Beware of the leadership style you adopt, because it can lead you to get punished even for honest mistakes. How should your leadership style be in order to gain acceptance with your teams and even be somehow pardoned, should mistakes occur? Here are a few insights.
In 2009, then President Barack Obama nominated Timothy Geithner for Secretary of Treasury and Tom Daschle for Secretary of Health and Human Services. Geithner was a known leader in the financial sphere and instrumental in navigating the 2007-08 financial crisis, as the President of the Federal Reserve Bank of New York. Daschle was a well-known figure in the political circuit, a long-term senator from South Dakota who had served as a leader of both Minority and Majority Senate. Around the same time, both of them were accused of improper tax returns.
Both Geithner and Daschle claimed it was an unintentional mistake on their part. However, the consequences for the two nominees were categorically different. Geithner went on to successfully become the 75th Secretary Treasury. Daschle had to withdraw his nomination as a result of the mounting backlash from the allegations. The two were equally influential in their respective domains, were accused of a similar transgression, made similar clarifications and yet only one suffered the consequence. What explains this difference?
Ideally, there should not be any difference in punishment for similar violations, yet that’s not always the case. We also see this pattern among business leaders. For instance, the fund manager of Bayou Hedge Fund Group was sentenced to twenty years in prison for defrauding customers of more than $400 million. However, Olympus executives, who were also accused of similar corporate fraud worth $1.7 billion avoided any jail time for their actions.
Why do some leaders receive greater backlash and face harsher consequences, while others are given the benefit of the doubt and let off the hook? Our research, recently published in Academy of Management Journal, suggests it has to do with how the leader achieved his or her status.
Our theory, and how we tested it
There’s a theory in social psychology that describes how leaders achieve status and wield influence in groups. Basically there are two ways: either through dominance or through prestige. And we propose that the extent to which leaders are punished for misbehavior might depend on which of these ways brought them their status.
Leaders achieve status based on dominance by being assertive and forceful in getting their opinions across and by not hesitating to influence others through coercive or intimidating tactics. Because of their relentless proactiveness and agentic behaviors, others regard them instrumental for group’s success. Steve Ballmer, the former CEO of Microsoft known for being a tough taskmaster, is an archetype of a dominant leader.
Alternatively, leaders achieve status based on prestige by acting as a teacher, sharing their knowledge, skills, and expertise with others in the group. Because they help group members learn and develop their expertise, they’re also viewed as instrumental for the group’ success. Satya Nadella, the current CEO of Microsoft known for his collaborative and grounded approach, is a sound example of a prestige-based leader.
We proposed that for transgressions or mistakes where fault is ambiguous (e.g., in case of improper tax returns, it could be because the individual didn’t want to pay the taxes or because the tax laws were complicated), leaders whose status is based on dominance would be held more accountable and punished more harshly; whereas leaders associated with prestige-based status would be given the benefit of doubt and let off the hook. There are two reasons behind this. The first has to do with how intentional people perceive the transgression to have been. Since people view dominant leaders as selfish and unethical, this would make it hard to believe that a transgression was an honest mistake versus more intentional. And because prestigious leaders are perceived as less concerned with their own benefit, when they make a similar error and declare it an honest mistake, individuals would trust them.
Second, prestigious leaders are also known for their altruistic behavior and for possessing a moral compass. Thus, a misdeed by a prestigious leader would be perceived as less wrong, less unethical and less immoral because of their virtuous history. In simple terms, this can be described as having enough credits in one’s moral saving bank account, which buffers such individuals from ambiguous transgressions. Leaders associated with dominance are not bestowed with such moral credentials, resulting in their actions being judged as more wrong and immoral.
These ideas led us to believe that dominant leaders would be more punished for “honest mistakes” than prestige leaders. We tested this hypothesis across multiple studies. Our first study was among professional ice hockey players in the National Hockey League (NHL). We investigated the possibility of a player being penalized for a minor foul. Minor penalties are often difficult to judge and are awarded in a split second, leaving room for referees to be biased by a player’s reputation. Across two full seasons of player-level data, with close to 1,300 observations, we found that high-status (higher-paid) hockey players associated with dominance received greater minor penalties from referees, whereas those associated with prestige were punished significantly less. (The difference in punishment was roughly 13%, which increased penalty minutes for players associated with dominance by 4.33 minutes over the course of a season.)
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An intensive lab experiment, where a professionally trained actor led a group of five to six participants on a problem-solving task, lent further support to our prediction. At the end of the task, group members discovered a mistake which could have resulted from either a computer glitch or from the leader breaking the rules for his own benefit. Regardless, group members punished the leader (by not cooperating) when he or she was associated with dominance rather than prestige (something we set up through different treatment groups).
Several more experimental studies further showed that leaders associated with dominance were attributed with greater intentionality for their actions and bestowed with less moral credentials in comparison to their prestigious counterparts. We also conducted a study with a female leader to rule out any gender differences. Our results remained consistent suggesting that similar consequences would apply among women leaders whose status is based on dominance or prestige. However, the comparison in this study was not across gender but on leader’s status type. Other research has shown that women leaders often face harsher consequences for similar mistakes or bad decisions than men. But our work highlights that ambiguous transgressions are more costly for dominant leaders.
The real-world implications of these findings can be significant. For instance, James Burke who was the CEO of Johnson and Johnson and well admired among many was forgiven for the deadly Tylenol crisis in 2002, and even applauded for the way he handled it. On the contrary, Tony Hayward, the CEO of British Petroleum became the target of public and media scrutiny for his handling of BP’s oil spill, as he came across being too direct, lacking empathy and more concerned about his own interests. It eventually led to his resignation.
Takeaways for organizations and leaders
First, these results inform us what kind of leaders are most susceptible to backlash for mistakes. Allegations of misconduct within a firm often proves harmful, impacting its popularity, stock price and future earnings. Many actively project their leaders on the front lines to defend the firm’s reputation. But our work suggests that the effectiveness of this strategy might depend on the type of leader who is called upon.
Second, our research provides a useful framework on what organizations with dominant leaders at the helm can do when a crisis strikes. If possible, organizations can try to project a leader associated more with prestige as the face of crisis to avert potential backlash. Additionally, these organizations can respond more quickly, genuinely apologize, and provide relevant justification for their behavior.
Finally, our findings are important for regulatory bodies, compliance officers, and corporate ombudsman, who are typically responsible for ascertaining punishment following misconduct. They should be mindful of how subtle leader characteristics, such as status type, could influence their ability to deliver a bias free decision.
Author: Hemant Kakkar
Hemant Kakkar is a PhD candidate in Organizational Behavior at the London Business School. His research interests broadly revolves around the psychology of self in social hierarchies, specifically how the motivational elements involving the self, influence individual’s judgments, decisions and behaviors.