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CHARISMATIC MOMENT ARCHIVES: Profitability Through Charisma

Core Edge's Total Solution Shows Companies How to Use Charisma to Increase their Bottom Line

Did you know that charismatic CEO's and managers are most effective when a company is experiencing uncertainty during tumultuous times? What's more uncertain than the times we now live? With a spike in gas prices, companies moving operations to India and China combined with the high expenditures associated with maintaining an American work force (salaries, healthcare, pension funds, etc.), charismatic leaders thrive better during these times more than when conditions are stable.

According to a USA Today article, Charmed, I'm sure by Steve Bodow (12/9/02), charismatic leaders enhance profitability during economic downturns. Jay Conger, a London Business School professor and USC researcher says that the traits that allow charismatic leaders to help enhance profitability are:

· A restless compulsion to challenge the status quo. The charismatic leader is most at home, and most effective, in chaos.
· A clear vision within uncharted territory to explore
· An ability to articulate a vision compellingly to any audience and to imbue it with a sense of great importance.
· An ability to create a sense that no other person could--or would--take the same tactic.
· An ability to inspire and permit those around him to do extraordinary things.

An example of a charismatic leader who has lead his company to explosive profitability is Apple Computer's Steve Jobs. According to computer analysts for USA Today, Apple has now sold over 2 million ipods and has a 70.4% share of digital music player revenue, according to market trackers NPD Group. Jobs' legendary flair for unveiling new products and his passionate insights for describing Apple's future has consistently made him an icon with in the computer industry.
Opponents of the charismatic model suggest that charisma and its ramification don't have anything to do with corporate profitability. In fact, a 2004 University of Florida study showed that Chief Executive Officers who exude intelligence, optimism, and leadership do not necessarily help their companies perform better than less charismatic counterparts [1]. However, the more charismatic CEO’s tend to draw higher salaries and better benefits. The study surveyed vice president-level managers of 59 Fortune 500 companies about their perceptions of the company CEO's charisma. Indicators included confidence in the CEO's management abilities and whether the CEO made the survey respondent feel optimistic about the company's future. The study compared the resulting "charisma" score to indicators of corporate performance and cross checked the results against the CEOs' salaries. The conclusion... better firm performance is unrelated to the CEO’s charisma, but rather to higher salaries for the CEO1…except when the market volatility proved a benefit to the company. While this makes a salient point that charismatic leadership does not affect marketability when a company is stable, it does validate that charismatic leadership is most effective when economic conditions are volatile. But why is this the case and what can companies do to gain the most from charismatic leadership?

The short answer would be, "Charismatic Performance." The high energy, fast pace and exciting frenzy that a charismatic leader creates is a breath of fresh air to a corporation, which subscribes to traditional values. During each change of corporate management, the promise of change is so common place that employees begin to say, "Here we go again…more promised change." While one of the greatest fears we have as human beings is the unknown, we actually look forward to a change of doing business in a way that rejuvenates, promotes and expands our horizon. Unfortunately, what happens under the purported new regime is much of the same as the past. Invariably, managers are promoted, not because of their fresh and new approach to managing the company, but by their ability to perpetuate the stability of the corporate environment. The idea is, "Don't fix it, if it ain't broken." Even if the stock is down slightly, there is no cause for alarm. It's only when the stock has plummeted and the fate of the company is uncertain will the board began looking for the "star" performer. The university of Florida study suggests that these "star" CEOs get paid a higher salary than their less charismatic counterpart. But, why? If the charismatic CEO hasn't shown an ability to increase market share and profitability, why hire him? Interesting enough, the charismatic CEO is hired for the same reason the traditionally-oriented CEO is hired, because he brings value to the table based on the immediate needs of the company. The perpetuity of a company thrives on applying the correct remedy to its needs. Steering a company towards profitability is the same as steering a ship to safety. The atmospheric conditions dictate what choices are made for its safe arrival. Charismatic leaders shake up the company and employees prodding them to do and innovate their ways of getting things done. Listening and attempting what was seen as "crazy" by the past administration, but strangely helpful to moving the company along to a different way of thinking. Remember, his restless compulsion to challenge the status quo is the momentum that gets things moving. If perception is reality, for the first time in a long time, employees are beginning to feel a change in things to come. What happens when people begin to feel a part of a new movement or revolution? They get excited and moreover, they begin to experiment. This is where the breakthrough for profitability emerges. By combining experience with imagination, you have now created the environment for endless possibilities. This is why charismatic leaders are highly paid, because they make you feel the sky is the limit when you thought the ceiling was all there was to live for. Once this incendiary environment for creativity has been sparked, it opens the door for profitability.
This is a departure from the "Feel Good 1990's." This era of former Federal Reserve Chairman, Alan Greenspan's ,"Irrational Exuberance" had everything to do with selling emotion with little tie -in to profitability. Yes, selling emotions is profitable, but only short term. Cultivating charismatic leadership is a long term strategy. Indeed it is a philosophy that encompasses many dimensions of which persuasion is merely a small component. As an example, witness the explosion of mega-churches and charismatic leadership.
Bishop TD Jakes' Megafest 2004 saw a reported 130,000 people and put over $100 million in the Atlanta economy in less than a week. Joel Osteen's Lakewood Church in Houston, Texas is deemed the largest church in the country with over 25,000 members. It is believed that Lakewood is on course to be the first church to reach a membership of 35,000. Megachurches are known for their size (thus their profitability) with the average number of congregants being 3,646. All totaled, megachurches bring in an average of $4.8 Billion a year. But exactly what is it that allows such explosive growth in megachurces and what lessons can corporate America learn from its strategy?

Essentially, megachurches have three key factors that drive its success: 1. Charismatic leadership; 2. A compelling message and 3. Programs relative to the needs of congregants.

The engine that drives the message and thus the programs is the charismatic leader himself. What churches offer that is largely lost by corporate America is leadership that taps into the visceral emotions of its congregation. Corporate America's aim of enhancing stock shares through its analytical and dispassionate means curtails the profitability experienced by megachurches. In fact, the very notion of emotionalism in business is anathemic to corporate DNA. Emotions cannot be measured and thus cannot be managed. In corporate parlance, what can be measured, gets done. On the contrary, what can't be measured is getting done--and in a big way! While, it would be impractical to believe that corporations can take on the full armor of megachurches, there are attributes which corporations can begin instilling in its leaders.

Eminent sociologist, Max Weber (1864-1920) is credited for being the first person to demystify the term charisma. Up until Weber, charisma was viewed as an intangible trait bestowed upon a chosen few. Charisma was seen as a non-secular concept. Weber articulated that charisma was a learned skill set that was the most effective and important among bureaucratic and monarchy forms of leadership. It is still largely believed that charisma is not a skill set and is shrouded in mystery. However, while secular society refutes the legitimacy of charisma and the extent of its effects, megachurches are built upon its premise. A skeptic might postulate that the early beliefs surrounding charisma were based on religion and would stand to reason that the clergy would be the recipients of its grace. However the philosophy and system of charisma have little to do with religion. In fact, it has already carried itself into business and politics---witness Lee Iaccoca, Donald Trump and Bill Clinton. What these individuals have learned, just as their clergy brethren, is that charisma is the most critical skill set one can develop in a media-centric age for increasing profitability.

But, what is the process for garnering charisma within magachurches and how can corporate America achieve similar results? First and foremost corporate America has to embrace its creative sides. Thinking out of the box cannot be merely a cliché', but a mantra. While many companies purport to embrace out of the box thinking, very few include it as part of its corporate creed. The reasoning is understandable---corporations aren't accustomed to growing profits using creativity and emotions (charisma). Even if megachurches are built upon charismatic leadership, corporate heads believe it doesn't apply to them. But the common link between both entities is the people they serve. As long as the social dynamic of people is involved, charisma and its effects will always be relevant. Further, the process by which charismatic leaders build megachurches is very systematic. The process begins by:

1.) Setting the Stage--Charismatic clergy have a flair for drama. While they may be sincere in their religious convictions, they realize that a great deal of garnering commitment rests on tapping into the emotions of congregants. People often act on emotion and justify their actions through reasoning. A little fanfare goes a long way! Corporate leaders can achieve the same effect by making meetings an event. Steve Jobs of Apple is known for using technology, music and lights to create a bigger than life presence when unveiling a new product or idea. In an age of the Free Agent employee, corporations have to create the means for instilling loyalty that are nontraditional and resonate with the collective desire for excitement that employees crave.

2.) Promoting Group Dynamics---Charismatic leaders use the influence of group acceptance and peer pressure to instill cohesion. In meetings/events, the leader creates a bond by using imagery-laden communication that sparks a crusade which participants are apt to comply with for fear of disappointing colleagues. Generally, individuals are impacted by the consensus of the group and look for ways to be team players without upsetting its mission.

3.) Tapping Into Expectations---Charismatic leaders use preconceived notions and beliefs of congregants to instill loyalty. Humans are constantly being bombarded with personal challenges from job downsizing to failed relationships. Charismatic leaders tap into these human experiences by creating an environment of open sharing. Now that the congregant realizes she isn't alone, she is supportive of the leader who helps her get through these challenging times. Corporations can encourage greater productivity and thus greater profitability by tapping into the beliefs and preconceived notions of its employees.

4.) Fulfilling Congregant Needs---Charismatic leadership offers solutions through optimistic communication that shows congregants why committing to their ideals benefits them. Invariably, congregants are looking for answers that charismatic leaders provide that serve as a blueprint for handling life's challenges. Corporate leaders, while not in the business of solving personal problems, should consistently reinforce where the employee fits into the corporate mission taking into consideration the needs of the employee. Megachurches have paved the way for competing and doing business in a global economy. To survive and thrive, companies will have to do the same.

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