What Makes Leaders Effective? A Stakeholder Approach to Leadership Effectiveness

Submission Number: 14333

WHAT MAKES LEADERS EFFECTIVE?

A STAKEHOLDER APPROACH TO LEADERSHIP EFFECTIVENESS

Robert Hooijberg

IMD
International Institute for Management Development
Chemin de Bellerive 23
Lausanne, SWITZERLAND 1001
41-21-618-0172
41-21-618-0707 (fax)
hooijberg@imd.ch

Daniel R. Denison

IMD
International Institute for Management Development
Chemin de Bellerive 23
Lausanne,SWITZERLAND 1001
41-21-618-0311
41-21-618-0707 (fax)
denison@imd.ch

Division: Organizational Behavior

The authors gratefully acknowledge the support for this paper provided by IMD. We are also
grateful for the data analysis expertise provided by Hee Jae Cho.

Submission Number: 14333

WHAT MAKES LEADERS EFFECTIVE?
A STAKEHOLDER APPROACH TO LEADERSHIP EFFECTIVENESS
Abstract
Research on leadership roles has clearly shown that there are substantial differences in

the judgements of multiple raters about which leadership roles have greatest influence on

effectiveness. Few studies, however, have used multiple criteria of leadership effectiveness.

This paper suggests using multiple criteria of effectiveness to improve our understanding of

the relationship between leadership behaviors and effectiveness. Using Denison & Neale’s

(1996) leadership framework, the paper examines twelve leadership roles and three criteria of

effectiveness, as judged by bosses, peers, direct reports, and the leaders themselves.

Like other studies, our analyses of overall effectiveness show that bosses give higher

ratings to leaders who show externally oriented traits such as mission, while direct reports

give higher ratings to leaders with skills in the internally focused area of involvement.

However, when assessing three specific criteria of leadership effectiveness: 1) the leader as

role model for the organization, 2) the leader’s potential for the future, and 3) the leader’s

effectiveness with customers, our analysis shows how focusing on overall effectiveness alone

can hide interesting and important associations.

Involvement proves to be a strong predictor of leaders as role models. Adaptability is

a weak predictor of overall effectiveness and leaders as role models, but is a strong predictor

of future potential and effectiveness with customers. Finally, mission is a strong predictor of

overall effectiveness, but a weaker predictor of the specific criteria. These results suggest

that future researchers should consider multiple criteria of leadership effectiveness.

Word count: 246 words
Keywords: leadership; effectiveness; multi-source feedback
Division: Organizational Behavior

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Many leadership researchers have found support for the notion that bosses, peers,

direct reports and managers themselves find different leadership roles important for

effectiveness. This finding is typically explained by arguing that direct reports observe one

side of a manager’s behavior while peers or bosses observe another, or by arguing that

different observers value different behaviors. There is, however, a much simpler explanation:

Direct reports, peers and bosses associate different leadership roles with effectiveness

because they use different definitions of effectiveness.

This explanation has been neglected by most leadership researchers. In most cases,

they have continued to use a single general assessment of effectiveness, as they focus on

multi-source feedback. This contrasts with other research areas such as organizational

effectiveness, team effectiveness, job satisfaction, or commitment in which the interests of

different stakeholders, or the different facets of the criterion measure, are considered a critical

part of the phenomenon. In this paper, we begin to apply this stakeholder perspective to the

study of leadership effectiveness. We argue that the term “overall effectiveness” has a

different meaning for direct reports than it does for peers, bosses, or managers, and that these

differences become clearer when multiple criteria of effectiveness are examined.

Following a brief review of the treatment of these issues in the leadership literature,

we examine the use of a stakeholder or facet approach in several other literatures. Next, we

present a set of hypotheses, derived from the stakeholder perspective, and test them using

data on 1,254 focal managers, including data from 10,737 bosses, peers, and direct reports,

using the model & measures developed by Denison & Neale (1996). The results of these

analyses confirm the general pattern in which different respondent groups favor different

leadership roles when making judgements about overall effectiveness. But the results also

show that the use of three different criteria of effectiveness help to clarify the particular

perspective that each respondent takes when judging overall leadership effectiveness.

3

Multi-Source Feedback Research

Leadership research applying the multi-source feedback paradigm in most cases

supports the notion that members of a manager’s role-set differ in the behaviors they see as

most critical for leadership effectiveness. For example, Bernardin and Alvares (1975) assert

that the organizational level of the constituent (relative to the ratee) has an impact on the

perceptions of what constitute critical leadership behaviors. It is important for managers to

know what various constituents consider critical leadership behaviors, because constituents

“make decisions to give or withhold resources, such as information, materials and their own

efforts, that are critical to a manager’s success in performing his or her job” (Tsui, Ashford,

St. Clair, & Xin, 1995, p. 1516).

This literature has demonstrated a number of interesting empirical findings. Pfeffer

and Salancik (1975) found that housing supervisors’ perceived expectations of their

subordinates were more important in influencing their social behaviors, while the perceived

expectations of their bosses were more important in determining their work-related behavior.

Salam, Cox, and Sims (1997) found that the subordinates’ perceptions of leadership

behaviors had different relationships with effectiveness depending on the rater of

effectiveness. Tsui (1984) found that the managers’ own perceptions of which leadership

roles were most strongly associated with effectiveness differed significantly from the

perceptions of their subordinates, peers, and superiors. Using a sample of public utility

managers, Hooijberg and Choi (2000) found support for the existence of distinct leadership

effectiveness models for managers themselves, direct reports, peers, and bosses. Others have

argued that not only the rater-ratee relationship influences the leadership behavior-

effectiveness association but so does the organizational context (e.g., Eggleston & Bhagat,

1993; Hooijberg & Choi, 2001).

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The above-mentioned studies generally support the notion that, depending on the

perspective and organizational context, different leadership roles are seen as important for

leadership effectiveness. While anywhere from two to eight leadership roles were examined

in these studies, each study employed only one overall assessment of effectiveness.

The same research cited above, however, does provide indications that using a single

criterion variable may hide interesting relationships. Church and Bracken (1997), for

example, in their review of the Salam, Cox, and Sims (1997) article in their special issue on

360-degree feedback, state that “it is interesting to learn that leaders who challenge the

formal system may tend to receive higher performance ratings from their followers (i.e.,

direct reports) but lower performance ratings from their supervisors” (p. 153). If the same

behavior influences overall effectiveness differently depending on the rater then this suggests

that the direct reports and supervisors in the Salam, et al. (1997) study use different criterion

variables even though both label them overall effectiveness. Research in other areas such as

organizational effectiveness, team effectiveness, job satisfaction, organizational commitment,

and careers have acknowledged this phenomenon and suggest that it is useful to break down

an overall criterion assessment into relatively independent component parts.

Stakeholder and Facet Approaches in Other Literatures

Although the concept of multiple stakeholders with different perspectives, needs, and

demands has had little impact on the leadership literature, it has been a central feature of

research in several other areas. The area of organizational effectiveness, for example, has a

basic grounding in Ashby’s concept of requisite variety (Ashby, 1952) and has long held that

organizations must serve multiple constituencies who make competing demands (Seashore,

1983; Quinn & Rohrbaugh, 1983). This basic framework has influenced many aspects of

organizational theory (Clarkson, 1995; Mitchell, Agle, & Wood, 1997; Lewin, Long, &

5

Carroll, 1999). More recently, Schneider (2001) has used this background to being to

develop a stakeholder perspective on organizational leadership.

The stakeholder perspective has also had a considerable impact on the study of team

effectiveness. Contemporary teams often operate in complex goal environments. Thus,

comparing teams across levels, functions, geography, and time all suggest that a judgement of

overall effectiveness will be less useful than a careful consideration of the needs of different

constituencies (Denison, Hart, & Kahn, 1996; Cohen & Bailey, 1997; Katzenbach & Smith,

1994). This area of research also helps provide a second model of how to examine leader

effectiveness from a stakeholder perspective.

In addition, several other areas of research have taken an approach that focuses on

“facets” as a way to define important criterion variables. For example, many researchers

have divided overall job satisfaction into various facets and have acknowledged that, “the

effects of personality dispositions on all facets and global satisfaction items are not

necessarily uniform” (Dorman & Zapf, 2001: 499). In addition to examining overall job

satisfaction, these researchers have examined such dependent variables as satisfaction with

supervisor, pay, coworkers, promotion and work (e.g., Jung, Dalessio & Johnson, 1986),

burnout (e.g., Klein & Verbeke, 1999), and openness to change (Wanberg & Banas, 2000). A

similar approach has been taken to examining organizational commitment. In this area,

researchers have examined in-role and extra-role organizational citizenship behaviors (e.g.,

Morrison, 1994), intent to leave the organization (e.g., Levine, 1993), and absenteeism. Derr

(1986; 1987) observes that the careers literature has been dominated by a getting-ahead

orientation. As an alternative, he distinguishes five career orientations rather than just one

and argues that people with a different career orientation value different aspects of their work

environment. In other words, depending on their career orientation they hold different

definitions of career success. Researchers have found that these criterion variables, while

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being components of overall satisfaction, commitment or career success, are predicted by

different independent variables depending on the context in which they are examined.

Interestingly, while in much of the leadership literature researchers seem to have

relied on a single, overall measure of effectiveness, early studies such as those conducted by

Seashore, Indik and Georgopoulos (1960) and Friedlander and Pickle (1968) have often

pointed out that the correlations among various effectiveness criteria are generally low and

sometimes even negative. Few researchers have followed up on those findings by examining

more than one criterion variable. There are several exceptions.

Zammuto, London and Rowland (1982), in a multi-source study of hospital nurses

and university resident advisors, explicitly examined whether overall performance means the

same to different raters. They found that different groups of raters “appeared to focus on

different aspects of performance in their evaluations of overall performance” (p. 649).

Borman and Motowidlo (1993) also argued for expanding the domain of criterion variables

and proposed that we should distinguish between task and contextual performance.

Motowidlo and Van Scotter (1994) found support for the notion that task and contextual

performance contribute independently to overall performance. While Antonioni and Park

(2001) acknowledge the distinction between task and contextual performance in their study of

multi-source feedback and affect, they focus only on the contextual performance criterion.

Given these approaches have been so central in other literatures, it seems important to

explore the idea that direct reports, peers and bosses use different criteria of effectiveness.

Given that we are entering a relatively new area, we test four general hypotheses.

HYPOTHESES

Consistent with findings in multi-source feedback research, we expect that bosses,

peers, and direct reports will vary in the extent to which they see various leadership roles as

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critical for overall effectiveness. This hypothesis asserts that our findings regarding an

overall measure of effectiveness will reflect the typical findings in the existing literature.

P1: Direct reports, peers, and bosses associate different leadership roles and
in different degrees with overall effectiveness.

The more important contribution of this paper, however, is to examine the impact of

multiple criteria of leadership effectiveness. In order to do this, we selected three additional

criteria of effectiveness that we thought would be valued differently by direct reports, peers,

and bosses: 1) the degree to which the leader serves as a role model in their organization, 2)

the future potential of the leader, and 3) their effectiveness in customer relationships. We

briefly elaborate on these three criteria to formulate our hypotheses.

Direct reports look at the behavior of their leaders to see whether they “walk the talk.”

In other words, can they really believe that their leader is a role model? We expect that direct

reports will be more concerned with the degree to which their boss is a role model and that

peers and bosses are more concerned with actual results, rather than the way in which they

were received. Thus, we propose that:

P2: Direct reports will associate leadership roles more strongly with the role-
model criterion than will peers or bosses.

Peers will look to see who among them has the most potential to be a leader in the

future. In assessing that they may take into consideration current performance but also assess

to what extent the person is ready for the next level of leadership. Peers do as a form of

social comparison (i.e., “who are my competitors?”) and from a point of view of objectively

assessing their colleagues performance. We expect peers to be more concerned with this

criterion relative to direct reports and bosses. Therefore, we propose that:

P3: Peers will associate leadership roles more strongly with the future
leadership potential criterion than will direct reports or bosses.

8

Bosses will be most concerned with current results. One of the ways I which they

assess this is by examining the quality of the relationships their managers have with the

internal and external customers. We do not say that direct reports and peers do not feel

concerned about customer relationships, just that this criterion will be more prominent in the

minds of bosses than in the minds of direct reports and peers. We propose, therefore, that:

P4: Bosses will associate leadership roles more strongly with the customer
relationship criterion than will direct reports or peers.

METHODS

Sample

1254 Managers participated in the study between 1996 & 2001. In addition to the

responses from the managers themselves we received responses from 1201 bosses, 4518

peers, and 4323 direct reports. Of the participating managers 25% were female, 60% had at

least a Bachelor’s degree, 66% were between the ages of 30-49, 85% had been at least 2

years with their company, and 85% were White Caucasian. This sample of managers came

from a broad collection of companies in a broad range of industries, and include both private

and public sector managers. Approximately 75% of these managers reside in North America,

with approximately 15% in Europe and 10% in Asia.

Measuring Leadership Behaviors

To define the leadership roles for this study we used Denison & Neale’s (1996)

leadership framework (see Figure 1). Denison identifies four broad leadership traits;

involvement, consistency, adaptability & mission. Each of these traits is measured with three

indexes made up of eight survey items each.

Insert Figure 1 About Here

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Involvement - Building human capability, ownership and responsibility. Individual

managers who know how to create "high-involvement" strongly encourage others to be

involved and create an environment of experimentation and exploration, as well as a sense of

ownership and responsibility.

Highly involved individual managers depend on informal, voluntary and implicit

leadership skills to move their work group or organization forward rather than formal,

explicit, bureaucratic directives. Out of this sense of ownership grows a greater commitment

to the organization, an increasing capacity for leadership, and a sense of autonomy.

Receptivity to the ideas of others increases leadership quality and improves implementation

of new ideas. The three measures of the Involvement role are: Empowers People; Builds

Team Orientation; and Develops Organizational Capability.

Consistency - Defining the values and systems that are the basis of strong leadership.

Consistency provides a central source of integration, coordination and control. Consistent

individual managers develop a mindset and a set of operations that create an internal system

of governance based on consensus. They have highly committed employees, key central

values, a distinct method of doing business, a tendency to promote from within, and a clear

set of "do's and don'ts."

Consistency produces leadership based on a shared system of beliefs, values, and

symbols that are widely understood by members of a work group or organization. Implicit

control systems based on internalized values can be a more effective means of achieving

coordination and integration than external-control systems that rely on explicit rules and

regulations.

The power of leadership consistency is particularly apparent when organizational

members encounter unfamiliar situations, when it enables leadership to react in a predictable

way to an unpredictable environment by emphasizing a few general, value-based principles

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on which actions can be grounded. The three measures of the Consistency role are: Defines

Core Values; Works to Reach Agreement; Manages Coordination and Integration.

Adaptability - Translating the demands of the organizational environment into action.

Successful individual managers hold a system of norms and beliefs that support his or her

capacity to receive and interpret signals from the environment and translate them into internal

changes that increase the organization's chances for survival, growth and development.

Three aspects of adaptability influence an individual manager's effectiveness. First is

the ability to perceive and respond to the external environment. Successful individual

managers are very focused on their customers and their competitors. Second is the ability to

respond to internal customers, regardless of level, department or function. Third is the

capacity to restructure and re-institutionalize a set of behaviors and processes that allow the

organization and its employees to adapt. Without this ability to implement adaptive response,

an organization cannot be effective. The three measures of the adaptability role are Creates

Change, Emphasizes Customer Focus, and Promotes Organizational Learning.

Mission - Defining a meaningful long-term direction for the organization. The

individual manager's mission provides purpose and meaning by defining goals and a purpose

for his or her unit. It provides a clear direction that defines an appropriate course of action for

the individual manager and his/her employees. The individual manager is able to align the

mission and goals for his/her functional area or unit to the mission and goals of the

organization. A sense of mission allows an individual manager to inspire, to direct activities,

and to formulate strategy by envisioning a desired future state. Being able to translate his/her

mission into action contributes to both short and long-term commitment to the organization.

Success is more likely when individual managers and organizations are goal directed. The

three measures of the Mission role are: Defines Strategic Direction and Intent; Defines Goals

and Objectives; and Creates Shared Vision.

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Validity and Reliability

To establish the reliability and validity of these measures, we include in this paper a

brief summary of our validity testing. This model was developed from the general model of

organizational culture and effectiveness developed by Denison (Denison, 1990; Denison &

Mishra, 1995). Ninety-six items are used to define twelve separate measures of the four basic

traits. All items were rated on a seven-point agree-disagree scale. A response of seven

indicates that the respondent strongly agrees. All items are presented in Appendix A.

Each of the indexes is highly reliable. Indeed, reliable measures can be formed form

five of the eight items in all cases. The alpha coefficients for these measures are presented in

Table 1. A correlation matrix of the twelve measures is presented in Appendix B.

Insert Table 1 About Here

Next, we present a confirmatory factor analysis that tests for the presence of three

separate measures for each leadership traits. This analysis focused on the 24 items used for

each trait, to see if they fit into the three separate measures as prescribed by the framework.

The fit statistics presented for these models shows that the three-factor model fits better for

each trait than does a one-factor model. The fit statistics also show that a one-factor model

fits quite well in three of the four traits, but fits less well for the Adaptability role. This

analysis is presented in Table 2.


The next step in our validity analysis was to analyze the twelve measures to see if

they in fact fit into the four basic traits defined by the model. The results of this analysis are

presented in Table 3. These results show that the four-factor model is indeed a significant

12

improvement over a one-factor model. The model parameters for this model are presented in

Figure 2.


Insert Figure 2 About Here

This analysis helps to establish the validity of the model and measures. Similar

results were obtained for separate analyses of each of the sub-groups of bosses, peers, direct

reports and the leaders themselves. But a detailed discussion of these results is well beyond

the scope of this paper. For the purposes of this paper we focused on the four main

behavioral traits of involvement, consistency, adaptability, and mission as our independent

variables.

Dependent Variables

This study uses four dependent variables. The first is a question about overall

effectiveness to compare and contrast our results with those of previous research. This item

asks, “Overall this individual is a highly effective leader.” In addition, we use three items to

assess the focal manager’s effectiveness as a role model (“This individual’s leadership style

serves as a role model for others in the organization”), his/her potential as a future leader

(“This individual has great potential as a future leader in our organization”), and his/her

effectiveness in relating to customers (“This individual develops high quality relationships

with internal and external customers”). These last three criteria of effectiveness will help us

explore to what extent overall effectiveness is an effective criterion variable.

RESULTS

The regression analyses presented in Table 4 show that our results are consistent with

previous multi-rater feedback research. The analyses show that involvement has the

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strongest association with overall effectiveness for direct reports and that mission has the

strongest association with overall effectiveness for the bosses. The strength of the association

between involvement and overall effectiveness is strongest for the direct reports, weaker for

the peers and weaker yet for the bosses. The pattern for mission is quite different. The

association between mission and overall effectiveness is strongest for the bosses, weaker for

the peers, and weakest for the direct reports. This confirms that for overall effectiveness, in

general terms, direct reports have a more internal focus and bosses a more external focus.

This is consistent with findings by Hooijberg and Choi (2000; 2001).


The results of the regression analyses for the three components of effectiveness show

interesting differences from this overall picture. Table 5 shows the results for the regression

analyses of the effectiveness of the leader as role model. Surprisingly we see few differences

among the direct reports, peers, and bosses as to which leadership roles have the strongest

association with perceptions of the leader as role model. Consistent with hypothesis 2 the

direct reports perceived a slightly stronger association between involvement and consistency

and the leader as a role model effectiveness than the peers and bosses, but these differences

were small.

Involvement and consistency have the strongest association with a leader’s

effectiveness as a role model for the organization for direct reports, peers and bosses alike.

Adaptability has little or no association with a leader’s effectiveness as a role model for the

organization. Only mission has a stronger association with a leader’s effectiveness as a role

model for bosses (.39) than it has for direct reports (.27) and peers (.25).

14

These results show that effectiveness as a role model comes from empowering people,

building teams, developing people, defining core values, working to reach agreement, and

creating coordination and integration.


The results for the second effectiveness criterion of future leadership potential are

very interesting because the three groups of raters associate different leadership roles with

this criterion. Table 6 shows that direct reports associate the involvement, consistency and

adaptability leadership roles with future potential as a leader; peers associate the consistency

and adaptability leadership roles with future potential as a leader; and bosses associate the

adaptability and mission leadership roles with future potential as a leader. The bosses do not

see a significant association between involvement and future potential as a leader.

While all three groups of raters associate a different set of leadership roles with

effectiveness as a future leader, hypothesis 3 does not get support. That is, peers do not

associate leadership roles more strongly with this role than do the direct reports and bosses.

The one consistent part in this picture is the role of the adaptability leadership role.

While the adaptability role had only a small association with effectiveness as a role model,

direct reports, peers and bosses all see a strong association between the adaptability role and

effectiveness as a future leader. Especially bosses see a strong relationship here.


Table 7 presents the results for the third criteria of effectiveness in customer relations.

The results provide some support for the proposition that the bosses see the strongest

association between the leadership and effectiveness with customers. This is especially true

15

for the strong association bosses see between consistency and customer relationship

effectiveness (.66).

Overall, however, the results are similar for the direct reports, peers and bosses. All

three groups see the strongest association between consistency and adaptability and customer

relationship effectiveness. It is interesting to see that effectiveness in managing the

relationships with internal and external customers comes from balancing seemingly opposite

roles (see Figure 1). This seems to suggest that the leaders who are judged most effective

with respect to the customer effectiveness criterion are in fact those that manage the value

chain of internal and external customers (Denison, 1997). Interestingly enough, the mission

leadership role has no association with customer relationship effectiveness in the perceptions

of the bosses and even a small negative association in the perceptions of the direct reports (-

.06) and peers (-.11).


DISCUSSION

This paper set out to explore the extent to which differences among raters in multi-

source feedback studies stem from implicit differences in definitions of overall effectiveness.

We first confirmed the basic finding in multi-source feedback that different groups of raters

tend to associate different leadership roles with overall effectiveness. Specifically, we

confirmed two general findings. First, direct reports see a stronger association between

internally oriented leadership roles, such as involvement, and overall effectiveness than do

peers and bosses. Second, bosses see a stronger association between externally oriented

leadership roles, such as mission, and overall effectiveness than do direct reports and peers.

Then we explored the extent to which these same relationships would hold up when

we explored components of overall effectiveness. Specifically we explored three components

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of overall effectiveness: effectiveness as a role model; effectiveness as a potential future

leader; and effectiveness in relationships with internal and external customers. We found

limited support for our formal propositions, but did uncover several interesting findings.

Most interesting were the findings that different leadership traits had strong

associations with the three effectiveness components. Involvement, adaptability and mission

showed interesting variations across the three effectiveness criteria. Consistency, in contrast,

showed great uniformity across the three effectiveness criteria.

Involvement showed a strong association with the effectiveness criterion of leader as

a role model, but much weaker associations with the effectiveness criteria of future potential

leadership and quality of customer relationships.

Adaptability role showed the weakest association with overall effectiveness and

leader as role model of all four leadership roles, but it did show a strong association with

future potential leadership and quality relationships with customers. In particular, the contrast

for the bosses for the association between adaptability and overall effectiveness (.18) and for

the association between the adaptability role and future potential leadership (.53) is striking.

Based on these results, we would conclude that it is highly important to include multiple

criteria of effectiveness in future leadership studies. A study using overall effectiveness

measures only would conclude that adaptability was not very important. Using multiple

effectiveness measures adds a powerful caveat – adaptability appears to be highly important

for organizations that want to have customers and leaders in the future!

Mission also shows some interesting effects, several of which are in the opposite

direction of the adaptability role. Mission has strong associations with overall effectiveness,

but none of its associations with the more specific criteria of effectiveness exceed that of the

association with overall effectiveness for any of the three groups of raters.

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The results even show negative associations between mission and the quality of

customer relationships. This seems to indicate that having a shared vision and a clear

strategy at best (for bosses) does not affect the quality of relationships with internal and

external customers, and at worst (for direct reports and peers) may get in the way!

Consistency showed the opposite effect of mission. In all but one case, it exceeded

the strength of the associations with overall effectiveness. It showed especially strong

associations with the effectiveness criterion of the quality of relationships with internal and

external customers.

In general, consistency seems to play an important part in the perceptions of all three

groups of raters for all three criteria of effectiveness. If we had used only the overall

effectiveness criterion we would have been unable to detect this central role of consistency.

It indicates that defining core values, working to reach agreement and managing coordination

and integration represent key leadership behaviors for managers’ effectiveness as a role

model, as a future potential leader, and for having high quality relationships with both

internal and external customers.

Given that this was an exploratory study, we expect that future research will build a

more comprehensive framework of leadership effectiveness. Company, industry, and other

contextual factors may also have a strong effect. But at a minimum, the strong contrast

between the strength of the results for mission and consistency between overall effectiveness

and the more specific criteria indicates that researchers have not yet uncovered all of the

criteria that make up leadership effectiveness. Thus, we conclude that this exploratory study

has shown that a single criterion of overall effectiveness can hide many interesting and

important dynamics. In answer to the question posed by this paper, we conclude that a focus

on overall effectiveness alone is not very effective!

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20

Figure 1.
Denison Leadership Development Model

21

0.18 Empower

0.17 Team 0.84
0.91
0.19 CapDev 0.90 Involve 1.00
0.23 Core
0.96
0.82
0.28 Agree 0.80 Consist 1.00 0.91
0.81
0.22 Coord
0.97
0.89
0.26 CreCh 0.85 Adapt 1.00 0.92
0.71
0.35 Customer 0.79 0.94
0.18 OrgLearn
Mission 1.00
0.92
0.12 StrDir 0.87
0.95
0.16 Goal

0.18 Vision
Chi-Square=3401.55, df=48, P-value=0.00000, RMSEA=0.078

22

Table 1. Alpha Coefficients by Index

Trait Index
Alpha (α)
Involvement Empowers People α = .89
Builds Team Orientation α = .93
Develops Capability α = .92

Consistency Defines Core Values α = .92
Works to Reach Agreement α = .93
Manages Coordination & Integration α = .92

Adaptability Creates Change α = .93
Emphasizes Customer Focus α = .93
Promotes Organizational Learning α = .88

Mission Defines Strategic Direction & Intent α = .93
Defines Goals & Objectives α = .93
Creates Shared Vision α = .94

Table 2. Confirmatory Factor Analysis Results (Total N=11,991)

Model χ2 df RMSEA SRMR GFI AGFI NNFI CFI ∆χ2(df)
Measurement Models
Items and Indexes by Trait
(24 × 24 Item Covariance Matrix)

Involvement
One-index model 37482.45 252 .119 .048 .77 .73 .84 .86
Three-index model 19261.63 249 .085 .044 .87 .84 .90 .91 1822.82 (3)***
Consistency
One-index model 63119.28 252 .153 .068 .67 .61 .78 .80
Adaptability
One-index model 69551.14 252 .162 .175 .65 .58 .74 .76
Mission
One-index model 38765.86 252 .120 .044 .77 .72 .86 .88

*** p < .001

Table 3. Structural Equation Modeling Results (N=11,991)

Model χ2 df RMSEA SRMR GFI AGFI NNFI CFI ∆χ2(df)
Testing the Theoretical Model
Twelve Indexes and Four Traits
(12 × 12 Covariance Matrix)
One-trait model 11295.21 54 .135 .029 .86 .80 .92 .94
Four-trait model 3401.55 48 .078 .019 .95 .92 .97 .98 7893.66 (6)***

*** p < .001

23

Table 4
Overall Effectiveness Regressions

Rater
Leadership Roles Direct Report Peer Boss
Involvement .48 .39 .28
Consistency .33 .25 .32
Adaptability .19 .24 .18
Mission .27 .38 .48
R2 .66 .63 .63

Table 5
Leader as Role Model Effectiveness Regressions
Rater
Adaptability .09 .21
Mission .27 .25 .39
R2 .70 .64 .62

Table 6
Future Potential as Leader Effectiveness Regressions
Rater
Involvement .33 .22
Mission .17 .26 .43
R2 .60 .53 .48

Table 7
Leader Relationships with Customers Effectiveness Regressions
Rater
Mission -.06 -.11
R2 .61 .56 .55

24

Appendix A
Denison Leadership Development Survey: Items by Index and Trait

Trait Index Item
Involvement Empowers People 1. Sees that decisions are made at the lowest possible level.
2. Shares information so that everyone gets the information s/he needs.
3. Creates an environment where everyone feels that his/her effort can make a difference.
4. Involves everyone in shaping the plans and decisions that affect them.
5. Ensures that the necessary resources are available to do the job.
6. Conveys confidence in people’s competence to do their job.
7. Encourages others to take responsibility.
8. Delegates authority so that others can do their work more effectively.
Builds Team 9. Builds effective teams that get the job done.
Orientation 10. Encourages effective teamwork by others.
11. Knows how to use a team approach to solve problems.
12. Knows when to use a team approach to solve problems.
13. Fosters teamwork within the work unit.
14. Knows how to design work so that it can be done by a team.
15. Values the contributions of the people s/he works with.
16. Acknowledges and celebrates team accomplishments.
Develops 17. Builds the capabilities of employees into an important source for competitive advantage.
Organizational 18. Knows how to utilize the diversity of the workforce.
Capability
19. Coaches others in the development of their skills.
20. Is sensitive and responsive to diversity issues when dealing with others.
21. Helps direct reports create realistic development plans and create opportunities for them.
22. Uses rewards and recognition to motivate good performance.
23. Develops his/her own people so that they are ready for promotion.
24. Builds employee skills so that the organization always has good “bench strength”.

Consistency Defines Core Values 25. Does the “right thing” even when it is not popular.
26. “Practices” what s/he “preaches”.
27. Has an ethical code that guides his/her behavior.
28. Helps define the organization’s culture, values, and ethical standards.
29. Helps employees learn to apply the organization’s values when dealing with others.
30. Lives up to promises and commitments.
31. Has earned the confidence and trust of others.
32. Clearly articulates a set of fundamental beliefs that are not negotiable.
Works to Reach 33. Helps people to reach consensus, even on difficult issues.
Agreement 34. Works to find alternatives that will benefit all when confronted with a disagreement.
35. Helps people in his/her organization be effective at reaching agreement on key issues.
36. Incorporates diverse points of view when making decisions.
37. Promotes constructive discussion among people with conflicting ideas.
38. Is willing to compromise when necessary in order to reach agreement.
39. Works toward win/win solutions when disagreements occur.
40. Reconciles differences by seeking to clarify and understand other’s points of view.
Manages 41. Works hard to foster the alignment of goals across all functional areas.
Coordination and 42. Builds coordination across departmental boundaries.
Integration
43. Uses informal networks to get things done.
44. Builds relationships with key people in other functions and levels.
45. Helps create an environment that facilitates coordination of projects across functional units.
46. Makes certain that things do not “fall between the cracks”.
47. Builds support for ideas through contracts with other departments.
48. Establishes mechanisms that facilitate effective cross-functional communication.

25

Appendix A, Continued
Denison Leadership Development Survey: Items by Index and Trait
Trait Index Item
Adaptability Creates Change 49. Continuously looks for new and better ways to do work.
50. Encourages creative thinking.
51. Challenges the way that things have always been done and looks for a better way.
52. Champions change that goes beyond the scope of his/her job.
53. Challenges organizational practices that are nonproductive.
54. Foresees problems before they arise.
55. Serves as a model that creates change in other parts of the organization.
56. Generates innovative ideas and solutions to problems.
Emphasizes 57. Encourages direct contact with customers.
Customer Focus 58. Responds quickly and effectively to customer feedback.
59. Ensures that employees have a deep understanding of customer wants and needs.
60. Uses customer comments and recommendations to change organizational practices.
61. Actively seeks feedback from customers.
62. Continuously tries to improve service to customers.
63. Incorporates customer input into the planning process.
64. Recognizes the need to respond quickly to customer concerns.
Promotes 65. Deals constructively with failures and mistakes.
Organizational 66. Views failures as an opportunity for learning and improvement.
Learning
67. Creates a working environment in which learning is an important objective.
68. Openly accepts criticism without being defensive.
69. Works well under conditions of ambiguity and uncertainty.
70. Knows the strengths and weaknesses of the competition.
71. Encourages others to learn about the best practices in the industry.
72. Helps others to understand “the big picture”.

Mission Defines Strategic 73. Provides employees with a clear mission that gives meaning and direction to their work.
Direction & Intent 74. Implements strategies by developing clear goals, objectives, and tactics.
75. Focuses on long-term strategies, rather than quick fix “band-aid” solutions.
76. Effectively allocates resources in line with strategic priorities.
77. Helps define strategies and tactics that keep his/her organization competitive.
78. Has a clear strategy for the future of his/her own part of the organization.
79. Is able to meet short-term demands without losing sight of the long-term strategy.
80. Communicates a clear and compelling rationale for the business strategy.
Defines Goals & 81. Sets clear goals that are ambitious, but realistic.
Objectives 82. Holds individuals and teams accountable for achieving goals and objectives.
83. Provides clear directions and priorities for employees.
84. Establishes high standards of performance.
85. Involves employees in the goal-setting process so goals and objectives are understood and shared.
86. Tracks progress against stated goals.
87. Effectively communicates the goals and objectives of the organization.
88. Aligns goals and objectives with the strategy and vision.
Creates Shared 89. Helps create a shared vision of what this organization will be like in the future.
Vision 90. Communicates the organizational vision to his/her employees.
91. Uses the vision to create excitement and motivation for employees.
92. Realizes short-term goals without compromising long-term vision.
93. Organizes work so that everyone sees the connection between the vision and daily activities.
94. Translates the vision into reality in a way that helps guide individual action.
95. Inspires others with his/her vision of the future.
96. Engages others in ways that ensure buy-in and commitment.
(Self survey item starts with “I…”; Other raters’ survey item starts with “This person…”) Copyright © 2000 Daniel Denison

26

Appendix B
Correlation Matrix for Twelve Indexes
(Alpha Coefficients in Parentheses)

(N=11,991)
Index Mean STD 1 2 3 4 5 6 7 8 9 10 11 12
1 Empowers People 5.53 .95 (.89)
2 Builds Team Orientation 5.54 1.00 .83 (.93)
3 Develops Org. Capability 5.22 .99 .79 .81 (.92)
4 Defines Core Values 5.69 .95 .74 .74 .75 (.92)
5 Works to Reach Agreement 5.43 .96 .72 .75 .72 .72 (.93)
6 Manages Coordination & Integration 5.48 .94 .71 .74 .73 .74 .72 (.92)
7 Creates Change 5.47 1.00 .67 .69 .72 .72 .66 .73 (.93)
8 Emphasizes Customer Focus 5.63 .93 .60 .61 .64 .62 .60 .66 .66 (.93)
9 Promotes Org. Learning 5.41 .90 .72 .73 .76 .74 .75 .73 .75 .70 (.88)
10 Defines Strategic Direction & Intent 5.41 .98 .72 .73 .77 .76 .67 .76 .78 .68 .77 (.93)
11 Defines Goals & Objectives 5.51 .96 .71 .72 .76 .74 .64 .75 .73 .67 .73 .86 (.93)
12 Creates Shared Vision 5.21 1.04 .73 .75 .78 .73 .69 .75 .76 .68 .77 .85 .81 (.94)

Note. All correlation coefficients are significant at p < .0001.

27

What Makes Leaders Effective? A Stakeholder Approach to Leadership Effectiveness

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