Blog

In 1982 I undertook a self-taught crash course in I/O psychology, with a special emphasis on leadership. At that time, I concluded that LMX theory was the only model of leadership that made any sense; the alternatives seemed hopelessly academic. I have recently had the opportunity to meet George Graen, the author of LMX theory and to confirm my initial reactions. George is smart, productive, perceptive, and an artist— which means that he is constantly fiddling with his ideas. At its core, however, LMX theory is, in my judgment, exactly right. I would like to summarize the highlights of the theory, as I understand it.First, LMX stands for “leadership motivated excellence”, although Graen has changed the meaning of the term three times. Nonetheless, leadership motivated excellence is the “real” definition of the term.Second, and in contrast with most discussions of leadership, Graen understands that it is not about the person in the role, leadership is about the performance of the team or business unit of which the “leader” is in charge. Graen evaluates leadership in terms of the team’s performance, and this is rarely done in the academic literature.Third, Graen makes a crucial distinction between leadership models that concern between group performance, and models that concern within group performance. Between group models evaluate managers using ratings by a few members of the manager’s team (e.g., the typical 360 subordinate evaluation). Managers of successful teams are compared with managers of less successful teams, based on these averaged ratings, and those data are used to identify the characteristics of successful managers. This methodology has led to inconsistent results over time. In contrast, LMX theory uses ratings from everyone on the team to evaluate a manager, and the evaluations concern the relationship between each team member and the manager. These dyadic relationships tend to be very stable over time, and lead to convergent research findings.Fourth, consistent with best practices of managers of real teams, Graen says leadership is not about how a manager treats his/her team in general or on average. Leadership is about building relationships between each member of the team, one person at a time. This is the key insight of Red Auerbach, the legendary coach of the Boston Celtics of the National Basketball Association—you motivate a team one player at a time. Rob Kaiser points out that the principle source of variance in 360 ratings is the ratings provided by single individuals—exactly as LMX theory would predict.LMX theory is rooted in social exchange theory—the leader and the member each get something from the relationship, otherwise defections will occur. Thus, followers can influence leaders as much as the reverse. Each dyadic relationship (between the leader and an individual member of the team) is unique and determined by the personalities of the two people involved. The quality of the dyadic relationship is the key factor affecting the member’s motivation. Inevitably, the members who are in a leader’s “in-group” contribute more to the team than those who are not.Fifth, Graen has a standardized rating form that can be used to evaluate the quality of the LMX dyads that make up any team. Higher scores on this rating form are associated with more effective teams that communicate, cooperate, and coordinate better, and have lower turnover intentions.Sixth, Graen has standardized (and proprietary) protocols for training managers in the kind of relationship building that LMX theory spotlights. Furthermore, he says that he has data showing that managers who are trained on this LMX model do better, in the sense that their teams perform better after they have undergone training.Seventh, the standard criticism of LMX theory in the I/O literature is that LMX is all about likability, that subordinates give higher ratings to supervisors that they like, so that LMX theory only concerns “halo or nuisance variance”. But Graen is quite clear that the LMX relationship depends on three elements: (1) the subordinate trusts his/her manager; (2) the subordinate respects the competence of his/her manager; and (3) the subordinate believes his/her manager is concerned about the welfare and performance of the team. These elements might result in likeability, but likeability is not necessarily entailed by these elements. As Graen notes, many aspects of a successful manager’s behavior make that person likeable, but the three criteria listed above are what predict team performance.Finally, as far as I can tell, every aspect of LMX theory is supported by data, and every aspect of LMX theory is consistent with the way I think about leadership, starting with speculations about the role of leadership in the evolution of our species, and ending with what is wrong with modern corporate leadership.

About 10 years ago, academic researchers rediscovered personality and its relationship to job performance. More recently, after the events symbolized by the collapse of Enron and MCI, the business community seems to have rediscovered the importance of character as a determinant of job performance—especially in the senior ranks. These represent different insights in the popular literature, because personality and character are usually considered separately. Nonetheless, the concepts of “character” and “personality” are closely linked; for example, Aristotle defined character in dispositional terms that are synonymous with the contemporary concept of personality. Moreover, the first academic journal devoted to personality research, established in 1932, was called Character and Personality. Gordon Allport, one of the founders of personality psychology in the U.S., remarked in his influential 1937 book that “character is personality evaluated, personality is character devaluated.”Personality psychology has always been outside the mainstream of academic psychology because it explicitly assumes that values are an inherent part of social life, and that character is part of personality. Lee J. Cronbach, grand arbiter of psychological fashion for 50 years, denounced personality and personality assessment in his 1960 textbook because some of the concepts (i.e., integrity) are “value laden.” Like all good behaviorists, Cronbach wanted psychology to be like the physical sciences—values free. Poor old Cronbach never understood that the physical sciences, like the human sciences, are shot through with value considerations. Values are about preferences, they concern rules that people use to make choices in ambiguous circumstances. Tycho Brahe, Copernicus’ teacher, was a religious nut who thought the sun was God, and therefore belonged at the center of the universe. His arbitrary value system set Copernicus on his quest to demonstrate that our universe revolves around the sun.Character is a term that summarizes a set of values. Values are indispensable for navigating social life. The only question concerns how to justify one’s values. Most people justify their values by appealing to authority—legal or religious. The framers of the U.S. Constitution justified their value choices in terms of the welfare of society, a pragmatic decision that informs our thinking as well.The most fundamental requirement for a functioning society is order—a system in which people comply with the established rules and customs of the group. However, in any functioning group, cheaters inevitably emerge and take advantage of those who are more compliant—this is an important principle in evolutionary theory: cheaters inevitably emerge. Cheaters threaten the integrity of their groups with varying degrees of severity. People of good character, people with integrity, people who support the rules and customs of their group, are the foundation of a viable community.Psychoanalysis argues that the fundamentals of character are set by about age five. And, as Freud noted, character is fate. Specifically, by about age five, a child’s core self-esteem—guilt and self-doubt versus self-confidence and optimism—is largely settled. In addition, by about age five, a child’s orientation toward rules and authority—rebellion and defiance versus effortless compliance—is largely set. Measures of self-esteem and attitudes toward authority powerfully predict job performance in adulthood. More importantly for a discussion of character, low scores on these measures powerfully predict delinquent conduct in adulthood. Poor self-esteem and defiance of rules and authority also predict some white collar crime. However, white collar crime is better predicted by adding values—specifically measures of selfishness and greed.Finally, to put a practical end to this abstract discussion, researchers at Hogan have been studying crime and delinquency for over 30 years. They have accumulated solid data showing that the HPI and the HDS are robust predictors of both blue collar and white collar crime and delinquency. The MVPI can be used to evaluate selfishness and greed. Personality, character, and personality assessment come together to predict important life outcomes with an accuracy that rivals the best in medical diagnosis, an outcome that would have given Cronbach fits.

The talented and charismatic Swiss psychiatrist Hermann Rorschach published Psychodiagnostik in 1921. Rorschach’s inkblots soon attracted a cult-like following and became the most widely used projective test in the world. The theory behind projective tests is that, when people are asked to describe an ambiguous stimulus, their descriptions will reveal their private thoughts and fantasies—a theory that seems plausible on its face.In the summer of 2009, Wikipedia published Rorschach’s ten inkblots and the most common responses to them. In the July 30th, 2009 issue of Newsweek, Wray Herbert describes the firestorm that resulted. His article raises a number of issues that are worth additional comment; I will mention four. Click here to read the article.First, the article confuses personality measurement with the assessment of psychopathology. This is a common mistake because, from the beginning of personality measurement in the late 19th century until after World War II, every major measure of personality was also a measure of psychopathology; these measures included the Rorschach and the Minnesota Multiphasic Personality Inventory (MMPI)—the most widely used objective measure of personality in the world. Research on performance in combat during the war showed that the absence of psychopathology does not predict effective performance—many people with problematic MMPI profiles perform well under pressure and many people with normal profiles perform poorly. Realizing that psychopathology is not necessarily related to effectiveness, pioneers such as Harrison Gough (author of the California Psychological Inventory in 1954) developed measures of normal personality to predict competent and effective performance. The point is, it is possible to assess personality without assessing psychopathology; and it is necessary to do so if one wants to predict effectiveness.Second, along with many professional psychologists, the Newsweek article misrepresents the concept of test reliability. The reliability of any measure is a key issue in science. In the physical sciences, the reliability of a score is estimated by taking the same measure two or more times and comparing the scores. In contrast, many psychologists think that reliability should be estimated by how closely the items on a test cohere in a statistical fashion—but this has nothing to do with the reliability as defined in the physical sciences. The Newsweek article defines reliability in terms of the degree to which two people who score the same responses on the same test, get the same results. Although this definition is mistaken—because it concerns the reliability of the scoring method not the test scores—it is still closer to the scientific meaning of reliability than the definition used in academic psychology.Third, there is nothing wrong, in principle, with the Rorschach. Like any test, it is a collection of (10) test stimuli, which by themselves mean nothing. The utility of any test depends on its scoring key. More specifically, the utility of a test depends on validity—the degree to which scores on the test predict real world outcomes. It is possible to develop scoring keys for the Rorschach that predict outcomes, but first it is necessary to understand what the purpose of assessment is. Assessment has a job to do, and that is to predict significant non-test behavior.Finally, unlike many psychologists, Wray Herbert (the Newsweek writer) understands the importance of validity. At the close of his essay he notes that “This dust-up over the Rorschach could be just the beginning of a major intellectual housecleaning in a field that has drifted from its scientific roots.” As this comment indicates, validity is the scientific raison d’etre for assessment, but it is something that many test publishers ignore. This fact is a public scandal and one that will ultimately come to haunt the entire test publishing enterprise.

Every significant piece of public policy, every important generalization in history, economics, political science, and sociology depends on (largely unevaluated) assumptions about human nature. Personality psychology concerns the nature of human nature; it is, therefore, concerned with one of the most powerful and dangerous forces on earth. Developing adequate methods for conceptualizing human nature and forecasting significant components of social behavior—for example, integrity, creativity, leadership—would seem to be a matter of real urgency. Nonetheless, personality psychology has a minor and marginal status in academic psychology. I have spent my career trying to understand the origins of human behavior, trying to develop measurement models for capturing key elements of social performance, and trying to defend the study of personality against the complaints of a seemingly endless supply of academic critics.

Robert S. McNamara (1916-2009) was the most powerful American Secretary of Defense in history and in many ways the architect of the modern war on terror. He was an immensely talented and successful man, whose career went up like a rocket from the beginning. Born in San Francisco, he was an Eagle Scout and President of the Rigma Lions boys club in 1933. He attended the University of California, Berkeley, where he studied economics, mathematics, and philosophy, was elected to Phi Beta Kappa in his sophomore year, and earned a varsity letter in crew. After receiving a master’s degree from the Harvard Graduate School of Business Administration in 1939, he worked for Price Waterhouse for a year. He then joined the Harvard faculty as the youngest and highest paid Assistant Professor at the university. He joined the Army Air Force in 1943 and worked in the Office of Statistical Control, where he analyzed the accuracy and effectiveness of US bombing missions, and made powerful connections.In 1946, McNamara and 9 other former officers joined Ford Motor Company with a mandate to stop its financial and administrative chaos using modern planning and management control systems. He again advanced rapidly, and in November, 1960 became the first president of the company who was not a member of the Ford family. A few weeks later, President-elect John F. Kennedy recruited him to be Secretary of Defense. Kennedy described McNamara as the smartest man he had ever met.Kennedy first directed McNamara to plan the Bay of Pigs invasion, which was a disaster, and then asked him to develop even more elaborate plans to overthrow Castro. In 1962, McNamara began implementing the modern strategy of counterinsurgency warfare to combat terrorism; he created special forces like the Green Berets, and sponsored secret paramilitary operations throughout Asia and Latin America. In 1963, again in response to the President’s request, he began a troop build-up in South Vietnam. After Kennedy’s assassination in November, 1963, President Lyndon Johnson asked him to stay on as Defense Secretary, and in essence turned the conduct of foreign policy over to him. Johnson, in awe of McNamara, commented “He is like a jackhammer….He drives too hard. He is too perfect.” In 1964, Johnson asked him to be his Vice-Presidential running mate, but McNamara declined.McNamara prosecuted the Vietnam War with his usual diligence, but had doubts about it being winnable. In 1967, he sent President Johnson a long memo urging him to begin negotiating with the North Vietnamese rather than escalating the war. Johnson decided that McNamara was plotting against him on behalf of the Kennedys, fired him as Secretary of Defense, and anointed him as President of the World Bank where he served from April, 1968 to June, 1981, when he retired.The Vietnam War is widely regarded as the greatest foreign policy mistake in U.S. history. Over 54,000 American troops died, millions of Vietnamese were killed, and nothing was resolved. In 1995, McNamara published a memoir in which he said his conduct of the war was “wrong, terribly wrong”. In reply, Howell Raines, the editor of the New York Times, wrote an editorial in which he noted: “Surely he must in every quiet and prosperous moment hear the ceaseless whispers of those poor boys in the infantry, dying in the tall grass, platoon by platoon, for no purpose. What he took from them cannot be repaid by prime-time apology and stale tears, three decades late.”AnalysisAt each point in his career—as a student, academic, business executive, Cabinet Secretary, and public figure—Robert McNamara was fabulously successful. He substantially rebuilt Ford Motor Company, as Defense Secretary, he was instrumental in putting in place wide ranging reforms to streamline the Pentagon and make it more effective, and he transformed the World Bank from an old boy’s club to an instrument for third world economic development. And then there is the Vietnamese war—an unmitigated disaster. How are we to understand this?The answer concerns how we think about leadership. The academic literature defines leadership in terms of the ability to ascend to the top of a hierarchy, and McNamara was superbly equipped to do this. He was very smart, very hard working, great with numbers and details, clear-minded, logical, and very, very eager to please his superiors. This is the recipe for success in a bureaucracy.In contrast with the academic literature, I think the essence of leadership concerns being able to build a team, being able to unite a group and act toward a common goal. McNamara was ruthlessly dismissive of subordinates who challenged him (he had no peers). His talent was for fixing inefficiencies and implementing processes. He had no talent for anticipating or even considering the human costs of his processes. His concern about the Vietnam war was that it was unwinnable from a technical perspective, not that lives were being wasted. He was an immensely successful bureaucrat but not a gifted leader.There is a sense in which Robert McNamara was a train wreck waiting to happen. He was an exquisitely tooled bureaucratic instrument, who could and would deliver results for whoever happened to be his boss. As Secretary of Defense, his first boss was the callow and impulsive John Kennedy, who ordered him to begin what ultimately became our war on terror—covert and illegal operations in Latin America and Southeast Asia. He second boss was Lyndon Johnson, a skilled and ruthless legislator who knew nothing about international relations, and whose staff feared he was insane. Kennedy foolishly invaded South Vietnam, Johnson inherited the project, and vowed not to be the first American President “to cut and run.” McNamara’s ambition and eagerness to please authority prevented him from opposing these policies and the rest is history. As for moral culpability, he was just following orders.

To err is truly human and mistakes are truly inevitable. Paul Nutt, an Ohio State University business school researcher, provides data showing that half of all decisions made in business organizations fail. In his book, Why Decisions Fail, he shows that decisions mostly fail because the deciders ignore feedback. The lesson is clear, decision making in business is a random walk—no one is any better at decision making than anyone else. The major difference between good and bad decision making concerns the degree to which people are open to feedback regarding the consequences of their decisions.In the moral development literature, there is a very interesting line of research on guilt. In the typical study, a hypothetical person makes a mistake, and the research participant is asked how he or she would respond if he or she had made that mistake. This is, of course, directly relevant to the topic of reactions to bad business decisions. The data show that people’s “guilt responses” fall into four relatively clear categories with specific behavioral consequences.The first category of responses is called “intropunitive”. Intropunitive people quickly, even reflexively, blame themselves. Such people are prone to more or less persistent feelings of guilt, seem somewhat neurotic, and were probably the kinds of clients studied originally by Sigmund Freud, the founder of psychoanalysis. They were the source of Freud’s ideas about the superego and the problem of guilt.The second category of responses is called “extrapunitive”. Extrapunitive people, when faced with the news that they have made an error, quickly, even reflexively, blame other people and external circumstances. They seem incapable of internalizing blame and seem somewhat hostile and suspicious of other people.The third category of responses is called “impunitive”. When it appears than impunitive people have made a mistake, they simply refuse to acknowledge that anything significant has happened. They deny the reality of the situation and typically wonder why anyone would bring up the subject. These people seem somewhat psychopathic, and the defining feature of psychopathy is no capacity for guilt.The fourth category of responses is relatively small in terms of frequency of occurrence. These responses are called “mature self-critical guilt”. Here the people own their mistakes and vow to learn from the experience.We are discussing an assessment literature here—the assessment of individual differences in how people respond to the news that they have made mistakes. Meaningful assessment should predict behavior, so it is important to ask what these four categories of guilt responses predict. In the moral development literature, the major outcome of interest is moral conduct—usually the delinquency/non-delinquency criterion. Intropunitive responses are primarily associated with feelings of guilt. Extrapunitive responses are primarily associated with hostility. Impunitive responses are primarily associated with denial. Of the four categories, only mature self-critical guilt predicts compliance and integrity; delinquents lack the capacity for mature self-criticism.

Kaizen refers to continuous, steady improvement. It means never being satisfied. It means continuous improvement in processes as well as products. If a company pursues kaizen, it will be able to produce higher quality products for less money.How does assessment fit with all of this? Hiring better people is part of continuous improvement. Assessment is the key to hiring better people. Using valid assessments will yield better results than using the DISC or OPQ. Hiring better people means hiring better workers, better managers, and better leaders. Good workers regularly come to work, follow sensible procedures, treat customers well, work well as part of a team, and accept (or don’t resist) change. Good managers provide their staff with structure and direction but treat them with respect. Good leaders are more concerned with the performance of the organization than with the advancement of their own careers. Good leaders are not charismatic, self-centered, self-promoters. Good leaders treat their staff with respect but hold them accountable for their performance, promote an appropriate philosophy and vision, and have the capacity for change. Valid assessment is the key to continuous improvement of personnel.

We now know that personality predicts leadership style, and that leadership style predicts ratings of leader effectiveness. There are also some data showing that leadership style predicts business unit performance. So there is a kind of causal arrow going from personality through leadership style to the performance of the business unit of which a manager is in charge. Thus, we can use personality to predict business unit performance.That is an important finding in itself, but it also raises a question about the links. That is, how do leaders affect organizational outcomes? Our Leadership Value Chain suggests an answer.