Resources: Blog Post
Is Character Under-Valued?
Many of us likely watched the recent U.S. presidential debate because we were intrigued by how “The Donald” would conduct himself in the debate format. It was hardly compelling content for sure, but rich on entertainment value before it became predictably boring. Mr. Trump was as “braggadocios” as ever, and clearly more clever than any other person on the planet….in his mind. I have wondered over the past months, as his candidacy became more than a fantasy, what it must be like to be the CHRO of a Trump company in which he is actively involved. I’ve actually asked some of my peers, somewhat in fun, to imagine such a situation and most have said, “it wouldn’t happen, so I’m not wasting my time thinking about it.” Fair enough, and although Trump might be an extreme case, more than a few of us have experienced narcissistic leaders, who, according to the Mayo Clinic, may cause patients to have an exaggerated sense of self-importance, thoughts of superiority, a requirement for constant admiration and a sense of entitlement. People with this disorder may handle criticism poorly and may harbour secret feelings of shame. Unquestionably, the character of a CEO has a major impact on a company’s culture and it is a topic for exploration at our upcoming SCNetwork meeting -October 26th (register here).
I recently came across an article by Matt Palmquist, which drew my attention to a recent study that links an executive’s character traits to certain patterns in a firm’s investments, strategy decisions, and overall performance. Fascinatingly, the authors analyzed the language used by 4,700 CEOs, examining more than 72,000 transcripts of the question-and-answer portion of conference calls with investors and analysts that took place from 2001 through to early 2013. Psychologists have established that the way people speak — including their word choice, tone, and reference points — is highly predictive of their personality and remains stable over time. This analysis revealed that CEOs primarily display one of five personality traits: agreeableness, conscientiousness, extroversion (versus introversion), neuroticism (versus emotional stability), and openness to experience. These essential traits represent the “patterns of thoughts, feelings, and behaviours that reflect the tendency to respond in certain ways in certain circumstances,” as one researcher who studies the framework put it. For example, CEOs who are characterized by their openness tended to lead R&D-intensive companies. Conscientious CEOs, meanwhile, usually oversaw companies with high book-to-market ratios; that is, their accounting and financial health were in line with their company’s stock price. Palmquist noted that, among the more striking findings, extroverted CEOs were associated with both negative short- and long-term returns on assets and cash flows. He questioned whether this was because extroverts like to dominate the decision-making process and seek compliance and agreement from those around them, thus missing out on the benefits of collaboration. Their irrational exuberance may also be a sign of overconfidence, leading to aggressive tactics or ill-conceived policies that quickly backfire. Importantly, as insightful as these findings might be, the authors caution that their work is meant to be descriptive of the larger relationship between CEO personality and company performance, and not necessarily causal.
The Greek philosopher Heraclitus, once stated, ”a man’s character is his fate.” Our character has been crafted over time and is displayed through our thinking, our behaviours, and our actions. Character is the sum of our virtues, values and traits. By definition, personality is a person’s character and traits. Our view of Mr. Trump is predicated upon the way he thinks, the way he behaves and the actions he takes. As it relates to a leader’s impact on an organization, I like what Howard Schultz, CEO of Starbucks has said; “In this ever-changing society, the most powerful and enduring brands are built from the heart. They are real and sustainable. Their foundations are stronger because they are built with the strength of the human spirit, not an ad campaign. The companies that are lasting are those that are authentic.” If Schultz is authentic (many say he is) and if he genuinely cares about people (look at progressive Starbucks HR policies), the answer to where the vast majority would want to work (Trump Corp vs Starbucks) is obvious. But for any leader, if character IS your brand, how many people would want to work for you?
Ian Hendry is the president of the Strategic Capability Network. In his Morning Musings, he provides insight on issues facing today’s business leaders and looks at subject matter related to upcoming SCNetwork events. He is also VP HR & Administration at Interac Association.
How important is a person’s character in relation to job performance? Does character win over skill set? Please share your thoughts and antidotes on our Linkedin page.