The concept of hero leadership came into its own in 1978 when James MacGregor Burns published his Pulitzer Prize winner, in which he described the transformative leader. Such an inspirational figure was described in one of four forms: revolutionary, intellectual, reform, or heroic, with the latter being described as one in which the followers of that heroic leader place great stall in their ability to move mountains, overcome all obstacles, and tackle any crisis.
It’s a concept that is perhaps especially pertinent in politics, as we often elect people and bestow upon them often wholly unrealistic expectations. The futility of this approach is perhaps never more evident than it is during the current coronavirus pandemic, during which a coterie of political and scientific leaders have fronted up to the television cameras, before many of them had to retire to their homes as the virus found its way to the most famous of doors.
Perhaps most pertinent of all has been the plight of British prime minister Boris Johnson, who announced on the 28th March that he had been infected by COVID-19 and would self-isolate for 7 days as a result. This was followed by a subsequent announcement on the 5th April, where the watching world were informed that Johnson had been admitted to hospital as a ‘precautionary measure’, thus rendering the British response to the pandemic in the hands of his nominated deputy, the foreign secretary Dominic Raab.
How important are leaders?
New research from INSEAD explores just what happens to firms who lose their leaders for prolonged periods due to health issues. The researchers explored the financial performance of firms whose leaders are hospitalized, and found the impact is significant.
The study gathered data on around 13,000 Danish SMEs from 1996 to 2012, with the data revealing that a five-to-seven day period of hospitalization for the CEO resulted in profitability of that business falling by 7% during that year. What’s more, this damage was even more severe if the period of hospitalization is longer.
“These results provide suggestive evidence of the setting in which CEO succession and contingency plans may have the most meaningful effect on performance,” the researchers say. “In addition, they point to the possibility of CEO absence as a neglected area of risk exposure, which HR managers should perhaps be aware of so they can effectively intervene if need be.”
This phenomenon seemed to be largely confined to the CEO themselves, with hospitalization of senior managers having about half as big an impact as that of the CEO.
The dip in performance was especially pronounced in firms being led by younger, better-educated, and more experienced leaders, with those in highly human capital intensive industries, which the authors suggest require greater management skill, especially badly effected.
Pandemic response
Of course, grave though the situation with Boris Johnson is, the response to the coronavirus pandemic will require a response from across society, not least of which will be from the healthcare industry. Media reports provide almost daily coverage of the doctors, nurses, and other frontline staff that are suffering as a result of the virus, with sickness rampant through the ranks of healthcare staff.
Is there a similar risk of diminished performance among hospitals and healthcare groups if their CEO falls victim to the virus? In this instance, the picture appears to be somewhat brighter.
Research from academics at Harvard, Lancaster and Bristol Universities explores the impact leadership has on performance levels in the public sector, and in particular that of the UK National Health Service.
Leaders of individual hospitals, often with around 4,500 employees and multi-million pound turnovers were tracked. The hospitals provided an interesting testbed precisely because of recent reforms that had given the leaders a much greater degree of autonomy. This allowed the impact of their leadership to become more profound.
Hospitals are also great test beds because of the wide range of metrics available to document performance levels. This allowed the researchers to explore what aspects of this performance can be influenced by the CEO.
Free flow of talent
The specialized nature of the work meant that talent would often flow from one hospital to another. These movements were monitored alongside the style of the CEO allowed them to test whether the leaders were able to influence multiple employers in the same or similar way. This data was also compared with empirical data on hospital performance after the new leader was hired.
Worryingly, the analysis finds very little evidence that the leader makes any difference to their organization at all.
“Overall, our results indicate that the CEOs of large public hospitals such as those included in the NHS do not bring about changes in hospital performance, a result that stands in stark contrast with earlier findings relating to the private sector and to smaller public sector organizations,” the authors say say.
Lackluster performance
The results are a start contrast to similar studies conducted in the private sector, and indeed in smaller public sector organizations. The authors propose a number of possible reasons for this poor performance of leaders in the NHS.
The first of these is the inherently political nature of the NHS in England. This might encourage not only politicians to meddle, but CEOs to pursue political goals rather than performance goals. In such a scenario, a rational CEO would pursue a strategy of minimizing bad news rather than one of actively trying to increase performance.
This is reflected in the fact that it’s more likely to see variance in the receipt of public honours among hospital CEOs than it is in performance levels, with those paid more more likely to receive honors than their lower paid peers.
A second possible explanation is that the NHS is inherently incredibly complex and that the organizational inertia is too much for the vast majority of CEOs to overcome and have any noticeable impact upon performance, especially given the relatively short timeframe they are in office.
“Regardless of what is the underlying driver of our results, they raise concerns about the plausibility of policy approaches that focus on the use of transient “turnaround” CEOs to improve the performance of individual hospitals,” the authors explain. “A leading NHS manager recently argued that it takes five years for a CEO to make a difference but the average time in post is less than two.”
Of course, this study isn’t looking specifically at the loss of a CEO to sickness, but it is perhaps illustrative of the impact, or lack thereof, should hospital managers fall victim to the virus. As for the impact of Johnson’s hospitalization on the U.K. response, time will tell.
