With the spotlight firmly on the cultural and leadership issues of financial institutions, sport and politics, are we experiencing a leadership crisis in Australia? And if so, then how can we encourage better leadership?

Do we have a leadership crisis in Australia, or have we just got the leaders we deserve?

I recently attended resilience training for government employees. Participants were in groups gloomily discussing coping with change. Only one group in the room was upbeat.

When asked why they were coping with change so well, they reported that when their department had been reshuffled, the appointment of a manager had been overlooked. They were taking it in turns and had never worked as a more efficient or harmonious team. The secret to their success… no manager. I laughed and then caught myself.

The following examples of leadership in Australia then came across my path the following week:

“In the last 10 years, nursing has become very good at pain management. If you want empathy and compassion, take your father home and get your family to give it to him.” – Nursing manager to a woman whose father was dying in hospital.

“Thank you for your 30 years of service. We would like you to take this time to consider whether you have anything of value left to add to this organisation.” – Australian bank to an employee.

“No, you may not take a day’s leave to take your sick son to the specialist.”– Government health manager to an employee.

Add this to the cultural and leadership issues we have seen in banks, sport and politics, and it raises the question of whether we are experiencing a leadership crisis.

How bad is it?

The most recent global leadership index report produced by the World Economic Forum¹ reveals a crisis of confidence on leaders on a global scale. Trust and confidence in leadership is ranked on a scale from 1 to 10, with 10 being total trust and confidence. From the most to the least trusted sector, Chart 1 shows how leadership ranked.

The only area which ranked above 50 per cent was the non-profit and charity sector. In Australia, the ranking of confidence we have in our leaders rated a measly 4.11 out of 10. The younger you are, the less confidence you have in our leaders.

The failure rate for our leaders is concerning. The Centre For Creative Leadership reports research showing that 50 per cent of leaders and managers are ‘estimated to be ineffective, incompetent or a mishire’². Research by the Adelante group³ shows that 30 to 40 per cent of chief executive officers fail in their first three years and it can take 10 years to recover from a poor CEO selection.

Globally, dismissals for ethical lapses rose from 3.9 per cent of all successions in 2007-11 to 5.3 per cent in 2012-16.⁴

According to the 2017 Edelman Trust Barometer⁵, only 37 per cent of people consider CEOs credible today. This is an all-time low and down 12 per cent from last year. The figure for government officials is even lower at 29 per cent.

Theo Veldsman, of the University of Johannesburg, studies⁶ the growth and impact of toxic leadership in organisations across the world. Veldsman says that although traditional research shows that one out of every five leaders is toxic, he argues the figure he is seeing is closer to three out of every 10⁷.

Why are so many of our leaders failing?

According to Finkelstein, Dotlich and Cairo⁸, most CEOs fail not because they are not competent, or do not have the knowledge or experience, but because of hubris, ego and lack of emotional intelligence.

This is confirmed by a LinkedIn survey⁹ of human resources managers in Australia, which found most Australian managers are lacking in the critical leadership skills of empathy, problem solving and creativity, and the ability to foster collaboration and innovation.

What impact is toxic leadership having?

What is the impact of this leadership crisis? At a business level, toxic leaders create toxic workplaces and ultimately, toxic businesses.

As one small example of what happens when leaders are toxic, Swedish researchers have published a study in the Journal of Occupational and Environmental Medicine¹⁰ looking at how leader behaviour impacts employee health. They studied more than 3,100 men over a 10-year period in typical work settings.

They found that if your manager was incompetent, inconsiderate, secretive or uncommunicative, you were 60 per cent more likely to suffer a heart attack or other life threatening cardiac condition. If you worked for a ‘good leader’, you were 40 per cent less likely to suffer a heart problem.

These research findings give rise to some interesting legal and workplace health and safety issues for the future, if we continue to hire and tolerate toxic leaders.

Ray Williams, in his book Eye Of The Storm: How Mindful Leaders Can Transform Chaotic Workplaces, describes the toxic workplaces that are created as a result of dysfunctional leaders as follows:

• All sticks and no carrots, with a management focus solely on wrongdoing and problems, rather than positive feedback;
• Profits are the most important consideration and people are treated as disposable – if you don’t like it, leave;
• High levels of stress, turnover, absenteeism and burnout, with long working hours, 24/7 availability and disregard for personal life;
• People have to compete against each other to keep their positionsand team work is not rewarded; and
• Little or no leader compassion or empathy.

The rise in toxic leadership has seen a decline in civility and a rise in bullying in the workplace¹¹. As a result, researchers¹² have found that employee engagement has declined significantly in most industries, with some finding as few as 29 per cent of employees are now actively engaged in their jobs.

What makes a good leader?

If the impact on a business by a toxic leader is so striking and negative, what does it take to make a good leader and why don’t we have more of them? It might not be what you think.

Compassion

Christine Boedker, of the Australian School of Business, researched 5,600 people in 77 organisations¹³on the link between leadership and organisational performance.She concluded that of all the elements in a business, the ability of a leader to be compassionate¹⁴ had the greatest correlation with profitability and productivity.

William Baker and Michael O’Malley¹⁵ found that a management style which had the traits of compassion, integrity, gratitude, authenticity, humility and humour, improved employee performance and retention. Researchers at the Wharton School at the University of Pennsylvania and the George Mason University School of Business found that compassionate workplaces increase employee satisfaction and loyalty and create better customer relations.

Humility

Humble leaders (those who can admit mistakes, spotlight follower strengths and model teachability) are more effective and better liked, according to a study published by Bradley Owens in the Academy of Management Journal¹⁶. These leaders also have more learning-oriented teams, more engaged employees and lower voluntary turnover.

Findings from a Baylor University study published in the journal Personality and Individual Differences¹⁷ also found the honesty-humility personality trait was a unique predictor of job performance.

Amy Y. Ou and her colleagues at Arizona State University studied the CEOs of 63 private Chinese companies and the 1,000 managers who worked with them, and published their findings in Administrative Science Quarterly¹⁸. They found that the humbler the CEO, the more managers working for them reported positive outcomes (their jobs were more meaningful, they wanted to participate more in decision-making, they felt more confident, and were more motivatedto collaborate and to share information).

Elizabeth Salib also contends that the best leaders are humble leaders¹⁹. She cites Google’s Senior Vice President, Lazlo Bock, who says humility is one of the traits he looks for when he is hiring staff.

A study by Catalyst²⁰ on inclusive leadership in six countries, including Australia, found that humility was one of four critical leadership characteristics for creating an environment where employees from different demographic backgrounds feel included.

Character

Leadership expert Jim Collins, in an article in the Harvard Business Review²¹, argues that the best leaders have the following characteristics:

• Compelling modesty and no need for adulation;
• Quiet, calm determination that relies on standards rather than charisma to motivate others;
• Channel energy and ambition into the business (and staff), rather than into themselves;
• Takes responsibility for poor results; and
• Gives credit for success to their staff and external factors, rather than themselves.

After studying 84 CEOs and more than 8,000 of their employees, Fred Kiel²² found that people were happier and worked harder when they felt valued and respected. CEOs who had the four character traits of integrity, compassion, forgiveness and accountability led companies whose returns on assets were five times larger than those of executives who were more self-centred. He found that leaders with low character or who were self-focused, cost a company money.

Why don’t we have better leaders?

Given the overwhelming research evidence over many decades that hiring humble, honest, compassionate leaders with integrity, results in better workplaces, better employee engagement and greater profits, why are we continuing to hire toxic leaders and have toxic workplaces?

Is it because we have fallen victim to the ‘sales pitch’ and hype of the charismatic superhero, who promises the world and fails to deliver? Is it because we are suffering under a misconception about how successful ‘tough managers’ are?

Emma Seppala’s²³ research shows that ‘tough managers’ mistakenly think that putting pressure on employees improves performance, when in fact, all it does is increase stress and its associated side effects.

How can we get better leaders?

So, if we want better leaders we need:

Better leadership training

According to Stanford University professor Jeffrey Pfeffer²⁴, we need to start measuring outcomes from leadership training, rather than listening to the hype. He says that despite all the research on what constitutes good leadership, we are still experiencing “an enormous psychological and even physical toll exacted on employees from bullying, abusive bosses”. If the Australian LinkedIn survey²⁵is to be believed, our managers desperately need the type of emotional intelligence training more commonly found in counselling, rather than traditional leadership training.

Change the way we select and reward employees

Pfeffer’s research shows that ‘the qualities we actually select for and reward in most workplaces are precisely the ones that are unlikely to produce leaders who are good for employees, or for that matter, long-term organisational performance’.

Stop falling for the hype

From charismatic superheroes and start endorsing quiet, humble and honest behaviour that makes for a better business and world. It is time to stop choosing authoritarian, controlling, narcissistic and toxic leaders. It is time we started making the choices that were good for our businesses and our employees.

Change our focus

In the words of one of the world’s most influential people, Frans de Waal, we need to ditch the ‘macho origin myth’ that human society needs to be a perpetual struggle for survival, with winners and losers, and focus on the true nature of humanity, which is one of empathy, co-operation and fairness²⁶. Anthony Mitchell, co-founder and chairman of strategic leadership firm, Bendelta, confirms this when he says: “The winners in today’s business world are fully engaging and inspiring their people, while the losers are not. It’s that simple²⁷.”

Footnotes

1. http://reports.weforum.org/outlook-global-agenda-2015/global-leadership-and-governance/global-leadership-index/
2. https://www.psychologytodaycom/blog/wired-success/201601/the-rise-toxic-leadership-and-toxic-workplaces
3. G Campbell, The Adelante Group, ‘Actively Developing Future CEOs: Boards Need To Ensure It Happens’, Governance Directions, May 2015
4. https://www.strategybusiness.com/feature/are-ceos-less-ethical-than-in-the-past?gko=50774
5. www.edelman.com/trust2017/
6. www.huffingtonpost.com/the-conversation-africa/how-toxic-leaders-destroy_b_8976140.html
7. www.huffingtonpost.com/the-conversation-africa/how-toxic-leaders-destroy_b_8976140.html. Theo Veldsman describes toxic leadership as “ongoing, deliberate intentional actions by a leader to undermine the sense of dignity, self-worth and efficacy of an individual. This results in exploitative, destructive, devaluing and demeaning work experiences.”
8. Sydney Finkelstein is the author of ‘Why Smart Executives Fail’, David Dotlich and Peter C. Cairo are the authors of ‘Why CEOs Fail: The 11 Behaviours That Can Derail Your Climb To The Top And How To Manage Them’
9. https://ww.businessinsider.com.au/australia-managers-dont-have-what-it-takes-to-be-leaders-2016-9
10. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2602855/
11. https://www.pscychologytoday.com/blog/wired-success/201207/the-rise-incivility-and-bullying-in-america
12. https://www.psychologytoday/con/blog/wired-success/201005/does-employee-engagement-really-drive-productivity
13. https://www.businessthink.unsw.edu.au/Pages?The-Rise-of-the-Conpassionate-Leader-Should-You-Be-Cruel-To-Be-Kind.aspx
14. This included the ability of a leader to spend more time and effort developing and recognising people, welcoming feedback and fostering co-operation among staff. These elements were critical to success.
15. Authors of the book ‘Leading With Kindness’
16. http://psycnet.apa.org/psycinfo/2015-02573-001/
17. http://www.sciencedirect.com/science/article/pii/S0191887911000146
18. http://bschool.nus.edu/Departments/ManagementNOrganization/publication/AmyOuJournal/Ou%20et%20al.,%20214,%20ASQ-CEO%20humility%prepub.pdf
19. Harvard Business Review, “The Best Leaders Are Humble Leaders”
20. http://www.catalyst.org/knowledge/inclusive-leadership-view-six-countries
21. Harvard Business Review, ‘Level 5 Leadership: The Triumph Of Humility And Fierce Resolve’
22. Author of the book ‘Return of Character’
23. http://hbr.org/2014/11/the-hard-data-on-being-a-nice-boss
24. Stanford University Professor in his book, ‘Leadership BS: Fixing Workplaces And Careers One Truth At A Time’
25. http://www.businessinsider.co.au/australia-managers-dont-have-what-it-takes-to-be-leaders-2016-9
26. Frans de Wal, biologist, professor of psychology and director of the Living Link Center at Emory University, author of ‘The Age Of Empathy Nature’s Lessons For A Kinder Society’. Selected by Time magazine in 2007 as one of the world’s most influential people.
27. www.businessinsider.com.au/australia-managers-dont-have-what-it-takes-to-be-leaders-2016-9