The risks of a having a charismatic company leader

The risks of a having a charismatic company leader

07.03.2016 By Cubiks Team

Charismatic leaders can be very important for the development and progression of a business. Steve Jobs revolutionised Apple, turning the company into one of the leading technology brands in the world.

After Steve Jobs death the business world saw a significant drop in Apple's share value. 

His involvement had already been severely reduced up until this point due to health reasons, and Apple's share price had already been in decline. No matter how competent his deputy Tim Cook was, who had in fact been managing day to day Apple operations for some time, the perception that the key player was no longer at the helm had been hard for the PR team to handle.

The other senior manages were still there, the excellent product designers hadn’t gone and the procedures that the business had in place to achieve very high levels of innovation were and still are deeply engrained within the organisation’s culture – effectively forming part of the organisation’s DNA.

What are the pros of having a charismatic leader?

Organisations need leaders who can:

  • Get staff at all levels to engage with the organisation’s vision and ideals

 

  • Persuade individuals to put their trust in the organisation and make a commitment to the business

 

  • Sell tough messages when needed

 

  • Capture the imagination of the media and secure positive coverage above the level of their competitors

 

  • Establish credibility with investors and the wider stakeholder community

 

Charisma helps with all of these things – if a leader can’t get people excited or get them to believe in what they are doing, then it won’t be long before staff, investors and the media find their heads turned by the competition.

What are the cons of a having a charismatic leader?

If organisations allow a cult of personality to become established around their figurehead then this can lead to real problems:

  • Over-reliance on the leader and suppression of the talented individuals that are behind them

 

  • Plunging share prices as soon as any doubts are raised about the leader’s long term future

 

  • Damaged internal morale as individuals begin to feel insecure about the future

 

  • Tainted business reputation if the leader strays offs the straight and narrow  - the media love to knock down what they have built up

 

So, what can employers do to overcome the issue?

Here are some of the steps that they should take to avoid falling victim to the cult or personality.

  • Plan for the event
    Anticipate either a health issue, a personal change of direction or fall from grace on behalf of the leader. This is just as relevant in terms of the disaster recovery plan, but is rarely considered largely because those at the top seem immortal either to themselves or their followers.
     
  • Have back-up options in place
    The organisation structure needs to underpin the stability of the company irrespective of whether or not he/she is at the helm. Whilst it might lose something in terms of panache, creativity or operational experience the team below needs to be competent and capable of stepping in.
     
  • Build a Team Profile
    Consider building up the profiles of a number of players in the top team rather than solely focusing on one, it worked for Hewlett and Packard.
     
  • Groom a successor
    Let the employees, the analysts and the market know that succession planning is in place and encourage the leader to occasionally step back from the limelight or share it with the up-and-coming talent. A good leader plans for a time when they will no longer have the drive, interest or perhaps credibility to steer the ship.
     
  • Think internal and external
    Undoubtedly Apple had a clear strategy internally for maintaining the business momentum despite the loss of Mr Jobs. Unfortunately, they failed to communicate this to the external world.  

 

  • A dose of humility goes a long way
    Finally the organisation should encourage the Chairman to acknowledge that they are not irreplaceable and even reflect this to the outside world. Who knows, it just may be that the character in the wings will be an even greater performer. Not all the stars of the business world will find this easy but they certainly owe it to themselves, their team and their shareholders to try.