Why Leadership Charisma Keeps Beating Performance

Despite all of the data that organizations have accumulated on the importance of  psychological and emotional factors in separating successful leaders from everyone else, executives - and those who select, promote and compensate them - continue to emphasize spurious performance numbers over intangible factors even when those 'soft' data have redounded to their own benefit.

This rejection of credible information reflects a fear of seeming insubstantial, even when it is clear that the economy is driven more by ideas than by metric tons. But it also presents an opportunity to those institutions prescient - and wise enough - to take advantage of it. JL

Roger Trapp comments in Forbes:

Charisma was found to be most powerful for both presidents and CEOs, when the data was ambiguous. In other words, charisma helps give leaders the benefit of the doubt.
At a time when collaboration and teamwork are said to be watchwords at the top of organizations of all kinds it is tempting to think that the charismatic leader must be on the wane. But a quick look around the world suggests that in politics as in business (or anywhere else, it seems) the odd technocrat might win through but in the main it is those with some kind of charisma that end up in charge. This situation in which personality beats substance is much lamented by members of the public and expert commentators alike. And yet new research from two European business school academics indicates that voters, headhunters and others in a position to make decisions over leaders continue to be more influenced by charisma than by objective performance data.
In their paper for the Academy of Management Journal, John Antonakis, professor of organizational behavior at the HEC Business School, University of Lausanne, and Phillippe Jacquart, associate professor of leadership at EM Lyon Business School, examine how leaders are evaluated and selected with particular reference to the role played by two well-known psychological theories about leadership. The first – attribution theory – suggests that leaders are rated according to the performance of their organizations. In other words, if a company is successful we assume that its leader must be good. That person is retained or hired by a bigger organization. Conversely, we blame poor organizational performance on the leader and act accordingly by firing them. Such attributions are made even though those making them rarely have firm evidence of a causal link between the leadership and organizational outcomes. The second theory – inferential theory – suggests that leaders are evaluated according to how well they meet the criteria associated with an idealized version of a good leader. One of these criteria is, of course, charisma – characterized, for example, by the leader’s ability to empathize with followers or his or her ability to articulate a vision with which others can identify. To explore the roles of the two theories, Antonakis and Jacquart studied the results of US Presidential elections from 1916 to 2008 and plotted how Democrat and Republican candidates fared depending on whether they were from the incumbent party and the state of the economy. They also devised an experiment whereby viewers were given different versions of a video about a fictitious company – each creating different impressions of the business’s performance and the charisma of the chief executive. The studies were designed to look at each process separately but – crucially – they examined how they interacted with each other.
The results described in “When Does Charisma Matter For Top-Level Leaders? The Effect Of Attributional Ambiguity” suggest that when we evaluate leaders we use both attribution and inferential approaches. In general, when the performance data is relatively clear and those making the decisions are not able to observe the leader closely they equate leadership competence with outcomes. However, when the performance is less clear-cut, the inferential effect – charisma – becomes important and those doing the evaluating are influenced by how leader-like the leader is. The more charismatic the leader, the more favorably he or she is likely to be judged when the performance is ambiguous, according to Antonakis and Jacquart.
The charisma effect was especially telling in the CEO study, with the authors finding that charisma influenced decision making even when performance data were strongly positive or negative. Charisma in a CEO may reinforce a positive impression created by the strong performance, but in can also help when the results are against them. Charisma was found to be most powerful, though, for both presidents and CEOs, when the data was ambiguous. In other words, charisma helps give leaders the benefit of the doubt.
There are lessons here for both leaders and those evaluating them. On the one hand, leaders would do well to develop some of the techniques associated with charisma – such as storytelling and empathy – and on the other evaluators should guard against being too easily won over by the charm of charismatic leaders and should concentrate on gaining performance data that is directly linked to the leader in question.