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Economist: Anyone who thinks it is worth paying extra for a CEO with charisma should think again. A new study[1] by three academics from the University of Pittsburgh and one (Mr Sonnenfeld) from Yale argues that boards of directors “need to be cautious when considering the potential benefits of charismatic leaders”. The study suggests that the relationship between a boss’s charisma and his company’s performance may be influenced by the so-called “halo effect”. The better a company’s performance, the more inclined its stakeholders are to perceive its boss as charismatic. The report finds that CEO charisma bears little or no relationship to a company’s future performance.

But what is charisma, you may ask. Surely one man’s charismatic leader may be another’s buffoon? The authors say such a leader must be: dynamic; a good example; show concern and respect for others; have high expectations; and be willing to take personal risks. Some may think charisma implies more than that—a little indefinable extra perhaps, a personal chemistry that persuades people to follow, through thick and thin. [Source]

[1] “Does CEO Charisma Matter? An Empirical Analysis of the Relationships Among Organisational Performance, Environmental Uncertainty and Top Management Team Perception of CEO Charisma”, Agle et al., Academy of Management Journal

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