The Cult of the Charismatic CEO

| October 28, 2002 Issue

As recent corporate scandals have flooded the headlines, politicians and activists aren't the only ones voicing their concerns about corporate leadership: Even investors no longer feel confident banking on corporate America's future. Incidents at AT&T, Enron, Tyco, and WorldCom "have revealed incompetent, unethical, and massively self-serving individuals atop corporations," writes Craig Lambert in Harvard Magazine.

When assistant professor of business administration Rakesh Khurana examined corporate leadership in America today, his research showed a trend toward companies hiring what he deems the "charismatic" CEO from outside, rather than hiring well-qualified executives inside the company. Khurana's new book, Searching for a Corporate Savior: The Irrational Quest for Charismatic CEOs (Princeton University Press), traces the changing image of the CEO. In the 1980s and early '90s, businesses began to see CEOs as motivating, flamboyant leaders, rather than capable administrators.

"Business tried to redefine itself," explains Khurana. "It was no longer about the profane task of making money, but concerned with vision, values, mission -- essentially religious terms." But despite the popular image of the CEO as a determinate of a company's success or failure, Khurana found that relevant business conditions have a greater impact on a corporation's success.

He also warns of the dangers of charismatic leaders. The growing presence of charisma in corporate leadership is "a throwback to an earlier form of authority that proved very unstable," according to Khurana. "The progress of Western civilization has been a movement away from charismatic leadership toward rational authority invested in laws and institutions. After Hitler and Mussolini, Americans were rightly skeptical of charismatic leaders. Separating the individual from the office is one of the great victories of Western society."

--Rebecca Wienbar
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