How to Develop Leaders in a VUCA World

So, what can leaders do to gain a competitive advantage in a volatile, uncertain, complex, and ambiguous (VUCA) world? Current research suggests there is a significant benefit in focusing on individual and organizational virtues and character traits. In organizations, there is most often a disproportionate focus on the development of leadership behaviors when compared to the development of a leader's character and virtues. Most Human Resources (HR) departments have focused on embedding defined behavioral expectations into talent management processes to reinforce alignment. However, few have given little, if any, thought on the role of leadership character and virtues. Although not often discussed within organizations, character and virtues historically are accepted as having a significant influence on both individual and organizational performance. Ancient philosophers such as Plato, Aristotle, and Marcus Aurelius spent much time discussing virtues. They articulated that character and virtues determine what and how individuals think and apply competence in different situations.

"The greatest virtues are those which are most useful to other persons." - Aristotle

Why Virtues and Character Counts

Many studies demonstrate the proven benefits associated with virtues and character in individuals and organizations. Fred Kiel conducted a study involving 84 CEOs from companies around the US to understand the connection between character and return on assets. They found that leaders rated high on the four-character dimensions of integrity, responsibility, forgiveness, and compassion had a return on assets of nearly five times those rated low. In a large-scale empirical study on the influence of virtues on employee and customer identification, distinctiveness, and satisfaction, Rosa Chun found significant positive correlations with all dimensions. In a study of over 232 firms by Carole Donada and colleagues, they surprisingly discovered that virtues had a more substantial positive significance on organizational performance than organizational management control systems. Pablo Ruiz- Palomino and colleagues conducted a study of 436 employees in the commercial banking and social economy to understand the impact of virtues and ethical culture. They found that virtues in an ethical culture positively influence the person to organization fit, job satisfaction, organizational commitment, and intent to stay.

"Nearly all men can stand adversity, but if you want to test a man's character, give him power." -Abraham Lincoln

Leadership Virtues and Character Explained

Virtue is the English translation of the Greek word for excellence and the Latin word for human. Aristotle considered virtues a habit or disposition to think, act, or feel in the right way that is not deficient or in excess and toward a proper goal. Virtues are a part of an individuals' distinctive character. Gerard Seijts and colleagues established a modern character framework from over 2500 leaders that comprised 11 leadership qualities (see infographic below).

When presented with a new or unknown situation, an individual's character will govern the actions taken. The modern reality of ambiguity is that most circumstances an individual will encounter are unexpected.

Virtues and character are often considered complex and challenging topics to articulate and measure, contributing to minimizing their inclusion within the workplace. However, validated instruments to measure character and virtues exist. Muel Kaptein introduced and validated the Corporate Ethical Virtues Model, which measures virtues at the organizational level. Vincent Ng and colleagues expanded on the Comprehensive Inventory of Virtuous Instantiations of Character instrument by creating a valid multidimensional forced-choice individual character instrument. The Leadership Character Insights Assessment measures an individual's character through self-assessment or 360-degree assessment using behavioral anchors. Gerard Seijts and colleagues found in their research that an organization can expect a yearly savings of up to 23% of an executive leader's annual salary when using the assessment for organizational placements. Like with the use of all assessments, an organization needs to consider the cost-benefit analysis. Special consideration needs to be given to the individual's scope of authority because the potential benefit is positively aligned with an increase in the scope of authority.

A New Approach to Leadership Development

Like competencies and behaviors, character and virtues can be developed and embedded within organizational processes for talent management. Also, like competency development, the development of virtues and character can have a variety of positive consequences for businesses. According to a neo-Aristotelian view of virtue and character development, an individual's development should include knowledge transfer, reasoning, and practice. Character development is primarily developed through role modeling, including feedback and reflection. Feedback is a gift; most people want more feedback on their performance. However, feedback on character gaps is not commonly provided, given the complexity of these types of conversations.

Additionally, most leaders spend little to no time reflecting on character experiences because of ethical blind spots. Godfrey Owen, CEO of Brathay Trust, suggested that utilizing a dedicated and skillful executive coach can improve character feedback and purposeful character reflection. Numerous studies have found that dedicated mentors can also support character development by openly reflecting on insights gained from experience. Research supports that organizations can incorporate character and virtue development into existing competency-based leadership development programs. It is not required for organizations to create separate leadership courses focused only on character and virtue development. An equal focus needs to be on both character and competence within organizations. To gain a competitive advantage in an uncertain world, leadership needs to move beyond a focus on leadership behaviors to include character and virtues.

Given modern realities, no leader considers their business and thinks they do not want to change. Likewise, as leaders, we should expect a need to look at leading others differently, as well. It’s fair to assert that leading the same way and expecting different results is the definition of leadership insanity.

Key Points

• Today's leaders are facing significant challenges amid high degrees of environmental turbulence.

• Developing leadership behaviors is essential but is not sufficient for today's challenges.

• Virtues and character provide an answer to meet the unknown challenges of the future.

References

Chun, R. (2017). Organizational Virtue and performance: An empirical study of customers and employees. Journal of Business Ethics, 146(4), 869-881.

Donada, C., Mothe, C., Nogatchewsky, G., and de Campos Ribeiro, G. (2019). The respective effects of virtues and inter-organizational management control systems on relationship quality and performance: Virtues win. Journal of Business Ethics, 154(1), 211-228.

Kiel, F. (2015). Return on character: The real reason leaders and their companies win. Boston, Massachusetts: Harvard Business Review Press.

Ruiz-Palomino, P., Martínez-Cañas, R., & Fontrodona, J. (2013). Ethical culture and employee outcomes: The mediating role of person-organization fit. Journal of Business Ethics, 116(1), 173-188.

Seijts, G., Crossan, M., & Carleton, E. (2017). Embedding leader character into HR practices to achieve sustained excellence. Organizational Dynamics, 46(1), 30-39.