Corporate Leadership: What makes a wise CEO

Last updated on May 13th, 2019 at 02:46 pm

Have you noticed that some CEOs just seem wiser than others? If you check out Webster’s, it says wisdom “is the quality of being wise…good judgment…learning…knowledge.”

Actually, there is a growing body of psychological research and philosophical inquiry into the subject of wisdom. One major conclusion has emerged regarding wisdom.  Succinctly stated, it has three general aspects: the acquisition of knowledge, the ability to analyze that acquired information, and the capacity to filter this information through the emotions.

The “Berlin Paradigm,” the label given to a group of scholars in Berlin, Germany, stipulates that someone with wisdom illustrates the following (and I quote directly from Stephen Hall, in the May 6 New York Times):

1. Has expert knowledge of both the “facts” of human nature and the “how” of dealing with decisions and dilemmas.

2. An appreciation of one’s historical, cultural, and biological circumstance during the arc of a life span.

3. An understanding of the “relativism” of values and priorities.

4. An acknowledgment, at the level of both thought and action, of uncertainty.

Now that the fundamentals of wisdom are in plain view, let’s go back to the basic question. Why do some CEOs seem to be wiser than others? Or better yet, can CEOs improve the level of wisdom they bring to their business environment? 

I believe the answer is a resounding yes. A three-dimensional wisdom tool developed by Dr. Monika Ardelt at the University of Florida illustrates how this is so.

The cognitive (knowledge) dimension

The wise CEO doesn’t see everything as black and white, but as many shades of gray.  He or she doesn’t try to fit every round peg into a predetermined round hole. Learning and seeking out multiple sources of information is high on their priority lists. Realizing that change requires adaptation and not control, especially as it relates to new employee generations and the needs that they bring to the workplace, is significant.

Here are some illustrations of “unwise” CEO responses to this dimension:

1. Employees either know the answer to a question or they don’t.

2. Ignorance is bliss.

3. Employees are either good or they are bad.

4. Life in our company is the same most of the time.

5. There is only one right way to do the job.

The reflective dimension

Wise CEOs are accountable for their actions and don’t blame others. If an employee is struggling, the CEO tries to understand what is wrong and intervenes. If the management team doesn’t agree on a course of action, the CEO tries to find merit with all sides of the issue.

The CEO, in bad times, does not just give in and feel self-sorrow. Here are some examples of unwise CEO responses to this dimension:

1. It’s often difficult to see things from an employee’s point of view.

2. CEOs are not expected to put themselves in the shoes of an employee who deliberately upsets them.

3. The blame for failure always falls on the CEO.

4. Emotions prevent most CEOs from considering other ways of dealing with major problems.

5. When CEOs see things go wrong, anger and depression tend to overwhelm them.

The affective dimension

Wise CEOs sense and understand the human condition. They know when employees are  happy or unhappy and try to understand why, especially if unhappiness is affecting their performance. They try not to dislike anyone whose performance is satisfactory.

 If an employee needs it, they will offer comfort and support with no encouragement from others. They go out of their way to avoid signs of impatience during a conversation with an employee. Here are some examples of unwise CEO responses to this dimension:

1. When CEOs wish that conversations with certain employees would end and they would leave.

2. When CEOs go out of their way to avoid dealing with an employee’s personal problem.

3. When CEOs get irritated when an employee argues with them.

4. When CEOs categorize the “constant complainers” and refuse to deal with their complaints.

5. When CEOs find themselves uncomfortable with certain groups of employees because of pre-existing stereotypes such as age, sex or ethnic origin.

As the Berlin group pointed out, wisdom in action reveals itself as good judgment, shrewd advice, psychological insight into people’s behavior and motivations, control of emotions, and empathic understanding. Many people have thought that these attributes only come with old age. That is simply not true.

Experience and “worldliness” obviously contribute, but they do not constitute the complete picture. Some of the wise CEOs I have met during the past 35 years with TEC also have these characteristics:

1. If they have children, they take an active role in their development outside the classroom.

2. They have an active interest in their communities.

3. They are continuous learners.

4. They practice employee development.

5. They travel and seek understanding of other cultures.

I also suspect that most wise CEOs had a wise mentor during their formative years and in their early business careers. Finally, let me conclude with one untested, opinionated perspective.

A wise CEO most likely has an above-average I.Q. (higher than 100), good common sense and some “street smarts.” But there is no scientific proof that these concepts are requisites for being wise.

Until next month, I hope all the CEOs reading this article will take an inventory on the three dimensions described here. Can you improve your performance?


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