During one of the Geneva Behavioral Economics Network meetups at the Geneva Impact Hub on March 14th, there was an interesting presentation by Professor Christian Zehnder, head of Department of Organizational Behavior, HEC Lausanne at University of Lausanne. The goal was to talk the audience through his research project “Just Words? Just Speeches?", which focused on the Economic Value of Charismatic Leadership. This was a study that he had executed with Professor John Antonakis from University of Lausanne, Professor Roberto Weber from University of Zurich and Giovanna d’Adda, researcher at Politecnico di Milano.
He explained that although charisma is a prominent topic in social psychology & management literatures,there was not much research around quantifying the value of charismatic leadership in economics literature, so they decided to test charismatic speech on workers’ performance.
The researchers decided to organize a 2013 Super Santa fundraiser for Birmingham Children’s Hospital in order to conduct the research. The job consisted of cold mailing 30,000 letters for fundraising, but the workers who participated in this job were unaware that it was an experiment until the end. Adecco hired 106 temporary workers, who only had to do a simple task at home for 3 hours:
• Check materials for quality problems,
• Assemble four items,
• Make labeled stacks of 10 envelopes,
• Place the stacks of envelopes in a box.
The first day, workers had to come to Adecco in groups of 8 people, follow a 25-minute instruction session, listen to a five minute motivational speech, and take materials for 350 letters home to complete the work. The second day, workers had to bring the completed letters to Adecco and complete a questionnaire. Workers were divided into three groups:
Baseline: 35 subjects were paid an hourly minimum wage of £6.31 for 3 hours work + 1.5 hours travel & training time and given a standard motivational speech.
Piece rate: 30 subjects were paid a fixed wage (for 220 envelopes or less) + 1.5 hours travel & training time plus a piece rate of £0.12 for each additional envelope and given a standard motivational speech.
Charisma: 41 subjects paid hourly minimum wage of £6.31 for 3 hours work + 1.5 hours travel & training time and given a charismatic motivational speech.
The researchers hired an actor to give the charismatic speech. Although the speech was very similar to the standard speech, it included Charismatic Leadership Tactics (CLT) like non-verbal techniques, metaphors, stories & anecdotes, contrasts, rhetorical questions, three-part lists, and sentiments of collective & high ambitious goals. They kept the “moral conviction” constant in both speeches.
Here are the videos of both the standard speech and the charisma speech:
Results
The research findings were fascinating. A 17.4% increase in performance (in terms of average output) of the workers who were given charismatic speech was observed. Likewise, there was a 20.2% increase in performance of workers who were given a piece rate compared to those who received a standard speech, based on the number of envelopes completed. There was no statistical difference found between the Charisma & Piece group rate outputs, which means that charismatic leadership is as effective as monetary incentives in increasing performance. Moreover, no significant difference in the quality of the envelopes was observed for each group, which also means that the quality of outputs were quite the same.
Additional findings included that the average cost per unit of output decreased considerably with charisma (18.9%). The research shows us how important and effective charismatic leadership can be in increasing the performance and productivity of workers.
About the Geneva Behavioral Economics Network
Behavioral Economics, by definition, is the study of the effects of psychological, social, cognitive, and emotional factors on the economic decision making processes of individuals and institutions. The Geneva Behavioral Economics Network aims to:
• Create an informal network who are working in or interested in Behavioral Economics,
• Share research, projects, results and perspectives,
• Promote Behavioral Economics, and
• Make Geneva a hub for Behavioral Economics.
This is an open community that serves high quality content and free quarterly meetups. The network can be reached here. Meetups are sponsored by Fehr Advice & Innovation Atelier.
Sources
Antonakis, J., d’Adda, G., Weber, R., & Zehnder, C. (2015). "Just Words? Just Speeches?" On The Economic Value of Charismatic Leadership. Congress of the Swiss Psychological Society, Geneva, Switzerland. A summary of the results of the study can be found here.
https://hbr.org/2012/06/learning-charisma-2
https://en.wikipedia.org/wiki/Behavioral_economics
http://files.meetup.com/16912622/Zehnder_Charisma_Geneva.pdf
As the actor in the video admits when demonstrating the charismatic speech, it does sound like he's a bit "doolally" when he talks about imagining the envelope whispering to you!!!
At the same time, there are some interesting points here. How do you see the findings of the research being used? It seems to me that behavioural economics and mood marketing are very much related - would you agree?