09/08/2019 Aggressive Leaders Are More Likely to Be Punished for Their Mistakes

CRISIS MANAGEMENT

Aggressive Leaders Are More

Likely to Be Punished for Their
Mistakes
by Hemant Kakkar
JULY 04, 2019 UPDATED JULY 08, 2019

MARTIN POOLE/GETTY IMAGES

In 2009, then President Barack Obama nominated Timothy Geithner for Secretary of Treasury
and Tom Daschle for Secretary of Health and Human Services. Geithner was a known leader in
the financial sphere and instrumental in navigating the 2007-08 financial crisis, as the President
of the Federal Reserve Bank of New York. Daschle was a well-known figure in the political circuit,
a long-term senator from South Dakota who had served as a leader of both Minority and Majority
Senate. Around the same time, both of them were accused of improper tax returns.

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Both Geithner and Daschle claimed it was an unintentional mistake on their part. However, the
consequences for the two nominees were categorically different. Geithner went on to
successfully become the 75th Secretary Treasury. Daschle had to withdraw his nomination as a
result of the mounting backlash from the allegations. The two were equally influential in their
respective domains, were accused of a similar transgression, made similar clarifications and yet
only one suffered the consequence. What explains this difference?

Ideally, there should not be any difference in punishment for similar violations, yet that’s not
always the case. We also see this pattern among business leaders. For instance, the fund manager
of Bayou Hedge Fund Group was sentenced to twenty years in prison for defrauding customers of
more than $400 million. However, Olympus executives, who were also accused of similar
corporate fraud worth $1.7 billion avoided any jail time for their actions.

Why do some leaders receive greater backlash and face harsher consequences, while others are
given the benefit of the doubt and let off the hook? Our research, recently published in Academy
of Management Journal, suggests it has to do with how the leader achieved his or her status.

Our theory, and how we tested it

There’s a theory in social psychology that describes how leaders achieve status and wield
influence in groups. Basically there are two ways: either through dominance or through prestige.
And we propose that the extent to which leaders are punished for misbehavior might depend on
which of these ways brought them their status.

Leaders achieve status based on dominance by being assertive and forceful in getting their
opinions across and by not hesitating to influence others through coercive or intimidating tactics.
Because of their relentless proactiveness and agentic behaviors, others regard them instrumental
for group’s success. Steve Ballmer, the former CEO of Microsoft known for being a tough
taskmaster, is an archetype of a dominant leader.

Alternatively, leaders achieve status based on prestige by acting as a teacher, sharing their
knowledge, skills, and expertise with others in the group. Because they help group members
learn and develop their expertise, they’re also viewed as instrumental for the group’ success.
Satya Nadella, the current CEO of Microsoft known for his collaborative and grounded approach,
is a sound example of a prestige-based leader.

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We proposed that for transgressions or mistakes where fault is ambiguous (e.g., in case of
improper tax returns, it could be because the individual didn’t want to pay the taxes or because
the tax laws were complicated), leaders whose status is based on dominance would be held more
accountable and punished more harshly; whereas leaders associated with prestige-based status
would be given the benefit of doubt and let off the hook. There are two reasons behind this. The
first has to do with how intentional people perceive the transgression to have been. Since people
view dominant leaders as selfish and unethical, this would make it hard to believe that a
transgression was an honest mistake versus more intentional. And because prestigious leaders
are perceived as less concerned with their own benefit, when they make a similar error and
declare it an honest mistake, individuals would trust them.

Second, prestigious leaders are also known for their altruistic behavior and for possessing a moral
compass. Thus, a misdeed by a prestigious leader would be perceived as less wrong, less
unethical and less immoral because of their virtuous history. In simple terms, this can be
described as having enough credits in one’s moral saving bank account, which buffers such
individuals from ambiguous transgressions. Leaders associated with dominance are not
bestowed with such moral credentials, resulting in their actions being judged as more wrong and
immoral.

These ideas led us to believe that dominant leaders would be more punished for “honest
mistakes” than prestige leaders. We tested this hypothesis across multiple studies. Our first study
was among professional ice hockey players in the National Hockey League (NHL). We
investigated the possibility of a player being penalized for a minor foul. Minor penalties are often
difficult to judge and are awarded in a split second, leaving room for referees to be biased by a
player’s reputation. Across two full seasons of player-level data, with close to 1,300 observations,
we found that high-status (higher-paid) hockey players associated with dominance received
greater minor penalties from referees, whereas those associated with prestige were punished
significantly less. (The difference in punishment was roughly 13%, which increased penalty
minutes for players associated with dominance by 4.33 minutes over the course of a season.)

An intensive lab experiment, where a professionally trained actor led a group of five to six
participants on a problem-solving task, lent further support to our prediction. At the end of the
task, group members discovered a mistake which could have resulted from either a computer

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glitch or from the leader breaking the rules for his own benefit. Regardless, group members
punished the leader (by not cooperating) when he or she was associated with dominance rather
than prestige (something we set up through different treatment groups).

Several more experimental studies further showed that leaders associated with dominance were
attributed with greater intentionality for their actions and bestowed with less moral credentials
in comparison to their prestigious counterparts. We also conducted a study with a female leader
to rule out any gender differences. Our results remained consistent suggesting that similar
consequences would apply among women leaders whose status is based on dominance or
prestige. However, the comparison in this study was not across gender but on leader’s status
type. Other research has shown that women leaders often face harsher consequences for similar
mistakes or bad decisions than men. But our work highlights that ambiguous transgressions are
more costly for dominant leaders.

The real-world implications of these findings can be significant. For instance, James Burke who
was the CEO of Johnson and Johnson and well admired among many was forgiven for the deadly
Tylenol crisis in 1982, and even applauded for the way he handled it. On the contrary, Tony
Hayward, the CEO of British Petroleum became the target of public and media scrutiny for his
handling of BP’s oil spill, as he came across being too direct, lacking empathy and more
concerned about his own interests. It eventually led to his resignation.

Takeaways for organizations and leaders

First, these results inform us what kind of leaders are most susceptible to backlash for mistakes.
Allegations of misconduct within a firm often proves harmful, impacting its popularity, stock
price and future earnings. Many actively project their leaders on the front lines to defend the
firm’s reputation. But our work suggests that the effectiveness of this strategy might depend on
the type of leader who is called upon.

Second, our research provides a useful framework on what organizations with dominant leaders
at the helm can do when a crisis strikes. If possible, organizations can try to project a leader
associated more with prestige as the face of crisis to avert potential backlash. Additionally, these
organizations can respond more quickly, genuinely apologize, and provide relevant justification
for their behavior.

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Finally, our findings are important for regulatory bodies, compliance officers, and corporate
ombudsman, who are typically responsible for ascertaining punishment following misconduct.
They should be mindful of how subtle leader characteristics, such as status type, could influence
their ability to deliver a bias free decision.

Correction: This article previously stated that the Tylenol crisis occurred in 2002. The correct year
is 1982.

Hemant Kakkar is an assistant professor of management and organizations at Duke University’s Fuqua School of
Business. In his research, he draws on social psychological and evolutionary theories of status to examine judgements
and behaviors of individuals and groups within social hierarchies. He also studies employees’ tendency to participate in
both positive and negative deviant behavior.

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3 COMMENTS

HUMBERTO VALDEZ a month ago

Tylenol crisis was in 1982 instead of 2002.

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