Saturday, December 17, 2016

Squandering a Tradition of Ethical Leadership Instead of Protecting the Accrued Reputational Capital: The Case of Ratan Tata in India

In India, Ratan Tata was a revered figure, dubbed Mr. Clean, until the end of 2016, by which time serious allegations of financial improprieties had cut into the stellar reputations of both the man and the famous company founded by J.N. Tata, who had intentionally applied his Parsee ethic to the founding of India’s first steel company with a zero tolerance for corruption. Generally speaking, strategic ethical-leadership and even the resulting reputational capital depend on the persona of whoever is in charge of a company, and not even family linage can be counted on to perpetuate a culture of ethical leadership and protect a company’s accrued reputational capital.

One of the most serious allegations of financial impropriety in the Tata conglomerate came from Ratan Tata’s chosen successor, Cyrus Mistry, in October, 2016. Citing an internal audit, he reported to Tata’s board that the company’s “airline joint venture, AirAsia, had made more than $3 million in ‘fraudulent transactions’ with two companies.”[1] In a reaction befitting guilt, Ratan Tata ousted Mistry as a result; the rationale—that “the board of Tata Sons lost confidence in him and in his ability to lead the Tata Group in the future”—can be interpreted as implicating even the board, which at the very least was doing Ratan’s bidding rather than protecting the company.[2] Firing the messenger is not the sort of move that protects a company’s reputational capital; rather, the dismissal suggests that the company’s culture was not appreciative of whistle-blowers.  At the very least, the reaction sent a message to potential whistle blowers to keep quiet. The company may actually have been rife with corruption, rather than having faltered in one instance.

In December, 2016, Subramanian Swarmy filed a court complaint calling for “an investigation into allegations from a government report that [Ratan] Tata in 2008 used a front company to apply for a telecommunications license, potentially circumventing the limits on the number of licenses one investor could hold.”[3] At the time, investors were competing for licenses to provide cell-phone service in India. In 2013, India’s Serious Fraud Investigation Office recommended prosecuting Ratan Tata, yet the government did not file a case in court. Besides doubtlessly having government connections, he could take advantage of longstanding reputations of his company and himself—something he could not do in December, 2016.

Mistry doubtlessly believed that the reputational capital of the company was at stake. “Never before has the Tata Group, including the philanthropic objectives of the Tata Trusts, been in jeopardy to this extent and scale,” he said in a public statement in December.[4] Accordingly, he said he had been trying “to protect the Tata Group from capricious decision-making by the interim chairman,” Ratan Tata.[5] Long past were J.N. Tata’s religious (i.e., Parsee ethic)-commercial decisions to provide nice bungalows with yards (after Tata’s son Dorab had viewed the squalid housing conditions of steelworkers in Pittsburgh), and free schools and hospitals in the village he carved out of the jungle for India’s first steel company, Tata Steel.[6] J.N. Tata regarded the company, the first venture of Indian self-reliant steel-making in British India, as playing a significant role in India’s eventual economic and political independence. In contrast, Ratan Tata was doubtlessly chiefly concerned with making money.

What is the lesson we can extract from this case of a mammoth family business? Even family linage cannot guarantee the continued salience of religious ethics—in this case, J.N. Tata’s Parsee environmental and charitable ethics—in the strategic leadership of a company. Put another way, ethical leadership is a function of persona rather than being institutionalizable in nature. So too, a company’s ethical reputational capital can quickly be squandered by a CEO/board-chair even though a company’s reputation might be the sort of thing thought to be inherently institutionalized. Even when a company is handed down to the next generation, diligence is necessary to safeguard the accumulated reputational capital; it cannot be assumed that tomorrow will be like today.

[1] Geeta Anand, “A Clash Atop India’s Tata Empire Has a Titan on the Ropes,” The New York Times, December 17, 2016.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Ibid.
[6] Skip Worden, “The Role of Religious and Nationalist Ethics in Strategic Leadership: The Case of J.N. Tata,” Journal of Business Ethics 47, no. 2 (October, 2003): 147-64.

Saturday, November 12, 2016

Transforming Transformational Leadership: Foundations over Ideology

James Burn’s concept of transformational leadership is in essence a process in which “one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality.”[1] This includes a moral commitment to develop followers, especially morally. To Burns, transformational leadership is therefore “an ethical, moral enterprise.”[2] I contend that the term transformation is not inherently ethical, and so it can apply to leadership in an amoral sense. Freed up from the limitations of being viewed primarily or even exclusively as moral, transformation can be seen to apply to leadership in at least two, much more direct—or central—ways than morally: as referring to a leader’s own transformation and to a leader’s vision being transformational.

Regarding a leader’s own transformation, taking on a substantial position of authority can transform a leader. To be sure, such a transformation may include moral development, but the change is much broader so reducing it to the moral dimension would be misleading. Referring to the change in President-Elect Warren G. Harding, Evalyn McLean observed, “He was, more and more, inclined to believe in himself. He cherished an idea that when a man was elevated to the presidency, his wits, by some automatic mental chemistry, were increased to fit the stature of his office.”[3] The solemn deference by others strengthened his self-confidence, which in turn could be expected to fundamentally alter, and thus transform, his capacity as a leader. As to the automatic neuro-chemical changes conforming a President-elect to such a statue as befits the high office, clearly in this way too transformation of a leader is accomplished. Harding himself remarked to his fellow Shriners two months before his inauguration, “I wonder if you know the feeling of a man who has been called to the greatest office in the world. There is an aloofness of one’s friends, and that is one of the sad things; and in me there is a deepening sense of responsibility.”[4] Anticipation of the coming awesome responsibility of the U.S. presidency would surely have a substantial effect psychologically—maturating the person and in this sense lifting him to fit the august office.

Almost a century later, Donald Trump may have undergone a maturating transformation in the days following his election to the U.S. presidency. In spite of the many rash things said during his campaign, he spoke quite effectively at 4 a.m. in New York to calm international markets—Dow futures had plunged more than 700 points. He assured allies that the U.S. would have good—but fair—relations with other countries. Within days, the Dow hit a record high. Then, just two days after election day, a subdued, almost reverential President-elect and President Obama spoke jointly in conciliatory words in the Oval Office to quell anti-Trump protests from escalating—Trump even remarking that Obama is “a good man.”[5] In both cases—assuaging worried investors and allies around the world, and facilitating a peaceful transfer of power—Donald Trump could be perceived as rising to the office—his transformation seeming as automatic as if he were going up one of the escalators in his high-rise “Trump Tower.”

The second way in which transformational can be applied to leadership in a fundamental sense refers to leadership vision. Whereas a vision that merely moves an organization or society along incrementally is hardly transformational, a vision whose basis or foundation (i.e., paradigm) represents a qualitative change from the status quo can be labeled as transformational. In this latter sense, a vision represents a paradigm change, which involves changing systems rather than “tweeking” existing ones.  

I contend that the transformation of a leader and a transformational vision are essential and fundamental to leadership, whereas the moral intent to develop followers and even the leader herself morally or otherwise is not. To be sure, moral development is a good thing, and important; the world could surely use more of it.  It can be in the transformation of a leader and in the development of followers. In his comment on how being President-Elect was affecting him, Harding went on to point to his enhanced realization that untruth “must be guarded against.”[6] Notice, however, that this is just part of Harding’s own account of how he had been changed.

The development of followers, moral or even in a broader sense, is just one of many policies that leaders can adopt as a matter of ideological preference. In fact, Bass’s original notion of transformational leadership as “a process by which followers trust, admire, and respect their leader . . .  may not necessarily elevate followers to higher moral ground but rather, depending on the leader’s vision and personal motivation, may in fact lead followers in negative, unethical and immoral directions.”[7] So even an ethically-tinged view of transformational leadership may not include the moral development of followers (and the leaders themselves). Bass would subsequently coin “authentic transformational leadership” to salvage the full moral connotations of Burns’ transformational leadership, but authenticity only means that motive is in sync with word and deed, rather than that the motive, word, and deed must necessarily be moral in nature, and more specifically oriented to people’s moral development.[8]

Therefore, transformational leadership can pertain to leaders whose visions are transformational yet do not include the development of followers as the leader’s moral task. Transformational leadership may pertain to amoral and even unethical tasks. Transformation is principally a term pertaining to change, rather than morality. It follows that Burns choice to make the moral development of followers and even leaders the way in which leadership is transformational can be viewed as too narrow, even distorted in overstating an element, given the more fundamental ways in which transformation pertains to leadership.

[1] James M. Burns, J. Leadership (New York: Harper & Row, 1978): 20.
[2] Ken W. Parry and Sarah B. Proctor-Thomson, “Perceived Integrity of Transformational Leaders in Organizational Settings,” Journal of Business Ethics 35, no. 2 (January, 2002): 75.
[3] Francis Russell, The Shadow of Blooming Grove: Warren G. Harding and His Times (New York: McGraw-Hill, 1968): 421.
[4] Russell, The Shadow of Blooming Grove, p. 430.
[5] To be sure, on a brass-tacks political level, Obama and Trump might have made a deal, such that Obama’s Administration would help Trump’s transition team and in exchange Trump may have agreed to amend rather than replace Obamacare and not push for prosecution of Hillary Clinton for corruption. Such a deal would have put the two presidents on “on the same page” such that the Oval Office visit would be viewed as conciliatory. 
[6] Russell, The Shadow of Blooming Grove, p. 430.
[7] Ken W. Parry and Sarah B. Proctor-Thomson, “Perceived Integrity of Transformational Leaders in Organizational Settings,” Journal of Business Ethics 35, no. 2 (January, 2002): 75.  
[8] Bernard M. Bass and Paul Steidlmeier, “Ethics, Character, and Authentic Transformational Leadership Behavior,” The Leadership Quarterly 10, no. 2 (1999): 181-217.

Tuesday, September 20, 2016

On the Difficulty of Ethical Leadership after a Breach: The Case of Wells Fargo’s CEO

On September 20, 2016, U.S. Senators questioning Wells Fargo’s CEO, John Stumpf in the Senate’s Banking Committee “seemed unmoved” by his “attempts to explain why more senior bank executives had not been tied to the widespread illegal sales activity.”[1] Bank employees may have opened as many as two million accounts in customers’ names without those customers’ knowledge.[2] Senator Elizabeth Warren, a Massachusetts Democrat, “said the illegal sales were a big driver of Wells Fargo’s success as one of the nation’s most profitable banks.”[3] She called on Stumpf to give back a large portion of his compensation, resign and be criminally investigated. I contend that giving back some of his compensation and resigning from the bank would have been necessary for the CEO get past the scandal in being able to be a credible and trustworthy ethical leader. That the bank’s board acted independently from its chairman, the CEO, a week later in taking back $41 million of his compensation and $19 million of the stock grants from Carrie Tolstedt, who had led the bank’s retail banking division (and cancelled any bonus for either official) does not lend the CEO any renewed credibility.[4] Rather, the action made the bank’s board members look like they were trying to do what was necessary, given the CEO’s underperformance during the Senate hearing.

“Have you returned one nickel of the money that you earned while this scandal was going on?” asked Warren.[5] Stumpf suggested that the board was considering whether he should also lose some of his compensation, which totaled more than $19 million in 2015.[6] He said the bank’s board was at the time considering whether he should lose some of his compensation, but in a classic conflict of interest, he himself occupied the board’s chairman position. In short, Stumpf admitted that he hadn’t yet been held personally accountable for the actions of his employees.[7]

Furthermore, despite the widespread unethical sales in the community banking unit, the executive who oversaw the retail bank, Carrie Tolstedt, was permitted to retire in July rather than be held accountable for the problems by being fired and having some compensation “clawed back,” Stumpf admitted. [8] Tolstedt received a retirement package that may amount to more than $100 million even though it is unlikely she was not aware of the fraud.[9] If she had been unaware, she clearly failed at her job and did not deserve $100 million.

More than 5,300 employees had been fired for the unethical sales since 2011, but they had been mostly lower-ranking workers, including many who say they felt pressured to bend the rules to meet the bank’s aggressive sales goals.[10] “Have you fired any senior management, the people who actually oversaw this fraud?” Sen. Warren asked the bank’s CEO. “No,” Stumpf replied.

Sen. Warren sized up the CEO thusly: “Your definition of accountability is to push this on your low-level employees. This is gutless leadership.”[11] It is unethical leadership—lacking basic integrity wherein “deed” matches “word.” Rather than putting his money where his mouth was, he offered platitudes, according to many of the senators, “about his willingness to take responsibility for the illegal sales while escaping any real consequences.”[12] To apologize for the actions of others is not sufficient, in other words, to buy back credibility and integrity. Frankly, the words are too easy without accompanying actions that involve real sacrifice by the leader as well as the bank.

Consistency in itself between word and deed is a very important aspect of integrity. A “divergence between words and deeds has profound costs as it renders managers untrustworthy and undermines their credibility and their ability to use their words to influence the actions of their subordinates.”[13] The application to leaders is straightforward: A divergence between word and deed also reduces a leader’s credibility and trustworthiness, and thus detracts from his ability to influence subordinates and the wider society to buy into his vision. Hence, nothing in Stumpf’s efforts at the U.S. Senate to “contain the damage to his bank’s reputation”[14] boosted his integrity, credibility and trustworthiness to his subordinates and at the societal level.

The main point to take away from the CEO’s attempt at strategic leadership before the U.S. Senate is how very difficult it is to go beyond platitudes of apologies to match them with inconvenient actions, such as firing senior-level managers, with “clawbacks,” and including the CEO himself even though he chairs the very board whose task it is to supervise him. Rather than exploiting a structural conflict of interest, a CEO/Chair must “take a hit” in order to have the trust and credibility both organizationally and in society to regain integrity. Such integrity is in turn required for effective ethical leadership to be practiced. Blaming others outside the inner circle of seniority in an organization and offering an easy apology too vague to say for certain whether the leader was part of the unethical practices do not suffice.

1. Michael Corkery, “Illegal Activity at Wells Fargo May Have Begun Earlier, Chief Says,” The New York Times, September 20, 2016.
2. Ibid.
3. Ibid.
4. Stacy Cowley, “Wells Fargo to Claw Back $41 Million of Chief’s Pay Over Scandal,” The New York Times, September 27, 2016.
5. Corkery, “Illegal Activity.”
6. Ibid.
7. Emily Peck, “Elizabeth Warren Hammers Wells Fargo CEO: ‘You Should Be Criminally Investigated,” The Huffington Post, September 20, 2016.
8. Corkery, “Illegal Activity.”
9.  Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Tony L. Simons, “Behavioral Integrity as a Critical Ingredient for Transformational Leadership," Journal of Organizational Change Management 12 No. 2 (1999): 89.
14. Nathan Bomey, “Four Things to Watch as Wells Fargo CEO Testifies,” USA Today, September 20, 2016, p. B1.

Thursday, September 15, 2016

On the Meaning and Value of Leadership: Formulating a Social Reality as a Vision

I submit that leadership is the formation of a vision and persuading other people to adopt it. From this standpoint, leadership is distinct from management—the latter taking the vision as a given and going from there to formulate strategy and implement it as policies. In short, a vision is open to leaders to change but closed to managers, who must take a vision as a given.

Regarding a leader’s vision, I contend that it contains meaning and values held together in a social reality; hence the breadth of a vision. Two scholars insist that a leader works to shape and interpret situations out of what has previously remained implicit or unsaid, guiding by common interpretation of reality via vision through foresight, hindsight, a world view, depth perception, peripheral vision, and revision.[1] The social reality in a vision is thus deep as well as broad, reaching even the subconscious level of the human mind. To the extent people have bought into the leader's social reality, the leader has led.[2]

Detecting or fashioning "meaning" is crucial to formulating a social reality for a vision. A couple scholars suggest that leaders "structure experience in meaningful ways."[3] In "defining the reality of others", leaders influence "systems of meaning," which circumscribe a leader’s vision as well as organizational activity.  In short, an essential factor in leadership is the capacity to influence and organize meaning."[4]

Humans are "congenitally compelled to impose a meaningful order upon reality."[5] Some people are able to do this better than others. Leadership is therefore basic to the human condition.[6] In fact, accurately defining reality can be considered a leader’s duty, with ethical implications not only from that duty, but also in the meaningful content of a leader's construed social reality, which can be laced with ethical principles and values.[7] Regarding the content, leaders interpret social reality in such a way that particular values and/or beliefs are highlighted.[8] In other words, a leader's "meaning making" includes giving meaning to shared values that are important and make a difference.[9] 

Therefore, both the doing and product of leadership can be viewed normatively. Accordingly, ethical leadership can pertain to the doing of leadership as well as to the content of visionary leadership. For example, a manager being called to serve in a leadership position can view accepting the promotion as an ethical imperative to impart meaning and values for people in the organization, who are otherwise having difficulty coming up with a social reality that is gripping and thus meaningful and of value. Such meaningfulness and values can themselves involve ethical principles set as duties, which followers as well as the leader should undertake.

For more, please see the following two booklets: Ethical Leadership and Christianized Ethical Leadership.


[1]. Warren Bennis and Burt Nanus, Leaders: The Strategies for Taking Charge (New York: Harper & Row, 1985).
[2]. Skip Worden, “The Role of Integrity as a Mediator in Strategic Leadership; A Recipe for Reputational Capital,” Journal of Business Ethics 46 No. 1 (August 2003): 31.  
[3]. Linda Smircich and Gareth Morgan, “Leadership: The Management of Meaning,” Journal of applied Behavioral Science 18 (1982): 258.
[4]. Bennis and Nanus, Leaders, 39.
[5]. Peter Berger, The Sacred Canopy: Elements of a Sociological Theory of Religion, (Garden City, NY: Doubleday, 1967): 22.
[6]. Worden, “The Role of Integrity,” 32.
[7]. Worden, “The Role of Integrity,” 32; Max DePree, Leadership is an Art (New York: Doubleday, 1989): 53.  
[8]. Kate Rowsell and Tony Berry, “Leadership, Vision, Values and Systematic Wisdom,” Leadership & Organization Development Journal 14 No. 7 (1993).
[9]. Jim Kouzes and Barry Posner, Credibility: How Leaders Gain and Lose it, Why People Demand It (San Francisco: Jossey-Bass, 1993): 197, 206. 

Tuesday, August 30, 2016

Biblical Positive-Thinking Applied to Leadership

"I can do all things through Christ which strengtheneth me.”[1] This biblical verse captures the extraordinary optimism of Norman Vincent Peale. Belief, expectation, and faith—his pillars of the Christian religion—are internals that can move mountains and thus get results. This biblically-based recipe for positive thinking can be applied to leadership, which, after all, is results-oriented. Its desired objective is of course the realization of a vision. Simply put, if religion can be used to do better in a job as Peale insists,[2] this holds for the task of leading other people, which consists of formulating and selling a vision.

A change inside a leader can do wonders in moving a vision’s mountain toward being actualized. From the Bible, “(W)hosoever shall say unto this mountain, Be thou removed, and be thou cast into the sea; and shall not doubt in his heart, but shall believe that those things which he saith shall come to pass; he shall have whatsoever he saith.”[3] A vision may seem impossible but for such faith in a believer that eliminates any doubt. Peale is astonishing in his insistence that that faith as belief and expectation can deliver actual results, regardless of how high external obstacles are. “According to your faith be it unto you.”[4] In fact, “(i)f ye have faith . . . nothing shall be impossible unto you.”[5] A leader with such faith can count on his or her vision being realized. What counts is in the leader’s mind.[6] A leader who doubts and is more generally habituated to negative thinking must transform his or her thought pattern before the benefits of faith can be realized.
Undergirding his theory, Peale claims as a “well-defined and authentic principle” the assumption “that what the mind profoundly expects it tends to receive.”[7] Expect your vision, and that belief itself can move mountains such that your vision is realized by others and the empirical world is changed. Specifically, “(w)ith the creative force of belief you stimulate that particular gathering together of circumstances” which brings your vision to pass.[8] The power of belief can change the external world such that it is more favorable to the objective.
[The expanded essay is a chapter in Christianized Ethical Leadership]

1. Phil. 4:13. Cited from Norman Vincent Peale, The Power of Positive Thinking (New York: Touchstone, 2015), p. 3.

2. Norman Peale, Power of Positive Thinking, p. 48

3. Mk. 11:23. From Peale, The Power of Positive Thinking, p. 98.

4. Matt. 9:29. From Peale, The Power of Positive Thinking, p. 92.

5. Matt. 17:20. From Peale, The Power of Positive Thinking, p. 10

6. Here Peale cites Karl Menninger, who claimed that attitudes “are more important than facts.” Peale, The Power of Positive Thinking, p. 10.

7. Ibid., p. 94.

8. Ibid., p. 91.

Friday, August 7, 2015

An Ex-CEO on U.S. Presidential Leadership: Dissecting Ted Turner’s Pessimistic Stance

The founder of CNN and TNT, two American television networks, Ted Turner maintains that presidential leadership at the federal level is elusive. More particularly, the American electorate’s task is very, very difficult because the federal president must be an expert in so many areas. Ironically, Turner may be overlooking how upper-echelons leadership differs from leadership within organizations, including the U.S. Government.

Turner claims that modern U.S. presidents are expected to excel not just in one policy area; they must be able to tend to a wide range of complex, intricate issues. "Things are so complicated now," Turner says. "Just the financial world is so complicated, to be an expert in that is very, very difficult."[1] While it is certainly true that modern financial instruments like those that swap the financial risk of default to another party are complex, the president of the United States need not have an intricate knowledge of them in order to lead. For one thing, the Secretary of the Treasury typically comes out of the financial world—like Henry Paulson, ex-CEO of Goldman Sachs—and thus can have more subject-specific knowledge; but even in this respect, to have been the CEO of a major Wall Street bank is distinct from supervising traders directly.

Similarly, the chief executive of the U.S. Government cannot be expected to have intricate knowledge of the workings of the federal agencies. Leaders atop organizations (and even societies) deal more abstractly with principles than with details. I submit that Turner obfuscates the respective natures of upper- and lower-level leadership. In fact, the latter can better be said to be management rather than leadership because typically a vision is formulated and enunciated at the top.

In short, a U.S. president need not know how CDOs or swaps on financial derivatives are put together on Wall Street. Besides the fact that Treasury can more easily get that information and even translate what it means on a more abstract level, “micromanaging,” as Jimmy Carter was so accused of doing as president, has a large opportunity cost.[2] The federal president essentially oversees an empire of fifty republics, or member-states., which differ culturally. He or she must assume this perspective in looking at particular policy domains. Even just in respect to each one, the matters that reach the president’s desk involve seemingly intractable clashes between principles (and interests).

Therefore, Ted Turner is seriously misunderstanding the nature of presidential leadership in claiming, "Back in the time of Thomas Jefferson and George Washington, all the books that were in the Library of Congress fit in one room. You could read them all. Now, a million books a year are printed—or over that. There's no way you can read them all."[3] For a sitting president to be reading a book on electrical engineering, for example, would be rather strange—not to mention having a high opportunity cost; more suitable books include those on past presidents as well as on the rise and decline of empires (and war and peace).

Meanwhile, the secretary of the U.S. Treasury might be reading the latest book on how much systemic risk Wall Street banks really represent to the financial system and the overall economy. The under-secretaries could be reading texts that are more specific. To presume that the U.S. president must also read those texts (as well as those on subjects relevant to the other cabinet secretaries and their respective deputies) is to vastly misunderstand what presidents do and what presidential leadership is. A president need not know every detail of everything in order to come up with a viable vision for America. That a former CEO could miss this point mystifies me.

As Turner himself says, "You have to specialize, and that's very hard for leaders, particularly political leaders that have to know a lot of different things. It's almost impossible for one man to be able to do it all."[4] For a president to specialize is for him or her to assume the vantage-point of the U.S. as a whole—whether that be looking at the government, economy, or society as wholes or even the U.S. itself as one whole—in formulating a principle or even a vision and to use (again specialized) political skills to sell it. All this does not come close to having to “know a lot of different things” and “do it all.” To be sure, the consolidation of power at the federal level in the U.S. (at the expense of the States) since the 1930s has indeed put more policy domains on the federal president's desk. From the standpoint of time-management, Turner's point that a president cannot do everything resonates, for no person has an infinite amount of time and energy. Generally speaking, as the number of items on a president's schedule increases, each item gets less attention. In short, the modern president is apt to be stretched too thin, but this is because of the increasing imbalance in the federalism rather than because the president has to read more books. 

1. Lisa Capretto, “Ted Turner On Why It’s So Hard To Find Good Political Leaders,” The Huffington Post, August 6, 2015.
2. The cost of the benefits of foregone alternatives lost, in this case by micromanaging rather than leading.
3. Capretto, “Ted Turner.”
4. Ibid.

Sunday, February 1, 2015

Spirituality in Leadership: Rudolf Otto's Numen as the Object of Charisma

Charismata, that elusive phenomenon attributed to the gods ages ago, is still today considered to hold the element of mystery in spite of the plethera of recent social science studies on the subject.[1]  Originally suggestive of powers that could not be explained by ordinary means(Conger, 1989:22), charisma has been subject to scores of sociological, psychological, and political studies(House, 1977:190), seeking to leave behind its original highly religious quality in search of a behavioralistic essence.  Yet religious language continues to accompany the concept, suggestive of the failure of scholars to capture it within behavioral terms.

There is a transcendent quality to charisma which eludes those scholars, but can be incorporated in terms of Rudolf Otto's (1957) Idea of the Holy. In his inquiry into the non-rational factor in the idea of the holy(the numen), Rudolf Otto (1957) characterizes several inter-related feeling-responses to its object, the numen.  In basing these responses on the object of the holy rather than in the perceiver, Otto distinguishes these feeling-responses from mere psychological and sociological occurrences, based in the subjective experience of the person rather than in the object itself.  There is thus posited to be a non-rational quality to the holy transcending self and society yet applicable to the human realm.  Charisma, too, has such a dimension, as evidenced by a residual of religiosity language even amid the modern behavioral studies which tend to assume that charisma is strictly a function of the follower's perception (e.g. Conger & Kanungo, 1987). 

Conger & Kanungo (1987:639) argue that a deeper understanding of charisma will come from striping away its aura of mysticism, approaching it strictly as a behavioral process.  Charisma is a matter of attribution arising out of followers' perceptions of a leader's behaviors.   Yet even as Conger & Kanungo (1987) assume that the element of mystery can be shaved off the phenonomen itself, Conger & Kanungo(1987:637) cite literature which posits 'profound and extraordinary' effects of charisma (House & Baetz, 1979:399), 'superhuman' qualities(Willner, 1984), 'magical abilities'(Etzioni, 1961), and 'exceptional sanctity'(Eisenstadt, 1968:46).    Max Weber(1947:358-9; Conger, 1989:22) defines charisma as a gift that sets charismatic leaders apart from ordinary men and causes them to be "treated as endowed with supernatural, superhuman, or at least...exceptional powers and qualities...not accessible to the ordinary person, but...of divine origin or as exemplary."  
In view of these descriptors, it would seem that the element of mystery is inherent in charisma itself rather than being merely that which is left to be explained in behavioral terms.  Perhaps charisma points to something beyond not only behavior, but the very reaches of human cognition and perception.  Perhaps reality does not stop at our fences and gates. Consider for instance whether human perception and cognition can in principle reach the limits of that which is profound, superhuman, or sacred. 
Otto(1957:1-2) views it a grave error "that the essence of deity can be given completely and exhaustively in 'rational' attributions".  Conceptual thought can not bind matters religious or spiritual. Otto(1957:13) argues that the objectively-given object of the holy,  the numen, gives rise to a feeling-response of mysterium, of "that which is hidden and esoteric, that which is beyond conception or understanding, extraordinary and unfamiliar".  It is not mysterious because it has not yet been discovered by science; rather, it is mysterious because it's object is 'wholly other', beyond the reaches of human reality.  Thus Otto (1957) seeks to use thought to point beyond itself to the surplus of meaning in the object of sacrality which he calls the numen. 
Otto's(1957) project can be applied to charismata because the 'profound', 'superhuman', 'magical', and 'sacral' attributions seem to point beyond the human sphere to a numinous realm of reality.  Specifically, Otto's numinous feeling-responses are in line with descriptions of charismatic leadership in the social science literature. 
In transcending the behavioralistic psychological and sociological approaches to charismatic leadership, a fuller and richer account of charisma will emerge.  Some not so pleasant features of charisma such as its latent propensity to illicit terror will be highlighted.  Such qualities have laid dormant as charisma has come to be identified with transformational leadership.[2]  The presence of attractive and frightening qualities within charisma will suggest that the mystery in the phenomenon is no accident, and that the paradox itself points to the transcendent holy ground of charisma.
An important key to understanding Otto (1957) is to remember that the basis of a numinous feeling-response is not in the person or her perception; rather, it is in the transcendent object itself, the numen.  A metaphysical treatise on the existence of the numen (i.e. that there exists an object 'out there' which is holy) is not the point.  Instead, the point is that the feeling-responses are not oriented to psychological, sociological, or ethical(e.g. right conduct) phenomena.  The responses are 'deep', transcending self and societal artifacts, as they are based in an experience of reality which is ‘wholly other’, beyond the grasp of human perception or cognition. 
It follows that spirituality in leadership is not necessarily ethical leadership.[3]  Otto (1957:5) argues that "to define the holy, or sacred, as the absolute moral attribute, is inaccurate, for it includes in addition a clear overplus of meaning".  The ethical meaning was not original to the word.  Otto's point is not that religion and ethics are mutually exclusive; instead, he wants to call attention to the uniqueness of the feeling-responses to the sacred which are ethically neutral; they transcend ethics.  There is something sui generis about the holy and its unique feeling-responses that cannot be explained away or captured in social scientific or ethical terms.  And in fact this is true of charisma as well. 
Consider how Otto's(1957) descriptions of the feeling-responses to the numen dovetail with descriptions of charismatic leadership in the literature.  As described above, both charisma and Otto's(1957) numen are mysterious.  Our project now is to use Otto's(1957) elements of mysterium to create an analytical framework for the mystery inherent in charisma. 
Otto (1957) posits five elements in the numen's mysterium: tremendum, fascinatus, alienum, majestas, and urgency or energy.  Each of these elements can also be found in charisma, suggesting that charisma taps into the mysterium of the holy.


Otto(1957) distances tremendum  from ordinary fear, an ordinary emotion based on perception rather than an exterior object.  Tremendum is of a religious dread, or terrifying awe which is distinct from fear.  Its source is in the incalculable and arbitrary energy of that which transcends the human dimension or reality yet impinges upon us in uncalculatable ways.  We are terrified of it precisely because it is not based on the self, or the reality portrayed by the self.  It is not moral or immoral, because it is without familiar rationale but is capricious.  If you get to close to it, it's power may destroy you without rhyme nor reason from our perspective, because it is not based in our reality but on itself: reality that transcends.
Is charisma such a phenomenon, eliciting terrifying awe inherently?  Is it conceivable that something which has the propensity to create warm emotional bonds also provokes dread?  What is the nature of this paradox and to what reality does it point?  Starting with tremendum, it will be argued that charismatic leaders can have a degree of dominating power owing to their charisma sufficient to instill the scent of awe-inspiring terror in their followers.
House(1977:191) suggests that dominance is a characteristic of charismatic leadership in much of the literature.  Weber(1947, italics added) in particular suggests that a charismatic leader must prove his extraordinary powers to his followers.  Given such necessity as well as conditions arising out of charisma discussed below. Charismatic  power could be destructive to even the leader’s own followers 'without cause'.  Even the mere possibility is sufficient for the odor of dread to be inherent in charisma.
Several writers on charismatic leadership (Berger, 1963; Dow, 1969; and Marcus, 1961) point to its revolutionary nature.  Consider how easy it is for a leader to use arbitrary destructive force in revolutionary times when order is being intentionally trumped.  Furthermore, the sentiments expressed by a charismatic leader may be heavily charged and contrary to the established order, alienating some people(Conger, 1989; Friedland, 1964). A charismatic could feel threatened in such a context.  He might act out against others, perhaps even blindly. So a charismatic's destructive force may not be limited to real adversaries. It could be quite irregular and thus arbitrary, even to the followers themselves as the leader feels the necessity to prove his power in ways that could be easily accomplished in a revolutionary context. 
If such circumstances and the potential for such a use of power are inherent in charisma, then followers may have a feeling-response of tremendum--going beyond fear because the source is a great(dominating) power which may actually destroy them without rhyme nor reason. 
The possibility of one's own existence in the world ending is inherently transcendental in the sense that one is forced to confront reality itself, beyond the world.  That charisma can have sufficient power to bring such a scenario to pass even against the wishes and power of the follower suggests that there is a transcendental quality in it. 
In the social reality of the business world, being fired is to have one's existence exterminated. The empty office is a virtual tomb. That a charismatic leader can 'terminate' one at will by virtue of the force of her charisma suggests that an employee might feel a sense of dread even as he identifies with the leader's ideal in an empathetic way.
The possibility that the firing could be made by mere whim suggests that the decision is not bound by the causal relationships in human relations and may hint at that type of reality wherein power is totally unpredictable, ambiguous, and irregular.  Thus even the mere possibility of a mere firing may mean that a charismatic leader in business is dreaded as much as she is loved.
An obvious example coming from the twentieth century of tremendum in charisma is Hitler.  Marcus(1961:237-8) argues that empathic identification with Hitler became the vehicle of transcendence for Germans such that the follower "saw in Hitler the real 'presence' in his own time of the ultimate teleological purpose of history itself": the Thousand Year Third Reich. 
According to Marcus(1961), this phenomenon is tied into the striving for transcendence itself, a basic human drive which involves the condition of empathy. Transcendence here means stepping out of one's present self into an idealized alter-ego(ibid.). The charismatic leader identifies with an ideal, either in the world or beyond it. So in empathizing with the leader, the follower internalizes the ideal personified in the leader.  As the ideal is sought, so too is the leader who personifies it.
The ideal of the Reich within History eclipsed the mundane lives of Hitler's followers and thereby freed the Nazis to experience something 'real', having a resonance transcending there typical social realities.  The thirst for such a transcendent ideal in personal experience is personified via charisma in the leader himself such that he evokes empathetic longing and clinging in identification. But the close bond contains not only love, but dread as well, as the possibility of the ideal came to be identified with the same man who could annihilate, with or without calculation, the very existence of the followers seeking transcendence in the ideal.

Considering that his ideal was at odds with the world and elements within Germany in 1933, Hitler had to exercise his charisma by proving his power in the world in a revolutionary and destructive way.  It is not difficult to see how the followers opened themselves up to their own destruction (via the Allies or Hitler himself) as they identified themselves empathetically with Hitler and his ideal. 

The empathy and arbitrary (to the followers) destructive use of power were both ingredients in the charisma itself.  It is no wonder that Germans today view charismatic leadership as a double-edged sword, in contrast to those American scholars who identify it with transformational leadership wherein leaders are oriented to their followers' growth and development.


In paradoxical contradiction to tremendum is fascinatus.  Both are in the mysterium of the holy.  The numen is thus not only daunting but is "the object of search, desire, and yearning for its own sake"(Otto, 1957:32).  One seeks possession of and by it in bliss, beatitude, and rapture.  That Otto's numen is both attractive and terrifying, giving rise to yearning and dread simultaneously, suggests that it is based not in the realm of human experience but in an aspect of reality ‘wholly other’, transcending human cognition and perception.  It is thus inherently mysterious in a paradoxical sense, with a certain binding such that the two elements are both felt in the same phenomenon. 
Much has been penned on how charisma gives rise to fascination. Tucker (1968:735) argues that charismatic leaders are revered by their followers, who follow out of love, passionate devotion, and enthusiasm.  Oberg(1972:22) claims that the test for charisma is the degree of devotion and trust the leader inspires and the degree to which it enables the follower to transcend his own finiteness and alienation and feel made whole.  Being the agent of such transcending may well lift the agent(i.e. the charismatic leader) to the status of an idealized hero who is empathetically identified with by the followers(Marcus, 1961) and thus the object of yearning and desire of an extreme nature. 
Jamshedjee N. Tata, founder of Tata Industries, and Mahatma Gandhi, the Father of India, exemplify this quality of charisma.  Both men personified the ideal of Swadeshi, Indian political and economic independence based on self-reliance, or 'let the Indian learn to do things for himself'(Elwin, 1958:18).  Gandhi personified this ideal symbolically through his ever-present practice of spinning his own yarn, while Tata became identified with it as he went from textiles to steel production.  Whereas Gandhi's propensity to be revered by his followers is well-known, Tata's impact on his own followers is less apparent. Tata believed that the Indian economy could not be self-reliant, nor India free politically, without Indian steel. 
Tata and Gandhi internalized a self-reliant strain of freedom and applied it economically and politically.  In empathizing with them, their followers could transcend the world of oppressive Britsh rule and experience glimpses of freedom.  As a result, these leaders were revered by their followers.  Indeed, every year at Jamshedpur, where Tata Iron and Steel, Inc., is located, and at Bombay, thousands of workers garland Tata's statue "in grateful homage to his memory on his birthday"(Harris:1958:ix).  The reverance for Gandhi is well known worldwide.
If tremendum and fascinatus are both attributable to charismatic leadership, then people such as Hitler, Tata, and Gandhi can be seen as instances of the same phenomenon.  Charisma has within it the best and the worst of feeling-responses, and is thus normatively amoral.  Charisma has within it the paradox of extreme reverence and terror, elements of charisma which both bind the followers to the leader. This paradox points to a power that transcends the human realm and approaches Otto's(1957) numen.   Charisma has an element that is 'wholly other', being not of this world but alien in the reality of its paradox and inherent mystery.


Otto's(1957:26) numen is alienum, or 'wholly other', "beyond the sphere of the usual, the intelligible and the familiar, filling the mind with blank wonder and astonishment".  It points to "something inherently 'wholly other', whose kind and character are incommensurable with our own, and before which we therefore recoil in a wonder that strikes us chill and numb"(Ibid., p. 28).  The referent object is "something which has no place in our scheme of reality but belongs to an absolutely different one"(Ibid., p. 29). Thus language and human experience are used to grasp the holy even as they can never touch it, given that its basis transcends the human reality.  In other words, to grasp in faith the holy is not to capture it, but to intuit that reality goes beyond the human dimension. 
Similarly, Otto (1957) claims that the wonder and astonishment or stupor from an experience of alienum can be prompted by extraordinary phenomena. House & Baetz (1979) attribute 'profound' and 'extraordinary' to charisma.  Several other writers suggest that unconventionality is part of charisma (Berger, 1963; Friedland, 1964; Marcus, 1961; Martin & Siehl, 1983).  But Otto(1957) stresses the difference between alienum and that which is merely unusual yet based in the human realm.  Charisma would have to be more than just unconventional to provoke the sort of feeling-response associated with that which is ‘wholly other’.
Several writers attribute not merely unconventionality but a transcendent vision to charismatic leadership(Blau, 1963; Dow, 1969; Marcus, 1961; Willner, 1984), suggesting that charisma is tied to an ideal which transcends ordinary human existence.  Weber(1947:358) claims that charismatic leaders "reveal a transcendent mission or course of action".  Transcendence is attributed implicitly to both the qualities of the leader (e.g. supernatural, superhuman, or exceptional) and the content of his mission(House, 1977:189). 
Marcus(1961:236) views transcendence as a stepping out of one's present self into an idealized-other.  This 'other' can be within or outside of time or history.  Thus transcendence can appear as a realizable, immanent goal within historical time, such as a Thousand Year Reich, or as a higher state of timeless alter-ego, such as the Kingdom of God
Charisma incarnates a transcendent ideal through which the follower identifies with a transcendent state as an immediate reality.  The root, according to Marcus (1961:238), is the empathic identification with a hero-personality, or charisma, seen as the transcendent self.  The charisma 'resonates' with the follower's own sense of being, transforming it into an idealized alter-ego personified in the charismatic leader herself.  The follower’s sense of being is thereby transformed such that the alienum ideal is made real and experienced in the realm of the profane.  The individual can transcend his own finiteness and alienation and feel made whole(Oberg, 1972:190).

Magestas & Energy

Otto(1957:21) goes on to argue that as the transcendent numen is the sole and entire reality, the self in the profane world senses its utter impotence and general nothingness or annihilation. Unlike Schleiermacher's feeling of dependence which is not uniquely spiritual and can have the self as referent, Otto's creature-feeling is essentially the experience of submergence into nothingness before an overpowering, awe-inspiring absolute might which is taken to be objective and outside of the self.  This is the majestas of the numen.
Such a feeling-response "starts from a consciousness of the absolute superiority or supremacy of a power other than myself"(Ibid., p. 21).  This force is felt to have an urgency or energy that is urgent, active, compelling and alive, coming from beyond the human realm. The power dimension of charisma has already been discussed under tremendum
Shils(1965) links the majesty of charisma with its transcendent feature: persons holding positions of great power will be perceived as charismatic because of the 'awe-inspiring' quality of power, the only requirement is that the expression of power must appear to be integrated with a transcendent goal(House, 1977). 
According to Berlew(1974:269), such a visionary goal provides meaning and generates excitement.  The meaning is exciting because it is transcendental, departing from the conventional social reality and touching on an ideal in or beyond history.

Individuals test their notions of reality against the opinions of others where interpersonal evaluation is highly subjective (Festinger, 1950). Leaders can personify or place in their mission idealized values which become salient as basic assumptions about the nature of human nature, relationships and activity, as well as truth, time, space, and the nature of personal, social and metaphysical reality itself(Shein, 1992:94-5). Religion can be directly connected ot such deeper assumptions about truth, time, space, human nature and reality(Ibid.).  Leadership can thus involve a spiritual dimension as it makes salient basic assumptions.[4]  The revolutionary character of charismatic leadership can easily involve an enhanced awareness of basic assumption. As one paradigm is intentionally replaced by another, one’s existing basic assumptions lose their transparency.

As charisma has an alienum quality, it is in essence transcendental, so its own contribution to meaning would be felt as real—as a transcendent ideal in itself. That is, charismata  is that resonance wherein transcendence  itself is felt as meaningful and significant in a personified idealized alter-ego.  A connection is felt which transcends profane ordinary existence to the real.

In short, charisma hints at the existence of the numen in and beyond the human realm of reality.  Charisma is felt as tremendum, fascinatus, alienum, majestas, and urgent energy, transcending transformative and moral leadership as an instance of spirituality in leadership because it is inherently transcendental.  Charisma is itself amoral, and need not lead to the development of followers; in fact, it may lead to their destruction even as the followers rever the leader.  It is this paradox inherent in the phenomenon which is the clearest indication of its transcendental basis.


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[1] For a review of this literature, consult the two issues of volume 10 (1999) of The Leadership Quarterly  devoted to charismatic and transformational leadership.
[2] See Conger(1989) and House & Shamir(1993), as accounts which minimize the differences between transformational and charismatic leadership.  These writers are at pains to account for a Hitler, as they identify charisma with transforming followers in their growth and development.  See Yukl(1998; 1999) for a critique of this identification.
[3] Thus, the view that religion can be reduced to a social ethic is rejected. 
[4] Note that ‘make salient’ does not necessarily mean ‘change’.  Thus leadership can have a spiritual dimension without involving change.