What differentiates the world’s most successful leaders from their peers? Today’s leaders are under immense pressure to possess a unique blend of diverse skills, including interpersonal abilities, self-awareness, empathy, accountability, inclusion, and the ability to drive results. However, it wasn’t always this way.
In the past, business leaders were primarily focused on maximizing profits, but today, businesses are expected to prioritize ethical practices, sustainability, and corporate social responsibility. Consequently, today’s leaders are expected to demonstrate a commitment to the well-being of all stakeholders, including employees, customers, communities, and the environment. Today’s best leaders balance a combination of interpersonal qualities and personality traits that enable their people and organizations to thrive. The results of a recent groundbreaking research study demonstrate that companies with leaders who effectively balance these qualities generate consistently higher financial returns over longer periods of time than their peers.
Trickle-Down Culture
Company leadership style plays a vital role in shaping workforce culture, and executives' behavior, communication style, and values have a profound impact on how this takes shape. The trickle-down effect of culture refers to the phenomenon where the values of leaders at the top of an organization cascade and influence the behavior and decision-making at all levels of the organization. These norms become the organization's culture, shaping how employees interact with each other, approach their work, and ultimately impact the organization's financial performance. Exceptional leaders leverage the trickle-down effect to amplify their impact to inspire, foster collaboration, and create an environment that nurtures individual growth, collective achievements, and bottom-line results.
Economic Transition and Leadership Style Evolution
For much of history, traditional hierarchical organizations saw leaders hold authority and make decisions at the top, while employees followed instructions without much autonomy. Leaders were valued for setting clear goals, providing direction, and ensuring compliance. As economies transitioned from being industrial-based to being knowledge-based, organizations realized the benefits of harnessing employee creativity, innovation, and expertise. This shift placed a greater emphasis on collaboration, teamwork, and creating work environments that nurture the talents of individuals.
Agentic Leadership: A Directive Approach
In the hierarchical, command-and-control type companies of the past, leaders who demonstrated an “agentic” leadership style proved to be highly effective; making quick decisions, taking charge of situations, and driving results. However, while effective in certain contexts, this style can create problems for organizational culture.
One of the primary challenges associated with agentic leaders is their tendency to prioritize individual achievement over collective success, inadvertently promoting a culture of competition rather than collaboration. This can hinder teamwork, impede knowledge sharing, and limit the organization's capacity to overcome complex problems. Agentic leaders can also often exhibit a hierarchical mindset that can stifle creativity, innovation, and engagement. In extreme situations, it can breed a culture of fear, stifling the free flow of ideas and hindering the organization's ability to innovate.
These leaders can sometimes struggle with empathy and emotional intelligence; their strong focus on results and achievement can overshadow the importance of understanding and supporting their team on a human level, which can erode morale, diminish employee satisfaction, and ultimately contribute to high turnover rates.
While agentic leadership can inspire a sense of purpose and direction and empower individuals to take ownership of their responsibilities, today’s most effective leaders recognize that complimenting their agency with a more people-centered approach is needed to deliver results.
Communal Leadership: An Empathetic Style
The transition from industrial-based to knowledge-based economies throughout the mid-to-late 1900’s resulted in a shift toward greater collaboration and teamwork, where “communal” leaders proved to be more effective than leaders with an agentic-dominant style in building relationships, fostering collaboration, and creating the environments most conducive to success in knowledge-based work.
Communal leaders prioritize the collective success of their teams and place a strong emphasis on building relationships, trust, and a sense of belonging. They recognize the power of collaboration, they value the opinions and perspectives of their team members, and appreciate diverse perspectives and innovative thinking. Communal leaders also exhibit a strong sense of transparency and integrity, which serves to build trust and foster a sense of ownership and commitment among team members. In doing so, they empower team members to contribute their best work, knowing their efforts are aligned with a shared purpose and vision. Communal leaders also emphasize personal growth and development, and typically invest in professional and personal well-being, provide mentorship, coaching, and opportunities for learning.
There are challenges associated with a communal-dominant leadership style, however, such as the potential for slower decision-making processes due to a greater need for consensus. The desire to maintain a cohesive and agreeable environment can also lead to the suppression of dissenting opinions or alternative viewpoints, which can hinder ideation and innovation.
Exceptional Leaders Integrate Communal and Agentic Styles
Today, results-driven leaders are commonplace, but research has shown that “integrative leaders” who blend the assertiveness and decisiveness of agentic leadership with the empathy and collaboration fostered through a communal style significantly outperform those who do not.
To understand how communal and agentic styles interact to create exceptional leaders, we conducted a ground-breaking research study into the leadership style of thousands of executives of publicly-traded companies, the company cultures they create, and the long-term financial performance of their organizations. Findings indicate that integrative leaders who effectively balance agentic and communal styles foster healthier workplace cultures and their organizations consistently generate stronger financial returns over longer periods of time than their peers.
The results of our research are captured using the Communal-Agentic Circumplex, a framework ideally suited for benchmarking and evaluating leadership style. Through assessment of a leader’s language, the Circumplex captures the degree to which they demonstrate these two leadership styles, and the implications for the culture and success of their organization. The Circumplex presents communal and agentic dimensions as independent variables with sub-facets that describe the unique characteristics associated with varying degrees of communal and agentic qualities. The Circumplex is an effective tool for leadership assessment, selection, and executive development. For more information about the science behind the Circumplex follow this link.
Leadership Flexibility is Foundational to Sustainability
At the dawn of the 20th century, leaders were primarily tasked with driving profits and satisfying shareholders, believing that success stemmed from a relentless pursuit of self-interest. However, as societal paradigms shifted, a realization took hold: business performance is inextricably linked to the well-being of the people they employ and the communities they serve.
Today, business leaders are called upon to champion ethical practices, foster diversity and inclusion, and make meaningful contributions to the greater good. Those who are successful have integrated a balanced and flexible approach that effectively integrates agentic and communal leadership styles, and the flexibility to continuously adapt these qualities to the needs of their teams, organizational priorities, and the ever-changing demands of our ever-evolving society.
The above mentioned research study will be published in Q1 2024. Please leave your contact info if you’d like more information or early access to the publication.
