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5 Big Discoveries About Leadership in 2012

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Bad management appears to be an epidemic, costing the economy a total of $360 billion every year in lost productivity. Some 65 percent of employees say they would take a new boss over a pay raise, and three out of every four employees say their boss is the most stressful part of their job.

It's not like we're not trying: According to the American Society for Training and Development, in 2011, U.S. firms spent about $156 billion on corporate training. Against this backdrop, what have we learned in 2012 that might help us improve the quality of leadership? Here are five of the bigger findings.

1. Why incompetent leaders keep getting hired

There's a reason we hire poor leaders. It's not because of incompetent HR departments or poor competency frameworks. According to a new study to be published in the Journal of Applied Social Psychology, narcissism increases one's chance of acing a job interview. The more extroverted someone is, the more likely he or she will be hired. In short, we hire poor leaders because they interview better.

Unfortunately, narcissism doesn't equate with leadership success. Studies suggest that overconfidence can often have a detrimental effect on an individual's performance and decision making. An arrogant boss is simply bad for business. This is because "[t]hey do not mentor junior colleagues nor do they motivate a team to benefit the organization as a whole, contributing to a negative social workplace atmosphere." Organizational psychologist and professor Stanley Silverman of the University of Akron and Michigan State University developed a measure of arrogance, called the Workplace Arrogance Scale (WARS), to help organizations differentiate between narcissism and competence before they experience a costly impact.

If overconfidence is a natural tendency for some, employers must recognize this as a potential flaw rather than an asset. Good interviewers look out for these tactics and know how to look past them.

2. More women increase a team's smarts

"Collective intelligence" is a measure of how small groups make decisions and solve problems -- literally how smart teams are and why. It turns out that teams have a relatively stable intelligence over time, just as individuals do, and this intelligence can be measured and compared.

A key researcher in this space is Dr. Christopher Chabris of Union College. To measure collective intelligence, Chabris divided 700 volunteers into small groups to work on tasks that required collective decision making and collaboration. In the end, three factors were found to be consistent in the teams with the highest rate of intelligence: the ability of group members to read and respond to others' social cues, an open climate with an even exchange of ideas from all members and, lastly, the number of women in the group. Groups with more women were found be more intelligent, thanks to the fact that women tend to be better at reading social cues.

While teams can affect an individual's performance negatively with increased costs of collaboration, invisible delays and conflicts with formal work processes, the reality is that much work today requires a team. Understanding the elements that make teams (rather than individuals) smarter may be a key to improving the quality of management.

3. To increase engagement, share more information

Companies keep a lot of secrets. However, as of 2012, some 5,000 courageous firms are adopting what is called "open book management," where the firm's financials are available to everyone. A smaller subset of companies is embracing something best described as "radical transparency." Imagine information that is normally kept very private (think performance metrics, people's personal goals and weekly progress charts and even their expense reports) being available to everyone in the firm 24/7.

One company using radical transparency is Qualtrics. Qualtrics CEO Ryan Smith believes it alleviates the distractions, fears, threats and negativity that hinder concentration. He thinks it helps increase focus and engagement and helps grow the right talent, because we can all truly dig in to see people's performance.

From a neuroscience perspective, this makes sense. As Dan Radecki explained at the recent NeuroLeadership Summit in New York City, "[o]ur brains work best when we no longer feel the need to hide, cover up our mistakes or dwell on errors. We do better when we aren't mentally bogged down in a 'threat response,' worrying about which of our colleagues is the boss' 'flavor of the month,' getting a hasty promotion or badmouthing our work."

Not every firm is going to jump on the transparency bandwagon, but in this world of information flowing more freely than ever, I wonder if this will become an increasing trend. More research is needed here.

4. Turns out leadership really is personal

Bosses are typically viewed as arrogant individuals who drive people using objectives and metrics. One study found that 60 percent of employees are miserable, not because of low pay, poor workplace benefits or insufficient vacation days but because they don't feel connected at work.

At the recent NeuroLeadership Summit, Naomi Eisenberger and George Kohlrieser layed out the reasons why impersonal leadership fails. Kohlrieser, who had a background in hostage negotiation before becoming a leadership professor, explained how most employees feel as if they are hostages, drowning in feelings such as anxiety and fear in the workplace. The way to escape from feeling like prisoners of these emotions, Kohlrieser says, is by finding a place where we feel a sense of security. Whether that is in another person, place or with an object, we all gravitate toward things that give us comfort, and where we feel the most accepted, we thrive.

Naomi Eisenberger's research helps us understand the science behind this. She says that a lack of feeling socially connected with others evokes feeling of pain, emotionally and physically. The painful feelings that come with social rejection or loss, such as loneliness, also activate regions of the brain that respond to physical pain. An experiment Eisenberger conducted at UCLA even showed that taking Tylenol actually reduced feelings of pain as a result of social isolation and rejection.

We think that leadership should be cold and hard. That may well work when we can motivate people with ever-increasing bonuses, but in a world of shrinking resources and increasing uncertainty, motivating through a sense of safety and connection may be a better recipe for engagement than through fear. It may be time for leaders to lead more with their hearts, and not just their heads.

5. Being the boss isn't so stressful after all

Yes, you read the title correctly. A new study from James Gross of Stanford University and six of his colleagues found that the higher people are in the pecking order, the less stress they experience.

Gross' finding can be explained using the SCARF model®, a model I published in 2008. SCARF® stands for status, certainty, autonomy, relatedness and fairness, and these five specific social experiences either create a strong threat or reward response in the brain.

Let's take the first attribute, status. Cameron Anderson from Berkeley showed in a study that having a higher status among others mattered more than a pay increase when it came to one's happiness. This higher status means more autonomy at work. In addition, higher-level leaders often have much more certainty than their junior colleagues, in part because of the security given to them from their long-term contracts and big pay packages. And due to these million-dollar salaries, I would suspect that many of these senior leaders perceive the world as being fair.

Thus, despite the fact that CEOs often have a lot more on their plate than lower leaders, they experience many more reward responses that those under them may.

In summary, we've learned a lot about leadership this year, with many findings being surprisingly counterintuitive. Let's stop hiring the most confident, start to share more information, increase the percentage of women at the top and remember that leadership really is personal. Perhaps none of this is "new news," but it is exciting to see the research catch up to our hunches. Happy new year to all!