Leadership and the Fate of Organizations

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Leadership and the Fate of Organizations

Robert B. Kaiser Kaplan DeVries Inc.Robert Hogan Hogan Assessment Systems

S. Bartholomew Craig North Carolina State University and Kaplan DeVries Inc.

This article concerns the real-world importance of leader-ship for the success or failure of organizations and socialinstitutions. The authors propose conceptualizing leader-ship and evaluating leaders in terms of the performance of the team or organization for which they are responsible.The authors next offer a taxonomy of the dependent vari-ables used as criteria in leadership studies. A review of research using this taxonomy suggests that the vast empir-ical literature on leadership may tell us more about thesuccess of individual managerial careers than the success

of these people in leading groups, teams, and organiza-tions. The authors then summarize the evidence showingthat leaders do indeed affect the performance of organiza-tionsfor better or for worseand conclude by describingthe mechanisms through which they do so.

Keywords: leadership, leadership effectiveness, organiza-tional psychology

The psychological literature on leadership is quiteextensive and contains some useful generalizationsabout the links between personality, cognitive abil-ity, leadership style, and evaluations of leadership potentialand performance (cf. Bono & Judge, 2004; Ilies, Gerhardt,

& Le, 2004; Judge, Bono, Ilies, & Gerhardt, 2002; Judge,Ilies, & Colbert, 2004; Lord, DeVader, & Alliger, 1986).Psychologists also know that certain leadership styles areassociated with certain effectsconsiderate leaders en-hance the job satisfaction of subordinates, structured lead-ers have higher performing teams, and transformationalleaders inspire greater commitment (Judge & Piccolo,2004; Judge, Piccolo, & Ilies, 2004; Lowe, Kroek, &Sivasubramaniam, 1996). And we know what styles areappropriate to what conditions (Peters, Hartke, & Pohlman,1985; Schriesheim, Tepper, & Tetrault, 1994; Strube &Garcia, 1981)for instance, a task-oriented approach isbetter when leaders have a high degree of control over the

situation, whereas a people-oriented approach is betterwhen control is moderate.Nonetheless, people outside the academic community

seem not to be overly impressed with what psychologistsknow about leadership (R. Hogan, Curphy, & Hogan,1994). For example, in an article concerning the comingwar for talent, The Economist magazine noted that even if organizations are able to recruit talented people, they willnot know how to lead them because human resources as adiscipline has not achieved anything like the level of so-phistication of, say, nance (Everybodys Doing It,

2006, p. 5). Evidently our message needs to be sharpenedand rened.

This article concerns the real-world importance of leadership for the success or failure of organizations andsocial institutions. We begin by dening leadership; wethen offer a taxonomy of leadership criteria based on thedistinction between perceptions of individuals in leadershiproles (i.e., managers) and the actual performance of theteams and organizations they are supposed to lead. Next,we review the literature using our taxonomy; this leads to

the conclusion that most leadership research concerns howindividual managers are regarded and is less informativewith regard to how they affect group performance. Thisdistinction is important because the factors correlated witha successful career in management are not necessarily thesame as those associated with leading a successful team.We then summarize the evidence showing that leaders doindeed affect the performance of organizations, for betteror worse. We conclude with a review of the psychologicaland management literatures regarding the mechanisms bywhich leaders shape the fate of organizations.

Defining LeadershipEvery discussion of leadership depends on certain assump-tions. We assume that leadership is a solution to the prob-lem of collective effortthe problem of bringing peopletogether and combining their efforts to promote successand survival (R. Hogan et al., 1994; R. Hogan & Kaiser,2005). Three implications of this view should be noted.First, leadership involves inuencing individuals willinglyto contribute to the good of the group. Second, leadershiprequires coordinating and guiding the group to achieve itsgoals. Finally, goals vary by organizationGeneral Mo-tors serves a different purpose than Microsoft, Wal-Mart,and the New England Patriots but most organizations arein competition with other organizations for scarce re-

Robert B. Kaiser, Kaplan DeVries Inc., Greensboro, North Carolina;Robert Hogan, Hogan Assessment Systems, Tulsa, Oklahoma; S. Bar-tholomew Craig, Department of Psychology, North Carolina State Uni-versity and Kaplan DeVries Inc., Greensboro, North Carolina.

A portion of this article was presented at the 20th annual meeting of the Society for IndustrialOrganizational Psychology, Los Angeles, CA.

We thank William C. Howell for helpful suggestions, Stuart G.Ferrell for assistance with the review and coding of the leadership liter-ature, and Jennifer T. Lindberg for assistance in locating relevant research.

Correspondence concerning this article should be addressed to Rob-ert B. Kaiser, Kaplan DeVries Inc., 1903-G Ashwood Court, Greensboro,NC 27455. E-mail: [email protected]

96 FebruaryMarch 2008 American PsychologistCopyright 2008 by the American Psychological Association 0003-066X/08/$12.00Vol. 63, No. 2, 96110 DOI: 10.1037/0003-066X.63.2.96


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sources, and this is the appropriate context for understand-ing group performance.

Our emphasis on social inuence and group goals isconsistent with what the eld generally offers (cf. Bass,1990; House & Aditya, 1997; Yukl, 1989; Zaccaro &Klimoski, 2001). Although most scholars agree that groupscompete and that leadership has implications for groupperformance, the context of competition is not alwaysmade explicit. For instance, functional theories maintain

that leadership is a resource for team performance andadaptation (Hackman & Walton, 1986; Lord, 1977; Zac-caro & Klimoski, 2001) and the fact that teams compete isimplicitly understood; we want to make it a focal issue.

Measures of LeadershipThe psychological study of leadership is about 100 yearsold, and the resulting literature is enormous. It is instructiveto consider the various ways leadership has been measured.One tradition denes leadership in terms of emergence exercising inuence in a group of strangers or attaininghigh status in a social system. Another tradition considersleadership effectiveness . Some studies dene leadership

effectiveness in terms of the evaluations of managers.Other studies dene leadership effectiveness in terms of how managers affect employee satisfaction, motivation,and unit results. There is also a variety of measurementmethods. Sometimes leadership ratings are gathered fromsuperiors, sometimes from subordinates. In addition tothese subjective measures, there are also objective mea-sures such as productivity or rate of voluntary turnover.One recent study used CEO personality to predict historio-metric ratings of executive team dynamics and nancialmeasures of organizational performance (e.g., revenues and

return on assets; Peterson, Smith, Martorana, & Owens,2003).

The methodological diversity in this research suggestsa robust literature but may also reect a lack of denitionalclarity. For example, the early work on personality andleadership appeared to produce inconsistent results,prompting reviewers to dismiss its importance (Mann,1959; Stogdill, 1948). However, Lord et al. (1986) notedthat this early research confused how leaders are perceived with how their teams perform . After sorting studies basedon this distinction, they found consistent relationships be-tween how leaders are perceived and such personalitycharacteristics as adjustment, dominance, and inquisitive-ness (Lord et al., 1986). Thus, distinguishing betweenpeople who seem leaderlike and the performance of theirteams brought considerable clarity to the literature. It alsodemonstrated the importance of distinguishing appropri-ately among different leadership metrics.

Toward a Taxonomy We reviewed 10 meta-analytic studies (described below) to

determine how leadership has been measured in past re-search. 1 These meta-analyses included evaluations of over280,000 leaders from 1,124 samples and 1,695 statisticaltests of the relationship between predictor variables (e.g.,leader personality, leader behavior) and leadership criteria(e.g., emergence or effectiveness).

We content analyzed the criterion variables used in themeta-analyses and identied two categories of leadershipmeasures, each with two subcategories. The rst categoryconcerns measures focusing on individual leaders; the sec-ond category includes measures focused on groups, teams,and organizations. This categorization parallels Lord etal.s (1986) distinction between how a leader is perceived and the effectiveness of the group for which the leader isresponsible.

Perceptions of individuals. There are twounique perspectives on the individual leader as the unit of analysisleadership emergence and perceived effective-nessand this distinction has a long history in scholarlyresearch (Judge, Bono, et al., 2002). Leadership emergencerefers to being perceived as leaderlike, usually in a group of strangers, as discussed in studies of small-group processes(Bales, 1950; Geier, 1967) and leaderless group discussions

1 There are more leadership meta-analyses than these 10. We did notinclude all of them in our review for three reasons. First, some studies didnot consider leadership outcomes (e.g., the Eagly, Johannesen-Schmidt, &

van Engen [2003] study of gender and perceptions of leadership style).Second, the samples in some meta-analyses have been included in updatedstudies, and we used the more recent and inclusive ones (e.g., Judge &Piccolos [2004] study of transformational/transactional leadership sub-sumes the sample in Lowe et al. [1996]; Judge, Bono, et al.s [2002] studyof personality subsumes that of Lord et al. [1986]; Judge, Piccolo, &Iliess [2004] study of consideration and initiating structure subsumesmost of the Woffard & Liska [1993] analysis of Houses [1971] path-goaltheory). Finally, there was ambiguity in the criterion coding in the threemeta-analyses of Fiedlers (1967) contingency theory (Peters et al., 1985;Schriesheim et al., 1994; Strube & Garcia; 1981). The authors of thesethree studies did not describe in sufcient detail the measures of leadereffectiveness in the primary studies they collected.

Robert B.

Kaiser

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(Bass, 1954). Measures of emergence include observerratings, peer ratings, and formal nominations for leadershiproles (Anderson & Wanberg, 1991; Lord et al., 1986).Leadership emergence is also measured by the quantity andquality of an individuals participation in leaderless groups(Mullen, Salas, & Driskell, 1989; Sorrentino & Boutillier,1975). As Judge, Bono, et al. (2002) noted, these arewithin-group phenomenaemerging as a leader concernsrelative standing among members of a social group. For thesame reason, we also include in this category ratings of potential or perceived likelihood of advancement (e.g.,Bray & Grant, 1966). Again, emergence is dened byobservers perceiving a person as leaderlike (R. Hogan etal., 1994; Lord et al. 1986), and we refer to this subcategoryof individual measures as standing out in a crowd.

The second type of individual measure concerns anindividuals perceived effectiveness in a leadership role.Examples include Tsuis (1984) reputational effectivenessscale (sample item: Overall, to what extent do you feelthis manager is performing his or her job the way youwould like it to be performed?), Quinns (1988) effective-ness scale (e.g., This persons degree of overall manage-rial success: 1 a failure , 5 a success ), and Bass and

Avolios (1997) measure (e.g., This person is effective inmeeting others job-related needs: 1 not at all , 5 frequently, if not always ). Researchers have also measuredleader effectiveness by aggregating ratings across multipleperformance dimensions (e.g., vision, communication, del-egation) to form a composite score.

Factor-analytic studies consistently nd that a singledimension accounts for most of the variance in leadershipratings (e.g., Bass, 1990; Russell, 2001; Scullen, Mount, &Goff, 2000). Further evidence indicates that this generalfactor has a large affective component, which means that

these ratings reect how raters feel about the managerbeing evaluated. For instance, Brown and Keeping (2005,p. 245) concluded that ratings of leadership are highlyinuenced by the interpersonal affect raters feel towardsthe target being rated. This is consistent with eld studiesthat nd performance appraisals to be a function of howwell the evaluator likes the person being evaluated (Varma,DeNisi, & Peters, 1996). Thus, effectiveness ratings of leaders are like job approval ratings for the president of theUnited States, and we refer to this second subcategory of individual measures as approval because of its closeassociation with affect.

Approval measures involve judgments about an indi-vidual vis-a-vis implicit expectations for incumbents in aleadership role (cf. Lord & Maher, 1991). These standardsvary with the status of the evaluator; overall evaluations of leaders from subordinates, peers, and superiors are a func-tion of different factors. 2 For example, subordinate ratingsreect facilitation of group process, reduced performancemonitoring, and trust in the leader, whereas superior ratingsreect the leaders education, technical competence, and

achievement orientation (e.g., J. Hogan & Harris, 1992;Hooijberg & Choi, 2000). This may explain why ratingsfrom subordinates, peers, and superiors are only modestlycorrelated (Conway & Huffcut, 1997). Moreover, ratingsfrom subordinates may be more appropriate measures of leadership because they represent evaluations of onesleader (R. Hogan et al., 1994), whereas ratings from supe-riors are evaluations of ones subordinate. Nonetheless,ratings from superiors are frequently used to evaluate lead-ership effectiveness, both in academic research and inorganizational practice.

In summary, we classify measures focusing on indi-vidual leaders as either standing out or approval, aclassication that parallels the long-standing distinctionbetween emergence and perceived effectiveness. Standingout concerns being seen as leaderlike; approval con-cerns others judgment of a persons performance as aleader. Finally, both standing out and approval areperceptual categories of leadership (Lord et al., 1986) thatfocus on the characteristics of individuals. However, lead-ership is a collective phenomenon (Avolio, Sosik, Jung, &Berson, 2003).

Group performance. The second category of leadership criteria concerns the effects leaders have on theperformance of the teams for which they are responsible(R. Hogan et al., 1994; R. Hogan & Kaiser, 2005; Kaiser &Hogan, 2007). It is important to distinguish between two

aspects of team performance, group process versus goalaccomplishmenta distinction that is often blurred (Bales,1950; Hackman, 2002). We distinguish between the twobecause how a team functions (process) is different fromwhat it achieves (results).

Within the process subcategory of group performancemeasures, we further distinguish between the effects lead-

2 We thank an anonymous reviewer for suggesting that we addressthis issue.

Robert

Hogan

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ers have on individual subordinates/followers and the ef-fects they have on teams as a whole. The psychologicalstudy of leadership has overwhelmingly focused on howleaders inuence individual followers (Bass, 1990; Hunt,1991); nonetheless, leaders also inuence collective phe-nomena such as team dynamics (Hackman & Walton,1986; Zaccaro, Rittman, & Marks, 2001) and climate andculture (Kozlowski & Doherty, 1989; Likert, 1967; Litwin& Stringer, 1968). Together, the effects of leaders onindividuals and groups provide a multilevel perspective of group process (Yammarino & Dansereau, 2003); we referto this category as How did the team play?

Factors other than leadership affect group processes.For example, follower personality predicts job performance(J. Hogan & Holland, 2003) and job satisfaction (Judge,Heller, & Mount, 2002), and organizational culture inu-ences group dynamics (Schein, 1992). Recognizing this,Katz and Kahn (1978) described leadership as an incre-mental inuence above and beyond these individual andorganizational factors (cf. McGrath, 1962). Group processvariables, then, are the proximal means by which leadersaffect group results (Kaiser & Hogan, 2007).

The second category of group-level measures of lead-

ership concerns the results a group achieves. We call thiscategory Did the team win? because it reects the out-come of a groups competition with its rivals. There areseveral kinds of organizational outcomes, none of which isan adequate proxy for overall group performance; consid-ered together, however, they provide a more complete andbalanced view of performance (Campbell, Dunnette,Lawler, & Weick, 1970; Kaplan & Norton, 1996). Orga-nizational outcomes include measures of productivity(quantity and quality of goods or services), nancial per-formance (revenues, costs, prots), customers (satisfaction,

retention, growth), human resources (turnover, safety, hu-man capital), and innovation (product and process im-provements). These outcomes are objectivetheir valueusually does not depend on subjective judgments. Althoughthese outcomes may be rated, true scores are availablefor productivity, nancial performance, and so forth.

Our taxonomy of leadership criteria is summarized inTable 1.

Relative Frequency of Alternative Measures Robert B. Kaiser and a research assistant used this taxon-omy to classify and then count the criterion measures foundin the leadership meta-analyses listed in Table 2. 3 First wedeveloped rules for assigning measures to one and only onecategory in the taxonomy. Next we independently codedthe measures in each meta-analysis and then counted thenumber of times each type of measure was used in order tocompute a validity coefcient. We agreed on 35 of the 40cells (10 studies 4 types of measures); Cohens (1960)kappa coefcient was .85, indicating greater than chancelevels of agreement. We resolved the 5 disparities by

jointly reviewing the information provided in the appropri-ate articles.

Table 2 reports the number of times each type of leadership criterion measure was used. Two ndingsstand out. First, the research in these meta-analyses wassomewhat more concerned with how individual manag-ers are perceived than with group performance. Fifty-three percent of the analyses used criteria focused onindividual managers, either standing out (emergence)or approval (perceived effectiveness). The most com-mon criterion measure was approval how raters feltabout the performance of people in leadership roles. Thesecond noteworthy nding is that, when it comes toorganizational performance, researchers have studiedhow leaders inuence group process much more oftenthan they have studied how they affect group outcomes.In other words, we know more about the interpersonal andsocial effects of leadership than we do about its effects onbottom-line performance.

These data raise a question about the role of differentcriterion measures in leadership research. The content of the measure should depend on what one is interested infor example, emergence or effectiveness. However, themethod also deserves careful attentionespecially when itcomes to measuring leadership effectiveness. Approvalmeasures concern how individual managers are regarded,whereas team process and outcome measures reect howmanagers affect group performance. Understanding thecharacteristics associated with how leaders are perceived isinteresting and useful information, but this information isprimarily relevant to the careers of individual managers.Standing out concerns being selected for a leadershipposition, and approval, particularly from superiors andpeers, predicts career outcomes such as promotions and

3 We are grateful for assistance from Stuart G. Ferrell in contentcoding the criterion variables reported in the leadership meta-analyses.

S. Bartholomew

Craig



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T a

b l e 1

T a x o n o m y o f

L e a

d e r s

h i p

C r i t e r i a

U n i t o f a n a

l y s i s :

I n d i v i

d u a l

l e a d e r

U n i t o f a n a

l y s i s :

G r o u p

E m e r g e n c e

( S t a n

d i n g o u t )

P e r c e i v e

d e f

f e c t i v e n e s s

( A p p r o v a

l )

P r o c e s s

( H o w

d i d t h e t e a m p l a y

? )

O u t c o m e s

( D i d t h e t e a m w i n o r

l o s e

? )

P e e r n o m i n a t i o n s o f

l e a d e r s h i p i n

l e a d e r

l e s s g r o u p s

R a t i n g s o f

l e a d e r

/ m a n a g e r

e f f e c t i v e n e s s

F o l l o w e r

/ s u b o r

d i n a t e l e v e

l

P r o d u c t i v i t y ( e . g . ,

q u a n t i t y a n

d

q u a l i t y o f p r o

d u c t i o n o r

s e r v i c e s , e f

f i c i e n c y i n

t r a n s

f o r m i n g i n p u t s i n t o o u t p u t s )

A t t i t u d e s

( e . g . ,

j o b s a t i s f a c t i o n ,

i n t e n t t o t u r n o v e r

)

O b s e r v e r r a t i n g s i n l e a d e r l e s s g r o u p s

E v a l u a t i o n s o f

l e a d e r / m a n a g e r o v e r a l

l

j o b p e r f o r m a n c e

M o t i v a t i o n ( e . g . ,

e f f o r t ,

e f f i c a c y , c o m m i t m e n t )

F i n a n c i a l ( e . g . ,

r e v e n u e s ,

c o s t s ,

p r o f i t s o r r e t u r n s )

R a t e o f p a r t i c i p a t i o n i n t a s k - o r i e n t e d

g r o u p

d i s c u s s i o n

A g g r e g a t e r a t i n g s o f m

a n a g e r

/ l e a

d e r

j o b p e r f o r m a n c e a c r o s s

d i m e n s i o n s

K n o w

l e d g e ( e . g . ,

r o l e c l a r i t y /

a m b i g u i t y )

C u s t o m e r s ( e . g . ,

s a t i s f a c t i o n ,

r e t e n t i o n

, g r o w t h

, m a r

k e t

s h a r e )

R a t i n g s o f

p o t e n t i a l b y s u p e r i o r s o r

f r o m

A s s e s s m e n t C e n t e r s

S u b o r d i n a t e r a t i n g s o f s a t i s f a c t i o n w

i t h

t h e

l e a

d e r o r w

i t h s u p e r v i s i o n

B e h a v i o r

( e . g . ,

t a s k

p e r f o r m a n c e ,

c i t i z e n s h i p

,

d e v i a n c e )

H u m a n r e s o u r c e s

( e . g . ,

t u r n o v e r ,

s a f e t y , t a l e n t d e v e l o p m e n t )

N u m

b e r o f e l e c t e d o f

f i c e s

h e l d ( f o r

s t u d e n t s )

T e a m

l e v e

l

S e l e c t i o n

f o r a

l e a d e r s h i p r o

l e / j o b

T e a m

d y n a m i c s

( e . g . ,

c o n f

l i c t ,

c o h e s i v e n e s s ,

c o o r

d i n a t i o n ,

c o m m u n i c a t i o n , c o

l l e c t i v e

e f f i c a c y , m o r a l e , s t r e s s

)

I n n o v a t i o n ( e . g . ,

n e w p r o d u c t s

a n d s e r v i c e s ,

p r o c e s s

i m p r o v e m e n t s

, g r o u p

l e a r n i n g

)

P r o m o t i o n r a t e

C u l t u r e

/ c l i m a t e

( e . g . ,

r i s k

t o l e r a n c e , p s y c

h o l o g i c a

l

s a f e t y

, s u p p o r t

f o r c r e a t i v i t y

,

c u s t o m e r s e r v i c e o r i e n t a t i o n )



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T a

b l e 2

F r e q u e n c y o f

D i f f e r e n t T y p e s o f

C r i t e r i o n

M e a s u r e s

i n L e a d e r s

h i p

M e t a - A n a

l y s e s

M e t a - a n a l y s i s

T o p i c

C r i t e r i o n m e a s u r e

U n i t o f a n a

l y s i s :

I n d i v i

d u a l

U n i t o f a n a

l y s i s :

G r o u p

E m e r g e n c e

( S t a n

d i n g o u t )

P e r c e i v e

d e f


( A p p r o v a

l )

P r o c e s s

( H o w

d i d t h e

t e a m p l a y

? )

O u t c o m e s

( D i d t h e t e a m

w i n o r

l o s e

? )

B u r k e e t a l . ,

2 0 0 6

T e a m p e r f o r m a n c e

3

1 1 0

J u d g e

& P i c c o l o ,

2 0 0 4

T r a n s f o r m a t i o n a

l a n d t r a n s a c t i o n a

l

1 7 0

8 3

7 7

J u d g e ,

I l i e s ,

& C o l

b e r t ,

2 0 0 4

I n t e l l i g e n c e

7 4

3 4

4 0

J u d g e ,

P i c c o l o ,

& I l i e s ,

2 0 0 4

C o n s i

d e r a t i o n a n

d i n i t i a t i n g s t r u c t u r e

1 8 5

1 7 1

5 4

D i r k s

& F e r r i n

, 2 0 0 2

T r u s t

1 3

7 1

J u d g e ,

B o n o ,

I l i e s ,

& G e r

h a r d t

, 2 0 0 2

P e r s o n a l i t y

1 2 7

9 5

G e r s t n e r

& D a y ,

1 9 9 7

L e a d e r m e m

b e r e x c h a n g e

2 7

1 4 1

1 5

E a g l y ,

K a r a u ,

& M a k

h i j a n i ,

1 9 9 5

G e n

d e r a n

d e f


7 6

7

1 4

E a g l y

& K a r a u ,

1 9 9 1

G e n

d e r a n

d e m e r g e n c e

7 5

M u l

l e n ,

S a l a s ,

& D r i s

k e l l , 1 9 8 9

E m e r g e n c e

3 3

T o t a l

3 0 9

6 0 0

4 7 6

3 1 0

% o f a l

l m e t a - a n a l y s e s

1 8 %

3 5 %

2 8 %

1 8 %

N o t e .

E a c h c o u n t r e p r e s e n t s a

b i v a r i a t e s t a t i s t i c a l t e s t o f t h e r e

l a t i o n s

h i p

b e t w e e n a

p r e d i c t o r v a r i a

b l e a n

d a

l e a d e r s h i p c r i t e r i o n .



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salary level (Kraut, 1975; Ng, Eby, Sorensen, & Feldman,2005; Scandura & Schriesheim, 1994; Wayne, Liden, Krai-mer, & Graf, 1999). On the other hand, the impact thatleaders have on group processes and team results affectsthe success of organizations and the viability of socialinstitutions (R. Hogan & Kaiser, 2005; Kaiser & Hogan,2007; Zaccaro & Klimoski, 2001). The fate of individualcareers and the fate of organizations are distinct consider-ations, and as we have argued, evaluations of leadershipeffectiveness per se are more properly focused on organi-zational performance.

A Lesson in Waiting

Lord et al. (1986) and R. Hogan et al. (1994) distinguishedbetween leadership measures that reect how managers areregarded and measures that reect how groups perform.Lord et al. (1986, p. 408) showed that these two classes of measures are unique and have different antecedents andconsequences. However, this distinction has inuencedleadership theory more than empirical research .

Consider, for example, the Judge, Bono, et al. (2002)meta-analysis of the personalityleadership literature. Theydened leadership emergence as being perceived as lead-erlike and leadership effectiveness as a leaders perfor-mance in inuencing and guiding the activities of his or herunit toward achievement of its goals (p. 767). However, intheir Method section, they stated, Ratings were coded asmeasures of leadership effectiveness in cases in which aleaders effectiveness was assessed. There were no cases inwhich group performance was the effectiveness measure (Judge, Bono, et al., 2002, p. 769, emphasis added). Interms of our taxonomy, their research on effectivenessconcerns the effects of personality on the approval of individual managers rather than the effects of leader per-sonality on team performance.

Our point is not to criticize the Judge, Bono, et al.(2002) study. Our point is that leadership research oftenfocuses on how leaders are regarded and tells us little aboutleading effective teams. As Lord et al. (1986) noted, re-views of leadership research often wrongly conclude thatthe attributes that help managers gain recognition and ap-proval also help organizations prosper. This is a persistentproblem, the implications of which may be underappreci-ated.

The Fate of Careers Versus the Fate ofOrganizationsIn an ideal world, career success and leadership compe-tence would go hand in handthat is, those people who areselected for leadership positions, who are well paid, whoare promoted quickly, and who are well regarded by theirbosses would also motivate employees, make good deci-sions, and build teams that produce results over time. Butthere are good reasons to believe that this is not necessarilythe case.

Career Success and Organizational Effectiveness

Experienced observers suggest that what advances a man-agers career is not necessarily what makes an organizationeffective. For instance, Leonard Sayles has studied manag-ers for years using ethnographic and observational meth-ods. Sayles (1993, pp. 198199) noted that many managers

believe that getting ahead depends more on looking goodthan leading effectively; he then offered the followingpromotion tips: Avoid confrontation; withhold sugges-tions for improvement; do not ask your boss to championunpopular positions; always agree with your boss; con-centrate on presentation skills and looking good in meet-ings with superiors; demonstrate an intense desire to wincareer advancement and to best your peers; and try to ndyour next promotion because rapid advancement looksgood.

Sayles (1993) concluded this (only partly tongue-in-cheek) advice by noting that many senior managers seemunconcerned about how well junior managers lead. Themessage is that overcoming organizational inertia, raisinguncomfortable realities, and initiating adaptive change canwreck individual careers (see also Heifetz & Linsky, 2002).To paraphrase Voltaire, it is dangerous to be right when theorganization is wrong.

Three lines of research suggest that the characteristicsassociated with career success are not the same as thoseassociated with leading a team to success. The rst con-cerns individual differences in orientation toward onescareer versus ones team or organization. Ellemers, deGilder, and Van den Heuvel (1998) showed that careercommitment and team and organizational commitment aredifferent constructs. These authors found distinct patternsof relationships between these types of commitment and

organizational criteria (e.g., job satisfaction, work behav-ior). They concluded that career-oriented and team-ori-ented commitments are differentsome managers focus ontheir careers and are relatively uninterested in their teams,whereas some are highly involved in both their careers andin their teams, and so on.

The second line of evidence comes from the so-calledderailment literature. This research shows that manybright and ambitious executives nevertheless are red, aredemoted, or fail to advance (Bentz, 1985; McCall, 1998;McCall & Lombardo, 1983). R. Hogan and Kaiser (2005)reviewed surveys suggesting that about 50% of executivesderail; they suggested that this failure rate reects the factthat managers are rarely chosen on the basis of their talentfor leadership. Dixons (1976) study of the British militarycame to the same conclusion; senior ofcers preoccupiedwith status and promotion caused the death of tens of thousands of soldiers and the loss of dozens of strategicpositions in the 19th and 20th centuries. These incompetentofcers were promoted on the basis of their skill at man-aging impressions, not their skill at leading troops.

A third line of research contains studies directly eval-uating the relationship between a managers career successand the performance of his or her team. Luthans, Hodgetts,



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and Rosenkrantz (1988) found that measures of careersuccess (e.g., rate of promotion) and team performance(e.g., team morale and productivity) were unrelated. Lessthan 10% of their sample of general managers had bothsuccessful careers and effective teams (Luthans, 1988).Successful managers also spent their time differently thandid effective managerscareer success was associatedwith socializing, politicking, and networking with outsid-ers, whereas effective team leadership was related to com-municating, motivating, disciplining, managing conict,stafng, and training subordinates.

Studies of CEO charisma also show that career suc-cess and leadership effectiveness stem from different char-acteristics. One study of Fortune 500 rms found that CEOcharisma predicted level of pay but not rm performance(Tosi, Misangyi, Fanelli, Waldman, & Yammarino, 2004).Although boards of directors and compensation commit-tees may believe that charismatic CEOs add disproportion-ate value, the results of this studyas well as those of twoothers (Agle, Nagarajan, Sonnenfeld, & Srinivasan, 2006;Waldman, Ramirez, House, & Puranam, 2001)suggest

that this is not usually the case. In contrast, Collins (2001a,2001b) surveyed the Fortune 1000 to identify companiesthat performed below the average of their business sectorfor 15 years and then performed above the average for 15years. Remarkably, only 11 companies t this prole, andin each case the rms performance improved after a newCEO took over. These CEOs shared two characteristics.First, they were modest and humble, as opposed to charis-matic. Second, they were extraordinarily persistent in theirpursuit of the organizational agenda. Thus, although char-ismatic CEOs transform their personal wealth, modest andpersistent CEOs with a talent for leadership transformlackluster organizations into effective competitors.

Implications The research described above illustrates how having asuccessful career in management is not the same as leadingan effective group, team, or organization. Further, the twooutcomes have different antecedents: The personality char-acteristics, motives, and behaviors that predict career suc-cess differ from those that predict leading an effective teamor organization.

Thus, we propose that the relationship between careersuccess and leadership effectiveness is weak in the corpo-rate population. This proposition is supported at the seniorlevels by the well-documented lack of a relationship be-tween executive compensation and performance (Bebchuk

& Fried, 2004; Gomez-Mejia, 1994; Jensen & Murphy,1990) and at middle management levels by Luthans et al.s(1988) nding of no relationship between the career suc-cess of managers and the performance of their teams.Although the overall trend indicates that leaders are notusually rewarded on the basis of the value they add to theirorganizations, in some cases they probably are. In otherwords, the relationship between career success and leader-ship effectiveness is likely to vary across organizations. Soour second proposition is that when there is little relation-ship between career success and leadership effectiveness,

organizations are likely to strugglebad strategy, poorexecution, low morale, high turnover, and even corruptionwill drag them down. This is certainly the case with gov-ernments characterized by nepotism and cronyism. Con-versely, we predict that organizations that choose and re-ward leaders on the basis of how their teams perform willbe more likely to succeed and stand the test of time.

Leadership and the Fate ofOrganizationsThe foregoing discussion assumes that leaders affect the per-formance of organizations. Although most people tend to takethe importance of leadership for granted, many academicschallenge this position. Some argue that the effects of leader-ship are minimal compared with historical, organizational,and environmental forces (Lieberson & OConnor, 1972;Pfeffer, 1977; Salancik & Pfeffer, 1977). Others suggest thatattributing organizational outcomes to individual leaders is aromantic oversimplication (Meindl & Ehrlich, 1987; Meindl,Ehrlich, & Dukerich, 1985). Similarly, complexity theoristsmaintain that organizational performance cannot be attrib-uted to individual leaders because performance is an emer-gent phenomenon involving complex, nonlinear interac-tions among multiple variables in a dynamic system opento outside inuences (Marion & Uhl-Bien, 2001).

Each of these views is contradicted by a simple em-pirical fact. Research on managerial succession over thelast 20 years has consistently found a relationship betweenwho is in charge and organizational performance as mea-sured by a variety of indicators (e.g., Barney, 1991; Bar-rick, Day, Lord, & Alexander, 1991; Bertrand & Schoar,2003; Collins, 2001a; Day & Lord, 1988; Joyce, Nohria, &Roberson, 2003; Thomas, 1988). Using different method-ologies, these studies converged on the conclusion thatchanges in leadership are followed by changes in rmperformance. Joyce et al. (2003), for instance, determinedthat CEOs account for about 14% of the variance in a rmsnancial results. Other studies have estimated the effect of executive leaders to be as high as 20% to 45%, dependingon the measure of organizational performance (Day &Lord, 1988; Thomas, 1988). To put these gures in per-spective, the industry in which a rm competes accountsfor about 19% of variation in nancial performance (Mc-Gahan & Porter, 1997).

Two economists recently demonstrated the strong ef-fect leaders have on organizational performance (Bloom &Van Reenen, 2006). They evaluated the management prac-

tices in more than 700 manufacturing rms in the UnitedStates, Great Britain, France, and Germany in terms of fourcategories: operations (e.g., process improvements, internalcommunication), targets (goals, rigor and transparency of setting goals), monitoring (tracking and following up onindividual performance), and incentives (links between payand performance). They assessed company performanceusing a broad range of metrics (e.g., rm-level productiv-ity, protability, sales growth, survival rates). Country andindustry effects accounted for about half of the variance incompany performance, but the remaining variance was a



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function of the four categories of management practices.The degree to which these management practices wereutilized depended on the rms senior leaders, but thequality of management within the organization matteredmore than the top executives by themselves. The largenumber of rms that were poorly managed produced theweakest results, reminding us again that good leaders en-hance rm performance and bad leaders degrade it.

Although organizational effectiveness depends onmore than leadership, the data clearly show that leadershave a substantial inuence on it. Given that leaders affectorganizational performance, the next question concernshow they do so.

How Leaders Affect Organizational Effectiveness Leaders do not achieve results themselves. In response tothe claim that CEO Louis Gerstner added $40 billion to IBMsstock market value in the late 1990s, some observers asked,Did he really do this all by himself? (Mintzberg, Simons, &Basu, 2002, p. 71). The answer is no; leaders inuence

organizational outcomes through other people (R. Hogan &Kaiser, 2005; Hollander, 1992; Lord & Brown, 2004).Organizations are complex systems in which leader-

ship is only one of several signicant inuences (Campbellet al., 1970; Jaques & Clement, 1991; Katz & Kahn, 1978;Zaccaro & Klimoski, 2001). Leaders do not directly controlresults because unpredictable dynamics can determine out-comes in complex systems (Marion & Uhl-Bien, 2001),and external forces sometimes overwhelm intentions andeffort. Luck also plays a role. Nonetheless, leaders cancreate conditions that are more or less conducive to teameffectiveness (Hackman, 2002; Hackman & Walton, 1986).Schneider (1998) described this as providing a context for performance the circumstances that inuence the abilityof employees to contribute to organizational goals. In thisview, the links between leadership and organizational out-comes are complicated but real. The complexity arisesbecause the links are mediated by other aspects of thesystemthe performance of subordinates/followers, 4 theteams they compose, and the organization in which theyare embedded (R. Hogan & Kaiser, 2005; Kaiser & Hogan,2007).

Individual followers. The subject of how lead-ers use rewards and punishment to motivate followers hasbeen studied in detail (see Bass, 1990; Yukl, 1989). Thissubject is called transactional leadership because it con-cerns the exchange of rewards for effort (Bass, 1985;

Burns, 1978). A large body of research on leadermemberexchange theory shows that the quality of the social ex-change relationship has a profound impact on followers(Gerstner & Day, 1997; Graen & Uhl-Bien, 1995). Inparticular, followers attitudes and performance are a func-tion of trust in the leader and perceptions of the leaderssupport, consideration, and inclusiveness (Dirks & Ferrin,2002; Gerstner & Day, 1997; Judge, Piccolo, & Ilies, 2004;Likert, 1967). Leaders who are unjust, disrespectful, incon-siderate, noninclusive, and, in the extreme, hostile andabusive (Tepper, 2000) alienate and demoralize followers;

conversely, leaders who are fair, respectful, considerate,and inclusive favorably impact attitudes, motivation, andemployee involvement. In turn, attitudes, motivation, andinvolvement are positively related to nancial, productiv-ity, customer, and human capital measures of business-unitperformance (Harter, Schmidt, & Hayes, 2002).

The concept of transformational leadership describeshow leaders persuade followers to set aside selsh pursuitsand work toward a collective purpose (Bass, 1985; Burns,1978). Through a combination of vision, appealing groupgoals, high standards, intellectual stimulation, role model-ing, and relationships, transformational leaders are believedto inspire and enhance the performance of their followers(Bass, 1985; Podsakoff, MacKenzie, Moorman, & Fetter,1990). Many believe that transformational leadership issuperior to its transactional counterpart, but a recent meta-analysis suggests that the difference in their overall effectsis small (Judge & Piccolo, 2004). However, the two formsof leadership are complementary (Seltzer & Bass, 1990),and the success of transformational leadership depends onwhether followers trust the leader (Podsakoff et al., 1990).

Research on how leaders affect followers self-con-cepts indicates that transformational leadership works byinuencing followers to identify with a collective enter-prise and to internalize group aspirations (Lord & Brown,2004; Shamir, House, & Arthur, 1993; van Knippenberg,van Knippenberg, De Cremer, & Hogg, 2004). Transac-tional leadership appeals to followers self-interest, buttransformational leadership changes the way followers seethemselvesfrom isolated individuals to members of alarger group. Transformational leaders do this by modelingcollective commitment (e.g., through self-sacrice and theuse of we instead of I), emphasizing the similarity of group members, and reinforcing collective goals, sharedvalues, and common interests (Shamir et al., 1993; vanKnippenberg, et al., 2004). When followers see themselvesas members of a collective, they tend to endorse groupvalues and goals, and this enhances their motivation tocontribute to the greater good (Lord & Brown, 2004).

Teams. Leaders also inuence performance at theteam level of analysis. The functional perspective regardsleadership as social problem solving in which leaders dowhatever needs to be done for the group to succeed (Fleish-man et al., 1991; Hackman & Walton, 1986; Lord, 1977;McGrath, 1962). Thus, leaders are responsible for identi-fying potential obstacles between a team and its goals,discovering solutions to those obstacles, and implementinga preferred course of action (Kozlowski, Gully, Salas, &

Cannon-Bowers, 1996; Zaccaro et al., 2001).The functional approach is an extension of early group

performance research (Bales, 1950), and it considers twoclasses of problemsgroup maintenance and goal accom-plishment. Group maintenance refers to the degree of har-mony, cohesion, and teamwork, and the associated leader-ship activities include resolving conict, building trust and

4 For the remainder of the article, we refer to subordinates of leadersas followers , in keeping with the psychological literature.



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cooperation, and attending to the socioemotional needs of team members (Lord, 1977; Zaccaro et al., 2001). Leadersalso keep teams together by ensuring clear channels of communication, clarifying misunderstandings, and facili-tating group interaction and discussion. Hackman (2002)described these as the enabling conditions that are a pre-requisite for effective task performance; meta-analytic ev-idence supports positive relationships between enablingleader behaviors, group maintenance, and group results(e.g., Burke et al, 2006; Mullen & Copper, 1994).

Several leader behaviors are related to goal accom-plishment (Burke et al., 2006). These include setting direc-tion and dening clear and signicant objectives (Hack-man, 2002). Another instrumental leader behavior isboundary spanningmonitoring external events and inter-preting their meaning and signicance for the teams per-formance (Katz & Kahn, 1978; Kozlowski et al., 1996;Zaccaro et al., 2001). Leaders also facilitate goal accomplish-ment by specifying roles, clarifying performance expecta-tions, and coordinating collective action (Burke et al., 2006;Fleishman et al., 1991; Kozlowski et al., 1996; Lord, 1977).

Team efforts must be coordinated in stagesrst decidinghow to combine individual efforts, then coaching team mem-bers to interact in this conguration, and nally standardizingthese interaction patterns (Kozlowski et al., 1996). However,it is sometimes necessary to change the way a team functions.Indeed, leadership differs from routine management in thatleadership entails the initiation of change (Kotter, 1990).Some recent writers have even emphasized the leaders role inteaching teams to innovate and adapt on their own (Day,Gronn, & Salas, 2004; Hackman, 2002). Meta-analyticresearch has found a strong link between empoweringleader behaviors and team learning outcomes and a mod-erate link with productivity (Burke et al., 2006).

Leaders also inuence teams indirectly by the climateand culture they create.

5

Lewin (1951) dened climate as apersons affect-laden internal representation of the featuresof the environment that inuence motivation and behavior.Leadership is a primary determinant of climate perceptions(Likert, 1967; Litwin & Stringer, 1968; McGregor, 1960),and the favorability of these perceptions is a function of thefollowers relationship with the leader (Kozlowski &Doherty, 1989; Naumann & Bennett, 2000).

Leaders behaviors and decisions are a symbolic ex-pression of their values, motives, and worldview, and theseare what create a climate (Likert, 1967; Litwin & Stringer,1968; McGregor, 1960). Leaders communicate their pref-erences through role modeling, feedback, choices, and the

use of rewards and sanctions (Dragoni, 2005; Schein,1992). Through the social learning process, followers iden-tify and interpret the values implicit in the behavior anddecisions of their leader (Dragoni, 2005; Kozlowski &Doherty, 1989). Over time, a shared interpretation of work group experiences produces a work group climate (Reich-ers & Schneider, 1990). This climate may not reect theperceptions of any single person, but it nonetheless acts asa cue for attaining rewards and governs group behavior andinteraction patterns (Dragoni, 2005; Hackman, 2002). Inthis way, organizational processes, norms, and culture

come to resemble the values of the leader (Schneider,1987).

Consider the recent events at Home Depot. CEO Rob-ert Nardelli was removed after a 2006 shareholder revoltover his $250 million compensation package between 2001and 2006, during which time Home Depot lost 12% of itsstock value as that of Lowes, its main rival, nearly doubled.Nardelli has been described as tyrannical and insensitive;he eliminated jobs and cut pay, and the company lostveteran talent at all levels. His successor, Frank Blake,immediately exemplied a different set of values by reduc-ing his own pay to 60% of Nardellis salary, something thatwas widely noted in the company and the business press.Blake also ended Nardellis policy of providing free gour-met lunches for senior executives. According to the NewYork Times , Blake told senior executives to take theelevator down to the rst oor and, on their own dime, eatwith the companys rank and le in the cafeteria (HomeDepot Gets a Fresh Coat, 2007, p. C1). The Times notedthat this underscored Blakes message that the era of theimperial chief executive at Home Depot is over (p. C1).

Organizations. Leaders also exert inuencethrough decisions about strategic goals, organizationalstructure, stafng, and policies (Finkelstein & Hambrick,1996). Some theorists view these as situational factors thataffect employee behavior rather than as formal features of the organization determined by leaders (e.g., Staw & Sut-ton, 1993). But these decisions are both (Kaiser & Hogan,2007; Katz & Kahn, 1978): Leaders establish goals, strat-egies, and policies; in turn, the goals and policies guide andconstrain follower and team performance.

Strategic leadership theory (SLT; Finkelstein & Ham-brick, 1996; Hambrick & Mason, 1984) describes howleaders decisions affect organizational performance.Moreover, SLT argues that these decisions are a function of a leaders personality, values, assumptions, and beliefs.Unfortunately, most of the research on SLT used demo-graphic variables as proxies for psychological variables,which likely underestimated their relationships with impor-tant decisions (Cannella & Monroe, 1997). Nonetheless,the ndings are suggestive and consistent with our majorthesis.

For example, Bertrand and Schoar (2003) tracked asample of senior managers as they moved across rms andindustries, and found a main effect for individual execu-tives on patterns of investment and nancial decisions.There was also a main effect for executives on rm per-formance, indicating that some make better nancial deci-sions than others regardless of organizational constraintsand opportunities. Finally, decision-making styles were

5 The terms climate and culture are often used interchangeably.Climate originated in psychology, whereas the concept of culture wasimported to organizational theory from anthropology. Most theorists re-gard the two as overlapping constructs: Culture concerns a more deep-seated system of values, assumptions, and meaning, whereas climate canbe understood as the manifestation of culture in group perceptions andexperiences (Reichers & Schneider, 1990). We use the term climate to focusour discussion on the impact that leaders have on followers and teams.



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systematically related to demographic variables (e.g., olderexecutives were more conservative, MBAs made moreaggressive investments). Similarly, Prince (2005) sug-gested that managers have a nancial signature, that is,characteristic preferences for investing in new initiativesand controlling costs, preferences that are rooted in atti-tudes about money. In both cases, the researchers impli-cated psychological variables without using psychologicaltheory or constructs.

Other studies link leader personality to business strat-egy. Leaders with an internal locus of control and highneeds for achievement tend to invest in research and de-velopment and sponsor product and service innovations(Howell & Higgins, 1990; Miller, Kets de Vries, & Tou-louse, 1982; Miller & Toulouse, 1986). Dark-side person-ality characteristics also inuence decision making (Kaiser& Hogan, 2007). This is illustrated nicely by studies of executive overcondence or arrogance. Using differentmethodologies, the studies showed that arrogant CEOs aremore likely to make risky acquisitions and pay more forthem than their market value (Hayward & Hambrick, 1997;

Malmendier & Tate, 2005). Furthermore, these investmentsusually add value for the acquired rms but lose money forthe acquiring rms. Chatterjee and Hambrick (in press)showed that arrogant CEOs also change strategy morefrequently, make more and more expensive acquisitions,and produce less consistent results.

Mid-level managers and rst-line supervisors also de-cide direction, goals, whom to put in which roles, andoperations management (Zaccaro & Klimoski, 2001).However, their decisions tend to be less complex andambiguous and take less time to unfold (Jaques & Clement,1991). Because lower level managers face more constraintscompared with senior managers, individual differences willbe more apparent in decisions made at higher organiza-tional levels (Hambrick & Finkelstein, 1987; Kaiser &Hogan, 2007). Senior managers, then, have a greater op-portunity to inuence organizational effectiveness, for bet-ter or worse (Finkelstein & Hambrick, 1996; Jaques &Clement, 1991; Kaiser & Hogan, 2007; Zaccaro & Kli-moski, 2001).

Organizational Outcomes in Leadership Studies Research on leadership and organizational effectivenesshas largely addressed how leaders inuence the context forperformancehow they affect processes at the follower,team, and organizational levels of analysis (see Table 2).

Less is known about how these effects translate into orga-nizational results. There are several reasons for this.For example, contemporary writing on organizational

effectiveness treats the topic in vague terms. This is prob-ably because the subject is complicated and there are nowidely endorsed theoretical models of organizational ef-fectiveness (Cameron & Whetten, 1983; Kirby, 2005). Al-though there are several alternative theories, they seemonly to converge on the view that the ultimate goal of organizations is long-term adaptability and survival (Day,2001; Quinn, 1988). Most models focus on the organiza-

tional processes needed for survival, but they either fail tooperationally dene the relevant outcomes or do so in arestrictive way (e.g., only with nancial measures; Finkel-stein & Hambrick, 1996).

Historically there have been few efforts to classify keyvariables associated with organizational effectiveness (Car-lile & Christensen, 2005), but a few taxonomies of out-comes have been published in recent years (see Day, 2001).Perhaps the most widely used in business organizations isthe balanced scorecard (Kaplan & Norton, 1996), whichdistinguishes among nancial, productivity, customer, hu-man resources, and innovation results. In order to makeleadership research more relevant to real organizations,psychologists need to include these kinds of outcomes inempirical studies. We offer ve suggestions for using mea-sures of organizational effectiveness (see also Cameron &Whetten, 1983; Day, 2001; Day & Lord, 1988).

First, no single measure will be an adequate index of team or organizational effectiveness because success re-quires optimizing a number of outcomes simultaneously(Cameron & Whetten, 1983; Campbell et al., 1970; Kaplan

& Norton, 1996; Quinn, 1988). For example, customerservice and human resourcebased outcomes are not re-ected directly in the bottom line. Nonetheless, if an orga-nization achieves nancial results while alienating custom-ers and demoralizing employees, it will eventually suffer areversal of fortune.

Second, many group and organizational performancemeasures reect an internal perspective and overlook thefact that companies compete against one another. Considerthe Harbour Report , which tracks productivity in the au-tomobile industry. In 2004, it reported that General Motorsreduced the time to produce a vehicle in its North Americanplants to 34 hours. However, the same report indicated thatToyota in North America needed only 28 hours to producea vehicle (General Motors: The Lost Years, 2005). It isessential to compare within-organization performancemeasures with meaningful external standards, such as theindustry average or a competing organizations standing oncomparable gures (e.g., Collins, 2001a). This helps ex-plain why, despite productivity gains, General Motors con-tinued to lay off employees, lose market share, and postdeclining prots through the early 2000s: Its rate of pro-ductivity improvement lagged behind that of its rivals.Measures of organizational outcomes, like raw scores onpsychological tests, need normative data to be interpreted.

Third, outcome criteria should be measured at a levelappropriate to the leader in question. Typically, this will

concern the results achieved by the team or organizationalunit for which the leader is directly responsible. For in-stance, turnover or error rates in a production crew mightbe used as effectiveness criteria for front-line supervisors,and company stock performance might be used for CEOs.It would be inappropriate to use stock performance toevaluate production supervisorsthey are not responsiblefor company-wide performance.

Fourth, the time lapse between many leader actionsand their consequences increases with higher levels in thehierarchy (Jaques & Clement, 1991; Zaccaro & Klimoski,



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2001). For supervisors, this may mean a few weeks, but itmay take several years to evaluate the impact of decisionsmade at the executive level. Day and Lord (1988) sug-gested a minimum time lag of two years to properly eval-uate the impact of executive leadership. Models such asstratied systems theory (Jaques & Clement, 1991) canhelp determine the appropriate time horizon for measuringorganizational outcomes associated with leadership.

Finally, objective outcome measures are difcult toobtain. This is surely one reason why leadership research-ers often rely on approval ratings to represent effective-ness. 6 Although ratings are easier to collect than hard data,it would be more appropriate to collect ratings of team- orunit-level outcomes. For instance, Kirkman and Rosen(1999) developed a ve-item team performance ratingscale. Russell (2001) had bosses estimate the percentage of planned nancial results actually achieved by the businessunit led by each executive (e.g., if the target was $1 millionin revenue and the result was $900,000, then the percentageof planned results would be 90%). This method has theadvantage of also controlling for differences across busi-

ness units in terms of size, resources, industry, competition,and other factors. Regardless of the measurement method,the unit of analysis for evaluating leadership effectivenessshould be the performance of the group, team, or organi-zation being led.

ConclusionThe main argument of this article can be summarized interms of three points. First, leadership effectiveness shouldbe dened and evaluated in terms of the performance of thegroup or team for which a leader is responsible. Second,much leadership research concerns how managers are per-ceived and therefore provides limited insight into leader-ship effectiveness. Third, a portion of the literature isinformative about how leadership affects organizationalperformancehowever, it focuses more on follower, team,and organizational processes than on organizational out-comes. We recommend a greater emphasis on results toenhance the real-world relevance of leadership research.

At a pragmatic level, we wish to emphasize twofurther points. The rst concerns the fate of careers versusthe fate of organizations. It is important to distinguishbetween the success of managers careersdened interms of wealth, status, and reputationand managerseffectiveness as leadersdened in terms of the perfor-mance of the group or organization they lead. Everydayexperience and the empirical literature suggest that these

emphases are distinct, but the kinds of criteria used inleadership studies suggest that researchers often overlook the difference.

Our second pragmatic point is that much leadershipresearch focuses on career success and how leaders areperceived. There has been relatively little research on thecharacteristics of leaders whose teams and organizationsbeat the competition (for an exception, see Collins, 2001a).It is interesting to speculate about why psychology has paidso much attention to how leaders are perceived. There areat least three reasons for this particular focus. First, orga-

nizational performance is difcult to conceptualize andmeasure. It is easier to collect evaluations of individualleaders. Second, Meindl et al. (1985) reminded us that thereis a romantic attachment to, and a cult of personality about,leaders in Western thought. And nally, the focus on howindividual leaders are perceived as opposed to how welltheir teams perform is consistent with the prevailing indi-vidualistic orientation of American psychology (cf. R.Hogan, 1975).

It is worth noting that our argument has implicationsfor politics as well as business. Presidential campaigns tendto be decided on the basis of self-presentation skill andcharm more than talent for leadership. Sometimes the pub-lic gets luckyUlysses Grant and Dwight Eisenhower, thetwo greatest leaders in American military history, werecharismatically challenged but were steady, competentpresidents (cf. Korda, 2007; Smith, 2001). On the otherhand, John Kennedy and William Clinton, two of the mostcharismatic presidents ever, had less impressive records inofce. Moreover, their personal needs for attention andadmiration often caused distractions from more pressing

needs facing the country.6 We thank an anonymous reviewer for making this point.

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