Value Driven Leaders: Learning the Impact of your Splash
Jo-Ellen Pozner, professor of management and entrepreneurship, has been forecasting a crisis of governance for years, and as leaders of the world’s largest companies threaten to cage fight and are being arrested for fraud, this crisis may be upon us.
“The rise of the ‘Celebrity CEO’ is a phenomenon that is hard to ignore as they make headlines daily, run active social media accounts, and have documentaries and memoirs documenting their successes and failures,” Pozner said. “These leaders are far from what was expected of CEOs 30+ years ago, when companies were looking for someone dependable, reliable, and capable of presenting a consistent, disciplined message.”
Pozner, who is also Faculty Director of the Executive MBA program, aims to help tomorrow’s CEOs avoid scandal by training future leaders to lead in a principled way. Starting with values and emphasizing respect, she encourages them to focus on and acknowledge the impact of their decisions, not just what she refers to as “the splash”--or the initial reaction to social media behavior.
The introduction of the internet and social media has allowed heads of companies to speak more directly and simultaneously to a variety of different stakeholders without tailoring their messages to individual groups. These new channels can drive how leaders communicate and make important decisions and leave very little room to fabricate or hide information when speaking to mass audiences.
The potential consequences of a lack of discipline are explored in Pozner’s most recent research, which examines the process of scandal creation. She explores how an organizational issue becomes a scandal when public attention is triggered through media–or social media–coverage, and when the public perceives their values are being violated, whether by a company at large or a CEO specifically.
“It’s much better to focus on values and principles, things that are going to help each individual find their own idiosyncratic ways, instead of trying to help students emulate someone who is not emuable,” said Pozner about how she approaches teaching. “If you have a principled rationale for decisions that you make, especially in times of crisis, that value provides justification and explanation.”
Even leaders who maintain clear, strong personal values can make rash decisions on a very public scale. Though that might not generate scandal, it can create anxiety and uncertainty for employees and consumers who don’t know if they will be out of a job tomorrow or if their favorite app or product will be discontinued.
According to Pozner, this is why it is important to have strong governance at the board level. Creating a system of checks and balances can prevent CEOs from making reckless, disruptive decisions. However, to create stronger, more effective governance at organizations, it’s necessary to have diversity.
A board full of people with different backgrounds, ideas, and perspectives allows for more constructive discussions than a board full of people who look like the CEO. A diverse board brings deeper discussions around topics including how a CEO should act and how the company should react in certain situations. They can help explain why a situation or a reaction might be viewed differently by someone of another racial or socioeconomic background.
“At Leavey we’re doing a lot of work to get people ready to join corporate boards, especially those in underrepresented minority groups,” said Pozner. She pointed to the Black Corporate Board Readiness (BCBR) and Women’s Corporate Board Readiness (WCBR) programs at Leavey - both of which she teaches in - as essential in accelerating diverse representation in corporate governance by helping minorities build personal brands and networks as they seek and obtain board positions that align with their personal values.
“Failures of companies like Theranos and FTX are morality tales that suggest we should go back to first principles and really look for good governance, stable leadership, and strong management principles in companies we’re looking to create, join, or invest in,” explained Pozner. “I’m really proud to be associated with the Leavey School of Business, where we take ethics and governance so seriously. Without a strong foundation in ethically-grounded organizational decision making, it’s easy for firms and leaders to disregard what is in the interest of the multiple stakeholders they serve.”
Pozner continued, “Looking ahead, if a values driven approach becomes more widespread, we’ll see a lot more stability and humanity, and more good done in the world. It’s exciting for Leavey to be a leader in that effort.”