How hu­mil­ity of CEO serves busi­ness in­ter­est

LEAD­ER­SHIP Hum­ble chief ex­ec­u­tives tend to have con­fi­dence in their abil­i­ties paired with ac­cu­rate self-ap­praisal of their lim­i­ta­tions

Business Daily (Kenya) - - TOP NEWS -

Hu­mil­ity is the lat­est badge of virtue for those in po­si­tions of in­flu­ence. From politi­cians, to ex­ec­u­tives, to chart­top­ping artists.

The idea of a hum­ble CEO is a ro­man­tic de­par­ture from the greedy self-serv­ing cor­po­rate hero. Rather, when faced with ad­ver­sity, hum­ble CEOS sacri­fice their own in­ter­ests for the greater good.

Stud­ies echo the in­tu­ition that hum­ble lead­ers are more mod­est, emo­tion­ally sta­ble, and ea­ger to learn. Un­sur­pris­ingly, they are less likely to dis­play self-ag­gran­dis­ing traits such as nar­cis­sism.

Per­haps most telling is the find­ing t hat com­pa­nies and teams led by more hum­ble in­di­vid­u­als, per­form bet­ter. But de­spite hu­mil­ity be­ing good for busi­ness, it’s ex­tremely dif­fi­cult for CEOS to be gen­uinely hum­ble.

SUC­CESS CULLS HU­MIL­ITY

A dis­tinc­tive strength of hum­ble lead­ers is self-aware­ness — con­fi­dence in their abil­i­ties paired with ac­cu­rate self-ap­praisal of their lim­i­ta­tions. Yet, peo­ple of­ten over­es­ti­mate their virtues while un­der­es­ti­mat­ing their lim­i­ta­tions.

For ex­am­ple, a re­cur­ring re­search find­ing is that peo­ple think they are bet­ter-than-av­er­age. Smarter, bet­ter look­ing, even su­pe­rior driv­ers. CEOS are no ex­cep­tion, in fact they may be even more at risk of over­es­ti­mat­ing their strengths.

A key rea­son for this is that CEOS are — as a byprod­uct of their ca­reer suc­cess — highly con­fi­dent. Whether the CEO climbs the rungs of the cor­po­rate lad­der or whether a celebrity CEO is parachuted in, they will have suc­cess­fully out-com­peted other con­fi­dent and ca­pa­ble peo­ple for the job.

The con­fi­dence that ac­crues with ca­reer suc­cess is im­por­tant for lead­ing an or­gan­i­sa­tion. Yet, suc­cess is a mixed bless­ing. The same string of ca­reer wins may also lead CEOS to over-ap­praise their strengths with­out at­tribut­ing the role of other fac­tors, such as luck, in their achieve­ments.

Such over­con­fi­dence can even harm or­gan­i­sa­tions. Stud­ies show that CEOS, who over­es­ti­mate their abil­i­ties tend to over­pay for ac­qui­si­tions, take un­due risks, in­tro­duce more un­suc­cess­ful new prod­ucts, and have more volatile firm per­for­mance.

ACT­ING “LIKE A CEO”

If find­ing an au­then­ti­cally hum­ble CEO can­di­date is rare, look­ing at the per­son­al­ity pro­files of peo­ple who want to be CEOS com­pli­cates mat­ters fur­ther.

Re­search shows cer­tain jobs at­tract peo­ple with spe­cific per­son­al­i­ties. Re­cruiters in turn rely on judge­ments, of­ten sub­jec­tive, of how a can­di­date’s per­son­al­ity will fit the job and the or­gan­i­sa­tion.

CEOS tend to score higher than the gen­eral pop­u­la­tion on per­son­al­ity at­tributes such achieve­ment-ori­en­ta­tion, am­bi­tion, as­sertive­ness, and risk-pref­er­ence. In­di­vid­u­als with some, or a com­bi­na­tion, of these traits may be par­tic­u­larly adept at pre­tend­ing to fit ideal cri­te­ria for a spe­cific role.

For in­stance, stud­ies show that nar­cis­sists are par­tic­u­larly skilled at ap­pear­ing charis­matic at first sight. Charisma, in turn, has long been con­sid­ered a de­sir­able fea­ture of CEOS. CEOS per­ceived as charis­matic, ac­cord­ingly, re­ceive higher pay.

Gen­uine hu­mil­ity may thus be a scarce per­son­al­ity fea­ture among can­di­dates for CEO po­si­tions.

HUR­DLES TO LEAD­ING WITH HU­MIL­ITY

Hum­ble CEOS em­pha­sise lead­er­ship as a shared ac­tiv­ity and ac­tively seek ad­vice from oth­ers. Although this might work for more con­sid­ered and an­a­lyt­i­cal de­ci­sions, it may come at the cost of speed.

High-per­form­ing firms are of­ten char­ac­terised by an abil­ity to make de­ci­sions quickly. In fact, some ev­i­dence sug­gests that more nar­cis­sis­tic CEOS may be quicker in mak­ing judge­ment calls, for in­stance, about adopt­ing new tech­nolo­gies.

CEOS are also ex­pected to pro­vide pre­cise fore­casts of an un­cer­tain fu­ture. How­ever, man­agers of­ten en­gage in herd be­hav­iour in the face of un­cer­tainty, and firms of­ten end up im­i­tat­ing each other. By virtue of their self-aware­ness, hum­ble CEOS can be ex­pected to is­sue more re­al­is­tic ex­pec­ta­tions that may de­vi­ate from col­lec­tive overop­ti­mism.

How­ever, an­a­lysts tend to rate op­ti­mistic fore­casts more favourably. As such, hum­ble CEOS may be pe­nalised for con­vey­ing more con­ser­va­tive, al­beit more re­al­is­tic, fore­casts.

Some re­search sug­gests that ac­com­plished pro­fes­sion­als could po­ten­tially be­come more self-aware in the later stages of their ca­reer. If this is the case, then some CEOS may be­come more hum­ble as they get closer to re­tire­ment.

How­ever, the pur­ported ben­e­fits of age and ex­pe­ri­ence may be off­set by other ten­den­cies that emerge dur­ing later ca­reer phases. For in­stance, CEOS closer to re­tire­ment have a nat­u­ral ten­dency to re­duce in­vest­ments in in­no­va­tion and those with longer tenures tend to be overly averse to change.

Equip­ping or­gan­i­sa­tions with the right lead­er­ship at­tributes is cru­cial for suc­cess. Hu­mil­ity is a pre­cious, but rare, com­mod­ity in the ex­ec­u­tive suite.

Stay­ing gen­uinely hum­ble through pro­gres­sive stages of high achieve­ment is dif­fi­cult for CEOS. Those who are au­then­ti­cally hum­ble, in turn, face dis­tinct chal­lenges that may trump the ben­e­fits of their hu­mil­ity.

Hu­mil­ity is at risk of be­com­ing the lat­est lead­er­ship buzz­word. Or­gan­i­sa­tions that man­age to find an au­then­ti­cally hum­ble CEO, how­ever, may just have an edge.

Hum­ble CEOS em­pha­sise lead­er­ship as a shared ac­tiv­ity and ac­tively seek ad­vice from oth­ers ...Per­haps most telling is the in­d­ing that com­pa­nies and teams led by more hum­ble in­di­vid­u­als, per­form bet­ter.’’

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