How Character Can Give You a Competitive Advantage
What does your organization look for when recruiting a new CEO? If you’re like most, leadership character is not at the top of your hiring criteria. In fact, assessments of leadership character are usually not a part of the hiring process at all. But why is that? While most would agree that character is important, there are a few common misconceptions about leadership character that might keep organizations from giving it an active role in their hiring and promotion. In this article, we will dispel these commonly held misconceptions, and discuss how your organization can effectively assess leadership character to select and develop stronger leaders.
The Impact of Leadership Character
Before we jump into misconceptions, we want to take a moment to re-affirm the importance of character. Numerous studies have sought to understand the underlying science of character and the impact it has on organizations overall. Here are some notable findings related to the importance of leader character:
- A study done by Harvard Business review found that organizations with leaders of high character had nearly five times the return on assets of organizations with leaders of low character. In this study, character was quantified by how employees rated their leaders on integrity, responsibility, forgiveness, and compassion.[1]
- Analyses done by the Ivey Business School found that in many high-profile cases — such as the global financial crisis of 2008, the Volkswagen emissions scandal, and the Boeing 737 Max tragedies — leaders did not lack in technical competence. Rather, it was a lack of leader character that contributed to the crises[2]
- Research conducted by the Ivey Business School, based in part on data collected from the Institute of Corporate Directors (ICD) members, found that directors in the public, private, and not-for-profit sectors believe that leader character plays an important role in board governance and organizational effectiveness, particularly with regard to how boards make decisions, recruit new members, lead their organizations, and work together to perform their fiduciary and other responsibilities. Most ICD members agreed or strongly agreed (91%) that the character of a CEO has a tremendous impact on the effectiveness of a board; and that the board should assess and evaluate the character of the CEO (86%).[3]
Common Misunderstandings About Leadership Character
Having affirmed the importance of leader character, let’s take a look at the common misconceptions that may have kept organizations from integrating leader character assessment and development into their human resources (HR) practices.[4]
- Character is often sidelined because organizations believe it has more to do with things like brand image, culture, and communications than with practical aspects of operations. While character should certainly inform a company’s mission, vision, and values, it is also an important factor in strategic thinking and decision making. Leaders with strong character can delay immediate — and possibly unethical — gratification in favor of long-term, legitimate reward. They are also more likely to sacrifice their own status or success for the sustainability of the business. In short, leaders with character are more likely to do the right thing, even when it’s hard.
- Another common misconception about character is that people have the capacity to accurately judge their own character. In a study of 84 CEOs and their leader character, all 84 CEOs rated themselves as being people of very strong character, when in fact, only about 30% of them were accurate.[5] This trend toward over-estimation of one’s own character tends to be true of people in general, and it means that about 70% of us don’t have an accurate view of the strength of our own character.
- The third and final misconception about leader character is the assumption that character is fixed, rather than a quality that can be developed. When we think of character, most leaders classify it as a product of “nature,” rather than “nurture.” Character, however, is not a fixed construct. Character is a set of competency-based dimensions. Each dimension has sub-elements, and each sub-element can be developed in order to strengthen the overall dimension. Below, we’ll take a deeper dive on how your organization can begin developing leader character. We’ll also point you in the direction of a few practical resources for leader character development.
Developing Leader Character with the LCIA
Having dispelled the myth that leaders are born and not made, let’s talk about how your organization can begin developing leaders with strong character. First, you will need a reliable method for assessing leader character. To do this, you will need a science-based leader character assessment like SIGMA’s Leader Character Insight Assessment (LCIA). Leadership assessments like this can be used to measure an individual’s baseline competence in each leader character dimension, find strengths and development opportunities, and create individualized development plans.
To help you create actionable development plans, read SIGMA’s blog Changing Your Habits to Build Character, or download individual development guides for each leader character dimension at the link below:
Character is the Competitive Edge
The application of leader character research is beginning to gain traction among high-performing organizations. For example, Ron Francis, the general manager of the National Hockey League’s (NHL) Seattle Kraken, recognizes the importance of leader character to his team’s performance and advocates for leader character-based selection and development. When asked what he looks for in a draft pick, Francis responded that he looks primarily for character.
Said Francis, “Competence is table stakes, but what sets players, teams, and organizations apart is the character that enables them to bring their best every day, even in challenging situations. Will the exhausted player maintain the drive needed to win the one-on-one puck battle? Will a player withstand an opponent trying to pull them off their game? And will a team persevere through a difficult stretch of losses? None of these choices are about competence or skill but about character, and they make the difference between winning and losing. At the highest level, character is the competitive edge.”[6]
Looking for More?
If you’re interested in learning more about leader character, consider SIGMA’s Leadership Character Insight Assessment (LCIA). This test was specifically designed to measure the key dimensions of leader character. Each assessment includes a personalized report that provides an analysis of your scores, next steps for development, and helpful resources for further education. You can use the LCIA to help your leaders understand themselves, each other, and work together more effectively as a team.
Talk to Ruby
Ruby Nadler, Ph.D., Leadership Consultant
Ruby has a Ph.D in Cognition and Perception, as well as specific training in mindfulness and positive psychology. She brings this expertise to SIGMA’s executive coaching programs. In 2015 she was awarded a two-year Ontario Centers of Excellence TalentEdge Fellowship, and her research has been featured on CBC, BBC Radio, Happify, and NPR. Call or email Ruby – she would be happy to answer questions about the LCIA, leader character, coaching, etc.
Phone: 1-800-401-4480 ext. 223
[1] F. Kiel, “Return on Character: The Real Reason Leaders and Their Companies Win” (Boston: Harvard Business Review Press, 2015).
[2] Crossan, M., Furlong, W., & Austin, R.D. (October 19, 2022). Make Leader Character Your Competitive Edge. MITSloan Management Review. Retrieved from https://sloanreview.mit.edu/article/Make-Leader-Character-Your-Competitive-Edge/
[3] Bhardwaj, R., Seijts, G. H., (2020). Leader character in the boardroom. Organizational Dynamics.
[4] Crossan, M., Furlong, W., & Austin, R.D. (October 19, 2022). Make Leader Character Your Competitive Edge. MITSloan Management Review. Retrieved from https://sloanreview.mit.edu/article/Make-Leader-Character-Your-Competitive-Edge/
[5] F. Kiel, “Return on Character: The Real Reason Leaders and Their Companies Win” (Boston: Harvard Business Review Press, 2015).