David A. Waldman
There can be little doubt that executive leaders of organizations have come under increased scrutiny in recent times. In the United States, corporate scandals that are associated with leadership failures have fueled legislative reactions, such as the Sarbanes-Oxley Act. Employees and the public as a whole largely perceive the image of corporate leaders in an unfavorable manner, including attributions of distrust and greed.[1] Similarly, organizations and leaders at strategic or the highest echelons of organizations are becoming increasingly concerned with corporate social responsibility and how it can be used for competitive advantage.[2] There is a growing recognition that characteristics and behaviors on the part of leaders at the upper echelons of organizations may be relevant to performance in the area of social responsibility.[3] In sum, the ground is fertile for academics to help strategic leaders better understand such challenges and the best practices for dealing with them.
The purposes of this chapter are threefold. First, I put forth an argument for why a social responsibility theme is so relevant to effective leadership at strategic levels. Second, I outline the leadership principles and practices that promote or support socially responsible leadership. Third, I address the challenges facing leaders and organizations wishing to put such principles and practices into place.
Corporate social responsibility (CSR) can be defined as actions on the part of the firm that further the needs or goals of an identifiable stakeholder group or a larger societal collective.[4] Identifiable stakeholders include constituents inside the firm (that is, employees), as well as those who are external to the firm (that is, shareholders, customers or consumer groups, and environmentalists). CSR can be further delineated as actions that go beyond those that are required by law. For example, CSR can involve programs designed to further the development of employees, or to partner with environmental or consumer groups to ensure actions on the part of firms designed to further the needs or desires of such groups beyond legal requirements. CSR can also involve actions that are directed toward the greater society or community, such as philanthropy or the sponsoring of community-based development projects.
In contrast, most executives are concerned with the immediate, business-specific interests of their firms. Day-to-day pressures from markets and shareholders dictate a strong concern for profits and returns on investments as priorities over social issues. Even the training grounds for future business leaders have been described as “propagating ideologically inspired amoral theories [that free] students from any sense of moral responsibility.”[5] For example, the basic tenets of the framework of Harvard Business School strategy professor Michael Porter[6] suggest that companies need to compete not only with their competitors, but also with suppliers, employees, regulators—and even customers.
The upshot of such assumptions is a narrow emphasis on self-interests, or a profit and investment returns stance on the part of many executives. By following such assumptions, leaders may come to have a purely instrumental view of their constituents. For example, employees may be viewed simply as a resource to be used and manipulated rather than as partners in the pursuit of organizational goals. As a result, executives may approach constituents in a competitive or even manipulative manner to extract outcomes that are one-sided and advance the narrower interests of themselves and shareholders.
There is an alternative perspective. Specifically, I argue for the necessity of socially responsible leadership for two key reasons: greater employee and organizational effectiveness as well as fewer counterproductive regulations. First, and foremost, as outlined following, a case can be made that a socially responsible perspective benefits the organizations for which executives are stewards. Indeed, there is some empirical evidence of a linkage between corporate social performance (in terms of better relations with such primary stakeholders as employees, customers, and suppliers) and shareholder wealth.[7]
But why should there be such a linkage? There is growing evidence that when employees believe that their firms have a high level of social responsibility prestige (as compared to financial or market prestige), they identify more with, and are committed to, those firms.[8] In turn, as a result of identification and commitment, employees realize better performance. In addition, executives advocating values that stress the importance of relations with a broad set of stakeholder groups (for example, employees, customers, environmentalists, and so forth) in their decision making (as compared to values that simply stress economic or profits-based factors) are more likely to be viewed by followers as demonstrating leadership characterized by vision and integrity. Such leadership is, in turn, more likely to be associated with firm performance.[9]
Second, it is in the interests of societies and capitalistic systems that they encourage firms to pursue CSR policies that are inherently voluntary in nature. The alternative to a CSR stance is a more traditional, competitive (and even selfish) position that pits firms not only against each other, but also against various constituent groups (for example, employees, consumer groups, environmentalists, and so on). The costs of constituents who are at odds with one another could potentially affect the immediate maximization of shareholder wealth.[10] Societies that are less conducive to CSR policies often spawn costly forms of government regulation. For example, the traditional position necessitates broad governmental control and regulation in an attempt to maintain the common good of society. Unfortunately, the result can be counterproductive regulations that result from a backlash when competitive or selfish tendencies on the part of firms and their executives threaten the common good.
A clear example can be seen in the recent Sarbanes-Oxley Act of Congress in the United States, designed to ensure the proper enactment and reporting of financial activities on the part of firms.[11] This piece of legislation requires significant expenditures by firms to ensure compliance, but such expenditures do nothing to support real productivity or innovation. Indeed, a recent estimate suggested that for companies with revenues less than $1 billion, the average annual cost of compliance is approximately $3.4 million.[12] As such, Sarbanes-Oxley can be viewed as a drain on organizational performance and financial returns necessitated by a capitalistic system in which firms are remiss (or potentially remiss) in policing themselves in terms of social responsibility and ethical behavior.[13] This legislation also represents the type of backlash that can occur when people in executive roles do not practice the types of leadership philosophies and behaviors described in this chapter. This is not to say that leadership practice can ever fully substitute for, or prevent, legislative initiatives such as Sarbanes-Oxley. The restraints that these initiatives put on productivity and innovativeness, however, can be minimized by greater attention being placed on leader social responsibility, as described next.
Values need to form the backbone of leadership that emphasizes social responsibility (see Figure 10.1). They are particularly relevant to one form of leadership that has been shown to be highly effective: charismatic leadership. In terms of behaviors, these exceptionally effective leaders articulate visions that are based on strongly held ideological values and powerful imagery. They also stimulate thinking that fosters innovative solutions to major problems and emphasize radical change and high-performance expectations. In addition, they generate high degrees of follower confidence, intrinsic motivation, trust and admiration in the leader, and emotional appeal.[14]
While there are negative examples of charismatic leaders, charisma just as often represents a positive source of power that can be used for good and worthwhile purposes. This is especially true when charismatic leadership is socialized to seek positive and ethical outcomes.[15] Morality, specifically in terms of social responsibility, forms the basis of what is called socialized charismatic leadership. Under such leadership, followers and leaders are able to progress to the highest levels of moral development.[16] At these levels, they act in an independent and ethical manner, regardless of the expectations or norms of other individuals or groups. An example would be the executive who supports and reinforces ethical and open financial disclosure procedures, despite the norm among his or her peers of “getting away with what you can.” This premise is illustrated in more detail in the discussion that follows. Here a set of foundational principles is proposed, along with best practices associated with each principle.
Effective and sustainable leadership at strategic levels is based on strongly held values stressing social responsibility.
Individuals with a strong disposition toward social responsibility possess beliefs and values reflecting high moral standards, a feeling of obligation to do the right thing, and a concern about others.[17] Numerous examples come to mind of executives or entrepreneurs who are known to personify such values and are charismatic leaders. They include Anita Roddick of The Body Shop, Ben Cohen of Ben & Jerry’s Ice Cream, Paul Newman of Newman’s Own products, and Tom’s of Maine. For example, Ben Cohen and Paul Newman used a combination of high-quality ingredients, support of local businesses, and donations of after-tax profits to differentiate their products successfully and develop high-quality brands. A less-known example is David Varney, the chairman of mmO2, Europe’s leading provider of mobile communications services. Varney implemented a strategy to demonstrate his commitment to CSR by working with stakeholders to develop socially responsible policies with respect to adult content and its distribution on the Internet, and to explicitly restrict the use of an input that might motivate harm toward animals.[18] In one way or another, through their actions and policies, all of these charismatic leaders reflect the values of social responsibility.
How exactly might leaders at strategic levels pursue a higher moral plane and base their decision making and other actions on social responsibility values? In the following, I describe a few key practices in terms of executives: (1) examining how their behaviors and decisions align on Kohlberg’s[19] morality scale, (2) questioning their decision making in terms of its effects on a broad group of constituents, and (3) showing a strong commitment to social responsibility, rather than paying lip service or only an instrumental commitment.
Examine the morality of your behaviors and decisions. First, consider the typical stage of morality for most people in society and your peer groups, including yourself. Specifically, examine how your behaviors and decisions align on Kohlberg’s[33] morality scale. The aim, of course, is to move yourself up the scale. At Kohlberg’s preconventional stage, people follow rules or act in deference to authority in order to avoid punishment. My guess is that relatively few executives operate at this lowest stage. The conventional stage of morality occurs when an individual fulfills duties and obligations as prescribed according to a collective’s norms, essentially living up to the expectations of others. In contrast to the preconventional stage, it is likely that a large percentage, and perhaps a preponderance, of executives could be characterized at this conventional stage of morality. In contrast, the postconventional stage occurs when an individual follows internalized principles of justice and right versus wrong. They are acting according to ethical standards, regardless of the expectations of others. By so doing, the postconventionally moral individual is balancing concern for self with concern for others.[20] Although many executives might want to think of themselves as operating at this advanced stage of morality, I am not sure that such is actually the case.
Let’s consider an example. The acquisition of Gillette by Proctor & Gamble represents a highly publicized business event in recent times. As reported by Millar,[21] as part of the buyout deal, the Gillette chief executive officer (CEO), vice chairman, and chief financial officer (CFO) pocketed $124 million, $41 million, and $22 million, respectively. It could be argued that these individuals “did the right thing.” After all, the shareholder value for Gillette increased after the announcement of the takeover, and the Gillette executives simply received their market value in payoffs as part of the deal. However, it could also be argued that instead of “doing the right thing,” the Gillette executives “did things right.” They played by the rules of the game, and by so doing, they operated at Kohlberg’s[22] conventional stage of morality. In other words, they did what any executives would be encouraged to do in the current climate of business. However, the result in this example is that the greater executive culture of our capitalistic system has implicitly, if not explicitly, reinforced greed and self-serving behavior.
Yet the question remains as to how exactly executives could personify a higher stage of morality in the Proctor & Gamble takeover of Gillette situation, thereby demonstrating the type of social responsibility leadership proposed in this chapter. One possibility is that leaders take bold, unconventional steps in the demonstration of their social responsibility values. For example, the Gillette executives could have accepted their payoffs and donated perhaps as much as 50 percent to efforts to assist the thousands of employees who are projected to be displaced as a result of the acquisition. Note that I am not suggesting some form of veiled socialism whereby executives would be mandated to provide donations of this sort. Instead, I am suggesting volunteer actions, such as those described, that would personify socially responsible leadership. If many such steps were taken and publicized, the negative image of executives of large firms might significantly improve. Imagine the implication for organizations and society if the terms selfishness, manipulation, and greed were no longer associated with business executives.
Consider a full range of stakeholders in your decision making. Executive-level decisions usually affect multiple stakeholder groups. For example, when considering acquisitions or divestitures, executives might not only examine financial figures and balance sheets or their own personal benefit. Instead, they might consider future relations with employees of a targeted takeover firm. They might also consider potential negative effects on the needs of customers of the firm, or even product safety.
Show a strong personal commitment to social responsibility. It is relatively easy to make an executive decision by allocating a certain amount of funds to charities or community-based projects. On the other hand, it shows greater commitment to become personally involved in such projects, and in turn to lead by example. For instance, Jeff Swartz, president and CEO of Timberland, Inc., gets personally involved in community-based projects sponsored by Timberland in the New England area. The program is known as Serv-A-Palooza, and it involves employee projects to refurbish schools, build playgrounds, and so forth.
Similarly, it shows a higher degree of commitment to CSR when strategic decision making is forced to take into account and balance the long-term needs of a broad set of stakeholders rather than simply the short-term needs of shareholders. Stakeholders could include consumers, employees, and environmentalists, among others. In short, the true demonstration of CSR values requires strong affective commitment on the part of the leader. In contrast, weaker values may be reflected by more of a calculative commitment (that is, What do I or the company stand to gain by CSR?) or normative commitment (that is, How do our CSR actions compare to competitors or other firms in the community?). A leader with a more calculative commitment would operate on the basis of determining the monetary returns to investing in CSR. For the purpose of presenting a favorable appearance, he or she would probably attempt to portray such a commitment favorably with a more heartfelt, affective image. The leader with normative commitment would base the pursuit of CSR on others, such as competitive firms. Such a leader would want to “keep up with Company Y” by aligning the extent of CSR actions of his or her firm with those of others. In contrast to both calculative and normative commitment, the leader characterized by genuine and affective commitment would be consistent over time and base CSR actions and investments largely on moral grounds. Ben Cohen of Ben & Jerry’s is representative of such leadership. However, one should not necessarily equate affective commitment to CSR with its unbridled pursuit. At Ben & Jerry’s, all strategic decisions and operational plans require the simultaneous consideration of CSR, profits and economic gain, and product innovativeness and quality. The company’s motto is that “we did good by doing good.”
Socially responsible leadership at strategic levels requires (1) visionary behavior and (2) integrity and transparency.
One of the important insights from research on effective charismatic leadership is the central importance of vision.[23] Leadership vision can be defined as a future-oriented articulation or image of an organization’s purpose and direction that inspires enthusiasm and is ambitious, but is within a latitude of acceptance on the part of followers.[24] Further, as compared to strategic goals, visions tend to be less concrete, encompass a broader time span, and contain a higher content of idealistic values, beliefs, and purpose, as opposed to business-oriented content. For example, the vision of Fannie Mae is “to strengthen the social fabric by continually democratizing home ownership”; the vision of Hewlett-Packard is “to make technical contributions for the advancement and welfare of humanity.”
As is evident, a key distinguishing aspect of vision is the direct appeal to the personal values and beliefs of followers.[25] This appeal tends to engender intense, favorable reactions and attributions on the part of followers.[26] In the case of vision, favorable attributions on the part of followers may include the generation of confidence, perceptions of intelligence or foresight, instilling optimism, and strong admiration, respect, or trust. In contrast, little enthusiasm or admiration may be generated by future-oriented articulations stressing such things as the maximization of shareholder wealth. As noted by Collins and Porras, “listen to people in truly great companies talk about their achievements—you will hear little about earnings per share.”[27]
What promotes perceptions of a visionary leader, especially one who is able to link social responsibility and vision? From research, we know that leaders perceived to be visionary include references to a broad range of constituencies in their communication—and as noted previously, social responsibility involves considering the needs of a wide range of constituencies or stakeholders. In addition, they emphasize their own values and moral justifications pertaining to those constituencies in that communication. In doing so, they are challenging the status quo, which may emphasize more narrow or short-term concerns of the firm. Moreover, when a leader’s social responsibility values become evident, followers will tend to attribute foresight and admiration to the leader.
As an example of a vision that could generate more mixed reactions in followers in terms of social responsibility, consider the vision of Jack Welch of General Electric. His earliest vision was to be the number one company in market share for any given business unit. It certainly inspired enthusiasm, was ambitious, and embodied a sense of purpose—all of which are characteristics of vision. At the same time, its strict emphasis on winning in the marketplace, and lack of any social theme, may not be representative of the type of vision that would generate widespread support and identity with the organization on the part of followers.[28] This is not to say that business content must be absent in order to classify a future-oriented articulation as a vision. Rather, to generate maximum enthusiasm among a broad range of followers, more socially responsible elements need to be present in the vision.
Integrity is a second dimension of leadership relevant to socialized charisma. A leader’s integrity can be defined in terms of the following behavior: (1) being open and sharing critical information with followers, (2) keeping one’s word, and (3) serving the interests of followers rather than one’s own. Favorable reactions on the part of followers are likely to include perceptions of integrity and selflessness, as well as trust in the leader.[29]
The leader’s values regarding the importance of others’ needs and concerns need to include those of followers. The leader will be seen as serving the interests of followers in his or her decisions and actions. In addition, the leader’s selflessness and sense of ethics engender follower trust in the leader. I am not by any means suggesting that leaders totally abandon their own self-interests. Nevertheless, I do propose that for a leader to demonstrate integrity, he or she must demonstrate a balance between the pursuit of self-interests versus showing deference to the needs and interests of followers and the greater organization. For example, as mentioned earlier, voluntary donations to employee assistance on the part of Gillette executives would represent the type of leadership suggested here.
A likely outcome of the leadership processes depicted in Figure 10.1 is the building of a social responsibility culture among followers. It is therefore important that leaders communicate or symbolize messages that contain many references to values and moral justifications. Unlike attitudes, values are likely to be relatively enduring over time48 and not readily changed. The vision and integrity of a strategic leader, based in social responsibility values, will enhance concomitant values of followers. As such, their decision making is likely to stress a broad range of constituents and include concerns for ethics and responsibility toward others.
In summary, my characterization of leadership based in social responsibility rests upon deeply held values that help guide behaviors and decision making. The behaviors that followers will perceive with this form of leadership consist of (1) emphasizing the pursuit of a vision, (2) acting decisively, (3) displaying high standards of ethics, (4) placing the concerns of others above their own concerns, and (5) communicating openly.
A number of practices are relevant to the effective pursuit of visionary leadership and integrity at executive levels. I describe these practices within the context of a social responsibility perspective. They include (1) building shared vision, (2) intellectually stimulating followers in the pursuit of balancing the needs of multiple stakeholders, and (3) allowing or even encouraging morality and spirituality in the workplace.
Build a shared vision. The key term here is shared vision. An important aspect of vision involves the extent to which it is shared by followers versus one that is appealing to, say, only senior leaders. According to Senge,[30] a leader’s vision becomes shared when it builds upon a desire on the part of followers to pursue a common important undertaking, and when it connects to their personal visions. As a result, the followers are committed to carrying out the vision. To achieve such outcomes, it may be appropriate to place some emphasis on the active role of followers in vision formation.
Two key factors must come into play to help ensure shared vision. First, as described earlier, when a leader’s vision is based on socially responsible values, there will tend to be a greater connection to the self-concept and values of followers. Although there may be some followers in certain organizations who may not be attracted to a socially responsible vision or values (for example, investment bankers), this connection is likely to result in the widespread sharing of, and commitment to, the vision. How should leaders go about finding the appropriate mix of CSR values for themselves and their organizations? Which stakeholder groups should be emphasized? The answers to these questions are not easy, but they can be most readily addressed through the type of shared leadership practices described here.
The second, and perhaps most important, approach is to engage in practices of shared leadership. Pearce and Conger defined shared leadership “as a dynamic, interactive influence process among individuals in groups for which the objective is to lead one another.... The influence process involves more than just downward influence on subordinates.”[31] As such, shared leadership involves an influence process that is broadly distributed among a set of individuals, rather than being only concentrated in the hands of a single, hierarchical leader.
At first glance, shared leadership may seem overly difficult or even anathema to the type of visionary leadership described earlier. The problem is that many writings portray the inspirational or visionary leader in largely heroic terms.[32] But in real life, there are several relevant practices that come to mind. These practices can be seen in the case of the general manager of Goodyear-Mexico, Hugh Pace. He introduced the outline of a new vision that would take the subsidiary from being a producer devoted to the local Mexican market to being an exporter operating globally.[33] He then subsequently used a shared leadership approach that involved a series of meetings and a retreat with top management personnel. These individuals represented a number of nationalities, including those of Mexico, France, Argentina, and the United States. In essence, Pace allowed the top management team at Goodyear-Mexico to reshape his initial vision, based on agreement concerning commonly held values. The end result was a shared vision emphasizing social responsibility values pertaining to employee job security and development, as well as the continuous improvement of product quality so that the tires produced by Goodyear-Mexico could be marketed globally to satisfied customer groups.
The larger vision was, in turn, rolled out with the goal of shaping visions in lower-level subunits. The hope was that these lower-level visions would be aligned with the larger vision, and a vision shared across the organization would be realized. Two things helped to ensure this outcome. First, as noted above, senior management was in agreement in terms of the larger picture and vision of where the organization was heading and what values would be stressed along the way. Second, Hugh Pace was adept at practicing an often forgotten, but nevertheless important practice of effective leadership at strategic levels: leadership by walking around. He also recognized the importance of distant leadership, as described in more detail below, with regard to the successful implementation of vision. But he recognized its challenges in terms of being able to ensure that the vision reached throughout the organization. Accordingly, he would attempt to get out of his office and engage in dialogues with individuals or small groups of lower-level employees. Although he could not personally communicate with all 2,000 employees of Goodyear-Mexico, a substantial number could be reached, and others were likely to hear inspiring stories that at the very least would lessen resistance to the new vision.
Stimulate followers to find ways to balance the needs of multiple stakeholder groups in actions and decisions. To fully understand the power of leadership vision as applied to the pursuit of social responsibility, one must consider the complex challenges of balancing the needs of multiple stakeholder groups when deriving and implementing a vision. The key may lie in the effective practice of what we call “intellectual stimulation” on the part of the strategic leader.
An intellectually stimulating leader will attempt to scan and think broadly about the environmental context and the manner in which a wide variety of organizational stakeholders may be served.[34] These leaders suggest (and get followers to suggest) creative ways of simultaneously satisfying the demands of shareholders and the desires of groups such as environmentalists or consumers demanding a product produced in a socially responsible manner (for example, the demands of many Nike customers for shoes manufactured under humane conditions). They describe a more dynamic picture of how the various external forces interact with each other and capture the necessity of effectively taking into account the needs of multiple, relevant stakeholder groups. They portray to followers a richer perspective of firm performance and competitive advantage that goes beyond such narrower notions as cost leadership or product differentiation.[35] In short, intellectually stimulating leaders realize that, increasingly, organizational success requires strong relationships with a variety of key stakeholders, as well as a perspective that includes social responsibility.
A key goal of the intellectually stimulating leader is to enhance followers’ understanding that the demands of achieving performance goals can be balanced with the desire to pursue CSR. Such thinking may be a challenge for followers who are consumed by the day-to-day pressures of pursuing short-term performance goals. Yet the intellectually stimulating leader will use his or her own ideas and questions to stimulate followers’ understanding of how socially responsible outcomes can be achieved, while simultaneously generating adequate returns for shareholders. Through intellectual stimulation on the leader’s part, followers will be better able to view the issue of integrating strategy with social responsibility, such that the latter will be viewed more as an opportunity than a threat.
Intellectually stimulating strategic leaders are likely to provide followers and board members with an enhanced realization that the company does not exist in isolation from the needs and pressures posed by specific stakeholders, as well as by the larger community and society. For example, intellectually stimulating leaders may attempt to show how improving the educational level of the workforce can impact the firm’s competitive advantage.[36] Intellectual stimulation may actually be the most important aspect of charismatic forms of leadership in realizing a high level of social responsibility performance on the part of a firm.[37]
To illustrate how it is possible to simultaneously pursue performance goals and social responsibility, I use the case example of a CEO of a Fortune 500 company. During the previous 6 months, the CEO had been trying to energize his executive leadership team and other senior managers to focus on a totally new conceptualization of the firm’s strategy. Yet because of the uniqueness and change involved in the strategy, the executive team responded with skepticism. As part of his efforts, the CEO organized a three-day retreat with his top two hundred executives to discuss the new strategy and build commitment to its implementation. During the first day, the CEO and other speakers provided details on the new strategy and engaged in a variety of discussions. But early on, it was clear that the CEO was not fully connecting to the group. In line with previous suggestions regarding the use of intellectual stimulation, he changed gears and started talking about how the new strategy would help the company contribute to the global fight against AIDS. He began by showing the word imagine to his top management team. Then he talked about how the war against AIDS could benefit from the new strategy, even though the company is not in the medical field at all.
The impact of the five-minute talk about AIDS was eye opening. The mood of the group showed a discernable change. Managers started showing a stronger interest in the topic. During all formal and informal discussions for the remainder of the retreat, many references were made to the battle against AIDS. Upon completion of the retreat, the participants rated the discussion about AIDS as one of the highlights of the retreat. The gathering started with a large group of skeptical executives and ended with energized and mobilized executives. The upshot is that followers may be more motivated and energized to implement visions and strategies that have strong social responsibility elements. Further, it may be imperative for leaders to intellectually stimulate followers by showing how corporate performance goals and strategies can be melded with social responsibility.
Allow, and even encourage, employees to bring spirituality or moral values into the workplace. Spirituality can be a sensitive and even politically charged issue these days in organizations—though I am not suggesting such things as prayer sessions in the workplace. However, there is an ongoing contradiction involving spirituality/morality and organizational work life. Specifically, the norm of organizations is that when employees come to work, their spirituality, or even desire to engage in moral actions, should remain at the door. Rather, the typical employment contract narrowly stresses performance-based activities and goals that will further the business objectives of the firm—and spirituality/morality is nowhere to be found in that contract.
In order to attain a higher degree of commitment, it is increasingly important for organizations to understand this disconnect that the typical employment contract implicitly or explicitly tends to stress. Many employees have a desire to connect to higher (and even spiritual) purposes, and that desire is not easily turned off when they are in their work environments. Simply put, employees have a growing desire to reconcile their daily work lives with their morality and spiritually based beliefs.[38] Furthermore, if leaders themselves are to stress integrity and morality, it would seem consistent that lower-level employees be allowed to do so as well. Nevertheless, it is understandable that strategic leaders might fear becoming entangled in a web of legal, philosophical, or even religious differences.
That said, the type of moral, socially responsible leadership described previously will allow followers to connect their self-concepts to, and identify with, a socially responsible vision for their organizations.[39] Social identity theory may help provide an additional framework for better understanding linkages among socially responsible leadership, identification processes, and employee pursuit of spirituality. Specifically, social identity theory suggests that group membership (for example, one’s organization) can provide a powerful source of identification for individuals and in turn influence attitudes and behavior.[40] Socially responsible leaders may be effective at forming a collective identity based on appealing values that go beyond the self-interests of individuals and even the greater organization. Accordingly, employees would connect their organizational identity with the greater good of society and be motivated to pursue a socially responsible vision.
Yet the vision and values of the firm are likely to become more real to employees if they are allowed and even encouraged to be personally involved in socially responsible activities. As an example, Timberline, Inc., encourages projects involving its employees (largely on company time) that benefit individuals and organizations in their community. For example, groups of employees spend time working together to renovate a children’s summer camp. By engaging in such activities, the firm is allowing employees to personally identify with the firm’s socially responsible values.
Socially responsible leadership at strategic levels involves distant as well as proximal relationship building.
In the prior discussion, the word followers is used in a generic sense, as is the case in most theories of leadership. In other words, there is no consideration for issues such as levels of separation (organizationally or geographically) between leaders and followers. Indeed, historically, leadership theories have been framed narrowly at dyadic or small-group levels where such separation, especially organizational, is not especially relevant. However, when examining leadership phenomena at strategic levels, it is essential to consider effects on followers who are both close to the leader (proximal) and those who are distant. Proximal can imply closeness in terms of organizational or physical proximity. So, for example, the top management team will report to a CEO, and thus be organizationally proximal. They may also be physically proximal by being located at a common site.
Yet relevant “followers” may not be so proximal in either an organizational or physical sense. They could include supervisors and workers who are far removed in the organizational hierarchy, or located thousands of miles away from the CEO or even a division general manager. This is more and more the case in a truly global economy. Nevertheless, the potential influence of the leader on such followers is real and important. Therefore, strategic leaders need to be concerned not only with relationship building with regard to proximal followers, but also with regard to nonproximal followers. How can a relationship be formed with followers who are distant and not so proximal? I am reminded of a folk rock song from a number of years back that referred to John F. Kennedy. A key line in the song suggested that President Kennedy was a friend of his. One can presume that the writer of the song had never communicated, nor come into physical proximity, with John Kennedy, and yet he or she felt some sort of bond of friendship. How is this possible? As described below, the answer can be found in the types of communication and behavioral strategies used by astute strategic leaders.
Through processes that are termed image building and social contagion,[41] strategic leaders are able to have a positive influence on followers who are typically distant in either physical or organizational terms. As an example, Anita Roddick, CEO of The Body Shop, spear-headed the development of a new product category, specifically, cosmetics using ingredients that are based on non-animal testing procedures. Although Roddick was not directly in contact with many lower-level employees, her staff were inspired by a vision that was based on such socially responsible values. In addition, knowledge of such socially responsible strategic actions was spread among employees through newsletters, word of mouth, and so forth. In other words, Roddick’s vision became “contagious” through various means of formal and informal social communication processes.
The management of proximal relationships with followers (for example, the top management team) may seem like a daunting enough task for a top-level executive. However, Principle #3 would suggest that nonproximal or distant relationships are of equal importance. But how can such relationships be managed and nourished, especially when the executive has multiple layers and perhaps thousands of employees in his or her organization?
Image or impression management, combined with leadership by walking around (or meeting around) represents a key practice relevant to the implementation of Principle #3. My premise is based on the assumption that to motivate and lead employees who are geographically removed, the leader will have to spend a significant percentage of time getting out and meeting with, and listening to, employees at multiple hierarchical levels and perhaps multiple geographic locations. Despite advances in technology (for example, e-mail and teleconferencing), there simply is no substitute for the “getting out” role of executive leadership.
The importance of such behavior has been discussed in various literatures. For example, in research on mergers and acquisitions, various authors have stressed that it may be important for the strategic leader not just to engage in the glamorous activities associated with negotiating a deal, but also to maintain involvement by performing the many externally and internally oriented activities required to steward such a major organizational change.[42] External activities are geared toward such constituents as stockholders and industry analysts. More forgotten are those activities involving internal constituents (that is, lower-level managers and employees). Gadiesh, Buchanan, Daniell, and Ormiston stress the need for continuous, enthusiastic “crusading” to get the vision across.[43] They also suggest that such hands-on leadership cannot simply be delegated to lower-level leaders. That is, the strategic leader himself or herself must stay engaged in the process by maintaining face-to-face contact and presenting fact-based and well-reasoned arguments to employees at various hierarchical levels.
Sam Walton and Mary Kay Ash represent specific examples of leaders known for their leadership-by-walking-around practices. In the case of Walton, he would frequently visit a Wal-Mart store in his own pickup truck for the purpose of talking to employees and listening to their concerns or problems or their success stories. Mary Kay Ash was known for her personal meetings with, and rewarding of, sales representatives. Such leaders were viewed broadly as inspirational by rank-and-file employees with minimal, or perhaps no, direct contact.
I have made a case in this chapter for effective leadership principles and practices at strategic levels taking into account a social responsibility perspective. The growing complexity of the environment of organizations and, specifically, stakeholder groups in the environment necessitate such a perspective. A remaining question is how strategic leaders will come to possess social responsibility values, as well as accompanying vision and integrity.
Perhaps the answer can be found in the attraction-selection-attrition (ASA) model proposed by Schneider.[44] It suggests that followers (especially those at higher management levels) will be attracted to, selected by, and retained in an organization when their beliefs and values are in line with the organization’s founder or current top executive.[45] Shamir and others described specifically how leaders are likely to recruit followers who share their values, and that followers are likely to choose a leader based on the extent to which he or she is perceived to represent their values.[46] In short, although it is possible that a top management team would possess values that diverge to some extent from the leader or organizational context, in practice it would be difficult for such a team to exist over the long term.[47] It follows from the ASA model that social responsibility values will be bred and nurtured in organizations in which prior leaders were role models of such values.
On the other hand, it may be increasingly necessary for boards of directors to actively pursue CEOs and executives who personify the leadership model presented here, especially when it is clear that their organizations have little history of social responsibility and leadership integrity. The changing and increasingly complex landscape of the business environment may necessitate a broader perspective and perhaps require a new take on leader selection at the top of organizations.
There is, first, evidence that more socially responsible firms yield higher performance over time, especially in terms of employee commitment to, and identification with, those firms. Second, at a societal level, widespread executive leadership based on social responsibility values is likely to result in fewer scandals of the type witnessed in recent years (for example, Enron), as well as diminish legislative and regulatory backlash (for example, the Sarbanes-Oxley Act) that serves only to make firms more bureaucratic and less efficient.
This chapter presents a set of three principles outlining the nature of socially responsible, executive leadership. First, socially responsible values form the backbone of effective and sustainable leadership at executive levels. Second, based on such values, effective leaders will emphasize (1) visionary behavior and (2) integrity and transparency. The emphasis is on the important value of socially responsible vision as a means of connecting to and motivating followers. Integrity and transparency follow from socially responsible values, and these leadership qualities seem to be increasingly necessary and expected of leaders at strategic levels. Third, socially responsible leadership at strategic levels involves distant as well as proximal relationship building. In other words, socially responsible leaders will understand and take steps to build positive relationships with followers at multiple organizational levels and, if relevant, in multiple geographic locations. To do so requires attention to image and impression management.
Coinciding with these principles, this chapter outlines specific practices to guide leaders toward effectiveness. Examples include employing methods to build a shared vision, intellectually stimulating followers to derive ways to balance the needs of multiple stakeholder groups, allowing employees to bring spirituality or moral values into the workplace, and leading by walking around and meeting with individuals or groups who are removed hierarchically or geographically from the leader. In sum, such practices represent the embodiment of the principles of effective strategic-level leadership described in this chapter.