What Kind of Leadership Matters Most When?

Leadership is an endlessly fascinating topic and one that is never more important now in the United States. The US is facing a critical leadership challenge this year, with a situation it has never encountered before. And it’s interesting when comparing leaders in government to leaders in the hemophilia community. Because this past year, we’ve seen leadership changes in our major bleeding disorder nonprofits. Change often causes constituents—like you and me—to sit up and take notice. Who exactly is running the show? How are they running it—and why?

Certain forms of leadership are likely to be more important when countries, companies or nonprofits are facing unpredictable futures. And an effective and appropriate leadership style is often contingent on the voters, market or constituents you serve.

One study from the 1990s examined this. To identify what qualities of leadership count the most under different conditions, a team of academic researchers asked two top managers of 48 large US companies to assess the qualities of their chief executive and their operating environment.

The top managers assessed the extent to which their CEO displayed the qualities of “transactional” or “charismatic” leadership. The first type of leadership describes an executive who works within the existing system and rewards employee contributions to it; the latter describes an executive who visualizes an altered future and stimulates employee passion for it. The top managers also evaluated the degree to which their firms faced markets that were dynamic, risky, and stressful.

The researchers found that charismatic leadership by the CEO tended to have adverse impact on company financial performance when the market was predictable—but favorable impact when the market and environment was uncertain.

In other words, if a country, company or nonprofit is facing a fast-changing world with an uncertain future, building a passion for the future is critical. And this means getting citizens, employees and constituents on board with a leader’s vision, through trust, communication and credibility.

Ask what’s happening right now in our country, with our nonprofits. Which leader appears transactional? Which charismatic? What vision do they offer? Are they credible? Trustworthy? Communicate their vision well? Facing an uncertain future, a charismatic leader may well command a greater sense of power, of impact. This does not mean they are the best leader, but it means they may be the best at winning consensus and achieving power, conveying a vision and having people believe in them.

Something to really think about this year: whether in US politics or the bleeding disorder community… study the topic and components of leadership as much as you study the leaders.

Source: David A. Waldman, Gabriel G. Ramírez, Robert J. House, and Phanish Puranam. “Does Leadership Matter? CEO Leadership Attributes and Profitability Under Conditions of Perceived Environmental Uncertainty,” Academy of Management Journal, February 2001, pp. 134–143.

© 1996–2001,Wharton Center for Leadership and Change Management, University of Pennsylvania.

Leave a Comment

HemaBlog Archives