Flexible leadership and empathy in entrepreneurial organizations

¶ … leadership in organizations is almost unanimous in declaring the importance of leadership to the organization's success or failure. This is not merely a post facto justification of the astonishingly high salaries accorded to executives in comparison to the workforces they command. A leader's influence is felt throughout an organization, and Srinivasa Rao (2012) offers a useful summation of the process:

In all types of organizations, leader influences organizational effectiveness. Leader's behavior (Style) has a direct relationship to organizational effectiveness. They may be unaware of how their behaviors impact their employees. Employees place their faith and trust in their leader's capabilities and expecting the leader to provide. Leaders have the capacity to show vision, organize teams, stay the course, and ultimately help the whole organization win. (112)

The difficulty with leadership comes in trying to define the appropriate style. I hope to demonstrate through a survey of recent scholarship on the topic, with a focus on entrepreneurial leadership, that the most useful leadership style is one that is flexible. But the chief focus of any leadership model should be empathy or, as Von Bergen and Soper (2002) summarize the approach, the use of the "Golden Rule." (64). I will argue for this despite the fact that Von Bergen and Soper (2002) invoke the Golden Rule primarily to argue for its abandonment.

The first thing to note about leadership, however, is that it can differ broadly in style, from the "autocratic" style that we associate with military discipline and the giving of direct orders, to the "laissez-faire" style of distant supervision, allowing employees to do their work in the relative absence of direct interference unless strictly necessary. When the focus is on entrepreneurial business, we might assume that leadership is to be associated specifically with an entrepreneur's vision and thus should be a matter of exertion of personal control. However Darling and Leffel (2010) emphasize that even in an entrepreneurial structure, there are a variety of different approaches that can be taken:

Different leadership styles create different influences on the entrepreneurial spirit ... Businesses benefit from how well the individual entrepreneur inspires and transmits a collaborative and entrepreneurial spirit to the team. Together, these result in an enhanced trust, respect and support of the overall leadership milieu, improved individual and collective performance behaviors that contribute to the achievement of organizational goals, and individual and team-based motivation to perform at high levels. (Darling and Leffel 2010, 356)

What is most important to note here is that the leader's example carries down even in an entrepreneurial organization, and that also the leader's goals will benefit from a sense of "enhanced trust" and "respect." This does not mean that leadership cannot be conducted in a different fashion according to the specific goals at hand. The case study offered by TESCO -- although related to an existing business in the UK which is not primarily an entrepreneurial one, but instead a thriving chain of grocery stores which exists to compete for a share of an existing market -- is one which emphasizes flexibility in leadership within the organizational structure. TESCO's 2014 guide to leadership makes the availability of different options the chief point to recognize about leadership, noting that "although each person will have their own preferred leadership style, the most effective leaders adopt a style appropriate for the situation. They will consider several factors in deciding which style to use: The task -- is it business-critical? Must a decision be made immediately? What will be the potential impact on the business? The team -- Does it have the right skills and resources? Is it used to making decisions? Tradition -- What has been the norm in the past?" (TESCO 2014, 3). The questions used in determination of this style indicate that there are circumstances under which greater control should be exerted: time pressure, critical impact for the business, lower skill level of the employee team, or established organizational precedent are clearly circumstances in which a greater level of "autocratic" leadership might indeed be warranted.

However, this is where a serious question about the nature of leadership must be confronted. Von Bergen and Soper's 2002 study "Entrepreneurial Leadership Styles: What Works and What Doesn't" has, beneath the bland banality of its title, a somewhat disturbingly polemical argument to make that largely enables a more autocratic style of leadership. Von Bergen and Soper begin with that familiar ethical maxim, endorsed by Jesus Christ among others, known as the "Golden Rule": in its most familiar formulation, this states "do unto others as you would have them do unto you." For Von Bergen and Soper, this is a poor leadership procedure, and they argue against its adoption as a leadership tactic in organizations, particularly for entrepreneurial structures:

The Golden Rule is used in a way not intended, i.e., as a management philosophy. Many entrepreneurs believe the Golden Rule is the ideal principle for guiding management practice ... However, difficulties arise when we use ourselves as the measure of how to treat others, assuming we understand their perspectives, rather than assessing those perspectives. Treating others as we wish to be treated is based on one's own wants, needs, and perceptions, which does not take into account others perspectives and preferences. Such an approach implies that entrepreneurs use themselves as models for understanding how to manage people.,,,using the Golden Rule is not an appropriate model for entrepreneurs. (Von Bergen Soper 2002, 64)

The conclusion that the authors reach is that the leader in an entrepreneurial environment must abandon the Golden Rule and "accept the fact that the other person is as much an individual as you and insists on being treated as such. You may want to ask yourself periodically 'How would I feel in this situation if I were my complete opposite?'" (Von Bergen Soper 2002, 74). Although this may sound sensible on the surface, it becomes clear with a survey of recent scholarship on the subject of leadership that what Von Bergen and Soper are peddling here is dangerous nonsense. Indeed, it becomes apparent that the wisest leadership strategy is one that ignores their advice altogether.

In rejecting Von Bergen and Soper's argument, we must first note that they begin from a flawed premise, that somehow the Golden Rule would entail the leader of an entrepreneurial organization failing to recognize that others have different needs and goals than the leader possesses. It is a basic economic truism that all actors in a marketplace have different needs and goals, otherwise no commerce would take place at all. Brouwer's standard text Organizations, Individualism, and Economic Theory (2012) makes this clear and summarizes distinctly: "the working of capital markets can be described as a discourse among investors that hold different opinions ...Buyers and sellers disagree on the future value of a security. Buyers value the security above today's price, while sellers think that it will lose value in the future. So for each security to change hands there must be at least two people who disagree on its value." (66). In other words, any entrepreneur who takes the naive interpretation of the Golden Rule that Von Bergen and Soper pretend is so common would presumably fail at business before even getting a chance to lead others. Von Bergen and Soper's version of the Golden Rule and how it is employed is fundamentally a "straw man" argument, which bears no relation to how actors in a business environment actually think or behave.