Of Bosses and Business

Stephen DeAngelis

June 1, 2009

The current economic recession focused the harsh light of the media on chief executive officers of businesses that either helped create the conditions that caused the downturn or weren’t strong enough to survive the downturn on their own. People were outraged that the greed of many of these executives pushed them to make decisions that enriched themselves and their cronies but, in the end, shattered the retirement dreams of many individuals who trusted them. One can only hope that CEOs who successfully navigate the currents of the recession, as well as those who succeed them, demonstrate greater character and ethical courage than CEOs who have been disgraced. Don’t hold your breath, however, the public hoped the same thing following the collapse of Enron and other businesses. Being a CEO myself, I realize that it’s not fair to tar all CEOs with the brush of scandal. We seldom read about the good CEOs. The media focuses on those taking “perp walks” with their wrists handcuffed behind them or on those whose outrageous conduct is worthy of public opprobrium.

What started me thinking about this subject of leadership was a couple of recent articles about bosses. They provide very different views of what makes a good boss. The first was written by New York Times‘ columnist David Brooks [“In Praise of Dullness,” 18 May 2009]. Dullness hardly sounds like the kind of flattering characteristic that one would seek in a CEO; but, depending on the kind of business one runs dullness may be exactly what is called for. Brooks writes:

“Steven Kaplan, Mark Klebanov and Morten Sorensen recently completed a study called ‘Which C.E.O. Characteristics and Abilities Matter?’ They relied on detailed personality assessments of 316 C.E.O.’s and measured their companies’ performances. They found that strong people skills correlate loosely or not at all with being a good C.E.O. Traits like being a good listener, a good team builder, an enthusiastic colleague, a great communicator do not seem to be very important when it comes to leading successful companies. What mattered, it turned out, were execution and organizational skills. The traits that correlated most powerfully with success were attention to detail, persistence, efficiency, analytic thoroughness and the ability to work long hours.”

It’s difficult to argue that “attention to detail, persistence, efficiency, analytic thoroughness and the ability to work long hours” aren’t important characteristics. They are. As an entrepreneur, however, I also believe that “being a good listener, a good team builder, an enthusiastic colleague, [and] a great communicator” are also extremely important. Not having read the referenced book, I can only assume that Kaplan, Klebanov, and Sorensen studied well-established companies rather than entrepreneurial enterprises. In such companies, according to Brooks, “Organized, dogged, anal-retentive and slightly boring people are more likely to thrive.” To make his point, Brooks provides a few other examples.

“In 2001, Jim Collins published a best-selling study called ‘Good to Great.’ He found that the best C.E.O.’s were not the flamboyant visionaries. They were humble, self-effacing, diligent and resolute souls who found one thing they were really good at and did it over and over again. That same year Murray Barrick, Michael Mount and Timothy Judge surveyed a century’s worth of research into business leadership. They, too, found that extroversion, agreeableness and openness to new experience did not correlate well with C.E.O. success. Instead, what mattered was emotional stability and, most of all, conscientiousness — which means being dependable, making plans and following through on them.”

I agree that getting a business started and running a business once it’s up and operating require two different skill sets. It explains why many an entrepreneur sells his or her “baby” once it gets established or is ousted by stockholders when his or her visionary style is no longer appropriate. A business leader who can successfully make the transition is rare, but those who can do extremely well. Timing is also critical. They must know when the moment arrives for the switch from visionary entrepreneur to relentless business person to be made. Brooks continues:

“The research suggests it’s more important to be resolute, even at the cost of some flexibility. The second thing the market seems to want from leaders is a relentless and somewhat mind-numbing commitment to incremental efficiency gains. … These sorts of dogged but diffident traits do not correlate well with education levels. C.E.O.’s with law or M.B.A. degrees do not perform better than C.E.O.’s with college degrees. These traits do not correlate with salary or compensation packages. Nor do they correlate with fame and recognition. On the contrary, a study by Ulrike Malmendier and Geoffrey Tate found that C.E.O.’s get less effective as they become more famous and receive more awards. What these traits do add up to is a certain ideal personality type. The C.E.O.’s that are most likely to succeed are humble, diffident, relentless and a bit unidimensional. They are often not the most exciting people to be around. For this reason, people in the literary, academic and media worlds rarely understand business. … For the same reason, business and politics do not blend well. Business leaders tend to perform poorly in Washington, while political leaders possess precisely those talents — charisma, charm, personal skills — that are of such limited value when it comes to corporate execution.”

The point of Brooks column is that he is concerned that the stimulus package, which appears to be turning politicians into businessmen, will have adverse effects on the business world. I agree with Brooks that there is a line between business and politics that should be drawn. On the other hand, there must be some understanding between the business and government sectors so that good policies and legislation can be enacted. Finding the right course that fosters government support without triggering government interference is one of the subjects that I deal with when promoting Development-in-a-Box™. Brooks’ column focused on the characteristics of good business leaders. Washington Post staff writer Steve Vogel examines the characteristics of good government leaders [“Money’s Nice, but a Good Boss Is Better,” 20 May 2009]. Unlike Brooks, who judged the qualities of business leaders from the success of their companies, Vogel examines the qualities of government leaders as judged by their subordinates. As one might imagine, how a stockholder views a leader is much different than how an employee views a leader. I suspect that employees in the commercial and government sectors view their bosses pretty much the same. Vogel writes:

“When it comes to sizing up the quality of their workplaces, federal workers value strong leadership and straight answers from their bosses more than even pay and benefits, according to a new comprehensive study of the federal workforce.”

According to the study, the Nuclear Regulatory Commission is the best place to work in the federal government. Why? “Because senior management takes the time to listen to the staff.” Remember, that characteristic was not “very important when it comes to leading successful companies,” according to Brooks. That’s the conundrum that faces leaders. According to Vogel, agencies that received the lowest ratings included the Transportation Department, the National Archives and Records Administration, the Homeland Security Department and the Education Department.

“What separates these agencies in the minds of their employees is often the senior leadership, how well or poorly it shares information with subordinates, and the training and opportunities it provides workers. … ‘The challenge is for government managers to do a better job of communicating,’ said John Palguta, vice president for policy for the group. ‘Communicate, communicate, communicate. It’s like real estate.’ … Fewer than half of federal workers, 48 percent, are satisfied with the information they receive from superiors about what is happening in their organizations, a number that trails the private sector by 18 percentage points.”

I believe there is a way to reconcile Brooks’ observations with those of the government study. In large corporations headed by the CEOs described by Brooks, there are people whose job it is to ensure that employees understand what is going on and the direction the company is taking. The government generally has no such individual or group. In small and mid-size companies, good CEOs must often assume that role themselves. In my mid-size company, for example, I periodically get employees together and personally fill them in all everything that is happening. I try to ensure that they know what’s going and also instill in them my sense of enthusiasm for the way ahead. The bottom line is that even though Brooks doesn’t believe that communication is a critical skill for a CEO, I’m sure he would argue that good communication is an important characteristic for an organization as a whole.