Positive Leadership in Business

As we approach our LIFT Better Leadership Forum looking at leadership in business, LIFT’s founder Joanne Hession looks at the importance of positive leadership in business (a longer version of this article appeared in Accountancy Ireland magazine in early 2021):

The power of positive leadership in business

I remember the financial crisis of 2008. I remember scrambling to try to keep my two businesses afloat. I remember thinking, to paraphrase Seamus Heaney: if I can get through this, I can cope with anything.

Across the world, businesses were faced with incredible challenges. It was difficult for everyone. Employees took wage cuts, worked long hours, found new markets, and sought innovative solutions to keep their businesses going until things picked up. Some businesses did not make it while others did. Thankfully, we weathered the storm.

Why did some businesses survive while others did not? There are many reasons but a couple of years ago, I came across research conducted by Dr Fred Kiel in Harvard Business Review (as well as in Dr Kiel’s book, Return on Character).

In 2015, Dr Kiel looked at whether business performance has any relationship with the CEO’s character. He asked employees in over 100 organisations to rate their chief executive on integrity, compassion, forgiveness and responsibility. Based on respondents’ feedback, he gave the CEOs an overall score, which he called their ‘character score’.

Then, he looked at the return on assets (ROA) of the companies they led to see whether there was any relationship between character scores and business performance. The categorical answer was: yes, there was.

The CEOs rated highest for their character score invariably led the companies with the best performance. The five highest-ranked leaders led companies with a ROA of close to 10% over the period. The companies of CEOs with a medium character score had an average ROA of about 5%. Interestingly, the leaders with the lowest character scores had ROA rates of around 2%.

This research resonated with me deeply. I have always believed that the most important aspect of leadership lies in character. But more importantly, Dr Kiel’s research demonstrated that positive character attributes directly correlate with better leadership, all the way down to the bottom line.

The central point is this: when things are really difficult, as they were in 2008, character is central to how people respond. Little did I know back then just how much more challenging the world would become 12 years later, and just how vital positive leadership would be.

The role of influence

Leadership is an interesting concept. Ask most people to name a leader and they will invariably choose a CEO, politician or perhaps a team captain. Whatever the context, it will almost always be the person at the top.

Bottom-line results are often why one person is chosen over another: X was in charge when Rabona United won the league; or Y was the CEO when Tech Co. Inc. increased its share price three years in a row, for example.

There are undoubtedly great leaders among these positional leaders. Yet I cannot help thinking that this notion of leaders as those at the top of their environments misses the point about what leadership is and where we can find it.

Leadership is influence. If you influence others, you are leading them. Positive leadership is therefore about positive influence. Whether it is termed ‘authentic’, ‘transformational’, ‘charismatic’ or ‘servant’ leadership, positive leadership is influence that emerges because someone cares, empowers and supports others and because their behaviour or character provides an example that others use to forge their futures.

I have been in the privileged position of running several businesses for over 20 years now. As founder and CEO, I have, in a literal sense, led those businesses. But just as important throughout those 20 years, numerous others have led me.

When one of my staff saw a potential niche market, offering and explaining his findings, I was influenced to change our business direction slightly. When one of our technical experts saw a more efficient way to allow our teams to collaborate, I followed her lead to progress the overall business vision.

In purely business terms, I may be founder and CEO, but I am well aware that there are times when my role is to lead, and there are times when my role is to take my lead from others.

This is a liberating and empowering idea. It doesn’t matter what our role is, and it doesn’t matter whether we are running a business or are the newest recruit through the door. Every one of us leads at certain times and follows at others. We all encounter moments every day when our actions, words, or behaviour might influence others. When this happens, others are effectively taking their lead from us, and we are leading them. Equally, we are all influenced by others and, regardless of our seniority, we need to maintain the humility to recognise that leadership is a shared endeavour.