A CEO I’m working with shared a very powerful story with me recently. One of his employees sent him an email the day after the tragic killing of George Floyd. It was a short email. The employee simply asked him what he was going to do about the situation. The CEO’s first reaction was: “What am I going to do about this? This is my problem?” And then he paused a moment and said to himself, “Yes, yes, it is my problem.” The CEO told me that he realized in that moment something crucial about being a leader. He said: “People are hurting, they’re upset, and they’re afraid. They’re looking to me for help, support, and to explain my company’s role in finding a solution. They’re looking to me for leadership. I realized in that moment that as the leader I was responsible for more than delivering profits — I was being asked to deliver purpose.”
Stories like these are not uncommon. We are hearing them more and more during this period of extraordinary disruption. The lesson of 2020 seems to be that we’re all interconnected, that we’re all being disrupted, and that CEOs are expected to do so much more than deliver financial results. One can’t help but wonder how preparation for a career in business could possibly also have equipped CEOs to be virologists, diversity experts and psychologists at the same time.
The depth and speed of the disruptions coming at us — combined with the well-chronicled failures of traditional institutions to share in the burdens of leadership — have thrust CEOs into the spotlight like never before. When leading through disruptions such as a pandemic, systemic racial injustice, climate change as well as more predictable forces like digitization, the best CEOs remember to ask themselves questions such as: What kind of leader am I? What do I believe in and how do I communicate these beliefs? How am I seen by my people?
The Transformational Leader
Forty years ago, the American historian, political scientist, and presidential biographer George MacGregor Burns created a model of leadership that prioritized the authenticity of the leader, the beliefs, needs, and motivations of the people being led, and the purpose and values of the organization. He called it transformational, because profound and sustainable organizational change occurs when the leader regards his or her employees as whole people and not simply as units of productivity. Burns demonstrated that when a leader motivates and inspires excellence through purposeful behavior and people feel respected, increased productivity and sustainable change occurs. Contrast this with transactional leadership, when an employee is simply paid by the leader commensurate with the value of a task, or authoritarian leadership, where it is all about the leader and the employee doesn’t participate fully, if at all, in the actual life of the organization.
In transformational leadership, the relationship between the leader and those being led is paramount as well as multidimensional. It is not based on a simple give-and-take transaction, but on several dimensions that emerge between people when leaders behave authentically and empathically. The leader becomes a role model, relates genuinely to others, listens deeply to their needs and ideas, and values people for more than their individual outputs.
Emotional intelligence drives much of this leadership style. Burns asserted that leaders who really connect with their people, who actively align their own values with the purpose and values of their people and organization, create enterprises that are better inoculated against severe disruption. Burns wrote, “Transformational leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality.”
Could there be a better framework of leadership for the world we are living in right now? Business leadership is itself being disrupted and is changing in favor of the competencies of the transformational leader: someone who leads with character, is unafraid to appear vulnerable, who practices empathy as well as who sets challenging goals, and connects the purpose of the company to the employees’ best efforts.
Characteristics of a Transformational Leader
|Creates a compelling and inspiring vision||· A vision that is significantly challenging but achievable; inspirational
· A wide swath of the company’s employee base can achieve it by working together
· Consistently communicates in a motivating and energizing manner
|Sets a strong personal example||· Unquestionable personal ethics: acts with integrity
· Demonstrates authenticity and appropriate vulnerability
· Is a leader for the right reasons
|Articulates the organization’s values and purpose||· Consistently engages the organization’s values, especially at times of important decision making
· References these values in action
· Connects values with the special purpose of the organization, i.e., addresses the questions: Why do we exist? What’s our special value to society?
|Demonstrates strong emotional intelligence||· Committed to increased self-awareness
· Adept at communication and building strong relationships at all levels of the organization
· Willing to express empathy and to connect meaningfully with others
· Balances motivation for profits with what’s best for people
|Emphasizes accountability and continuous learning||· Holds people accountable for results
· Establishes aggressive milestones for teams
· Emphasizes continuous learning and improvement through active leadership development and career progression
Consider these exemplary CEOs who demonstrate one or more aspects of transformational leadership:
• Arne Sorenson, CEO of Marriott. Like many leaders, Sorenson was faced with an unprecedented crisis in the face of COVID-19. Among other tough actions, Sorenson had to furlough tens of thousands of employees. He chose a medium as personal as possible for the formidable task at hand: video. To watch it is to see what a genuine, vulnerable, empathic and inspirational leader looks like in action. And it is not surprising. For years, Sorenson has promoted the ideals of transformative leadership — for example, driving policies across Marriott that focus on critical areas like sustainability, diversity, and individual values to enhance the customer and employee experience.
• Stan Bergman, CEO of Henry Schein. A truly transformational leader, Stan Bergman has led Henry Schein to years of continued growth while focusing on the company’s core values of serving medical personnel and practices and caring for its employees. In the face of the pandemic, Bergman set an example for his peer group by energetically pursuing new COVID testing distribution efforts to get as many tests into as many provider hands as possible, building on his in-depth knowledge of dental supply chains. Bergman has spent decades actively and deliberately building a team culture that thrives on the purpose and values of Henry Schein.
• Cathy Engelbert, CEO of the WNBA (former CEO of Deloitte). As the first female CEO of Deloitte, Engelbert drove a people-first agenda and made considerable progress in gender and diversity equality, sustainability, agile workforces, and digitally dexterous leadership. As the first commissioner of the WBNA, Engelbert continues to use her position and influence for greater diversity and inclusion in professional sports.
• Paul Polman, CEO of Imagine (former CEO of Unilever). In his ten years at the helm of Unilever, Polman was a role model for exhorting his peers to look beyond financial results and to serve broader needs for the common good. Nowhere has this been more evident than in his actions around climate change. The Unilever Sustainable Living Plan set the standard for how global companies can work with governments and NGOs to address critical environmental issues. And as the founder and current CEO of Imagine, Polman is continuing his transformational leadership through engaging CEOs in a virtual ‘race to the top’ to address pressing needs such as poverty and climate change.
• Marc Benioff, Founder and CEO of Salesforce. Recognized by Fortune as one of the World’s 25 Greatest Leaders and one of the 10 Best Performing CEOs by Harvard Business Review, Benioff is cited frequently for his work on equality and social justice.
Leading through Disruption
The CEO mentioned at the top of this article swung into action after his epiphany that the employee’s email required a special kind of leadership. He called his team together and talked openly and honestly about how he felt about the events surrounding George Floyd. More importantly, he listened. He really listened to how his employees felt about the tragedy and its wider implications. He asked everyone to participate together in creating a set of actions that would make substantive and long-term changes in their business, including addressing recruiting and hiring practices to improve diversity and cultural development to improve inclusion. He also restructured the top leadership meetings so more voices would be heard.
Embedded in this pandemic — and other disruptions we are living through — is a lesson that can teach us how profoundly interconnected we all are, from our health care systems to our supply chains. The silver lining, if there is one, is that disruption has caused us all to realize how much active leadership really matters.
Just like the CEO mentioned at the beginning of this article, we realize that good leadership means stepping up and caring about the whole person and not just his or her output. As Mary Barra of General Motors said recently, “When people can bring their whole selves to work, they bring their best selves to work.” Transformational leadership is about an emotionally intelligent leader who connects the purpose and values of the organization to employees’ priorities and societal benefit. Ultimately, transformational leadership is about building an organization’s resilience to disruption through the holistic engagement of its people.
For many years, you could have asked any CEO what the purpose of the corporation was, and you would have likely received the same answer: “Maximize shareholder value.” With the one-year anniversary of the Business Roundtable’s alteration of that longstanding phrase having just passed, we know that the purpose of a corporation has to be broader than that. Transformational leadership can provide a framework for getting us to a more sustainable definition.
To be a transformational leader…
• Bring honest and open authenticity to all your communications
• Be unafraid to show empathy for the whole person; make sure to listen to your employees and state what you heard
• Walk the talk. Convey explicitly what you and the organization value — and be sure these values show up in important decisions and resource allocation
• Be explicit about how employees’ efforts align with the purpose of the organization and call out examples
• Drive positive accountability by emphasizing the development and career progression of your people
• Look for every opportunity to connect your company’s purpose and employee efforts with societal improvement