The Dark and the Bright Side of Leadership

The often-quoted BANI world is forcing managers to juggle constant change, the pressure to perform at work as well as in all personal endeavors, and act ethically in everything they do. While making morally sound and responsible decisions is second nature to many of them, some business leaders abuse their position of power.  

Dark Leadership: The Shadowy Side of Management 

Management Professor Günter Stahl, researcher at WU Vienna and long-time lecturer at the WU Executive Academy, has investigated the dark side of leadership. Irresponsible leadership is often characterized by egotistical behavior and the desire to gain a personal advantage at the expense of others. Notorious examples of unethical or even corrupt C-level culture include the Lehman Brothers bankruptcy of 2008, in the course of which a burst real estate bubble ushered in a global financial crisis, or the Volkswagen emissions scandal of 2015, caused by the car maker’s intentional manipulation of exhaust gas figures in several of its models in order to meet emission standards.  

Power Seekers, Narcissists or Psychopaths? 

To better understand the personality of such managers, Günter Stahl joined forces with Stephan Doering, head of the Department of Psychoanalysis and Psychotherapy at Medical University of Vienna, and Milda Zilinskaite, researcher at WU Vienna, in order to analyze six internationally known top CEOS involved in infamous fraud scandals. Their hypothesis: these CEOs might have psychopathological tendencies.  

The basis of their analysis is the so-called “Dark Triad” which consists of Machiavellianism, narcissism, and psychopathy. The results show that the CEOs surveyed scored well above average regarding these personality features - which, however, does not constitute psychopathology per se. 

• Five of the six CEOs received prison sentences for corruption or abusing their authority while also showing strongly developed Machiavellian traits: a propensity to lie, deceive, and manipulate.  

• Two even showed narcissistic traits such as grandiosity, an intense need to get others’ attention, arrogance, and an inability to deal with criticism.  

How Corporate Culture Promotes Unethical Behavior 

The researchers did not stop at the CEOs but also looked into the corporate systems and cultures in which they operated. It is possible that the lack of ethics-based structures and incentive systems as well as a strong pressure to conform created an atmosphere conducive to malpractice.  

The failure to implement ethical structures and incentive systems seems to make a company’s employees more prone to acting in unethical and immoral ways.  

Another finding is the tendency to rationalize misdemeanor after the fact by invoking the organization’s customs and standards. Managers will say things like “This approach is widespread in our industry” or argue that “the end justifies the means,” allowing themselves to regard their behavior as morally sound even when their actions prove the opposite. Günter Stahl identified such mechanisms in all enterprises analyzed in the study and emphasizes that in many cases unethical behavior slowly but surely turned into a habit. After a while, breaking minor rules no longer seemed problematic to the managers, who then increasingly engaged in unethical behaviors.  

Away from Dark Leadership – and Towards Responsibility 

But there’s also good news: “For every corrupt manager, there are probably at least a dozen responsible and purpose-driven managers,” Günter Stahl says. Most managers are neither saints nor crooks, but there are some personality traits that can bloom into toxic or unethical behavior when the affected people find themselves caught in a dysfunctional organizational culture. 

Günter Stahl explains that this is why companies and managers must focus on the bright side of leadership. This can be actively promoted, for example, through targeted incentive systems and cultural and formal standards within the company. 

Bright Leadership: The Light Side of Management 

As opposed to dark leadership, managers on the bright side care about personal and social responsibility and purpose, striving for outcomes that go beyond merely reaching business goals and optimizing KPIs. “Particularly in times of crises, the human mind tends to overstate the negative aspects and neglect the positive side of things. This is why it’s our job as a business school to nurture a positive growth mindset, particularly but not exclusively among business leaders, in our training and further education offers,” Christof Miska stresses, explaining that this is the only way to bring forth potential for innovation, change, and new business models.  

New Leadership: Purpose-Driven, Responsible, and Positive 

The following three leadership styles (which overlap in some regards) can be localized on the “bright side of power,” and are core components of what has been termed new leadership: 

1. Purpose-driven leadership 

Purpose-driven leadership focuses on the bigger picture and the organization’s underlying purpose, both of which inform the actions of managers and the companies they work for. Against the backdrop of the numerous crises currently rattling the world, be it climate change or geopolitical tensions, managers must have a good grasp of their company’s purpose and lead and decide accordingly.  

Ideally, a manager’s personal mission aligns with the corporate goal: “Unfortunately, that’s not always the case,” Christof Miska says.  

A company's purpose can, but does not necessarily have to, extend to social impact. Sometimes it also remains at the marketing level - a strategy that can lead to conflicts of values if a company is committed to sustainability but at the same time disposes of waste in poorer countries. In such cases, managers have a responsibility to clearly align their decisions with the purpose and values of the company. 

The Four Dimensions of Corporate Purpose 

The corporate purpose encompasses four dimensions: 

• Identity: this concerns the question about what a company stands for; in other words: which values and visions shape (or, as is sometimes the case, do not shape) its identity.  

• Performance: this dimension is about how success is defined and measured in the company. 

• Goals: what is or are the goal(s) of the company? 

• Change: and finally, corporate purpose is also about how a company deals with change. 

2. Responsible leadership 

The term responsible leadership describes the leadership style of managers who base their actions on ethical and moral principles as well as social responsibility. “The scientific literature particularly stresses the individual level in this respect, because the scope of action is quite broad in corner offices,” Christof Miska explains. Integrating principles based on the SDGs or the Environmental, Social, and Governance (ESG) concept in corporate strategy can also encourage managers to lead responsibly.  

The Characteristics of Responsible Leadership 

Responsible leadership is particularly evident in the following three aspects: 

• Ethical Behavior 

This means that managers are guided by ethical principles as much as by legal stipulations. They do not exploit any loopholes to gain an advantage, and their teams perceive them as decent, trustworthy, and reliable leaders. They lead by example and in the best cases even initiate strategic compliance projects and incentive processes aimed to further ethical behavior among their staff. 

• A Focus on Stakeholders 

Decisions are made considering the needs of all stakeholders, including staff, customers, suppliers, cooperation partners as well as the environment and society at large. Responsible leaders find ways to create value that hurt neither people nor planet. 

• A Focus on Values 

Managers base their decisions on core values even if that incurs, at least at first, an economic loss. This would be the case when, for example, a company decides against the cheaper supplier in order to work with a greener alternative. Even in companies that don’t take particular pride in their responsible demeanor and that might even promote business practices generating profit at the expense of others, a responsible leader would speak up against such unethical plans and not shy away from making unpopular decisions. “Again, it’s about alignment: if a manager’s ideals do not match the company’s views, this will create a conflict of values,” Christof Miska explains. Such a conflict can even prompt managers and their employers to part ways. At the end of the day, acting based on values means making sure that decisions have a positive impact on the organization in the long term.  

Bonus: Servant Leadership und Shared Leadership 

Responsible leadership also encompasses the concepts of servant leadership and shared leadership: 

Servant leadership is a leadership style not much concerned with hierarchies or reporting lines, where managers adopt the role of an “enabler” (in a positive sense) for employees, supporting them in doing their work in the best way possible.  

Shared leadership has the goal of fostering a sense of responsibility among employees and allowing them to make their own decisions in their fields of work.  

3. Positive leadership 

The concept of positive leadership is about focusing on employees’ and the organization’s strengths, resources, and potential in order to bring forth change and innovation. Positive organizational psychology is first and foremost solution-oriented. “As a general stance, focusing on finding a solution is very important. At the same time, this does not mean that you lose sight of existing problems; you just don’t let them scare you,” Christof Miska says. This approach promotes a proactive attitude in which challenges are used as opportunities for further development and improvement. 

Positive Leadership in Action 

1. Leading Staff with a Focus on Strengths 

Managers identify their employees’ individual strengths and help them develop their full potential. This would be, e.g., a team leader who regularly organizes feedback sessions in order to see what every team member is particularly good at and which tasks best fit their talents. 

2. Appreciative Inquiry 

On the organizational level, the so-called appreciative inquiry is a way to explore a company’s potential. The traditional way of solving a problem is to come up with several possible solutions and pick one from the list. In an appreciative inquiry, the “problem” is framed as part of the solution. Every organization has a wide range of strengths, potential, resources, experiences and learnings rooted in its past, and all of these things can point to new approaches to solving an issue. Ask yourself: What are we already good at? What will we do differently when we are the leader in a certain field? What would be the best outcome for the future? 

Conclusion: The Road to Sustainable Leadership 

There are many ways to approach new leadership, but you always want to make sure to stay on the bright side of leadership, Christof Miska concludes: “Dark leadership might get more attention, but it’s the bright side that makes companies fit for the future, innovative, and resilient.”  

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