Published: Fall 2011 in Feature Story

The Necessity of Character: The Foundation of Effective Leadership

by Gayle D. Beebe, Ph.D.

An edited excerpt from “The Shaping of an Effective Leader: Eight Formative Principles of Leadership”

‘It all comes down to ethics,” replied the former CEO of a multi-billion dollar investment company. We were golfing, and I had just asked him what he thought was the secret of success in life and business. Our minds had drifted to the case of Bernie Ebbers at WorldCom, and then to Ken Lay at Enron, and finally to Bernie Madoff and others. The list seemed endless as we considered one unethical leader after another whose corrupt practices had led their companies into bankruptcy. As we neared the end of our round, he turned and asked, “What are you doing to teach ethics to the next generation of students?”

Twenty-five hundred years ago, Plato (427-347 B.C.) pondered the same question. “Can you tell me, Socrates, is virtue something that can be taught? Or does it come by practice? Or is it neither teaching nor practice that gives it to a man but natural aptitude or something else?” Throughout this long and provocative dialogue, Plato eventually concludes that virtue is only developed in people who commit their entire lives to realizing it.

As Plato notes, through education, discipline, natural aptitude and hard work, we discover the benefits of the virtuous life and of committing our lives to a wisdom tradition that can guide us. We also realize that the purposes behind every effort at education must include moral purposes. In discovering these moral purposes, we realize that every generation must receive guidance if its members are to discover the ultimate destiny of their lives and the ultimate contributions they can make as leaders.

I have seen so many great leaders ruin their opportunity because of a moral failing. Sometimes, it has been the ruinous vices of committing moral indiscretions, embezzling money, or committing corrupt political practices. More often than not, however, it has been the lesser evils that simply undermine people’s confidence in your work.

Years ago when I was a dean I was working with a man who had an inability to control his temper. He would get angry with himself and his circumstances and in the midst of his anger lash out at those around him. In one telling scene, he completely destroyed his opportunity when he blew up at his board of directors and said derogatory and destructive things about them that forever undermined their ability to trust him. Shortly thereafter, he was fired from his position and never worked again in this line of work. It wasn’t a deadly vice that did him in, but the inability to exercise emotional intelligence that ruined his opportunity.

During this episode, I couldn’t help but think about how each of us has an area of vulnerability that often prevents us from realizing our full potential. Many of us struggle in specific areas that keep us from being all that we could be. Learning how to identify and overcome our most self-destructive tendencies plays an indispensable role in our enduring success.

Drucker on Character
Character is built on our understanding of ethics. In Western society, there have been at least seven major streams of ethical theory that still inform us: virtue ethics, deontological ethics, utilitarian ethics, contractual ethics, communitarian ethics, feminist ethics, and post-modern ethics. Ethical theories encompass and express wisdom traditions. Wisdom traditions, in turn, often evoke longings and guiding principles that tie our individual lives into purposes greater than ourselves. Our capacity to build a foundation based on character will determine the extent to which we can achieve long-term, sustainable success.

Although these seven dominant streams still inform us, more recent attention has shifted to developmental psychology and especially the stages of moral development. A guiding resource in this development is Lawrence Kohlberg’s landmark study, “Theories of Moral Reasoning.” Identifying and outlining the six primary stages of moral development, Kohlberg made the astonishing claim that 80 percent of all Americans live at either a stage-three level (acquiescence to cultural norms) or a stage-four level (obedience to law and order) of moral reasoning. Their morality, moreover, depended on their vision of the moral life.

Peter Drucker, too, worked from a moral vision, using what he calls the “mirror test.” This test asks a quite basic question: whom do you want to see in the mirror when you wake up in the morning—a morally upright and respected person or an individual devoid of a soul?

Throughout his long and distinguished career, Drucker both articulated and assumed the necessity of character formation. He often emphasized that there is no such thing as “business ethics”— you are either ethical or unethical regardless of the situation. He insisted, moreover, that bedrock integrity was absolutely necessary for effective leadership.

I have often seen young, promising executives derailed by the most pernicious character flaws. These events have had little to do with these executives’ competence and everything to do with their lack of character.

Drucker amplifies the importance of integrity by noting that the greatest test of our integrity and character was the way we treated other people. In “Management,” Drucker writes, “They may forgive a man a great deal: incompetence, ignorance, insecurity, or bad manners. But they will not forgive his lack of integrity.” He goes on to emphasize that one’s lack of integrity is so serious that if it is discovered it should immediately disqualify one from any position of leadership.

Drucker also expresses concern that a manager’s attention needs to be focused on the strengths, not weaknesses, of those for whom he or she is responsible. He repeatedly emphasizes the importance of making our strengths dominant and our weaknesses irrelevant. He believed this was the unique responsibility of the leader and reflected the nature of our character. He believed great leaders understood their people, but this understanding was not so that they could eliminate everyone who didn’t measure up. This understanding helped a leader focus on an individual’s strengths, not their weaknesses, and led to his participation and interest in the StrengthsFinder movement.

Drucker’s primary focus included the responsibility of developing those people under your care. Noting that every one of us comes to a position of leadership with gifts and limitations, Drucker emphasized that our basic integrity and character are displayed in our willingness to develop other people. In his own fitting way, Drucker summed up the importance of integrity and character by noting, “The manager who lacks character —no matter how likeable, helpful, or amiable, no matter how competent or brilliant—is a menace and should be judged unfit to be a manager and a gentleman.”

Ultimately, Drucker believes the moral tone for the entire organization starts at the top. He believed, and I think he is right, that the behavior of your senior executives fundamentally sets the tone for your organization. He amplifies this by noting that our people decisions must demonstrate that we will be unwavering in insisting that leaders at all levels of the organization must have basic integrity that can be trusted and relied upon. It is simply too crucial and cannot be acquired later on. This is also why moral failings are so catastrophic: they undermine the very trust that is at the heart of leadership.

Why Character Counts and How Character Develops
But why worry about our character? The formation of our character creates predictability to our leadership. Predictability, dependability, and consistency: these three qualities ensure that our leadership is reliable and motivates people to place their confidence in us. Our effectiveness as leaders is built on trust. Though more than 75 percent of Americans surveyed by the Gallup Poll admit they would lie, cheat, or steal if they thought they could get away with it, the leader is on constant display and cannot escape the spotlight of public scrutiny.

Our goal for the first principle of effective leadership is to identify and illustrate the natural and deliberate processes of character formation. Character formation establishes the foundation for great leadership success. When absent, it charts the path for colossal leadership failure. Because our character is formed by our beliefs, our actions, our self-reflections on our actions, and our corrective behaviors as a result of this self-reflection, we must recognize the way in which these beliefs, actions, and reflections both shape and reflect our character.

One of the great challenges of becoming a leader is to develop the capacity for moral self-reflection. So often what distinguishes great leaders from also-rans is whether or not you can develop a capacity to self-correct. Leaders get off track. They overreact. They walk into situations and do not respond as they should. This in and of itself is usually not a problem. What becomes a problem is if they cannot recover from their mistakes. The first step to recovering from your mistakes is to recognize you made them.

Often, our own moral awakening is a result of our confrontation with the fact that we are completely out of sync with our deepest held convictions. When we recognize this, the next step is to realize how to get back on course: by elevating our deepest held convictions and pursuing our principles from a new perspective. So often leaders have to go through a moral reorientation in which they come to see their present reality in a completely new light. Parables, or stories meant to teach a moral lesson, are meant to lead us into reflecting on our life by seeing our life in a new way. Through encountering a very basic, common reality they invite us to take an entirely new look at our life.

Once we have recognized how out of sync we are and how much we need to improve our performance we then can engage in the sort of development that inspires people to follow us. Individuals want to know that you can be relied on. If they trust the way in which you lead and it is successful, then they will also be interested in the way in which you recover from mistakes. Together, both our strategies for success and our recovery from failures will give people the confidence to trust you so that you can have the moral authority to lead well.

The Ten Essential Qualities that Reflect Our Character
The lost element of character formation is developing benchmarks that help us determine if we are making headway or are completely off-track. These measurements of progress are captured in the ten following qualities. The extent to which we express these qualities fundamentally reflects the health and vitality of our character and the level to which we are likely to achieve long-term success.

First, the effective leader leads from a foundation of integrity. Webster defines integrity as “Fidelity to moral principles, honesty, soundness, completeness.” This means being true to our word and avoiding false appearances.

One of the most important realities we face as a leader is our lives are always on display. People do not intend to be intrusive, but they often are. As public figures, we can either resent intrusion or embrace it since it never goes away. Once we’ve embraced this reality, we then come to understand that everything we do has to be above board and beyond reproach.

Also, the effective leader displays wisdom and judgment about the basic facets of running a successful business. This inspires the trust and confidence of our board, our work associates, and our clients. The higher you go in a corporation, the more time you spend accomplishing your work through other people. Technical competence gets you the job, but relational competence helps you advance in your work. All of us are hired for our abilities, but we advance in our positions because of our attitudes, behaviors and conduct.

Equally important, the effective leader has the ability to absorb and undo the evil of others. This requires maturity and is a real test of our character. Every organization I have ever served had work associates and customers who were ungracious. Being able to make a gracious response to an ungracious person is a hallmark of character formation. Over time, an organization can develop interpersonal dynamics that are dysfunctional. Equally difficult, the leader also bears the brunt of attacks targeted at the organization or which occur between employees. Both tasks require skill and insight. Such ability is not natural to humans; rather, reflection and discipline equip a leader to discern the real problem and how best to respond.

The effective leader also works with understanding and respect for each member of the organization. This virtue cannot be manufactured: instead, it arises from a fundamental disposition of integrity. One of the main manifestations of integrity is the willingness and ability to identify, develop, and celebrate the gifts of those who work for you. To achieve the level of quality you need in your organization, you must be committed to gaining your employees’ goodwill by giving them the opportunity to develop their capacities to the fullest. Often, it requires a level of confidence in your own gifts and abilities in order to develop the gifts and abilities of those you lead.

Consider this legendary story of Sam Walton and his early days working for J. C. Penney. Sam was nearly fired because he was unable to fill out sales reports in a timely, accurate manner. Even though his sales exceeded every other person by a wide margin, this one weakness nearly cost him his job. Fortunately, a high-ranking supervisor intervened in the situation, recognizing that accuracy in reporting was secondary to results, and thus helped the company avoid a historic mistake.

Of course, the effective leader also works for the greater good, an important corollary to the previous emphasis on developing those who work in your organization. Leaders today are tempted to use their current positions to promote themselves to a more lucrative appointment. Conversely, those who work for the greater good are not motivated by self-promotion; instead, they look out for the interests of the organization. One notable example of this is taken from the life of Red Poling, the retired chair and CEO of Ford Motor Company.

In 2003, Poling was speaking at a business forum and was asked what moves he had made to achieve such a prestigious position. His answer was classic: he responded by sharing that it had never been his goal to become CEO at Ford. In fact, he had initially retired from Ford without having ever served as chairman and CEO when the board of directors asked him to come out of retirement to run the company. His point in this illustration was to help the student understand that if you work for the greater good of your organization, the results speak for themselves and lead naturally to a promotion. This is a beautiful example of Drucker’s principle that you do not plan a career, you manage it. And by managing your career, you take responsibility for your own development.

It is important for us to recognize that our most satisfying work will be comprised of efforts that serve purposes greater than ourselves. This is work for the greater good. Yet, most of the messages our culture sends today are self-centered and self-focused. Hopefully, through character formation, we can recover an ability to sublimate our own interests for the greater good and strive for results that benefit our company.

The effective leader also is temperate in all matters. A leader who demonstrates moderation in all things, including moderation in response to renegade employees, does not overreact or bring unnecessary crises upon the company. This is often difficult to accomplish, but so essential. Because every leader has opportunities to do both good and ill, necessary restraints must be established. These necessary restraints include policies, guidelines, and strategic plans that define reality and help channel the priorities and decisions of the organization. Temperance also includes a spirit of toleration that keeps leaders from retaliating. Those who retaliate often gain a reputation for acting with contempt and disregard for people under their care.

This is why it is so important that the effective leader is temperate when responding to employees. Temperance and mercy allow the effective leader to consider an associate’s particular behavior in the broader perspective of their overall performance rather than immediately reacting with a rash response. Though an organization obviously cannot endure a tyrant, a sloth, or an insubordinate, a leader who can pause long enough to determine whether an individual’s behavior is an aberration or a normative pattern will be able to lead effectively. Maintaining our composure in all circumstances is critical.

Then, the effective leader must balance a confidence in their ability with humility in their approach. In “Good to Great,” Collins notes that the most effective leaders have low ego needs and find their greatest satisfaction in leading their organization to successful results. Being confident in your ability but humble in your approach requires that you learn to celebrate the gifts of those around you and to recognize that your fortunes could change at any time.

In this regard, Drucker often commented on Avis, the rental car company with the slogan “We try harder.” What appealed to Drucker was their knowledge that they were not number one and, as a result, that they had to work harder and smarter in order to keep their customers. The lesson that always followed focused on the necessity of assuming your competition is smarter, faster, and better capitalized then you are. He also noted that the first and main way companies get into trouble is by believing they have surpassed any potential future problems.

Another critical ingredient is the need for the effective leader to be calm, loyal, prudent, and discerning. An excitable leader often lacks proper restraint. Eventually, associates lose confidence in a leader who cannot control his or her emotions, knowing at any moment they could become the targets of an unprovoked attack.

In addition, effective leaders hire well, communicate clearly, and trust the people they hire to achieve results. Work associates do not trust a micro-manager. Micromanagement is a direct result of a lack of trust, either in the people you have hired or in your ability to communicate a compelling mission and vision for your organization. Such communication includes defining the measurements of performance and the tactics and strategies needed to achieve desired results.

Trust is built on experience and perception. Over time, perception becomes almost more dominant then experience. A questionable activity is accepted as legitimate when a person has earned the right to receive the benefit of the doubt. When trust erodes, however, the same activity undermines our confidence in our associates. Prudence and discernment help us understand our business as well as the deeper motive patterns of our colleagues. It helps us recognize that every employee is unique and our management style needs to account for these differences.

Finally, the effective leader balances a concern for the overall welfare of their employees with the need to achieve positive results. It is imperative that we meet the basic obligations of our company. A company cannot stay in business without meeting the needs and demands of its business. As Drucker often emphasized, the first responsibility of business is to meet the cost of capital in order to stay in business. Yet, the companies that move from good to great are capable of long-term sustainable success because they balance the necessity of achieving long-term results with care of their people.

As I have attempted to demonstrate, character formation is progressive. It is never finished. As we go through life, and our leadership responsibilities increase, our character will be tested at new and higher levels of intensity. To maintain consistency and grow in effectiveness requires that we establish a foundation of integrity that never wanes. This foundation is established by engaging in the disciplines of the moral life that can sustain us.

Taken from “The Shaping of an Effective Leader: Eight Formative Principles of Leadership” by Gayle D. Beebe. Copyright(c) 2011 by Gayle D. Beebe. Used by permission of InterVarsity Press PO Box 1400 Downers Grove, IL 60515.


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