What kind of leaders will get us through the recession?

It won't be the tough guys who give orders, cut costs and take no prisoners, says one leadership guru...

by Miranda Kennett
Last Updated: 31 Aug 2010

According to Daniel Goleman, the psychologist who pioneered the understanding of the role emotional intelligence plays in leadership, the secret in lean economic times is to be able to inspire high performance in others – and this requires social power, based on empathy.

‘You can be brilliant as an individual and outstanding in your specialist area, but if you lack empathy you will fail,’ he told MT. Goleman, who’s one of the luminaries assembled for the Leaders in London conference this week, firmly believes that the path to great leadership begins with self-understanding and self-control. In fact, these were the key attributes that led to Obama winning the US presidential election, he suggests. ‘The way he responded to the financial meltdown made the difference. He was completely calm, clear and focused. McCain by contrast, had a small panic and behaved erratically, and that made people question his leadership abilities and cost him votes.’

Gordon Brown also seems to thrive on adversity. In Goleman’s view, would he also count as an outstanding leader? ‘Both appear unflappable, and calmness is important, but it is not sufficient. Obama is also a good communicator. People trust his choices. When he named his economic team, the markets calmed.’

But how appropriate is emotional intelligence to financial markets, where rationality is meant to reign? Hasn’t it been negative emotion that has exacerbated the situation? ‘When we panic our cognitive abilities seize up,’ Goleman explains. ‘Investment managers are not making the best decisions. There’s a strong argument for financial institutions increasing their capacity to manage their emotions, in order to make better decisions. Emotions are contagious in organisations, so if the leaders are not managing themselves well they will spread fear and panic and people will stay focused in their anxiety and be unable to perform well.’

Goleman’s studies of outstanding leaders have convinced him that their essential qualities are not just emotional self-control. They also posses social awareness and empathy; they’re able to perceive and influence the emotional flow between themselves and others they work with. This helps them to create effective relationships with individuals, teams, and whole organisations.

Another speaker at the conference is Jack Welch, the veteran (and much-feted) leader of GE. Despite the fact that Welch is renowned for his hard-man tactics – for example routinely sacking a quarter of his workforce, on the grounds that there must be 25% who perform less well than the rest – nowadays he’s radically changed his mantra. ‘Your job as a leader is to get into people’s souls’, he says. Doesn’t sound much like the axe-man Time magazine voted ‘leader of the century’, but perhaps things have changed in this century?

In today's bulletin:

Carphone boss David Ross quits after share scandal
Ryanair slams BAA as protesters delay flights
FTSE rallies - and HSBC ramps up lending
What kind of leaders will get us through the recession?
Harrogate Grammar top of the business pops

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