Effective Leaders Share the Spotlight with Their Teams
Many executives make decisions alone and take credit for every win. Research by Yuan Zou and Ethan Rouen shows how leaders—and their companies—directly benefit when they engage and elevate colleagues.
During a 2017 Amgen earnings call, CEO Robert Bradway began answering an analyst’s question, then turned to colleague Sean Harper and said, “Sean, I'll let you talk about the specifics.”
Bradway’s simple act of calling on Harper to add insight is the type of engagement that can have a powerful impact on both employees and companies, new research shows.
In fact, managers who elevate others like Bradway did are more likely to hold on to valued employees, according to a study by Yuan Zou, assistant professor of business administration at Harvard Business School. These managers also reap their own professional rewards, with the research showing they are twice as likely as the average manager to be promoted to CEO. And when they reach the CEO spot, they tend to boost returns for their firms.
While sharing the spotlight may be a value celebrated by management gurus, it’s rare to see it in practice. In the study’s sample set, the average manager did not engage colleagues even once during the year. Zou hopes leaders will begin to recognize the importance of encouraging input from subordinates, especially as many managers struggle to unite groups and boost morale during an extended pandemic that has upended typical team communication.
“Inclusive leaders are becoming really important as companies get bigger and more complex,” says Zou, whose research defines “inclusive” to mean managers who engage colleagues, often junior ones, for information or advice. “Managers need to know how to create an inclusive culture for employees so that they have the psychological safety to be motivated to contribute to the company.”
Zou coauthored the paper Inclusive Managers with Ethan Rouen, assistant professor of business administration at HBS, and Wei Cai, assistant professor at Columbia Business School.
How managers and employees benefit
Using transcripts from earnings conference calls held by Standard & Poor’s 1500 companies, the researchers looked for managers who turned to colleagues for input. Conference calls, the researchers say, are likely to offer insights into interactions between managers and team members that might be difficult to gauge any other way.
Combing through data that included 10,673 managers and 2,316 firms from 2010 to 2019, the researchers examined the characteristics of managers who include others, how their behavior shaped their career trajectories and team cohesion, and how promoting these managers affected companies.
Managers calling on other team members during earnings calls over the span of a year were 4.9 percent more likely to be promoted than managers who didn’t call on other team members in that same timeframe. Managers who called on multiple colleagues in a year were 11 percent more likely to be promoted than those who made no calls.
“We found that if a manager is more inclusive, that person is more likely to be promoted to CEO within the next year, and twice as likely to be promoted than the average manager in our sample,” says Zou.
Including others also boosted retention, according to the research. Employees working with a CEO willing to share credit were significantly less likely to leave the firm the following year.
The team found that female managers were 4.9 percent more likely and older managers were 0.6 percent more likely to call on colleagues than were male and younger managers.
Sharing the spotlight pays off
The willingness to engage colleagues in the boardroom appears to also pay dividends in the stock market. Firms with CEOs who made a habit of calling on colleagues had higher three-day market-adjusted returns than firms with less inclusive leaders, the researchers say, providing “economically meaningful evidence that investors value inclusive CEOs.”
When a company exchanged a less inclusive CEO for one who brings others into conversations, the firm’s value increased the year after. Naming an inclusive CEO increased a company’s average three-day return by 0.8 percent. This is likely because these managers retain staff, which may result in increased operating efficiency and innovation, Zou says, and markets seem to quickly reward these trends.
Engaging colleagues also helps CEOs cultivate a positive image. For example, Union Pacific CEO John Koraleski called on team members an average of 59 times during earnings calls in one year, making him the most inclusive manager in the study. Likewise, an internet search turned up articles extoling Koraleski for his vision and community service.
How managers can elevate others
For managers seeking to put the study findings into action, Zou has a few suggestions:
Focus on small wins. “During day-to-day communication, ask for more feedback and be more interactive with colleagues,” she says. “During decision-making, appreciate opinions from colleagues and lower-level employees.”
Encourage impromptu meetups, not just scheduled meetings. “Have more informal lunches and conversation,” she says. The more opportunity there is to share and exchange opinions, the more included employees are likely to feel.
Hire with an eye toward inclusiveness. When firms appoint a CEO who shares their success with others, the researchers found, inclusiveness of the entire executive team increases the following year.
“In the long run, trying to think about what kind of people you want to hire is also very important,” says Zou. “Companies need to focus on creating a culture that actively welcomes input from all employees, not just those at the top.”