Wednesday, June 24, 2009

Charisma Case Study: Former HP CEO Carly Fiorina

The firing of Hewlett-Packard (HP) CEO Carly Fiorina shows that when it comes to charisma, women are just as affected by it as men. Fiorina's ousting suggests that the playing field has not leveled equally for men and women, but charisma is an equal opportunity provider between the sexes. The February 10, 2005 Wall Street Journal article, "How Traits That Helped Executive Climb Ladder Came to Be Fatal Flaws" described Fiorina as "unshakable, self-reliant, comfortable with the spotlight, fond of dramatic gesture, impervious to criticism…passionate about the big picture…embracing change as a way of life." Intuitively, these traits should have been the means for rocketing HP's stock into orbit after its $19 billion merger with Compaq Computer Corp. However, before Fiorina's ouster, HP's stock reportedly was down 50%.

A 2004 University of Florida study showed that Chief Executive Officers who exude intelligence, optimism, and leadership do not necessarily help their companies perform better than less charismatic counterparts do. However, the more charismatic CEO’s tend to draw higher salaries and better benefits. The study surveyed vice president-level managers of 59 Fortune 500 companies about their perceptions of the company CEO's charisma. Indicators included confidence in the CEO's management abilities and whether the CEO’s made the survey respondents feel optimistic about the company's future. The study compared the resulting "charisma" score to indicators of corporate performance and crosschecked the results against the CEOs' salaries. The conclusion... better firm performance is unrelated to the CEO’s charisma, but rather to higher salaries for the CEO5…except when the market volatility proved a benefit to the company.

Taking the necessary cues from the University of Florida's study shows that charismatic leaders are great for getting the ball rolling and creating optimism, but they need a more stabilizing style of management while enthusiasm remains high. In the current global economy, the "all or nothing" approach to leadership is not sufficient. Dissenters of the charismatic leadership model cannot rest on Fiorina's demise by saying "I told you so”, nor can the charismatic leadership model suggest that a conservative, risk- adverse approach is impractical during volatile economic times. Fiorina's ousting illuminates the need for hybrid approaches to business management that are streamlined enough to turn on a moment’s notice based on the needs of the immediate situation. A world of differences has finally come to mean all the difference in the world.

The celebrity-industrial complex has insured that business, politics, and entertainment require inanimate entities to have personalities. For Hewlett-Packard to shun any nuance of the value that charismatic leadership brings would act contrary to its best interest. There is a reason England still maintains a monarchy, while the Prime Minister and Parliament operate the government. The individual pragmatically seeks a stable government to insure ones perpetuity, and the need to maintain traditional emotions acts as a stimulus.

The lessons learned from charismatic leadership are:

· Realizing the "Built in" power and weakness---While we live in a "winner take all" society, every business, or management model has its down side. The idea is to measure the strengths versus the inefficiencies and make the necessary corrections as part of the process.
· Checking and balancing the factors that spark charisma---Egotism, self-glorification and a need for high achievement are factors in a charismatic personality. In the celebrity-industrial complex, these are not necessarily negative traits, but one should apply modifications through pragmatic conservatism when deemed necessary.
· "Don't become overwhelmed"--Charismatic leadership sweeps in like a Tsunami and mesmerizes everyone in its path through shared passion and energy. Emotions often override logic and all that is left are the shouting and finger pointing. Managers have to be on guard for the intoxicating nuances that such leadership brings.
· Asking more questions---Big picture thinkers see the world from a different perspective. Charismatic leaders may be big on plans, but short on details. By analyzing every aspect of the "Big Plan”, executives can help the charismatic leader view the challenges that such actions may create.

For more information, visit:  Charisma

No comments: