The power of humility – Amy Ou

Successful leaders, it is often assumed, stand out from the crowd – they are bold, brash and assertive. They expect to get their own way and usually do.

Examples such as Steve Jobs, the late boss of Apple, are frequently held up as models of pushy, even abrasive, leaders who led their companies to great success.

Few would argue that in the fast-paced business world, chief executive officers need a broad range of skills to succeed, but humility is rarely listed among them.

If anything, being humble is often associated with weakness – almost akin to being uncompetitive. It is not a trait we are likely to see on display in reality TV shows such as “The Apprentice”.

To many, humble leaders can even seem powerless because they do not exercise their position to coerce or force others into action.

Humility might make a leader nicer to work with, but for those in top management and chief executive officers (CEOs) in particular, what matters is delivering results and not simply being a “great guy”.

However, in a recent study with colleagues from Arizona State University, we established a significant and positive relationship between a company’s bottomline performance and CEO humility.

CEOs and chief financial officers (CFOs) from 105 small-to-medium-sized American firms were studied on CEO personality, top management team dynamics, executive incentive structures, firm strategy and performance.

We found that humble CEOs lead their firms to enjoy up to 5 per cent more on return on assets. So how can a humble CEO be powerful and contribute to the bottomline?

Reduce pay disparity

CEOs are humble when they are willing to recognise not only their strengths, but also weaknesses, appreciate the strengths and contributions of others, and are open to self-improvement.

They acknowledge that they are not the centre of the world and are willing to pursue missions that are not for self-glory.

We found that humble CEOs have a lower need for self-glorification through material rewards or excessive luxury.

They also genuinely appreciate the capabilities and contributions of the senior management team.

As such, they are less likely to ask for excessively high pay for themselves or suppress the pay of the top management team. These result in a smaller pay gap between the CEO and the management team.

By doing so, humble CEOs make their management team feel more powerful. The team takes on critical responsibilities, making their duty more comparable to the CEO in importance and scope.

All in, humble CEOs who let go of power claims can create a culture among top managers characterised by a balanced division of responsibilities for shared vision and goals.

We also observed that humble CEOs encourage better integration across the top management team.

By narrowing the pay gap, the “grand prize” of being the CEO becomes less attractive. Thus, instead of fuelling internal competition for the top dog position, senior managers are less likely to see one another as competitors. They are less likely to pursue personal agendas or sabotage one another.

In place is an integrative team spirit where top managers willingly share information, jointly make important decisions and support one another in a timely manner, all for collective interest.

Most significantly, humble CEOs help raise the firm’s capacity to follow an ambidextrous strategy – exploring new opportunities for the future while also exploiting existing resources in the present.

Achieving the balance between the two is key – too much focus on exploration means the firm risks running out of resources before those possibilities become viable; but too much focus on current activities means firms can fail to keep pace with changing trends and demands, and become obsolete.

2 examples

While being humble as a CEO means putting aside self-interest and personal glory in favour of focusing on the collective mission and the greater good of the company, it does not mean that a CEO with these traits lacks confidence or the ability to lead.

Quite the contrary – it shows a strong confidence in the collective ability of the company and an ability to empower others to achieve success at a broader level.

Here are two examples of humble yet successful CEOs who have a decided positive impact on their business.

Eric Schmidt

Schmidt is the former CEO of Google who led the tech firm through a decade of phenomenal growth from 2001 to 2011.

Google is very much an ideas-based company. In the Internet era, Schmidt recognised that a critical component of the company’s success was that ideas should come from everywhere. To achieve that, a flat empowering corporate structure was vital.

“Part of the job of being CEO,” Schmidt told The Washington Post, “is to have an environment where people are constantly throwing you their best ideas, as opposed to being afraid to talk to you.”

At Google, he said, it often felt “like people are pretty much doing what they think best and they tolerate having us around”.

Lim Siong Guan

An example nearer home is Lim Siong Guan, group president of GIC. He has been reported to queue for postage stamps himself instead of asking his personal assistant to do so.

On his annual tour of GIC overseas offices, he prefers taking public transport than use a corporate limousine.

He does not splash out on hotel rooms. Instead, sleeping on the plane is not beneath him.

Known as one of the nicest bosses to work for in the civil service, Lim is always asking: “How can I help you do your job better?” This is balanced with a tough streak of demanding the best from others.

In business, humility can be a powerful force. It can also be one to deliver extraordinary results. – Today Online, March 7, 2016.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.