Strategy & Operations » Leadership & Management » The secret of charismatic leadership

FINANCE DIRECTORS need to be leaders of their teams, able to motivate high performance among subordinates in order to carry out their fiduciary duties of managing company assets. One of the keys to leading high-performance teams is charisma, typically considered to be an inherent quality that involves not just strong convictions and the ability to engage followers’ emotions, but also vision – the articulation of lofty goals and the determined pursuit of those goals through the encouragement of others’ efforts.

We know from numerous studies that charismatic leadership has positive effects on followers’ motivation, their satisfaction with leaders, as well as boosting leader effectiveness. Given the role of finance directors as leaders of teams as well as members of top management teams, charismatic leadership is of critical importance in understanding why some FDs are more successful than others.

But charisma is different from other personality attributes in that it is attributed to leaders by others – their team mates, subordinates, and other people with whom they come into contact in the workplace and beyond.

You can’t be a charismatic leader if you stay in your office with your nose in the accounts. You have to be out among people, giving them the opportunity to find out what kind of person you are, and giving yourself the opportunity to self-discover your own abilities.

It is this aspect of charismatic leadership – social interaction – that has become the focus of my recent research (co-authored with Prasad Balkundi and David Harrison and forthcoming in Journal of Applied Psychology). Challenging the conventional understanding of charismatic leadership as an inherent personality trait, we tested two quite different models of how charismatic leaders inspire their subordinates to higher performance.

Across 135 teams, we investigated whether leaders who were regarded by their subordinates as charismatic actually proceeded to become central in the advice networks in their organisations, or whether, by contrast, it was central leaders – active in giving and receiving advice from their subordinates – who were attributed with charisma.

The results of our study were surprising. Leaders who were active in their teams in terms of being at the centre of giving advice to subordinates and also soliciting opinions from subordinates tended to emerge as charismatic leaders in the eyes of those subordinates.

This raises the question of whether a financial director can learn to be charismatic. Traditionally, the emphasis for finance chiefs has been on quantitative skills related to understanding and managing financial accounts. But given the importance of leadership for financial directors who aspire to be more than account managers, the question is – what can they do to emerge as charismatic in the eyes of others?

To the extent that leaders are seen as charismatic, their pronouncements are likely to be viewed as visionary, their encouragement is likely to incite extra effort, and their teams are likely to perform well. Our research has removed much of the mystique from the process by which some leaders emerge as charismatic, whereas others do not.

For anyone aspiring to be a charismatic leader, the advice from our research is to make yourself available to your subordinates for advice about work-related matters, solicit their opinions about important problems and issues, and, in this way, establish yourself as not just the formal leader of your team but also the informal leader in terms of the expert to whom others turn when they are faced with problems and issues.

Our evidence suggests that this type of social networking on the part of leaders precedes and even drives judgements of leader charisma. Enhanced charisma is of great value in any effort the leader makes to improve team performance.

A finance director who is central in the team advice network compared with one who is isolated is likely to find many opportunities to dispense and gather advice, communicate work-related issues with team members, and, thereby, help construct a charismatic social personality that is likely to be a valuable resource in motivating and directing team performance.

By being at the centre of advice interactions in the team, such a leader has opportunities to communicate directly with team members his or her vision of how they can work towards team goals. Thus, the route to effective leadership involving charisma may be less daunting than it has been in past years given the move towards more egalitarianism in the workplace. These days, it is acceptable for people at very different hierarchical levels to work together to solve problems.

An FD who lacks the “vision thing” in public speeches can still emerge as charismatic in the eyes of his or her team even though this localised charisma may or may not transfer to more public arenas – such as grand occasions where inspiring speeches to large audiences are called for from speakers on podiums.

The modern understanding of charisma explored in my research certainly recognises that visionary rhetoric may be necessary when communicating to large numbers of distant people. But a team leader active in providing and eliciting advice may achieve a type of charismatic social capital within the team that can be very effective in promoting team performance.

Professor Martin Kilduff is Diageo professor of management studies at Cambridge Judge Business School, University of Cambridge