] or engaging in negative word of mouth (WOM)” (Hawkins & Mothersbaugh, 2010, p. 636).
Take-Away: No matter how skilled or good you are at your job, if you provide a service to customers (whatever that service might be), be sure to remember that you need to also provide exceptional or first-rate customer service, which includes providing timely responses to customer questions/inquiries and keeping your clients informed. Failure to do so can result in lost business (or clients) or damage to your reputation, or both.
Hawkins, D. I., & Mothersbaugh, D. L. (2010). Consumer behavior: Building marketing strategy (11th ed.). New York, NY: McGraw-Hill/Irwin.
I’ve written before about the challenges of successfully executing strategy. In this post, I’ll clarify the difference between leadership and strategic leadership. I’ll also discuss what constitutes strategic leadership, a major controversy surrounding strategic leadership, five challenges of strategy execution, and nine factors of strategic leadership.
Strategic leadership is different from leadership. Whereas leadership refers to leaders at any level within an organization, strategic leadership talks about leaders at the top of the organization (Vera & Crossan, 2004). Another important distinction is that leadership studies focus on the micro levels (relationship between leaders and followers, trait and style of leaders, individualized leadership models, etc.), while strategic leadership focuses on the macro level of executive work (e.g., instead of looking at leader-follower relationship, the macro view looks at how the dominant coalition of the company influences the strategic process of the organization)(Vera & Crossan, 2004).
According to Yukl (2010), a major controversy surrounding strategic leadership research is the level of impact CEOs have on the effectiveness of their companies. Critics maintain that CEOs exert little influence due to limitations imposed on them by stakeholders, corporate culture, lack of resources, strong competitors, and unsympathetic economic conditions. These opponents assert that industry performance and economic conditions play an even greater role on a company’s effectiveness and success than CEOs.
There are FIVE challenges of strategy execution (Franken, Edwards, & Lambert, 2009):
Relentless pressure from shareholders for greater profits. This forces top business leaders to redefine their strategy more often.
Increased complexity of organizations. For example, the activities it requires to create products and services span various functional, organization, and even geographical boundaries.
Balancing demands of executing complex change programs with business performance. In particular, in cases where management is tied to rewards based on performance, it can be difficult to get buy-in into creating strategic plans for the future.
Low levels of involvement of managers at the beginning stages of strategic execution.
Difficulty securing the required resources to execute the strategy. As a result of the large number of concurrent change programs, many of the company’s resources will already be allocated and even if they are available, managers will aggressively compete for them.
Yukl (2010), however, insists that the research shows, despite these constraints, CEOs and top executives can still have “a moderately strong influence on the effectiveness of an organization” (p. 401).
Davies & Davies (2004) proposed 9 FACTORS of STRATEGIC LEADERSHIP. They include organizational and individual abilities.
Strategic leaders need to have FIVE organizational abilities:
Be strategically orientated – link long-range visions and concepts to daily work.
Translate strategy into action – identify projects that need to be undertaken to move the company from where it’s at to where it wants to go.
Align people and organizations – aligning individuals to a future company state or position.
Determine effective intervention points – knowing both what to do strategically and exactly when to intervene and change direction.
Develop strategic competencies – in the example of a school, rather than delivering curriculum innovation, it is the fundamental understanding of teaching and learning.
Strategic leaders need to have FOUR individual abilities:
Dissatisfaction or restlessness with the present – seeing where you want to be (vision), while dealing with your current reality; being able to envision the strategic leap that the organization wants to make.
Absorptive capacity – recognizing new information, analyze it, and applying it to new outcomes.
Adaptive capacity – ability to change and learn, having the cognitive flexibility linked to a mindset that welcomes and embraces change.
Leadership wisdom – taking the right action at the right time; coming up with ideas, deciding whether ideas are good or not, making ideas functional and convincing others of its value, balancing effects of ideas on yourself, others and institutions.
Davies, B. J. & Davies, B. (2004). Strategic leadership. School Leadership & Management, 24(1), 29-38.
Franken, A., Edwards, C., & Lambert, R. (2009). Executing strategic change: Understanding the critical management elements that lead to success. California Management Review, 51(3), 49-72.
Vera, D. & Crossan, M. (2004). Strategic leadership and organizational learning. Academy of Management, 29(2), 222-240.
Yukl, G. (2010). Leadership in organizations (7th Ed.). Upper Saddle River, NJ: Prentice Hall.
I thought I would repost my comments to a discussion question in the SIOP (Society for Industrial and Organizational Psychology) group on LinkedIn about the notion of “corporate psychopaths” (made famous by the book Snakes in Suits: When Psychopaths Go To Work [Babiak & Hare, 2006]).
From Snakes in Suits: When Psychopaths Go To Work (p. xiv):
“The premise of this book is that psychopaths do work in modern organizations; they often are successful by most standard measures of career success; and their destructive personality characteristics are invisible to most of the people with whom they interact. They are able to circumvent and sometimes hijack succession planning and performance management systems in order to give legitimacy to their behaviors. They take advantage of communication weaknesses, organizational systems and processes, interpersonal conﬂicts, and general stressors that plague all companies. They abuse coworkers and, by lowering morale and stirring up conﬂict, the company itself. Some may even steal and defraud.”
As a former mental health counselor, I am very cautious about buying into this notion of “corporate psychopaths.” Technically, psychopathy is not mentioned in the DSM-IV-TR as a diagnosis. It actually falls under “Antisocial Personality Disorder” (301.7).
For information sake (not trying to diagnose), the criteria for Antisocial Personality Disorder requires that a person must have (1) a history of conduct disorder symptoms as a juvenile, AND (2) antisocial symptoms as an adult. It’s important to note that the DSM-IV explains the pattern of those who engage in antisocial behavior “continues into adulthood” (DSM-IV TR, p. 702). In other words, their problematic behavior started before they were 18 and continued into adulthood.
The DSM-IV said the prevalence of psychopathy in the general population is about 3% in males and 1% in females (DSM-IV TR, p. 704).
Another important note is that generally a diagnosis of Antisocial Personality Disorder is not warranted if the person also has a substance abuse problem.
Based on the criteria listed above, many of those who would be described or classified as “corporate psychopaths” in the book “Snakes in Suits” might actually not be psychopaths.
This is why I am very skeptical about this idea of “corporate psychopaths.”
Indeed, the authors of Snakes in Suits: When Psychopaths Go To Work (pp. xiv-xv) warned:
We consider it important to caution the reader that, although the topic of this book is psychopathy in the workplace, not everyone described herein is a psychopath [and that] reader[s] should not assume that an individual is a psychopath simply because of the context in which he or she is portrayed in this book.
American Psychiatric Association. (2000). Diagnostic and statistical
manual of mental disorders (4th ed., text rev.). Washington, DC: Author.
Babiak, P., & Hare, R. D. (2006). Snakes in suits: When psychopaths go to work. New York: HarperCollins Publishers.
My first job was working for a sporting goods store in a mall. I was really excited because it was a well-known company and had a sister company selling athletic shoes and clothing. But my manager was a guy much more concerned with making a sale than building a quality sales team or creating customer loyalty.
One incident still stands out in my mind to this day. A teenager and his mother came into the store looking for a new backpack since the seams were coming apart. I asked him the brand of his backpack, and when he told me, I shared with him and his mom that he did not need to buy a new backpack. Instead, all he needed to do was write to that company and ask them to repair or replace the backpack since it has a lifetime warranty on it. I told them that I had done this and that company honored their lifetime warranty and repaired my backpack just several months before.
My manager smiled, but as soon as they left, he berated me for losing a sale. When I tried to explain why I did what I did, he dismissed my reasons and told me that I did not have to tell them the whole truth, and that I should have left out the lifetime warranty part so they would have to buy a new backpack from our store.
I shared this piece of information with them for two reasons. First, it was the right thing to do. Rather than leaving out important information (e.g., they did not need to buy a new backpack) or tell some half-truths I felt it was best to help them save money. Second, by saving customers money, I established trust and built an honest relationship with a potential repeat customer or have that customer share via word of mouth how helpful I was to their friends and family. In fact, the mother was especially thankful and kept thanking me as she was leaving our store.
BUSINESS LESSON: What that sporting goods store manager failed to understand was that a sale was not lost, but rather a customer was gained. And in the eyes and minds of those two customers, I had earn their trust and respect. What’s more, they might be returning to the store because I had taken good care of them. They might even tell other people about their positive experience with me and refer other customers my way. Making a quick buck by deceiving customers with half-truths and leaving out important facts is what a manager with a short-term, self-serving mentality does. However, a great long-range mentality manager knows that business sales depends greatly on establishing and maintaining relationships with customers, and this is achieved by earning their trust.
Japanese television offers a wide selection of variety shows. Unlike those in the U.S., Japanese variety shows will invite a group of “talents” (although I’m still not sure what many of their talents are, other than smiling and tasting different foods). The thing that immediately got my attention about all of these variety shows was the repeated use of talents (actors or comedians) to comment on any issues, whether the person was qualified to do so or not.
It is simply baffling to me how a group of people, with no discernible expertise on a subject matter will comment on just about anything. The subjects can vary from management to mental health to melting snow, and believe it or not, a group of people will comment on it. Last week, I saw five people on one variety show standing around commenting on different shapes of snow.
In another week, a young man (one of the “talents”) was on a talk show embedded inside a joint infomercial and a soap opera (I’m not joking). The young man shared that he was concerned about his melancholy outlook on life and his tendency to be negative. Another “talent” (I think he’s a former teacher) proceeded to play armchair therapist by asking the guy to read aloud from Romeo and Juliet.
Ok, so what does all of this nonsense have to do with psychology and workplace behaviors? Two things: expertise and credibility.
I realize I’m making a huge leap from talking about Japanese variety shows to the business environment, so please bear with me. But, the more I watched these “talents” the more I kept thinking about expertise and credibility. Because these “talents” do not have the expertise to offer anything of substantive value (that I could not otherwise get by simply asking my next door neighbors for their opinions), they (at least in my eyes) end up diminishing their own brand and/or jeopardizing their own credibility.
In Business Leadership (2003), Kouzes and Posner said credibility is one admired characteristics of a leader:
“Credibility is the foundation of leadership” (Kouzes & Posner, 2003, p. 262).
“The qualities of being honest, inspiring, and competent compose what communications researchers refer to as source credibility. In assessing the believability of a source of information—whether it is the president of the company, the president of the country, a sales person, or a TV newscaster— researchers typically use the three criteria of trustworthiness, expertise, and dynamism. Those who rate highly in these areas are considered to be credible sources of information” (Kouzes & Posner, 2003, p. 261).
Kouzes and Posner (2003) said your credibility must be earned over time. It’s not something that’s bestowed upon you when you get a new title or job. What’s more, credibility can affect the workplace.
“Credibility has a significantly positive outcome on individual and organizational performance” (Kouzes & Posner, 2003, p. 266).
In The Leadership Challenge (2007), Kouzes and Posner explained in greater details about why credibility matters. They wrote (pp. 38-39):
“Using a behavioral measure of credibility, we asked organization members to think about the extent to which their immediate manager exhibited credibility-enhancing behaviors. In our studies we found that when people perceive their immediate manager to have high credibility, they’re significantly more likely to
Be proud to tell others they’re part of the organization
Feel a strong sense of team spirit
See their own personal values as consistent with those of the organization
Feel attached and committed to the organization
Have a sense of ownership of the organization
When people perceive their manager to have low credibility, however, they’re significantly more likely to
Produce only if they’re watched carefully
Be motivated primarily by money
Say good things about the organization publicly but criticize it privately
Consider looking for another job if the organization experiences problems
Feel unsupported and unappreciated
“Credibility makes a difference” (Kouzes & Posner, 2007, p. 39).
Kouzes, J. M., & Posner, B. Z. (2003). Leadership is a relationship. In J. M. Kouzes (Ed.), Business leadership (pp. 251-267). San Francisco, CA: Jossey-Bass.
Kouzes, J. M., & Posner, B. Z. (2007). The leadership challenge (4th ed.). San Francisco, CA: Jossey-Bass.
Forbes has a funny post about the silly job titles that some top executives hold (e.g., Chief Listening Officer [at Kodak]). Please understand I’m not commenting on the skills and competencies of the individuals who hold these titles, only in the silliness of the titles themselves.
The Forbes article quoted Mark Stevens, author of Your Marketing Sucks, in saying: “It is all corporate Kindergarten playtime title-making . . . It’s a puppet show.” According to Stevens, having “Chief” in the title is merely for show. “These people have absolutely no power . . . Most of these vanity titles don’t even report to the CEO.”
Here’s the bottom line: “The only C’s with ‘real’ power are the Chief Executive Officer, Chief Financial Officer and, occasionally, Chief Operating Officer” (Forbes).
Similarly, Josh Dreller wrote in a blog post about the most meaningless job titles on LinkedIn. As his post showed, title inflation is not unique to top executives. Instead, it’s an epidemic that is spreading to every level, in every company. On LinkedIn, Josh came across various silly titles, such as “Senior Road Warrior Marketing Intern”, “The Social Media Badass”, “Chief Thought Provoker”, “Chief People Herder”, and “Digital Marketing Magician.”
I love what Robbin Block (an author and a radio host who commented on Josh’s post) said:
“It’s getting ridiculous to the extreme. A label can be useful, but not if it’s completely fabricated . . . Titles actually used to mean something and indicated a person’s expertise and experience.”
Although Robbin was referring to marketing titles, I think this is certainly applicable in every industry.
All silliness aside, a job title is important for several reasons. I/O psychology professor Michael Aamodt (2010) explained that an accuratejob title does the following:
It describes the nature of the job.
It aids in employee selection and recruitment (by indicating the nature of the job, thus helping an organization match potential applicants with the requirements for the job).
It provides employees with some form of identity.
It affects perceptions of the status and worth of a job.
Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor
Aamodt, M. G. (2010). Industrial/organizational psychology: An applied approach (6th ed.). Belmont, CA: Wadsworth.
In a conversation about how, in one organization, management had known for quite some time what needed to be done, but they just didn’t do it, a professor inquired: “What purpose might it serve for an organization to be in possession of possible solutions yet choose not to implement them?”
What a great question.
Robert Sutton (2010) contended that what separates good bosses from bad ones is that good bosses find ways to link talking to doing, and that bad bosses are oblivious and often don’t even realize that they “routinely stifle and misdirect action” (p. 130).
Perhaps this is overly simplistic, but with regard to why organizations that are in possession of possible solutions but choose not to implement them, I think sometimes managers and/or organizations fall prey to “analysis paralysis” where there’s a tendency to over analyze everything and which can result in the crippling or stifling of timely actions.
The Ultimate Business Dictionary (2003) defines analysis paralysis (or paralysis by analysis) in this manner :
Paralysis by analysis is “the inability of managers to make decisions as a result of a preoccupation with attending meetings, writing reports, and collecting statistics and analyses” (p. 235).
The obsession with studying a problem and analyzing an issue to death is akin to creating a self-imposed bottleneck. The obstruction/congestion is your own doing.
Sutton, R.I. (2010). Good boss, bad boss: How to be the best…and learn from the worst. New York: Business Plus.
(2003). The Ultimate Business Dictionary: Defining the World of Work. Cambridge, MA: Perseus Publishing.
A recent New York Times’ article observed that Japanese tech giants, like Sony and Panasonic, are incurring huge losses and are “being overtaken by nimbler, cheaper overseas rivals” (Tabuchi, 2012). The article further said these aging Japanese tech giants cannot be relied upon to drive innovation, and that Japanese tech entrepreneurs and their start-ups might just be what’s needed to help infuse fervor into a country in much need of an innovation transfusion.
However, even while Japan’s sluggish economy and its aging population have contributed to Japan falling to #25 in a recent global innovation ranking, Japanese start-ups continue to struggle because of the risk-averse nature of Japanese society.
According to professor Parissa Haghirian (formerly with Sophia University, now at Ludwig Maximilian University of Munich), among the biggest differences between Japanese versus Western business practices are lifetime employment and seniority-based pay and promotion (Haghirian, 2009).
“Lifetime employment refers to the preference of Japanese corporations to hire their employees after their graduation from university and then keep them in the company for most of their length of their careers. Lifetime employment is not a legal requirement for Japanese companies, but a custom that developed after World War II. The strict Japanese labor laws, which make it very difficult to lay personnel off, supported the establishment of this system” (Haghirian, 2009, p. 955).
There are some distinct advantages of lifetime employment. First, organizations can invest in the training and development of their employees over a long period of time. Second, there’s more job security and thus increased employee loyalty and motivation.
Related to lifetime employment is another Japanese business practice of seniority-based pay and promotion. Haghirian (2009) explained that because traditional Japanese companies tend to be hierarchical, employees’ career opportunities are tied to their length of employment with an organization.
I wonder if these Japanese business practices (e.g., lifetime employment and seniority-based pay and promotion), which seems so ingrained in the culture here, might be contributing to the current struggle of Japanese tech giants to remain relevant in today’s globally competitive technology market.
“Japanese society continues to venerate lifetime company loyalty, while penalizing risk-taking and failure. The government has created a cumbersome web of regulations that hampers new entrants. And risk-taking is absent not just among would-be entrepreneurs, but also among investors, who still favor propping up old companies rather than fostering new ones” (Tabuchi, 2012).
Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor
Haghirian, P. (2009). Japan. In C. Wankel (Ed.), Encyclopedia of business in today’s world (pp. 952-957). Thousand Oaks, CA: Sage.
Politicians and car salesmen are notorious for being dishonest. But what’s often overlooked are skilled liars who might be a coworker, a supervisor, a top executive, a family member, or even a neighbor. It isn’t until a major scandal, like the ones involving Ponzi schemers Allen Stanford and Bernie Madoff, that people take note that lying is more pervasive and much more difficult to detect than we think.
The scandal in 2009 involved CEO Allen Stanford and other top executives of Stanford Financial Group. They were charged and convicted of fraud for scheming investors (for more than two decades). Allen Stanford was sentenced to 110 years in prison for a $7 billion Ponzi scheme.
The NY Times article said: “Prosecutors argued that Mr. Stanford had consistently lied to investors, promoting safe investments for money that he channeled into a luxurious lifestyle, a Swiss bank account and various business deals that almost never succeeded.” It also stated that Stanford was convicted “of running an international scheme over more than two decades in which he offered fraudulent high-interest certificates of deposit at the Stanford International Bank, which was based on the Caribbean island of Antigua.”
And, even as he made his final statement in court, Stanford continued to lie by saying: “I’m up here to tell you from my heart I didn’t run a Ponzi scheme.” The federal prosecutor called his statement “obscene” and said this: “This is a man utterly without remorse . . . from beginning to end, he treated all of his victims as roadkill.”
But a scandal in late 2008 is perhaps even more outrageous and infamous. It involved Bernie Madoff, wherein he lied, stole and laundered money, and deceived thousands of investors out of billions of dollars. Even more incredible was that the scheme lasted for two or even three decades! Madoff was sentenced to 150 years in prison for his Ponzi scheme.
An article in Scientific American led me to a book by professor Aldert Vrij called “Detecting Lies and Deceit” (Vrij, 2008). Professor Vrij defines deception or lying as:
“a successful or unsuccessful deliberate attempt, without forewarning, to create in another a belief which the communicator considers to be untrue” (Vrij, 2008, p. 15).
Dr. Vrij identified three different categories that make detection of lying challenging: (1) a lack of motivation to detect lies; (2) difficulties associated with lie detection; and (3) common errors made by lie detectors. I want to focus on “good liars” (identified on pp. 378-381), one of the seven reasons listed under “difficulties associated with lie detection.”
“Good liars are those people: (i) whose natural behaviour disarms suspicion; (ii) who do not find it cognitively difficult to lie; and (iii) who do not experience emotions such as fear, guilt, or duping delight when they are lying” (Vrij, 2008, p. 378).
CHARACTERISTICS OF GOOD LIARS
There are 8 Characteristics of Good Liars (Vrij, 2008, p. 378-379):
(1) Being natural performers: “Directed gaze to a conversation partner, smiling, head nodding, leaning forward, direct body orientation, posture mirroring, uncrossed arms, articulate gesturing, moderate speaking rates, a lack of ums and ers, and vocal variety” are often associated with being honest and likable.
(2) Being well prepared: “Good liars therefore say as little as possible or say things that are impossible for others to verify. The less verifiable information is given, the less opportunity it provides for the lie detector to check.” The better the preparation (and the more believable the lie), the easier it is for good liars to lie effectively.
(3) Being original: People who are especially good at lying are mentally creative and original. They’re able to offer a convincing and credible answer in almost any situation.
(4) Rapid thinking: Good liars are quick to respond to a question because waiting too long to answer would arouse suspicion. Thus, being able to think quickly is an important characteristic.
(5) Being eloquent: Being eloquent, in the context of being a good liar, means that you provide a long-winded, intentionally vague response to avoid answering the question. Good liars might even say something that, on the surface, sounds plausible, but actually does not answer the question. Just imagine a skilled politician dodging a question and you get the idea.
(6) Good memory: Good liars must have a good memory or else they risk getting caught in their web of lies. They have to be able to recall what they’ve previously said so they can repeat theta same information without contradicting themselves.
(7) Not experiencing guilt, fear, or delight: “Deceiving others is made easier if the liar does not experience feelings of guilt, fear or delight, because in that case there will not be any emotional behaviour that needs to be suppressed.”
(8) Good at acting: If a person is not a “natural performer” (the first characteristic listed) or they are not especially skilled at masking their guilt, fear, or delight when lying (the seventh characteristic listed), then being a good actor is a must. Good liars are masters with excellent decoding skills. They can adapt to quickly to disarm suspicion.
SPOTTING LIARS DIFFICULT DUE TO LIE DETECTION MISTAKES
Under “Common Errors Made by Lie Detectors”, Dr Vrij explained that, in addition to lie detection being difficult, those who play the role of lie detectors also make SEVEN mistakes. I’ll just mention five mistakes below.
(1) Examining the Wrong Cues: Lie detectors (referring to people whose job is to spot liars, such as police detectives) might look at the wrong cues. For instance, one police manual says that liars tend to look away and make grooming gestures. But a lie detection study, Dr. Vrij found that the more police officers endorsed the lie cues promoted in that police manual, the worse they were at detecting suspects who lied and suspects who told the truth.
(2) Neglect of Interpersonal Differences: There are large differences when it comes to people’s behavior, speech, and physiological responses. “The result is that people whose natural behaviour looks suspicious (e.g., people who naturally avert their gaze or fidget a lot) are in a disadvantageous position, because they run the risk of being falsely accused of lying . . . Introverted and socially anxious people in particular run such a risk” (Vrij, 2008, p. 383).
(3) Neglect of Intrapersonal Differences: “Not only do different people respond differently in the same situation (interpersonal differences), the same person also responds differently in different situations (intrapersonal differences). Neglecting or underestimating those intrapersonal differences is another error that lie catchers make. The failure to control adequately for intrapersonal differences is one of the main criticisms of concern-based polygraph tests” (Vrij, 2008, p. 383).
(4) Use of Heuristics: Following general decision rules (heuristics) can easily lead to mistakes and biases. For example, facial appearance heuristic is the “tendency to judge people with attractive faces or baby-faced appearances as honest” (Vrij, 2008, p. 385). And the fundamental attribution error which occurs when we form impressions of others and then overestimate their character factors while underestimating situational factors. Thus, if we believe someone to be trustworthy, we will judge that person a telling the truth in any given situation. On the other hand, if we think someone is untrustworthy, we’ll tend to judge that individual as dishonest in any given situation. “Obviously, trustworthy people are not honest all of the time and untrustworthy people are not always dishonest” (Vrij, 2008, p. 385).
(5) Overestimating the Accuracy of Lie Detection Tools: We tend to overestimate the accuracy of lie detection tools. However, despite the belief that polygraphs or fMRI brain scans are effective, Dr. Vrij argued that “every single lie detection tool used to date is far from accurate and prone to errors” (p. 386).
Polygraphs measure finger sweating, blood pressure, and respiration. Dr. Vrij explained that one of the most frequently used polygraph test today is the Comparison Question Test (CQT), also referred to as the Control Question Test. I would recommend reading Ch. 11 “Physiological Lie Detection: The Concern Approach” of his book for a detailed explanation about the CQT and the criticisms of the CQT. Professor Vrij (pp. 304-305 citing Iacono ) contended there are three reasons why the CQT is controversial: (i) there is no consensus amongst scientists that there exists an adequate theoretical foundation for its application; (ii) the polygraph profession operates outside the scientific environment and is practiced most by law enforcement officials trained at freestanding polygraph schools that are unrelated to universities; and (iii) polygraph tests can have profound consequences for individuals subjected to them. [***It is not the intent of this post to argue for or against the merits of the CQT because I do not possess expertise in this area. However, the criticisms about the CQT are worth noting.]
According to Dr. Vrij, when we try to deceive others, we activate higher centers of the brain. fMRI scans (when used to detect deception or lying) are supposed to reveal this. However, “different people tested in the same situation revealed different patterns of brain structure and area activity when they lied (interpersonal differences) and the same person shows different patterns of brain structure and area activity when he or she lies in different situations (intrapersonal differences)” (Vrij, 2008, p. 371). Therefore, Dr. Vrij argued, fMRI scans aren’t much different from the traditional polygraph lie detectors.
“So far, research has not yet shown that the fMRI technique does produce more accurate results than traditional polygraph testing, and I therefore do not recommend using such scans in real-life settings for lie detection purposes” (Vrij, 2008, p. 372).
The sad reality is that there are very skilled liars who are able to effectively lie for years or, in the case of Allen Stanford and Bernie Madoff, even decades before they’re caught. And, I suspect, there are many other good liars who have never been and probably will never be caught.
A 2016 study in Nature Neuroscience discovered that our brain actually adapts to being dishonest, and that habitual lying can desensitize our brains from “feeling bad,” and may even encourage us to tell bigger lies in the future.
Bottom line: Good liars (those with natural behavior that disarms suspicion, who do not find it cognitively difficult to lie, and who do not experience fear, guilt, or delight when they are lying) can be hard to spot because they’re very skilled at the art of lying. Even polygraphs and functional magnetic resonance imaging (fMRI) scanning techniques will not adequately identify those who are good at lying because these lie detection methods have important limitations.
Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor
Iacono, W. G. (2000). The detection of deception. In J. T. Cacioppo, L. G. Tassinary, & G. G. Berntson (Eds.), Handbook of psychophysiology, 2nd edition (pp. 772–793). Cambridge, England: Cambridge University Press.
A recent article in the Harvard Business Review talks about how J.C. Penney’s switch to the Fair and Square Everyday Low Pricing Strategy failed. The idea was to get rid of discounts and there won’t be any need to promote sales because, well, every day is a sale with low pricing. Sounds reasonable. The campaign was spearheaded by new CEO, Ron Johnson, who was formerly head of Apple’s retail store division.
The Fair and Square Everyday Low Pricing Strategy even features Ellen DeGeneres in funny TV commercials. One commercial had Ellen complaining about the cost of a hat. Another one showed her having a hard time trying to return a toga. And in another TV ad, Ellen is wondering why she has to wake up so early to get to a sale. I like Ellen and the TV commercials are funny. But I had a bad feeling that consumers would not connect with the ads, and it seems I was right.
According to the Harvard Business Review article (2012), J.C. Penney’s same store sales dropped by 18.9%, store visits decreased by 10%, and the average spend was down by 5% for the first quarter under this new pricing strategy. J.C. Penney lost $163 million (compared to earning $64 million in the first quarter of 2011) and its stock was $43 per share after the new pricing strategy was first announced in January 2012, now trades below $30.
In the HBR article, Mohammed (2012) said that during an investor conference call in mid-May, CEO Johnson maintained that the problem is that customers just don’t know about J.C. Penney’s new pricing strategy. Not only is this an understatement, it also underscores an important misunderstanding. Even if customers do understand, I don’t believe they would buy into that strategy. In other words, just because I understand what a company is attempting to do to market its product, it does not mean that I will go out and spend money for it.
Mohammed added, “Shifting from offering 590 promotions annually to a trimmed down Everyday Low Price Strategy, as J.C. Penney did, is a big change to communicate to shoppers.”
Philip Graves, in his book “Consumerology,” talks about the significance of considering the consumer in context. He writes:
“If you want to know why someone does or doesn’t buy, you have to understand how the environment shapes behavior. Divorcing the quest for understanding from the context in which it takes place is a recipe for leading yourself astray. To maximize sales or the impact of communication, the environment has to be right” (Graves, 2010, p. 53).
Thus, without taking into account the context, corporate advertising decisions can lead to products that are not well-received by consumers or marketing decisions that are off the mark. In the case of J.C. Penney, the product is J.C. Penney itself or its stores, since Penney is a retailer that sells merchandise and services to consumers through its department stores and online.
Here’s an example,
“When McDonald’s developed the Arch Deluxe burger in the mid-1990s, the company was confident that it had a winning product that would appeal to adult consumers. In the context of its market research the product performed very well, but in the context of a McDonald’s restaurant, complete with “Happy Meals,” Ronald McDonald, and other child-associated cues, the reaction was very different. Ironically, the advertising concept, which featured Ronald McDonald taking part in more grown-up activities, probably reinforced the contradictory associations customers were battling with” (Graves, 2010, p. 59).
So why didn’t market research work, and why didn’t it translate into real-world success?
“McDonald’s developed its “Burger with the Grown-up Taste” from its Oak Brook headquarters in a direct move to appeal more to adults. Away from the plastic seating, bright primary colors, and menus of familiar, child-friendly alternatives, respondents rated the product highly for taste, freshness, and satisfaction. Despite more than $200 million of expenditure, at least $100 million of which was spent promoting this product that research had shown was so appealing, it failed and was withdrawn” (Graves, 2010, pp. 59-60).
J.C. Penney’s Fair and Square Everyday Low Pricing Strategy failed because it did not consider context. Doing a sudden U-turn from offering 590 promotions annually to an Everyday Low Price Strategy is drastic. As a consumer, when I think about department stores and shopping for clothing or other items, I want a “good deal” and I look for “deals.” My brain has become accustomed to seeking out deals, sales, and bargains. There’s also something about finding a deal or catching a good “sale.” J.C. Penney executives are learning this too late, as the new CEO admitted, “We did not realize how deep some of the customers were into [coupons]” (Bhasin, 2012).
The lesson is this: Human behavior is strongly influenced by the environment. It is crucial to consider the context that people are in. “The context can determine not just how the person behaves, but how differently they act from the way they might have expected to, and, in most cases, how they would like to tell themselves they would” (p. 60).
Written By: Steve Nguyen, Ph.D.
Leadership + Talent Development Advisor
“Having an organizational culture that emphasizes ethical behavior can cut down on misbehavior of organizations. Research shows that whether an organization develops a culture that emphasizes doing the right thing even when it is costly comes down to whether leaders, starting with the CEO, consider the ethical consequences of their actions. Leaders with a moral compass set the tone when it comes to ethical dilemmas” (Truxillo, Bauer, & Erdogan, 2016, p. 385).
Robbins and Judge (2009) offer a nice list of what management can do to create a more ethical organizational culture. They suggest a combination of the following practices:
Be a role model and be visible. Your employees look to the behavior of top management as a model of what’s acceptable behavior in the workplace. When senior management is observed (by subordinates) to take the ethical high road, it sends a positive message for all employees.
Communicate ethical expectations. Ethical ambiguities can be reduced by creating and disseminating an organizational code of ethics. It should state the organization’s primary values and the ethical rules that employees are expected to follow. Remember, however, that a code of ethics is worthless if top management fails to model ethical behaviors.
Offer ethics training. Set up seminars, workshops, and similar ethical training programs. Use these training sessions to reinforce the organization’s standards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas.
Visibly reward ethical acts and punish unethical ones. Performance appraisals of managers should include a point-by-point evaluation of how his or her decisions measure up against the organization’s code of ethics. Appraisals must include the means taken to achieve goals as well as the ends themselves. People who act ethically should be visibly rewarded for their behavior. Just as importantly, unethical acts should be punished.
Provide protective mechanisms. The organization needs to provide formal mechanisms so that employees can discuss ethical dilemmas and report unethical behavior without fear of reprimand. This might include creation of ethical counselors, ombudsmen, or ethical officers.
A good case study of an unethical organizational culture is the now defunct Enron. Sims and Brinkmann (2003) described Enron’s ethics as “the ultimate contradiction between words and deeds, between a deceiving glossy facade and a rotten structure behind” (p. 243). Enron executives created an organizational culture that valued profits (the bottom line) over ethical behavior and doing what’s right.
“A business perceived to lack integrity or to operate in an unethical, immoral, or irresponsible manner soon loses the support of customers, suppliers and the community at large*” (Tozer, 2012, p. 476).
*In addition to losing customers, suppliers and the community, I would also include losing the support of employees and managers.
Written By: Steve Nguyen, Ph.D.
Leadership & Talent Consultant
Robbins, S.P., & Judge, T.A. (2009). Organizational behavior (13th ed.). Upper Saddle River, NJ: Pearson Education, Inc.
Sims, R.R., & Brinkmann, J. (2003). Enron ethics (or: Culture matters more than codes). Journal of Business Ethics, 45(3), 243-256.
Tozer, J. (2012). Leading through leaders: Driving strategy, execution and change. London, UK: KoganPage.
Truxillo, D. M., Bauer, T. N., & Erdogan, B. (2016). Psychology and work: Perspectives on industrial and organizational psychology. New York: Routledge.
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).
“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.
In “Leading Change” (1996), Kotter outlined an 8-Stage Process to Creating Major Change:
Establish a Sense of Urgency: Examine market and competitive realities; identify and discuss crises, potential crises, or major opportunities
Create the Guiding Coalition: Assemble a group with enough power to lead the change; get group to work together as a team
Develop a Vision & Strategy: Create a vision to help direct the change effort; Develop strategies for achieving that vision
Communicate the Vision: Use every vehicle possible to communicate the new vision and strategies; have Guiding Coalition role model the behavior expected of employees
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
Generating Short-Term Wins: Plan for visible performance improvements or “wins”; create those “wins”; recognize and reward employees who made “wins” possible
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
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):
Fear of the unknown
Lack of good information
Fear of loss of security
No reasons to change
Fear of loss of power
Lack of resources
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):
Education & Communication: educate people about a change before it is implemented; help them understand the logic behind the change.
Participation & Involvement: allow people to help design and implement the changes (e.g., ideas, task forces, committees).
Facilitation & Support: provide help (emotional & material resources) for people having trouble adjusting to the change.
Negotiation & Agreement: offers incentives to those who resist change.
Manipulation & Cooptation: attempts to influence others.
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
Kotter, J. P. & Schlesinger, L. A. (1979). Choosing strategies for change. Harvard Business Review, 57(2), 106-114.