Positive Power of the Humble Leader Found at NUS Business School

Humility is a leadership quality that, if possessed by a CEO, can bring a company greater profits, according to a study led by NUS Business School professor, Dr Amy Ou Yi.

“It is typically assumed that the humble person is not assertive, lacks confidence and the ability to motivate others. At worst, humility has been equated with being weak,” said Ou, a management and organization professor at NUS Business School.

However, using a survey of 105 small and medium-sized IT enterprises based in the US, Ou found that CEOs who were perceived as being humble by their chief financial officers (CFOs) had a positive impact on a firm’s performance that was worth about 5% of its ROA (return on assets).  

“Our study challenges [the prevailing] belief, showing that humble CEOs are more than just nice to work with and they are able to deliver extraordinary firm performance,” continued Ou, who coauthored the study with Suzanne Peterson and David Waldman, of Arizona State University’s W. P. Carey School of Business.

Humility as a leadership quality

How do humble CEOs exert a positive impact? By creating what the study describes as an “integrative top management team” that collaborates better, shares information openly, makes joint decisions and works towards a shared vision, and with less pay disparity to boot.

‘Sounds great, but how do we define humility as a leadership quality?’ you may well ask. The survey, the findings of which were held up against a range of hypotheses, contained nine questions aimed at identifying traits commonly associated with that of humility – from self-awareness and being able to recognize your own shortcomings to being open to feedback and putting aside personal vanity for the greater good of a company’s aims. One question, for example, asked whether a CEO ‘takes notice of the strengths of others’.

Certainly, the findings run counter to the traditional ‘kingpin’ CEO who oozes charisma and seems happiest when talking about him/herself. But, is a study like this revisionism for the sake of revisionism? It is a particular topic of interest for NUS Business School’s Ou, who previously found humility to be a leadership quality that can help cultivate an empowering organizational climate in a 2010 study. But Ou is hardly alone in looking to break down conventional thinking – Alex Frino, dean at Macquarie Graduate School of Management, has found that overly-narcissistic business leaders tend to produce lower annualized stock returns.  

NUS Business School professor emphasizes the need for balance

In addition, the present study also argues that humility is not anathematic to the idea of ‘strong’ leadership; indeed, there is an overlap between traits associated with being humble and those of a charismatic leader. In Ou’s opinion, the key is to create a balance between a strong sense of charisma that can win people over to a particular vision and the humility that would allow them to accept and embrace the idea that others could improve that vision.

“We hope that future research can further examine this largely counterintuitive, yet potentially important, characteristic of effective executives,” the study’s authors conclude. One possible point to pick up on in the future is that the CEOs analyzed in the survey, and indeed its CFO respondents, were overwhelmingly male (82% in the case of the CEOs). This is hardly a flaw of the study, as it is broadly representative of the current reality at senior management level in this industry. However, it would certainly be interesting to see if an equal gender split yields similar, or even more significant, results when exploring the relative merits of humility as a leadership quality. The NUS Business School study is published in the Journal of Management.