For CEOs, people skills detract from getting business results, states one study — but dig a little deeper and you’ll find a very different answer
Imagine reading in a provincial HR association’s magazine details about a research report from the United States that finds people skills actually detract from getting business results. Frustration soars when you find no rebuttal, clarification or detail. The Human Resources Professionals Association could be commended for fearless reporting of bad news in its October/November issue of HR Professional, but it’s a shame to publish reports without analysis simply for the shock value. Can’t we test our research skills and look a bit deeper? Misunderstandings, if resolved, deepen insight. Who better to spearhead the search for truth than HR?
It’s easy to Google the study’s title, Which CEO Characteristics and Abilities Matter, to see most of the coverage on the August 2008 study fails to dig deeper than its surface points. The authors’ scholarly abstract and 54-page paper lead casual readers astray, stating pretty much what has been reported. The authors even go so far as to question Jim Collins’ finding, in his in-depth book Good to Great, that the leaders with the best results are the top team players. That’s a sweeping claim for a small study.
Interestingly, fewer than one-third of readers who sought the report on the Social Science Research Network site bothered to download it and undoubtedly even fewer read it.
But there’s actually good news — the 316 private equity firms in the sample actually “over-emphasized people skills” in hiring CEOs. Good for them. But “over-emphasis” turns out to mean these skills were valued equally with the analytic or execution skills the authors found would have produced better results. This bad news is more than slightly mitigated by the fact the firms in the study seem to have been largely in the tech industry in the midst of the dot-com bust around the year 2000. At least the authors acknowledge “other factors” played a role.
We know two things. First, even 50 years ago, the theory of situational leadership points out there are circumstances where focusing more on task and less on people makes sense. When the ship is sinking fast, you don’t want the captain to wait for consensus on launching the lifeboats. Does the dot-com bubble bursting sound like a sinking ship to anyone?
Also, as in many smaller studies, we find analysis based on short-term results, not the long-term success of companies that hired solid, well-rounded CEOs with both people and execution skills. We don’t know how these leaders would have fared several years down the road, since few got the chance.
Second, the results of the study offer a sketchy contradiction, at best, to what tons of other evidence has been showing and the authors — two from the University of Chicago and one from Columbia Business School — admit this. The report makes no comparison with the growing mountains of scholarly research and business literature that cite facts and examples of how positive people processes form the core of most great success stories.
Collins’ findings, for instance, are confirmed and illustrated in cases such as Toyota, Southwest Airlines, GE and Wal-Mart. More fuel to the fire comes in the form of Harley Davidson’s More than a Motorcycle, Johnsonville Sausage’s Flight of the Buffalo, Ricardo Semler’s books about Semco and dozens of other examples where people skills measurably play a majority role in achieving results that far outstrip the competition. Should we suggest these are all wrong without digging a bit deeper when so many have been repeatedly detailed?
It doesn’t take a ton of effort to dig out the real story. Contrast the authors’ sample with that of Collins, who set out to identify large companies that were pretty good to begin with and over time, became and stayed great for many years. Which CEO Characteristics and Abilities Matter did find slight correlations favouring execution over team skills in a short-term crisis, but Collins found strong ones favouring teamwork integrated with execution for the long haul.
In HR, we have a responsibility to present the most accurate picture possible, to understand when each type of leadership style should be emphasized. We need to be alert to misunderstandings such as this, especially because we live in a very either/or environment when we talk about leadership. We often see organizations settle for leaders who get results over leaders with good people skills, as if it has to be one or the other. But we should know better.
This study of 316 CEOs of risky private equity ventures actually makes an incredibly important finding in which we can all take heart — even in make-or-break situations with their own money at risk, savvy investors take the time to seek out well-rounded leaders in hopes of building “good to great” organizations. They prefer this to the quick-fix leader who doesn’t worry about people and who will likely fizzle in the long term.
Contrast this with the many big, but foolish, companies where everything is an emergency — a burning platform where only the most aggressive are likely to survive. We see too much of that in organizations and little planning for the future. If everything is always viewed as an emergency, everything will continue to be an emergency. We need to encourage more risk-taking teamwork on building a better future.
There was at least one group that reported on the study pretty much correctly, though the wording was odd. At Directorship.com, the article, “The qualities of the perfect CEO,” states: “An overly aggressive CEO is not the solution but, rather, the study shows that selecting a CEO based (primarily) on exceptional team-related qualities is overrated. When hiring a CEO, a team-player is desirable, but also an individual who does not let a team-player mentality override important and assertive decision-making.” (The added word is mine.)
The key to this backhanded critique are the words “but also.” We need to emphasize this works vice versa — both assertive leadership and team skills are necessary for long-term success.
How many will inevitably read this as “forget about team-building skills?” Why? When faced with a decision that requires judgment in integrating and balancing divergent skills, people tend to cop out and go for a clean either/or — a team player or a get-the-numbers choice.
To be effective, it has to be both. To quote Albert Einstein, “Everything should be made as simple as possible, but not one bit simpler.” Analyzing a study such as this actually strengthens understanding and our ability to see both sides of the core issues.
Dave Crisp is a Toronto-based consultant with a wealth of experience, including 14 years leading HR at Hudson Bay Co. where he took the 70,000-employee retailer to “best company to work for” status. For more information, visit www.crispstrategies.com.
