Why overly optimistic leaders are not best suited to improve social performance in organisations.
One would think that positive leaders must be the holy grail of organisations: they keep teams engaged and highly productive, they boost performance, etc. This certainly may be the case in many contexts, but our latest findings question this line of thought when it comes to improving corporate social performance.
Leaders who are overly positive may not be the best choice to tackle societal issues and deliver corporate social results. In fact, leaders of this type could even hinder corporate social performance – that is, the company's commitment to having an impact and outcomes for society.
Leaders who are overly positive may not be the best choice to tackle societal issues
Research on management and social performance has largely focused on managers seeing societal challenges as either positive or negative, for instance as opportunity or threat. According to the common argument, managers with positive interpretations tend to be proactive in tackling social issues while those who see things in a negative way are often more reactive.
But what happens when managers don't adopt a black and white approach? What happens when leaders are ambivalent about social issues – that is, when they see social issues as positive and negative at the same time? Can this mental attitude help to increase a company's level of corporate social performance?
Together with a scholar from KEDGE Business School in Bordeaux, we wanted to shed light on this unexplored territory, as there is very little empirical evidence on how ambivalent leaders influence corporate responses to social issues.
To test this hypothesis, we analysed 249 CEO statements from corporate sustainability reports issued by 58 companies from 8 sectors – automobile, chemical, construction, electronics, forestry, mining, oil and gas, and pharmaceutical – over a period of five years. We tested the sentiment of the language used in these statements to measure the effects of leaders' positivity, negativity and ambivalence around social issues on corporate social performance.
In our analysis, 88% of CEO statements specifically referred to at least one of the 12 social issues we tracked: climate change, human rights, poverty and hunger, infectious diseases, waste and emissions, water and sanitation, land degradation, biodiversity, child labour, corruption, gender equality and accidents.
Leaders who are negative tend to increase social performance
Our findings suggest that leader ambivalence about social issues is positively related to corporate social performance in organisations. We argue that there are several plausible reasons behind this increase:
- Leaders who are ambivalent have greater openness and readiness to balance multiple perspectives as well as greater predisposition to change – a relevant aspect to tackle the inherent complexity of social issues.
- Ambivalence may be particularly helpful for executives to avoid biased, overly optimistic or overly pessimistic responses. Ambivalence also enables leaders to develop more balanced, prudent and substantive responses to social issues that take into account the complexity and long-term implications of their actions.
- Leader ambivalence is particularly relevant and beneficial in contexts of heightened complexity. The ability of leaders to see through the competing positive and negative aspects of an issue is particularly helpful when the issue at hand is unclear.
- Through ambivalence, leaders are more likely to develop more adequate interpretations and responses. Ambivalence prevents leaders from excessively leaning towards either positive or negative views on and responses to social issues.
- Ambivalence heightens the sense of novelty of an issue, which leads to a deeper engagement with the challenge in question.
- Ambivalence motivates a balanced consideration of the issue and helps people to lead change in complex situations.
Ambivalence helps people to lead change in complex situations
Negative thinking is not so bad after all
Contrary to our expectations, our findings also demonstrate that while leaders who are overly positive tend to lower social performance, leaders who are negative tend to increase it.
One explanation for this unexpected finding could be the serious nature of complex social issues such as climate change, human rights, poverty and infectious diseases. Excessively positive leaders may reflect a more abstract, high-level perception of these issues that may lead to a more symbolic response, which would explain the decrease in social performance.
Overly positive reporting
Another explanation for this positivity versus negativity link might be the nature of social sustainability reporting as it is currently practiced in the corporate world. As recent research findings corroborate, the tone of corporate sustainability reports tends to be more positive compared to the tone of corporate financial reports.
This overly positive reporting casts doubt on the credibility and effectiveness of sustainability reports and raises questions about whether these reports are more of a public relations tool than an accountability exercise.
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