Industry Thought Leadership

Authentic Leadership – The Success Factor

March, 2017
Eberhard Hübbe
Partner

Erik Almqvist
Managing Director - Middle East

goetzpartners

Are companies more successful if their managers are authentic? With all the enthusiasm surrounding the current discussion on authentic leadership, it’s important to note: unfortunately, it’s not all that easy. However, there is increasing evidence that suggests that clear and authentic leadership contributes to the success of companies – especially in times of uncertainty, such as we are experiencing with digital transformation.

Many people are quick to say that managers should act and communicate authentically, but in the daily grind between meetings, decisions and advancing one’s own career, authenticity is quickly forgotten. The study “Clear stance, clear direction – How companies promote and benefit from authenticity” conducted by goetzpartners, Förster und Netzwerk, and Prof. Matthias Spitzmüller shows how companies can promote an authentic approach over the long term and how they can deal with obstacles.

Acting on conviction
First and foremost, it is important to clarify a misconception: authenticity doesn’t mean that you wear your heart on your sleeve. It doesn’t mean expressing every emotion – positive or negative – and, for example, losing your temper with your employees just because you have a short-tempered personality. Conversely, authenticity does not necessarily mean that you should always be friendly and cooperative with employees: managers can still be authentic even if their individual leadership styles are rather distant or even authoritarian.

However, reliability and integrity are part of authentic leadership. Authenticity is defined as a basic attitude with which managers act in accordance with their inner values and own convictions, are minimally influenced by external factors, and steer their own actions rather than having them dictated by others. This has a positive effect especially for employees: they are more easily able to understand managers’ decisions and tend to know what to expect. A clear mandate strengthens employees’ trust and confidence in managers’ actions.

Better orientation, stronger performance
Defined in this way, authentic leadership can have a positive effect on the success of companies – as the study by goetzpartners and Förster und Netzwerk suggests. As much as 83 percent of the managers surveyed said that authentic leadership had a positive effect on the performance of teams of employees, and as much as 77% indicated positive outcomes for their own performance. Two other questions showed how important authentic leadership is, especially during times of continuous transformation: 76 percent of those surveyed are convinced that transformation projects can be managed better when managers are authentic, and 77 percent agree that authentic leadership provides more orientation in uncertain times.

However, despite these high approval rates, it appears that an authentic approach is not fully accepted in all companies. Although 81 percent of those surveyed assume that employees value authenticity, only 58 percent agree that authenticity is valued by their own supervisors. In many companies, managers who have a clear approach and sometimes cause offense have a hard time as a consequence – despite what leadership models and other official documents say. However, as the study highlights, it may be worthwhile resisting these supposed pressures – for the individual manager and especially for the company.

Three starting points for more authenticity
Where can companies start when they are convinced of the benefits of an authentic approach? How can they not only demand authenticity but also support and promote it from a structural and cultural perspective? The study shows starting points for these two questions, too. The strongest driving forces behind authentic behavior in the company are:

1. Authority based on professional expertise
At first glance, it seems obvious that power and authority are positively correlated with authentic conduct. In the end, managers who have more influence can make decisions autonomously more often and shape the company according to their values – and thus have greater opportunities to act in accordance with their inner values and ideas than less influential employees.

But here the study reveals subtle yet decisive differences: managers whose authority is derived from professional expertise are significantly more authentic than those whose power is based solely on their position in the company. Simply put, the decisive factor for authentic conduct is not which position of power a manager nominally holds, but whether the manager can fill this position convincingly with professional expertise.

This is a reminder for companies not to rely solely on functional hierarchies and structures. Authentic leadership is most pronounced when positional power and authority based on professional expertise go hand in hand. Companies can take this into account when selecting managers and it should also play a role in job transfers, continuing education programs and talent management.

2. Sense of belonging and individuality
The second starting point for more authenticity is based on the company culture: the study shows clear relationships between the sense of belonging, individuality and authentic behavior. A sense of belonging to the company is thus a strong driving force for authenticity. This is primarily influenced by strong and healthy relationships between levels of hierarchy and among employees at the same level. Fostering precisely these kinds of relationships is thus an important task for company leadership.

The strongest sense of authenticity in their day-to-day work is experienced by managers who contribute the experience of individuality in addition to a sense of belonging. Interestingly, it is not simply a matter of managers bringing their own personality traits and characteristics to the job. Strong, positive effects of authenticity are only observed when individuality is coupled with a sense of belonging. A company culture that combines both of these aspects – without being too sectarian or promoting individuality excessively – thus creates the ideal conditions for authentic behavior.

3. Freedoms
There is a clear association between authenticity and the organization of work in companies: the positive effects of autonomy in one’s work, identification with one’s tasks as well the social support that managers receive in the course of their work are particularly noticeable.

In particular, autonomous or independent work with enough freedom to make one’s own decisions has an extremely positive effect on authenticity. Companies are in a position to create the overall conditions that enable this autonomy, for instance by giving employees and management real responsibility and allowing them to decide for themselves when, how, where and with whom to perform a task.

Recognize and overcome obstacles
According to the study, there are four other factors that prevent authentic behavior: the size of the company and with that the experience of feeling like a small cog in a large machine almost always has the consequence of a certain degree of self-alienation. Highly hierarchically organized structures also have an inhibiting effect on authenticity, as do strongly felt conflicts between work and private life. When employees perceive their own work as significant and when they are aware of the relevance of their work “for the greater good,” then the negative effect of these three obstacles is reduced.

However, the fourth factor, which is also one of the greatest, cannot be balanced out by other factors: if, while at work, employees and managers have to maintain a pretense of emotions they do not feel, the result may be a sense of self-alienation. This is known as “surface acting”, and companies that want to foster authenticity should avoid expecting it as far as possible. Yet especially in professions with constant customer contact, such as in call centers or in sales, this is part of what is expected of a person in that position. In this context, managers could at least develop a better understanding of the roles and tasks of these employees and deal with them better.

More than paying lip service to authenticity
The study by goetzpartners, Förster und Netzwerk, and Prof. Spitzmüller concludes that companies can create the conditions that enable greater credibility and authenticity in company leadership and daily work. Practical starting points lie primarily in shaping the company culture and business processes – and companies are able to achieve far more this way than by merely prescribing authenticity in a leadership model.

You can download the full study here:
www.goetzpartners.com/publications

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