Why We Must Teach Humane Leadership

McKinsey has agreed to pay nearly 600 million USD to settle claims that its consultancy exacerbated the deadly opioid crisis in the United States. Recently, KPMG’s U.K. chairman Bill Michael was asked to hand in his resignation after he told staff to “stop moaning” about the impact of the pandemic and lockdown on people’s lives and to stop “playing the victim card.” And Philip Green, formerly the owner of retailing company Arcadia Group, has been widely blamed for that company’s demise, including the acquisition of its signature brands by ASOS. In news reports, current and former employees have accused Green of having a bullying management style, which they say created a “climate of fear” and an environment of deep-seated employee disengagement. 

These are sad but all too common examples of global companies putting profits before people. They also suggest that the old command-and-control style of leadership is not fit for purpose anymore—if companies are to thrive, they will need compassionate leadership. This means that business schools must do more to teach humane leadership in their MBA programs.

Transforming Business for the Better

According to new research by Ricoh UK, 50 percent of managers report that their employees’ mental health has been adversely affected by the challenges of remote work and the pandemic. When leaders behave badly under these circumstances, their actions can have ripple effects, first causing employees to disengage from their work and then more broadly affecting the company’s profitability.

Because business schools are the leadership pipelines for global multinational companies like McKinsey, they have both the power and the responsibility to transform international business for the better. They can shift management to place ethical leadership on an equal footing with traditional subjects such as finance, operations, theory, and strategy in their MBA curricula. They can produce leaders who consider their people and organizational culture to be just as important as profits.

The best MBA programs will teach students these habits of great leaders:  

• They focus on the impact of business as part of wider society to sustain their companies’ performance. They know that a focus on short-term profit maximization for shareholders is no longer a model fit for the 21st century.
• They articulate their purpose and values to those they lead.
• They demonstrate candor, build trust, stay calm, and exhibit compassion. 
• They view people as sources of value creation rather than replenishable resources.
• They engage the enthusiastic support of their people, who will in turn be fully engaged with the company’s customers.

In other words, great leaders know that the success of their organizations depends on how well they inspire, motivate, and care for their employees. They know that the enthusiasm of their people will create happier and more productive workplaces, which in turn will improve bottom-line profits.

Emphasizing Emergent Leadership

To help leaders create more humanized and prosperous workplaces, I have developed the Emergent Leadership Model. For several years, I have taught this model at MBA classes at business schools in the United Kingdom.  

Based on years of interdisciplinary research, this model shows that a leader’s consciousness and an organization’s culture are intrinsically linked. Each level is characterized by specific thinking patterns, language use, leadership style, and organizational outcomes/

In this model, pockets of employees might be operating at different levels throughout an organization. However, the size and prevalence of these pockets will depend largely on the level at which its leadership is operating. 

At Level 1, for example, the individual mindset is lifeless, and the organizational culture is apathetic. This level is characterized by a culture of negativity, lethargy, stagnation, fear, and blame. Leaders are neither engaging nor inspiring. Employees are likely to be self-destructive, feel isolated, and exhibit a lack of confidence and motivation. This results in a lack of engagement and team culture, poor performance, and low productivity. Not surprisingly, an organization with too many Level 1 employees and leaders will not survive very long. 

At Level 2, the individual mindset is reluctant, and the culture is stagnating. People tend to do the bare minimum to get their paychecks. They tend to blame others for problems and are reluctant to try new initiatives; they are stressed, argumentative, distrustful, and resistant to change. Level 2 autocratic leaders lead through fear and formal authority, causing employees to be disengaged. Such organizations often focus on short-term gains, making long-term prosperity unlikely.  

At Level 3, the individual mindset is controlled, and the culture is orderly. At this level, people accept formal hierarchical systems and expect to be micromanaged—they do what they are told to do. There is a strict division between leaders and followers; and leaders tend to use an authoritarian, command-and-control leadership style. Although people get work done, they often meet their goals only because of a “carrot and stick” management style. Otherwise, most employees are disengaged, have little or no passion for their work, and are reluctant to innovate. Level 3 organizations can do fine on a short-term to medium-term horizon, but they are unlikely to thrive.

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Level 4 individuals and organizations are enthusiastic, happy, motivated, creative, engaged, and empathetic. They are passionate about their work and focused on making a difference for their customers and the world.

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At Level 4, the individual mindset is enthusiastic, and the culture is collaborative. When Level 4 characteristics become dominant, individuals and organizations experience a fundamental breakthrough. People become enthusiastic, happy, motivated, creative, engaged, and empathetic; they are passionate about their work and focused on making a difference for their customers and the world. They embrace collaboration and teamwork. At the leadership level, power and authority are distributed, and people make decisions based on their knowledge, rather than on their hierarchical positions in the company. At this level, there is a substantial increase in performance, engagement, and profit. This environment allows natural leaders to emerge, and it is the product of a humane leadership style.

At Level 5, the individual mindset is limitless, and the culture is unbounded. Companies at this level possess all the characteristics of Level 4 but have reached a place where people believe that anything is possible through collective consciousness and collaboration. At this level, people have a strong sense of purpose; they feel energized and excited to work with others; and they are connected to their intuition and a deep inner wisdom. Very few teams and companies reach Level 5, but when they do, they achieve amazing outcomes—new inventions, disruptive innovations, and market breakthroughs.

Leveling Up

While Level 5 is desirable to reach temporarily, it is impossible to maintain. People who stay at this level too long will burn out. That’s why the most successful organizations achieve a fine balancing act between Levels 4 and 5.

The effect of Level 1, 2, and 3 leaders can be clearly observed in the stories of McKinsey, KPMG, Arcadia, and countless other organizations. But all of these scandals could have been avoided if these companies had prioritized Level 4 leadership—if they had made the people their focus, not the numbers.  

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While Level 5 is desirable to reach temporarily, it is impossible to maintain. People who stay at this level too long will burn out. That’s why the most successful organizations achieve a fine balancing act between Levels 4 and 5.

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Over the past year, the pandemic has acted as an accelerant that has made humane leadership more critical than ever. Leaders have had to make room for their employees’ autonomy, health, and well-being. They have had to show compassion and flexibility. Most important, they have had to show genuine care for people and provide space for them to develop.

Despite many employees saying they want to continue working remotely post-pandemic, nothing can replace the human connection. If leaders want their employees to feel connected to a community, share a common purpose, and act on a collective desire to make a difference in the world, they will have to show up with empathy, compassion, and courage—and get out of the way whenever necessary.

The Humane MBA

Business schools must design curricula that make humane leadership the norm, not the exception. In other words, they need to revisit their purpose for the post-pandemic world and articulate a vision of humane management that emphasizes people, ethics, and culture.  

For example, business faculty might incorporate into their courses more books and case studies that highlight examples of companies that demonstrate the power of humane leadership. Useful books to consider include The Healing Organization by Raj Sisodia and Michael J. Gelb and Firms of Endearment by Sisodia, David B. Wolfe, and Jagdish N. Sheth. I also include examples of 35 companies that have implemented or intended to implement humane leadership in my book Humane Capital.

Professors also could ask students to conduct research to find organizations that they think embody humane leadership and determine the characteristics that these companies have in common. I often ask my MBA students to participate in a role-playing exercise, in which they pretend to be Level 2, 3, or 4 leaders and employees, so that they can experience how different leadership styles make them feel. For many students, this exercise is something they remember for a long time.

Humane leadership will become one of the key competitive advantages for any organization that embraces it. If business schools train leaders to prioritize fair treatment, clear communication, and employee welfare, they will help organizations thrive. However, if they continue to train leaders to prioritize cost-cutting and short-term targets over people, they will only set up future organizations to fail.