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How to Put Meaning Back into Leading
By Martha Lagace
Harvard Business School Working Knowledge
The bottom line is, after all, the bottom line when it comes
to business success. No profit, no business. But should money
be the sole measure for evaluating and rewarding the effectiveness
of a leader?
In a new Harvard Business School working paper, three experts
on organizational behavior revisit the meaning of leadership.
Most scholars (not to mention boards of directors) gauge the
effectiveness of leadership almost exclusively through a lens
of economic performance, specifically return on investment,
say professors Joel M. Podolny and Rakesh Khurana, and doctoral
student Marya Hill-Popper. Yet the focus on economic results
usually gives a one-sided picture of what leaders can accomplish.
For the well-being of business and society, the HBS scholars
say, future research on leadership effectiveness should also
look at leaders' ability to forge new meaning and purpose
for an organization and its employees.
Podolny, Khurana, and Hill-Popper collaborated on an e-mail
interview to explain their latest research for HBS WorkingKnowledge.
Martha Lagace: As you wrote in your working
paper, the past century saw a major shift in focus in the
study of leadership. Most of today's organizational scholars
assume that leadership equals economic performance—an
assumption that is a source of deep concern to you. Can you
give us some background to the debate?
Joel M. Podolny, Rakesh Khurana, and Marya Hill-Popper:
One of the main ideas running through the work of late-nineteenth-century
and early-twentieth-century social scientists is what we call
"the meaning and organization problem." One of the
main trends of modern society was the rise of large formal
work organizations. Capitalists and managers encouraged the
development of large formal work organizations because they
perceived them to be extremely efficient. At the same time,
large work organizations destabilized extended family and
community relations: first, by removing individuals from their
family and community and placing them in factories for considerable
fractions of their day and, second, by serving as ongoing
sources of geographic and social mobility. Because individuals
derived most of their meaning from institutions grounded in
enduring social relations—institutions like family,
community, and religion—the leading social thinkers
of the late nineteenth and early twentieth century, scholars
like Max Weber and Emile Durkheim, worried that these large
work organizations threatened the ability of individuals to
derive meaning from life.
Yet, Weber and Durkheim were followed by other prominent
scholars who looked to the leaders atop these organizations
(as well as those atop smaller organizations) as a corrective
to this trend.
In the 1930s, Chester Barnard, a retired AT&T executive
who became a lecturer at Harvard Business School, expressed
such a view in Functions of the Executive, a theoretical treatise
regarded as one of the foundational classics of organizational
behavior. Barnard was strongly influenced by other researchers
at HBS—most notably Elton Mayo and Fritz Roethlisberger,
the scholars behind the famous Hawthorne studies. These scholars
saw organizations as more than mechanistic structures that
defined work roles and regulated economic action. Mayo, Roethlisberger,
and their followers saw organizations as social systems characterized
by ideals, values, and, ideally, a purpose. An individual
experiences work as meaningful when it is perceived to be
an enactment of values and a purpose to which the organization
subscribes. Barnard came to define the role of the organizational
leader as the creator and steward of the purpose and values,
where an important aspect of the stewardship activity is balancing
short-term efficiency concerns of the organization against
the enduring purpose and values that is the foundation for
meaningful action.
Other scholars built on and refined this view of leadership
as meaning-making. One of the most important was Philip Selznick,
whose 1957 work Leadership and Administration also became
a classic in the field of organizational behavior.
Our ideas have been profoundly influenced by these early
scholars.
Q: What concerns you about the emphasis
of leadership studies on economic performance rather than
social impact?
A: In more recent organizational scholarship
as well as in management practice, the link between leadership
and meaning-making has been lost. Most contemporary organizational
researchers—both those who advocate the study of leadership
and those who argue that it is of little value—talk
about leadership almost exclusively in terms of its impact
on economic performance.
There are a number of reasons why the leadership literature
has been recast so that it is solely focused on economic performance,
but we believe probably the most important thing is that the
obsession with shareholder value beginning in the 1980s led
organizational scholars to assume that the relevance of all
aspects of organizations is circumscribed by their impact
on financial results. The social impact of organizations essentially
took a back seat.
This tendency concerns us for two reasons.
First, as many critics of leadership have argued, the ability
of individual leaders to impact the ROI of large, complex,
formal organizations may be quite limited. Indeed, there is
a large body of quantitative research that shows that it is
difficult for one individual to exert a significant impact
on the economic performance of a large, complex organization.
If that is so, then by implication the leadership of a single
individual cannot have a large, systematic effect on performance.
If scholars assume that the sole purpose of leadership is
to improve economic performance, such research would seem
to suggest that scholars should stop focusing on leadership
and focus on other aspects of organizations that do exert
a more significant impact on performance. In fact, if one
reads the leading scholarly journals, such a judgment seems
to have been made; there is remarkably little work within
the academy on leadership.
However, we believe that drawing this conclusion from these
quantitative studies has been a real mistake. Put simply,
even if it turns out that leaders do have little impact on
the economic value of an organization, great leaders can still
be of tremendous value to organizational members and society;
however, this value is overlooked if the value of leadership
is solely understood in terms of economic impact.
Relatedly, and more practically, we are concerned that by
not attending to the impact of leadership on meaning, we miss
a potential opportunity available to leaders. We are not arguing
that meaning-making is required of leaders; rather we view
it as a powerful opportunity, one that we believe can be quite
important to the long-term survival of organizations and the
contribution they make to society at large. As organizational
scholarship and management practice have shifted away from
thinking about the connection between leadership and meaning,
this opportunity is increasingly lost.
Q: When and why did most organizational
scholars essentially stop attaching importance to any "meaning-making"
capacity of leadership?
A: The shift away from considering the meaning-making
capacity of leadership began shortly after World War II. Despite
scholars' embrace of Barnard's work and the favorable public
reception of the Hawthorne studies, the idea that the central
concern of leadership was to create meaning for organizational
members was not significantly advanced. We've identified two
possible reasons.
First, there has been a general tendency that has become
manifest across much of modern economic life, that values
and purpose are no longer important concepts, especially if
there is little evidence that they impact performance. In
place of values and purpose, we have come to privilege efficiency
and rationality as paramount. This tendency is most marked
in modern business organizations. It should not be surprising,
therefore, that organizational scholars should no longer see
meaning-making as central to organizational life. Meaning-making
is simply not something that most modern economic organizations
concern themselves with.
A second reason is that social processes involving meaning-making
are complicated phenomena and difficult to quantify using
the standard techniques of social science research. Beginning
in the 1960s, organizational scholarship—like social
science more broadly—turned rather resolutely away from
theory toward statistical research and developed an intense
preoccupation with narrowly circumscribed empirical studies.
When compared to the more easily quantified indicators of
economic performance, difficult-to-quantify constructs like
meaning-making seem less useful as an analytical construct.
Put more crudely, return on investment makes for a more tractable
dependent variable than meaning.
Q: How do you think leadership matters to
an organization?
A: For the last couple of years, the three
of us have been engaging in research examining the linkage
between meaning and economic life. Through informal discussions,
we came to understand that while our methods were different,
we were each absorbed in trying to answer similar questions.
Among them are: How can meaning be created in a market society?
How is meaning generated through work and other economic transactions?
How is meaning linked to organizations for the sake of the
common good?
Our initial work in exploring these questions suggests that
leadership impacts on meaning in several ways. First, leaders
make architectural choices—how to structure the organization,
design jobs, and allocate roles and responsibilities—that
shape how people who work in the organization experience their
jobs. Second, leaders engage in symbolic actions—through
the stories they tell, the symbols and rituals they create,
and other highly visible actions. The leader is both architect
and visionary, and both roles impact on the meaning individuals
experience through work.
We cannot yet conclusively say whether the architect or visionary
role is most important in creating meaning for organizational
members, but these are the types of activities we are studying.
Q: What do you think is a more powerful
way to study leadership?
A: Among the many functions of organizational
leadership, one of the most important is the development of
a worldview for participants. Organizations, like individuals,
search for stability and meaning. This search often ends when
organizations identify a set of morally sustaining ideals.
Ideals animate and help direct decision making in an organization
or a society. These ideals are never fully realized. We all
recognize that compromise is an essential part of organizational
life, but ideals create aspirations for an organization's
members. This is also true at the societal level. For example,
while we are far from the ideals of equality or a world without
racism, these ideas remain essential to animating public discourse
and to our evaluation of important governmental actions. One
part of what makes our action meaningful is the fact that
it is directed toward ideals that we value. To the extent
that we understand our work within an organization as contributing
to a goal or ideal that we value, our work will have meaning.
Meaning is created not only when people express aspects of
their own ideas (their beliefs or values), but also when this
occurs through relationships with other people. This relational
aspect of our actions is what we consider to be the second
component of meaning, community. Work can play an important
role in designating and maintaining social relationships.
When our activity at work produces an acute sense of awareness
with those with whom we share the same circumstances and often
the same fate, we experience work as meaningful. Such an organizational
setting is what organizational scholars call a natural community,
a state in which self and surrounding are inseparable.
So, meaning has these two components—a component emphasizing
the ability of individuals to engage in action that is directly
connected to their own ideals, and a social component, where
the pursuit of those ideals occurs in the context of enduring
communal relationships.
Our proposal then is to look at how a leader's choices about
vision and design impact on these two dimensions of meaning.
We expect that the meaningfulness of work will be strongly
impacted by:
- The leader's willingness to uphold organizational values
especially when there is some perceived economic cost to
doing so. (If values are violated when there is a perceived
benefit in doing so, they are little more than guidelines
and thus likely to be the object of suspicion and derision.)
- The leader's willingness to make sure (through design
and training) that each individual's positional assignments
fit their conception of self and their aspirations.
- The leader's willingness to commit her own time and organizational
resources to ensuring that each individual understand how
his or her own actions link up to the larger organization's
purpose.
- The time and attention that goes into hiring and retaining
those individuals who derive personal meaning from the organization's
values and purpose.
Q: Does it matter if it turns out that
meaning-making does not have a significant impact on economic
performance?
A: When you start talking about purpose
and meaning, it's often perceived as too soft for the business
world. Managers, executives, and scholars often ask what that
has to do with the bottom line. Yet, rarely do we ask the
questions "Why do people come to work?" and "What
guides their decisions and actions?" The answer is that
people's decisions and actions are not created in a vacuum,
but instead informed by the organizational setting, the nature
of the work, and their personal philosophy.
The need for meaning and a sense for order we believe is
a universal. It is a need that is deeply linked to the definition
of what it means to be human. Pretending that this need does
not exist or trying to suppress it—as scientific management
tried to do in the early part of the century—will only
make it come back with a vengeance. Sometimes it does so in
relatively benign forms, such as small acts of nonconformity.
But it can also emerge more brutally and with quite dysfunctional
consequences. Without meaning, individuals tend to become
rigid and hollow. Society itself seems shallow and lifeless.
Organizational life seems petty and zero sum. People go through
the motions, and do so amid distrust, cynicism, indifference,
and a sense of alienation.
We believe that in order for organizations to contribute
most fully to society, we must make room in organizational
life to nourish human beings' need for meaning. The capacity
for leaders to focus on meaning is not the anti-thesis of
great organizations, but rather a crucial component of those
organizations that contribute to the well-being of society.
To be clear, we believe there is a connection between meaning
creation and performance. Most obviously, if individuals find
meaning in those aspects of work that differentiate a firm
from its competitors, then meaning can be the foundation for
sustainable competitive advantage. The causality can also
run in the opposite direction; superior performance can enhance
meaning insofar as superior performance is a reflection of
impact. Therefore, there is good reason to believe that meaning
creation is positively related to performance. Our only concern
is that the significance of meaning creation not be subordinated
to a concern with performance. Meaning creation is too important
as an end in and of itself.
Additional Information:
Rakesh Khurana
is an Associate Professor of Business Administration in the
Organizational Behavior area at the Harvard Business School.
He is currently teaching Leadership and Organizational Behavior
in the MBA program.
Joel M. Podolny is the Novartis Professor
of Leadership and Management. He holds a joint appointment
between the Harvard Business School, where he is in the organizational
behavior unit, and Faculty of Arts and Sciences at Harvard
University, where he is a professor of sociology.
Marya Hill-Popper is a doctoral student
at the Harvard Business School.
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