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Catastrophic Leadership Failure: An Overview

By Henry L. Thompson, Ph.D.

Why do smart leaders with proven track records sometimes suddenly begin making really bad decisions—or no decisions? There are numerous well-known public examples, e.g., Enron, WorldCom, Tyco, the American Red Cross, Katrina, etc. CEOs are being replaced at a record high rate of 7.6 per business day. Over 28% of these CEOs were in position less than three years, and 13% less than one year (Challenger, Gray & Christmas, 2005). Research (Thompson, 2005) shows that stress and its impact on cognitive and emotional abilities may provide at least a partial explanation of what I call Catastrophic Leadership Failure.

Cognitive ability (IQ) and emotional intelligence (EI) abilities are required for successful leader performance—at all levels. Recent findings combined with my experience and research on leadership, stress, IQ and EI over the last 25 years indicate that when a leader’s stress level is sufficiently elevated— whether on the front line of a manufacturing process, in the emergency room, the Boardroom or on the battlefield—his/her ability to fully and effectively use IQ and EI in tandem to make timely and effective decisions is significantly impaired. This impairment often leads to catastrophic results.

A war for talent is underway. Finding, recruiting and hiring talented leaders with high IQ and EI is only the first battle of the war. The war will be won or lost by those who are able to control stress at the individual and organizational levels. Stress negates talent, IQ and EI.

Intelligence and Leadership

Research clearly demonstrates that cognitive ability (IQ) directly impacts leader performance (Schmidt & Hunter, 1998; Sternberg, 2001; Thompson, 2007). Schmidt and Hunter (1998) reviewed 85 years of leadership research and found that general mental ability (IQ) was a strong predictor of leadership success (r=.51, R2=.26). As the complexity of the job increases so does the value of IQ. 

My observations and empirical research on the relationship of IQ to leader performance over the last twenty five years validates that IQ is predictive of “cognitive” learning ability and speed of information processing, both of which make a significant contribution to leadership performance, particularly at the higher leader role levels. For example, I have found a steady increase in the average Leader IQ from the front line leader (IQ average of 100) to the CEO (IQ average of 125), especially in larger organizations (Thompson, 2007). IQ tends to be the price of admission for executive level leadership positions. It is very difficult to rise up the corporate ladder without an IQ in the 120-125 range.

Emotional Intelligence and Leadership

Over the past decade, emotional intelligence has not only come into being as a credible psychological construct, but a large amount of data has been amassed supporting that EI plays a significant role in the success or failure of the leader, especially at the more senior levels.  There are some reports which suggest that EI might even play a larger role in leader success than IQ (Goleman, 1995; Cherniss, 2004).  Whether IQ or EI contributes the most in leader performance is still debatable at this point. However, EI has been shown to play a significant role at all levels of leadership.

For the purpose of this summary EI is defined as:

A person’s innate ability to perceive and manage his/her own emotions in a manner that results in successful interactions with the environment, and if others are present, to also perceive and manage their emotions in a manner that results in successful interpersonal interactions (Thompson, 2006).

Note that this definition does not require interaction with another person. EI involves managing/ controlling the Awareness and Appraisal of emotions and the resulting action in a manner that produces successful outcomes, whether in the presence or absence of others.

When a stimulus occurs, a signal comes into the brain to the thalamus, which acts like an air traffic controller. The thalamus sends information to various parts of the brain, particularly “up” to the prefrontal cortex (PFC) and “down” to the amygdala (Goldberg, 2001). The PFC, or CEO of the brain, controls “higher” level thinking processes, e.g., logic, analysis, decisionmaking, etc.—a significant portion of the leader’s IQ.

The amygdala, sometimes described as the emotional center, plays a major role in emotional responses. It responds incredibly fast to incoming stimuli. But, fortunately, in most cases the PFC is able to exert control over the amygdala reactions and help the leader avoid what Daniel Goleman (1995) calls “amygdala hijacking.”  

When the right blend of thinking and control from the PFC is combined with the right amount of emotion from the amygdala, a person may execute an appropriate action pattern to respond successfully to a particular event (stimulus). If this process works “correctly,” then that person is said to have performed intelligently, both emotionally and cognitively.

Successful leadership interactions require a certain amount of conscious intention using both the PFC and the amygdala to create a blended response. When something, such as stress, interferes with the functioning of the PFC, the probability of making an inappropriate interpersonal decision increases.

Stress and Leadership

Each year stress in the workplace cost US industry over $350,000,000 and is linked to each of the six leading causes of death: heart disease, cancer, lung ailments, accidents, cirrhosis of the liver and suicide. Stress was dubbed as the 20th century disease and is quickly becoming the disease of the 21st century as well.

When a leader encounters a stressful event, a cascade of neurotransmitters and hormones is released into his/her system resulting in a short-term increase in strength, concentration and reaction time. These changes may be helpful in the initial response to a stressful event. However if the stress becomes high enough for a long enough period of time, deleterious effects will follow.

The initial release of neurotransmitters and hormones into a leader’s system begins to affect major brain systems, particularly the PFC and the amygdala. Too much stress “turns off” the PFC, resulting in a drop in IQ and ability to control the amygdala. Stress temporarily reduces IQ (Arnsten, 1998)! At the same time, the increased stress “turns on” the amygdala creating an overly sensitive, heightened state of emotion. A leader loses a significant amount of ability to “control” his/her emotions, thus becoming not only temporarily cognitively impaired, but also less emotionally intelligent!

To read or print a PDF of this complete Article, click here.

© 2007 Henry L. Thompson, Ph.D

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