The value of virtue in the upper echelons: A multisource examination of executive character strengths and performance

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Abstract

Previous research on upper echelon (i.e., top-level) executives has focused on how character flaws or lapses in ethical judgment lead to detrimental outcomes. Research is lacking that specifically examines whether character strengths that are reflected in the behaviors of top-level executives are related to positive outcomes. Therefore, this study examined behavioral manifestations of the character strengths of integrity, bravery, perspective, and social intelligence as influences on executive performance in the context of top-level executive leadership of for-profit and not-for profit organizations. Using matched-report data from 191 top-level, U.S. executives' direct reports and bosses and board members, this study found positive relationships between direct reports' ratings of executive integrity, bravery, and social intelligence and bosses' and board members' ratings of executive performance. These character strengths each accounted for variance in executive performance above and beyond direct reports' ratings of executives' developing and empowering behaviors and other control variables. Among the character strengths examined, integrity was found to have the most contribution in explaining variance in executive performance via relative weight analysis. The theoretical and practical implications of these findings are discussed.

Introduction

Character strengths refer to malleable positive traits or psychological processes and mechanisms associated with core characteristics universally valued as exemplars of human virtue, excellence, and prosperity (Park & Peterson, 2006). Character strengths can be developed through deliberate interventions and offer a wide variety of psychological, physical, and mental benefits. For example, empirical work reviewed by Peterson and Seligman (2004) indicates that people who act with integrity experience positive moods, garner higher levels of trust, and engage in more effective workplace relationships. The ethical leadership literature (e.g., Brown and Trevino, 2006, Palanski and Yammarino, 2009) suggests that character strengths of top managers often cascade down the ranks and influence the organization's ethical climate. An empirical study by Cameron, Bright, and Caza (2004) found that organizations whose members possess more character strengths outperformed those who possess fewer character strengths. Character strengths have also been proposed as distinguishing features of outstanding leadership (Sosik, 2006), and potential executive selection criteria for positions in the top ranks of organizations (Hollenbeck, 2009).

Despite the potential benefits of character strengths for executives in the top ranks of organizations, researcher and practitioner attention has typically focused on character flaws of top executives as seen in widely-publicized cases such as Ken Lay of Enron, Bernie Ebbers of WorldCom, and Bernie Madoff. Theoretical models of ethics, morality, and integrity in the leadership literature suggest reasons why character flaws cause lapses of ethical judgment and career derailment for executives (e.g., Fry, 2003, May et al., 2003, Pearce et al., 2010). For example, derailed leaders are often characterized as prisoners of their own achievement; they tend to be shielded from external criticism, leading to a vicious cycle of becoming cold, arrogant, inauthentic, egotistical, and insensitive to others (Bass, 2008). Inauthentic, hypocritical top executives profess their organizational attachment, expound upon the necessity of downsizing, and weep crocodile tears for the victims who lose their jobs, while increasing their own compensation (Bass & Steidlmeier, 1999). Indeed, Sosik, Juzbasich, and Chun (2011) found that managers in the lowest moral development stage rated themselves as more charismatic than those at higher levels of moral development whose ratings on their leadership were consistent with others' ratings. This implies that corporate executives may be more charismatic in their own eyes, but may be potentially less ethical.

Although these theoretical approaches and empirical findings highlight the dark side of character flaws, they do not fully account for how positive aspects of an executive's character may influence the ability to perform well in the upper echelons of organizations. These models also fail to recognize that character strengths are reflected in a person's behavior (e.g., Kaplan et al., 1991, Klann, 2007, Riggio et al., 2010, Sosik, 2006). It is likely that the array of behavioral manifestations of character strengths possessed by an executive, not only his or her character flaws, influences the effectiveness of the executive, suggesting the potential for character to benefit both the organization and the executive's reputation as a high performer.

While character strengths have been linked to outcomes valued by top-level executives such as happiness, satisfaction, and decreased stress (Peterson & Seligman, 2004), no empirical work has demonstrated links to executive performance. The purpose of this study is to add knowledge to what we know about predicting the performance of top-level executives by examining behavioral manifestations of executive character (i.e., integrity, bravery, perspective, social intelligence) that may be associated with executive performance. Zaccaro (1996) characterized executives' roles by their long-range planning and boundary spanning along with consensus building and network development. Javidan (1992) found that effective senior executives were viewed as dedicated and tenacious visionaries. Dealing with conflicting interests among multiple stakeholders requires a principle-based, long-term consistent approach built on executives' higher-level integrity (Bass, 2008, Javidan, 1992). In this long-term endeavor, top executives often have to be able to take independent and unpopular courses of action if necessary, which is grounded in their bravery (Bass, 2008, Zaccaro, 1996). Also, as boundary spanners within and across organizations (Zaccaro, 1996), better understanding of the unique characteristics of various organizational constituencies (i.e., perspective) and effectively navigating complex social relationships and environments (i.e., social intelligence) more likely pertain to executive performance than to that of lower-level leaders.

While these relationships between character strengths and executives' performance have been previously proposed in theoretical considerations of executive-level leadership (e.g., Hooijberg and Schneider, 2001, Kilmann et al., 2010, Palanski and Yammarino, 2009), such theoretical relationships have not received adequate empirical attention. The four character strengths of executives examined in the present study were operationalized using a multisource instrument that measures behavioral competencies considered important to effectiveness at the executive level. Prior research has also used managerial competencies and behaviors to assess character strengths and virtues (e.g., Grahek et al., 2010, Kaiser and Hogan, 2010, Riggio et al., 2010). Research also indicates that while self-report ratings from managers may be biased, unreliable, and inconsistent with ratings from others (Fleenor, Smither, Atwater, Braddy, & Sturm, 2010), subordinates typically rate their managers by focusing on their ethics and character, and superiors of managers tend to pay attention to technical competence in the managers' job performance (Hogan, Curphy, & Hogan, 1994). In line with these findings, we used direct reports' ratings of behavioral manifestations of executive character strengths, instead of self-reports, and bosses' and board members' ratings of executives' performance to provide appropriate source ratings of the focal constructs (Fleenor, McCauley, & Brutus, 1996) and to overcome methodological limitations of social desirability (Fernandes & Randall, 1992) and common method bias (Podsakoff, MacKenzie, Lee, & Podsakoff, 2003) often found in ethics research. Another methodological (and theoretical) contribution of this study is its use of relative weight analysis (Johnson, 2000) to determine which of the character strengths examined makes the most contribution toward executives' performance.

Section snippets

Theoretical grounding and hypotheses development

Upper echelons theory (Geletkanycz and Hambrick, 1997, Hambrick and Mason, 1984) and Peterson and Seligman's (2004) Values in Action (VIA) model of character strengths and virtues provide the general theoretical framework for our study. According to upper echelons theory, top executives influence managerial and organizational performance directly through their personal characteristics and behaviors and indirectly through the strategic choices they make, while being influenced by the external

Participants and procedures

The data for the present study were obtained from an archival database of top-level, U.S. executives participating in a third-party vendor's week-long leadership development program geared specifically for top-level executives between November 2007 and August 2010. To be used as part of this study, executives had to be at the very top level of their organization (e.g., CEO, CFO, COO, CIO, or president). Namely, these executives were upper echelon or C-level leaders. As part of the leadership

Results

Means, standard deviations, and correlations among the variables used in this study can be found in Table 2 and regression results in Table 3. A review of Table 2 indicates that executive performance was significantly (p < .01) and positively related to integrity (r = .41), bravery (r = .40), perspective (r = .20), and social intelligence (r = .39). Taking into account the control variables (gender, race, age, degree, business sector, and organizational tenure) and the competency of developing and

Discussion

Character has been purported to be a foundational element of leadership effectiveness for executives (Bass, 2008, Klann, 2007, Sosik, 2006) and an essential executive selection criteria for organizations (Hollenbeck, 2009). Results of the present study provide empirical support for these claims. This study makes several theoretical and practical contributions to our understanding of the role of character strengths for improving executive performance in the upper echelons of organizations.

Conclusion

In closing, our results demonstrate the role that behavioral manifestations of three character strengths play in influencing executive performance. While traditional executive competencies of sound judgment, strategic planning, results orientation, and global awareness remain important to performance ratings provided by corporate bosses and board members, the focal character strengths examined in this study also played a key role in influencing such ratings. Executives' integrity, bravery, and

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    An earlier version of this paper was presented at the 2011 national meetings of the Institute of Behavioral and Applied Management conference in Orlando, Florida, USA.

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