Charismatic management

We all have someone we look up to. Someone we want to identify with. Sometimes in an organization this person, this "hero", is a person with a management position. More often, it is a manager with a high-ranking position. What sort of influence could this person have on an organization? Is this influence only good, or could it also be bad?

In one of our management lectures our topic was the German sociologist Max Weber. Weber talks about three types of legitimate authority, where charismatic authority is one of them. This is a type of authority we find very interesting. Weber describes a charismatic leader as "a leader who is obeyed by virtue personal trust in him and his revelation, his heroism or his exemplary qualities so far as they fall within the scope of the individual's belief in his charisma" (the theory of social and economic organization, 1947).

In Weber’s definition of a charismatic leader, we find some interesting key words such as trust, heroism and belief. These words represent something we all want to find in our leaders. We want our leaders to be a "hero" who has the solutions to the challenges our organization is facing. We want to trust him or her to be able to make the right decisions, and finally, we want to believe in him/her and the visions and goals our managers point out.

One of the most important abilities of a charismatic leader is to present a vision in a clear and understanding way that motivates people and creates a community of an organization who works together towards this vision. And once employees identify themselves with the future vision, they give more support to the goals of the organization and their leaders. A good example is to look at what Steve Jobs, described as a charismatic leader, has done with Apple.

The shares had hit a low of $3.19 in July 1997, a few months after Jobs rejoined the company that he co-founded in 1976. They climbed steadily to almost $200 by the end of 2007 thanks to the success of the iPod and the iPhone, and a resurgent demand for Apple's desktop and laptop computers. The ability to point out clear visions as Jobs has done creates trust and belief in achieving the vision, and making it "easier" for employees to strive towards it. As we can see, charisma can have a huge motivational ability.

Another powerful ability that these types of leaders have is that they are creating a character that employees want to identify with. The leader becomes a hero, someone everyone want to please. This could be a good thing, but it could also be a bad thing. It could create immoral and dishonest actions among the people who wish to make the leader happy. This could be extremely destructing for an organization.

Another danger is that it becomes easier for employers to narrow their thoughts in the same direction as the leaders do. Not being able to think outside this "box" can be really harmful for an organization. But why hasn't this happened to Apple?

Apple’s motto is "think differently". This motto, together with Steve Jobs strong vision and charismatic leadership, are among the most important reasons to Apple's position as the world’s most innovative and valuable technology company.

So what happens if the leader should have to step down or transfer? A charismatic leader is often seen as glue that holds a group or an organization together. Normally, the group dynamic will fizzle and individual members will lose enthusiasm. When Steve Jobs resigned as Apple's CEO, the market reacted by sending Apple’s shares down nearly 3%, knocking around $10bn off the company's value.

A downside with charismatic leaders is that they can make a company so personalized that employees are not working for the best of their company, but for the best of their leader. When another leader takes over as CEO, employees might not have the same loyalty towards him or her compared to their previous leader. This is something that is hard for a new CEO to turn. In an e-mail sent to Apple's nearly 50,000 employees, Tim Cook, Apple's new CEO, wrote: “I want you to be confident that Apple is not going to change". You may ask: "How can it not?"

Tim Cook has been in the company since 1998 where his first position was Senior Vice President of Worldwide Operations. Being in the company for so long, and also working as close to Jobs as he has, it could be that he has learned some of Jobs mentality. It could be that charismatic leadership makes it easier to find a successor to a CEO within the company. This is again because of the clear visionary leadership that charismatic leadership is all about. We will end this blog post by supporting this thought and quoting Tim Cook. And once again we ask our followers about your opinion about charismatic management. Is it good or bad?

“I cherish and celebrate Apple’s unique principles and values. Steve built a company and culture that is unlike any other in the world and we are going to stay true to that — it is in our DNA we are going to continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do.”