So, in this lesson, we're going to talk about the first dimension of the organizational leader, that CEO level of leadership. We look at charismatic leadership. Now charisma is an idea that's been associated with leadership for a long, long time. Max Weber, the German sociologist argued that charisma was one of the fundamental qualities of leadership. So, within charisma, there are a couple of major components, and they interact quite strongly with each other. The first one is not necessarily charisma itself, but it's something that a charismatic leader tends to bounce off and his vision. The organisational leader has to have a vision that the followers understand. Now, this vision is very often not of the organization now, but of the organization in a future state. The future vision of the organization. So, that's the first component. No the second component is charisma itself, and charisma is not necessarily how common-sensical understanding has it where, some charismatic person walks into the room and it's an innate talent and they've been born with it. It's something that can be conveyed upon them by the followers themselves. So, there's elements of nature. Some people have degrees of charisma that they are born with, but there's some nurture. Both in terms of how you develop it and how perhaps you've been imbued with it by people who are already following you. This is why we can have arguments about whether someone is charismatic or not. But there might be some people who think this is the most charismatic leader and they will do anything for them. Whereas others will say no, he's not charismatic or told I don't want to follow that person. It's best to understand charisma as a social contract between the leader and the follower. In which the leader lays out the vision, lays out where he thinks everybody's should be going, and then persuades or influences the followers to follow him, to invest their beliefs and their emotional energy into that project and to go with him and to trust him to lead them all the way along that path to the future promised land. There are two bases for this sort of charismatic leadership and the first one is the external situation. So, it's the external locus of control. Is there something about the situation that enables a charismatic leader to arise? Are there all kinds of problems that needs to be solved that all of society recognizes and says, "These are things that are not good and we need somebody to help us solve them." Or is it innate, the internal locus, innate leader themselves, or is it some sort of extraordinary qualities that a few incredible individuals possess that flow out of them in this charismatic way of presenting and stating things and influencing people? So, is it the situation or is it the internal qualities of the person? Which one is the source of somebody's charisma. Doesn't matter which of the sources you necessarily believe in, the actual impact of charisma is something that you can see happening on a day-to-day basis and the effects of charisma. Now the first effect is that the followers believe in the rightness of the vision. They don't want to hear that it might be bad or wrong or hear other people critiquing it. They've invested their emotional energy and their psychological energy and their cognitive energy purely into this vision, and they absolutely believe it and they believe it is right. Alongside that, is a total and utter unconditional acceptance of what the leader is doing. That they're doing something for the greater good, that they're following some kind of ethical purpose and it's right to follow them. If you become one of those followers, you then become more self-confident about yourself. I'm the right kind of person doing the right kind of thing and in doing that, you have a greater degree of self-efficacy. You believe in how you're doing things, you believe you're doing things well. You're ready to accept a wider range of challenges. You believe that you're going to be able to get past more and more difficult obstacles and solve greater and greater problems. You develop this organizational citizenship behavior. The extra effort, the discretionary effort that organizations want from the people who work there. They go above and beyond what they're paid to do. Paradoxically, there's also a greater assumption of risk that goes alongside loyalty and obedience. So, on one hand you take this personalized risk. You say, I'm going to take the risk in these activities, I'm going to push myself and push myself. But you have loyalty and obedience to the leader. So, you're actually taking on personal risk, but you're not risking your relationship with the leader in any way at all. The final two, is increase motivation. You're fundamentally, intrinsically motivated to keep on going, to keep on pursuing the task. Finally, there's this strong set of way you identify yourself. Your beliefs, your values, with those of the leader. So, that continues to drive you forward. There are positive and negative interpretations of charisma defined as being socialized charisma or personalized charisma. Socialized charisma is when the leader is displaying a charisma that is based on galetarianism. There's interest in others, there's building a better world for the people around him, there's this whole understanding of, I'm solving community problems, I'm creating a better society. Personalized charisma is based on self-interest. I want to be worshiped, I want to be the one everyone turns to, I want to be the strong man, I am only doing it because it's me, I'm great and I want to be perceived as great. The personalized charismatic leader is someone who is very dominant, self-centered, narcissistic and they use their charismatic techniques for self-aggrandizement. They want to be worshiped, they want to be loved, they want to be adored. So, what does this mean in terms of organizational leadership? You see this charismatic leadership in all kinds of social and community situations. What does it mean in organizational leadership? Well, what we found is there has been a real shift between two types of organisational leader. Historically, we had the idea of the transactional leader and now, we have the idea of the transformational leader. Whereas a transactional leader was not seen as somebody who particularly possessed charisma. The transformational leader is somebody who has that charismatic kind of ability. So, the transactional leader is somebody who is quite happy with the status quo. They pay for people to do specific jobs, they hold everything in the same situation. So, you understand exactly what you're doing, why you're doing it, how you're doing it and the situation stays the same and there's this whole bunch of transactions to reward you exactly for what you're doing and you understand the fairness and equity of all of those transactions. They can be rewards, they can be punishments. But the idea is that we're in a situation we're trying to keep the same and the transactions match - are fair - within that situation. The transformational leader is somebody who says, "Well the situation we're currently in is not a good situation. We need to get from here to there. We need to transform the organization." Instead of involving the social economic exchanges of the transactional leader, what we need to do is go on this journey to transform the organization into a new state. Instead of social and economic exchanges, we need these highly emotional. We need this energy and the values and beliefs all to align, so that we can actually start delivering this transformational journey. As for the charismatic leader, the transformational leader needs to present a compelling picture for why that journey is worthwhile. They need to explain what is problematic about the current organization, they need to explain the promised land of the future organization, and they need to break down the pathway of the journey of how we're going to get from where we are now, to where we are going. As with the charismatic leader, there are a whole bunch of effects that relate to this transformational journey. So, as a transformational leader builds up this value set persuades people to come on this journey, there are a number of effects that are seen to happen within an organization. The first one is improvements in organizational performance, culture and learning. We see a high performing organization as people are more motivated to perform. We see a better culture. People sharing values more and more and more, and we see an organisation in which learning is central to their progression. Because an employee links their values and their emotions to this journey, we see higher level of commitment instead of just doing social and economic exchanges at a transactional level, an employee fully commits to the vision and the belief system, and the values and the future state. So, we see commitment go up. We see lower employee turnover rates. People stay at the organization for longer. We see higher levels of individual performance and we see increased levels of citizenship behavior. People showing more and more discretionary effort. Finally, transformational leadership is associated strongly with improved creativity and improved decision-making. So that as you are on this journey because it is a journey and because you're constantly having to solve problems to get from one point of the journey to the other, creativity improves, decision-making improves. Because they must and you are allowed to in order to get through the journey. The two concepts, charisma and transformational leadership have been linked to form the idealized version of what a great organisational leader should look like. There are a number of qualities that define what that kind of leader is, and how they behave, and what they do, and how they impact the world around them.
