systematicHR

Charismatic leaders create an envorinment in which employees want to follow a vision or idea that has been stated. A goal of most leaders is to create the type of enviironment where employees are engaged in that mission and vision of the company. However, charismatic leaders can turn off employees in the long run, and corporate values may be a major cause of employee synicism. When misapplied, charisma and values may not be the corporate friend and reduce employee engagement and satisfaction. If leaders claim values that they do not act upon, the hypocrasy effect is a serious negative impact to the employer brand and thus to the employee.
From Leadership Quarterly:

Theory on charismatic leaders suggests that shared values play an important role in promoting employee effort and organizational performance… We propose that employee sensemaking triggered by strong organizational values can increase the risk of attributions of leader hypocrisy, which lead to employee disenchantment in a process we call the hypocrisy attribution dynamic. Value expansion, organizational tenure, and perceived benefit/harm are proposed to moderate the hypocrisy attribution dynamic, influencing the chances of negative sensemaking about leaders’ behavior. This research sheds light on mechanisms through which charismatic leadership and values achieve their effects, and suggests that value expansion may be a double-edged sword—heightening followers’ experience of meaning at work but also increasing the risk of subsequent disenchantment. ((Cha, Sandra E. and Edmonson, Amy E., 2006. “When Values Backfire: Leadership, attribution and disenchantment in a values driven organization.” The Leadership Quarterly 17. Retreived from ScienceDirect.com on March 11, 2006.))

Ok, I have a hard time reading scholarly research sometimes too, but the point is well taken. The authors then followed up their research with an interview with HBS. ((Lagace, Martha. February 17, 2006. “Corporate Values and Employee Cynisism.” HBS Working Knowledge. Retrieved from http://hbswk.hbs.edu/ on March 11, 2006.))

Q: In this firm or others, can such conditions be lessened or avoided? Are these potential risks at most other organizations?

A: One of the next steps with our research is to look at leader strategies that reduce the chances of becoming seen as hypocritical. We theorize—but still need to test the ideas—that employees are less likely to jump to and maintain this harsh conclusion about leaders when leaders do four things:

(i) Explicitly acknowledge the tension among multiple aims. Sometimes values bump up against one another—consider the cases in which leaders need to manage tradeoffs between maximizing profits and investing in employees in a given year. L’Oréal manages such tensions by explicitly assigning responsibility for different values to specific people. Senior managers focus on short-term goals; HR is responsible for reminding them about long-term goals such as developing employees. These different foci are meant to trigger continuous dialogue about the tensions, leading to creative solutions.

(ii) Clarify the values’ appropriate meanings, but not restrict their scope excessively. The problems at Maverick began with employees’ interpretations of the corporate values, which were broader than the CEO intended, causing them to interpret some of his actions as breaching the values. Obviously, greater agreement about the values’ meanings would have helped to prevent their reactions. At the same time, we believe that leaders should not clamp down hard on how employees interpret corporate values, because it is in the process of personalizing abstract values—of finding unique personal meanings—that employees find inspiration.

(iii) Proactively “give sense” around actions that could be seen as values-threatening. When another person takes an action that harms us, we tend to automatically assume that the other person is bad and has negative intentions. When employees witness a leader acting in ways that could be seen as threatening cherished values, they are quick to conclude that he or she is a hypocrite. But leaders who take the time to carefully explain the reasons behind negative decisions (which are often invisible to employees) may be able to show employees the ways in which they are trying to sustain the values, while also managing business realities.

(iv) Create a sense of psychological safety. Employees need to feel that it is safe for them to express negative views about leaders. Leaders can make this possible by seeking regular feedback through anonymous surveys or other safe forums. Dreyer’s Grand Ice Cream (also sold as Edy’s) is a fantastic example of the last two strategies. In the late 1980s, several employees accused Dreyer’s leaders of being hypocrites who were not implementing the company’s employee-centered values in practice. In response, senior executives began working hard to do a better job of supporting the values, conducting and responding to regular employee surveys about the values. Then in 1998, Dreyer’s faced a number of serious challenges simultaneously. Among them: Competitors were engaging in aggressive discounting, the price of butterfat had skyrocketed, and the CEO was coping with a brain tumor. Dreyer’s senior executives decided that they needed to restructure the company financially. The day after they announced the restructuring to the financial community, they were on planes all over the country, meeting face-to-face with every employee to explain the situation and the changes that would have to take place. Rather than feeling bitter or disenchanted, employees rallied around the company. Their efforts helped Dreyer’s to recover from the toughest business climate it had faced in twenty years to become the leading U.S. ice cream producer today, with over 1.5 billion dollars in sales in 2004.

Q: What would you like our manager-readers to be aware of as they think about your research and try to apply it to the context of their organization? How should people on both sides of the fence (leaders and the led) avoid or diminish the kind of tension that happened at Maverick?

A: Leaders need to seek feedback before significant bad events transpire. At Maverick, although morale had gone down, there was no mass exodus of employees to other companies, no sharp decline in the quality of the work, no lost clients. Although employees were upset with the CEO they were still loyal to the organization, and they were still there. When people like Maverick’s CEO are open to seeking feedback before there is any obvious signal of things being bad, there is a much stronger chance of identifying and fixing problems in the making.

Employees can help prevent their own—sometimes unwarranted—disenchantment by questioning their knee-jerk responses to leader actions that seem hypocritical. They can consider the possibility that external constraints and multiple, conflicting aims are driving a leader’s behavior, and they can test these hypotheses by asking questions and sharing their concerns. But we think that the opportunity for fixing such problems lies mostly with a company’s CEO and leadership. ((ibid))

Also see the series on Leadership.