A charismatic leader is a highly problematic issue for a business, rife with numerous potential pitfalls and few upsides. Such a leader can possibly be a strong public relations benefit for the company, with the community, customers, and vendors and other business partners. The community may benefit, as well, if this boss is particularly aggressive about establishing strong ties through community activism (local education, transportation, and other business-impacting issues) and charitable endeavors.
However, the pitfalls tend to be more common and of greater consequence. Leaders like these tend to think of themselves as, virtually, the company, rather than as its servant: a manager hired by owners to advance their interests rather than to engage in self-aggrandizing behavior. This misperception of the boss’s role results in fiduciary distortions that negatively influence everything from corporate governance and the relationship between board and management to employee self-perception and declining productivity resulting from a passive over-dependence on the singular figure of the charismatic boss.
Such problems are most prominent in a publicly-held company, or a larger private company which has hired a management team headed by such a charismatic personage. Family firms can support leaders like this principally because the owner and manager are the same, thus glossing the problems associated with managerial usurpation of owner-level authority that often occurs with charismatic leaders in public companies.
But the problems with succession, in either case, remain the same. They are twofold: First, a company that has passively adapted itself to a dominant personality at the top will go through a culture shock in transition to a new leader that is equivalent to the disruptive and disorienting experience of a merger or buyout. Employees will become hyper-sensitive to political shifts and the stability of their own positions, and productivity will suffer a double blow from both the habitual passivity induced by the dominant leader and now by the fears generated by the change.
Second, while the personalities of the leaders will change, and the new one may not even be a charismatic-dominant, the expected relationship with him or her from employees and others will continue to be passive and dependent. This may force the new leader into adjusting to a role he or she is ill-suited for, or to institute a culture-change program in the firm that exacerbates the culture shock already shaking the organization due to the change in leaders.
The best sort of leader for almost any firm is a manager focused on the work, rather than on his or her image or interests. Then, the business is about what it and its people do in the economy, and it can respond to and anticipate change and opportunity on this operationally rational basis, rather than suffer the swings of mood and confidence that beset personality-driven firms.
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