Rick George is laughing.
The highly successful chief executive officer of Suncor Energy Inc. has just been asked if he thinks he's charismatic.
"Oh, get out of here," he says.
The thing is, Mr. George is charismatic. At least, many observers think he is. "I don't even think about charisma," he says eventually.
And that's probably a good thing, because in the long run, being charismatic doesn't equate with driving business success, according to a recent study. In the short term, however, charisma might actually help.
Professors Bradley Agle of the University of Pittsburgh and Jeffrey Sonnenfeld of Yale asked 770 high-level executives at 128 North American companies to rate their bosses on five elements of "total charisma:" dynamic leadership, exemplary leadership, concern and respect for others, high expectations, and willingness to take personal risks. They then compared those figures with the companies' financial results -- the firm's increase in sales, earnings, market share and return on investment compared with competitors -- before and after the arrival of the CEO.
In the long term, there was no correlation between perceived charisma and actual performance, contradicting the researchers' initial hypothesis. But in the short term -- a CEO's first five to six years with a company -- there was a positive correlation between charisma and performance. In fact, a CEO being charismatic could actually boost shareholder value between 10 and 12 per cent in those years, Prof. Sonnenfeld said, before companies' performance regressed toward the mean.
Their contradictory findings left the researchers somewhat flummoxed. Indeed, in an era of superstar CEOs like Jack Welch and Lee Iacocca -- feted by the public at large, with a cachet in our collective imagination -- how can charisma not matter? To answer that question, however, seems almost too ambitious because it implicitly asks the broader question, What makes a successful business leader? Academics, consultants and, of course, chief executives each have their own theories, but the answers remain as nebulous as the notion of what defines charisma itself. It's one business question for which there appears to be no bottom line.
"Charisma is a kind of broad term," Mr. George said upon further reflection, "but a certain amount of moxie where people are excited about going to work . . . that's a good thing."
"But," he added, "if you don't drive results, then the rest of it is just fluffy."
To Tony Comper, the no-nonsense CEO of Bank of Montreal, describing charisma as fluffy is pretty much on point. Some observers actually consider him uncharismatic, but the characterization doesn't miff this highly successful leader one bit.
"I frankly have never felt it's particularly important because charisma doesn't equate to results," Mr. Comper said in an interview. "What I think is important is authenticity."
Attempting to explain the contradictory findings of his study, Prof. Sonnenfeld speculated that charisma affected CEOs performance in their early years because they were able to "catalyze energy around the low-hanging fruit." As time wears on, however, "part of the problem is that the CEO has fallen back into a routine themselves," he said.
"Sometimes they become so celebrated that they don't realize that they themselves can become a cliché."
That view may lead one to ask whether charisma is better understood as the power to shape perceptions -- those of the market and subordinates, for example -- rather than an inherent ability to drive business success. Is charisma, in other words, more about hype than reality, more spin than substance? Perhaps, argues Vilmos Misangyi, a professor at the University of Delaware who has also studied the subject.
Mr. Misangyi's research has found that charismatic CEOs were more likely to be paid higher and win better ratings from analysts -- even though their companies performed no better than those of uncharismatic leaders. For that reason, companies should exercise caution when tapping a charismatic individual to lead their corporation, warned David Dotlich, president of the Mercer Delta Executive Learning Center, a Portland, Ore.-based organization that specializes in advising corporate leaders.
"When people are chosen for their charisma without substance or their lack of ability to execute, their star quality gets in the way of their ability to execute a strategy," Mr. Dotlich said, citing Hewlett-Packard Co.'s former CEO Carleton Fiorina, a once popular leader who was forced to resign her post under heavy criticism.
"The questions about the HP strategy become personalized about her," Mr. Dotlich explained. "She became the issue, not the company and not its strategy, and that's the downside of charisma."
Prof. Agle, the author of the recent study, distinguished between "individualized charisma" -- the Fiorina type, which is ego-driven and narcissistic -- and "socialized" charisma.
The former is dangerous, he said, while the latter should be viewed as a desirable quality, even if it doesn't directly lead to increased shareholder value, as his study found in the long term.
