Topic: Leadership, Organizational Performance
Publication: The Leadership Quarterly (FEB 2011)
Article: CEO leadership behaviors, organizational performance, and employee’s attitudes
Authors: Hui Wang, Anne S. Tsui, & Katherine R. Xin
Reviewed by: Chelsea Rowe
In a study of top and middle managers (CEOs, VPs, and senior managers) in 125 Chinese firms, Wang, Tsui, and Xin (2011) investigated the degree to which CEO leadership behavior influenced the performance of the firm. They took this a step further, also looking at the degree to which employee perceptions of the CEO impacted firm performance. Firm performance was measured in terms of profitability, asset & sales growth, market share, and competitive status within the industry.
Leadership behavior can be broken down into two categories: task- and relationship-oriented. Task-related behaviors include goal-setting & articulation and monitoring of progress. Relationship-oriented behaviors focus on developing employee-leader relationships that include trust, understanding of and concern for employee problems, and supporting employees.
Wang, Tsui, and Xin (2011) showed that CEO leadership behaviors can impact a firm’s performance both directly and indirectly. Task-focused behaviors have a direct relationship with the firm’s performance. This finding is pretty straight forward—when leaders set goals and communicate those goals clearly to employees while monitoring progress, the goals are more likely to be met, ergo the firm performs well.
What about those relationship-focused behaviors? They play a role but in a more indirect way. Relationship-oriented behaviors affect employees’ perception of the CEO (“likeable”, “good-leader”, “cares about me, the employee” OR “only concerned with the bottom-line,” “doesn’t value his/her employees’ opinions”). These employee perceptions of the CEO’s behavior influence the employee’s commitment to the goals. An employee that believes his leader cares about him/her and feels supported will work harder to reach (or surpass!) the goals established by the leader. On the flipside, an employee who views the leader’s behavior more negatively is less likely to exert quite as much energy.
What’s the take-home message? It’s important for CEOs and managers to demonstrate a mix of task- and relationship-oriented behaviors. Leaders who effectively communicate roles, goals and monitor progress to their employees can typically expect better performance. Likewise, managing employees’ perception of the leader is important as well. Employees who view their leader’s behavior favorably are more apt to work hard to achieve the aforementioned goals.