Leaders Who Care: The Chief Executives’ View Of Leadership In Social Enterprises:
Natural Aptitude Versus Learning And Development
Jonathan Gravells- Fargo Associates Ltd
(This is an Author's Accepted Manuscript of an article published in Human Resource
Development International, April 2012, Volume 15, No. 2, copyright Taylor & Francis,
available online at:
http://www.tandfonline.com/doi/abs/10.1080/13678868.2012.658633#tabModule.)
Abstract
The author examines what factors determine leadership success in U.K. social enterprises.
Despite the attention prompted by the U.K. government’s ‘Big Society’ policies, this remains
a relatively unexplored field in the leadership literature. Based on in-depth interviews with
successful social enterprise chief executives, carried out between April and December 2010,
this paper challenges the dominance of competency models, based on purely behaviourist
tradition. It examines the impact of personality, values, circumstance and career arc on the
way these leaders perform, in an attempt to take a fresh look at the interaction of traits,
behaviours and situational flexibility in determining successful leadership in this type of
organisation. A number of key factors are identified and categorised as dimensions of
‘being’, ‘doing’ and ‘style’. Consistent contra-indicators are also identified, providing the
basis for an approach to both leadership selection and development in this growing sector of
the economy.
Keywords: Authentic leadership; social enterprise; traits; competencies; caring; values
1
Introduction
This paper looks at the nature of leadership in social enterprises, whether commonly-agreed
success factors exist (according to our sample of successful practitioners), and the extent to
which these factors provide a universal agenda for leadership development or more diverse
and personalised patterns which vary according to the typology of social enterprise, the stage
of growth or maturity, the background of the founder/chief executive, or the challenges of the
prevailing operating environment.
There has historically been very little research into leadership in these organisations,
in comparison to the for-profit sector (Thach and Thompson 2006), but at the time of this
research, more public attention had been focused on the social enterprise sector due to public
sector cutbacks and U.K. government policy statements relating to the ‘Big Society’.
The research is based on in-depth, semi-structured interviews carried out between
April and December 2010 with nine successful chief executives from a mix of social
enterprises of different types, sizes and stages of growth. Four of the CEOs were women and
five were men, and the enterprises had been established for between five and thirty years,
varying in size from eight to four thousand employees. Obviously, it is not easy to define
‘successful’ in an entirely objective and consistent way for a group of very different
organisations. However, almost all of the enterprises had won national or regional awards for
their work in the last few years. Nearly all of them were continuing to grow, either
organically or through acquisition, with some migrating from regional to national influence.
Several of the CEOs were national social enterprise ambassadors and several had received
personal honours and awards for their work in the field.
Prevailing environment
At the time the research was carried out, the common perception of the prevailing climate for
all of these enterprises was as follows:
2

Public sector spending cuts would make it much harder to obtain grant support at a
time when demands on social enterprises from the most vulnerable in society were
likely to increase.

This would put a lot of pressure on social enterprises to obtain a greater proportion of
commercial income, manage their own costs rigorously and demonstrate clearly
where they could ‘add social value’.

One result of this pressure would be to put some enterprises out of business, and force
others to merge or cut back.

Messages about the ‘Big Society’ were still very vague and, at worst, based on a
dangerous misunderstanding that gaps in public sector provision could be filled by
organisations who could work for nothing or next-to-nothing.

Provided this misunderstanding could be corrected, there could be real opportunities
for robust and successful social enterprises to pick up business and increase their
impact.
....the image that's going out is that the community sector can pick stuff up for
free……yes we're good value, but we're not free...... ... (Interview respondent no. 6)
Leadership Research – Overview
A meta-analysis of leadership research to date, conducted by Avolio and Chan (2008)
provides a convenient overview of current thinking. Early trait theories, having initially been
abandoned in favour of later approaches, have enjoyed a partial comeback, with research
identifying a number of stable traits, such as extraversion, conscientiousness (Judge et al.
2002), intelligence (Lord, DeVader and Allinger 1986), and centralised self-efficacy (Smith
and Foti 1998).
3
This focus on who we are tends to favour the importance of good leadership selection
over training, whereas later behavioural theories focused primarily on observable behaviour what we do – and therefore lent themselves much more readily to the idea of leadership
development. Behavioural approaches have enjoyed prolonged popularity, as evidenced by
the continuing widespread use of competencies. However, competency frameworks have
been increasingly criticised as inadequate on their own to explain expert behaviour in
complex work situations (Kuchinke and Han 2005). They have always struggled to account
for the manifest differences between the behaviour of equally successful leaders, and the
tendency for successful leaders to play to their strengths and develop their own unique style.
This was nicely summarised by one of our interviewees:
I think what we've always described it as is recruiting the right people, finding out
what they can't do and then not asking them to do it.
Research has revealed the extent to which factors such as personality and emotion
recognition can positively influence transformational leadership (Rubin, Munz and Bommer
2005), and emotional intelligence (EI) is increasingly cited as essential in good leadership
(Goleman 2004; Wood and Vikinas 2007), although in academic circles controversy remains
as to how much EI is truly competency-based (Peltier 2010). Many will argue that it is
perfectly possible to develop self-awareness and emotional intelligence, and that these are
therefore simply additions to the growing list of required leadership behaviours (Goleman
1998). An alternative view, however, is that whilst leaders can learn to become more selfaware and conscious of the impact their behaviour has on others (i.e. improve their emotional
competence), the inevitable influences of upbringing and personality mean that EI is wellestablished by early adulthood and can only be modified to a small degree after this (Mayer
and Salovey 1997). Some would even argue that EI is entirely trait-based, (Petrides and
Farnham 2001).
4
Alongside these behavioural and trait theories of leadership, the final school of
thought might be seen as situational and contingency theories (Fielder 1964; Hersey &
Blanchard 1977), which focus attention on the way in which leaders can apply different
combinations of behaviour, or styles, in a flexible and adaptive way according to either the
needs of the situation and environment or the needs of particular followers.
Research findings
Turning to those interviewed in this research, one aspect cited frequently as enabling success
as a leader can be summarised by the word Courage. Despite the military references which
sometimes accompanied the discourse, this is most definitely not some vague, gung-ho
fearlessness in the face of all obstacles. Rather it can be very specifically summarised as:
Having the self-confidence and self-belief to take appropriate risks without either the
fear of failure or the desire for perfection paralyzing one’s ability to act decisively.
Six out of nine respondents mentioned this specifically, and most were able to give
clear examples of how this factor had contributed to success:
….crap happens and sometimes you just have to accept it and...that's life and it
doesn't mean you've done something wrong,..... and that actually some things can be
good enough without being perfect.
....Perhaps prepared to go very close to the line with things... And like with this
community centre thing, I thought 'I can see it's a massive opportunity for us..... But
when I came back....I could see the staff were thinking 'What is she doing
now???!!.....How's this gonna work? ...
The next aspect, closely associated in respondents’ minds with Courage, might be termed
Calm. This refers to the leader’s ability to ‘hold’ a difficult situation. It is not about
patronising or being dishonest with employees, but can be defined as:
5
Remaining open with employees about the challenges and potential consequences
of a particular set of circumstances, whilst presenting the appearance of being in control
and able to respond without panic or paralysis.
It requires a certain degree of self-awareness and self-control to do this successfully, but also
an implicit quality of being able to remain calm under pressure. Seven out of nine
respondents mentioned this specifically and again the majority were able to recount specific
examples:
And also if they see me going 'Right, well we've got a twenty grand gap between now
and the end of the financial year' and I've got a plan, and I'm not panicking, then
there's no reason for you guys to panic......but they still know the facts. They know
what's going on.....
Without exception, CEOs interviewed singled out clear Values as being fundamental to their
credibility and effectiveness as leaders, as well as their decision-making and clarity of vision.
A strong belief-system helped these leaders in a number of ways:

It made them feel a passion and enthusiasm for what they were doing and sustained
them through adversity and opposition.

It gave them credibility as leaders and role models for what their organisations stood
for.

It enabled them to self-monitor decisions against some sort of moral and ethical
framework.

It allowed them to set an authentic tone for the organisation, and signal what kind of
behaviour would be approved of and recognised.
6
Other than a common (and unsurprising) dedication to social benefit, the exact nature of the
values mattered less than the fact that individuals saw themselves as subscribing to a strong
belief system within which their decisions and behaviour were seen as consistent:
I'd say some of my core values are around honesty......and in hard work..... My own
personal philosophy is, right, if you work hard you get rewarded. And you'll see that
through the whole organisation. If the young people work hard, they get rewarded…...
If the licensees work hard, they get rewarded………. If the members of staff work
hard, they'll get progression through the organisation......
Caring for people was another common factor. This is a difficult quality on which to gather
evidence other than respondent’s opinions, but the best consensus might define it as:
Being interested enough in those who work for you to want to know about them as
human beings with lives outside work, not simply units of resource or even members of a
team.
It meant creating the feeling in followers that their boss had their interests at heart, as much
as those of clients or trustees, and genuinely appreciated their skills and effort. It has to be
genuine, (which is why descriptions of it in terms of a learned behaviour are unconvincing),
and it is what inspires loyalty and discretionary effort in followers:
…and my sort of concern for people in its broadest sense as well. I think people sort
of know that I do care for people. And I think knowing you're cared for is very
important......I don't care for people because they're useful to me. I think I care for
people anyway, if you know what I mean, and I think people know whether that's for
genuine or not.
All of these CEOs demonstrated clear-sightedness about what they were good at and equally
what they were not good at. Self-awareness is a notoriously problematic quality to identify
accurately, so it was particularly important to stress test statements directly about self-
7
awareness with other comments which might serve to corroborate these. We might
summarise this factor as:
Understanding one’s own values, skills and personality, and realising how the
behaviours these produce might affect others for good or ill.
Respondents were generally disarmingly candid about the limitations of their skills,
and what they did to compensate for these or mitigate any impact. This quality is what
enabled them to communicate and act authentically as leaders, showing humility and being
able to accept the ideas and help of others when appropriate:
Well, here's a perfect example. I'm absolutely rubbish at negotiating the final details
of ….contracts. And every time I do it I leave money on the table. And so I've just
decided I'm no longer going to do it. You know, I recognise my own failings and, if I
were to pat myself on the back, I'd say I was pretty good at setting things up, you
know....I'm like Emile Hesky. I can set the ball up, just can't stick it in the back of the
net…..So I just need not to be doing that job.
Managing performance was another critical success factor for all of the CEOs
interviewed. This encompassed having a clear focus on outcomes and impact, and having
measures in place to demonstrate these. Respondents were highly critical of the tendency for
social enterprises to be seen as relaxed in their approach to performance, emphasising the
need for ‘operational tightness’ and a firm grasp on the financial numbers.
They think that social enterprise is a freedom to do what they want. The reality is
you've just got another set of rules. So you can set up an organisation with structure,
which is inclusive in decision-making and consultative...but in the end you've gotta
8
pay your bills, and you've gotta pay your wages and you've gotta make sure that
you're not breaching the law....So you need to performance manage it.......
In some of the smaller organisations, this led to CEOs insisting on staying closer to
the financial management of the enterprise than they might have wished, due to a
combination of the absolute need for sound practice and the difficulty (especially for smaller
enterprises) of recruiting good finance people into the sector. A development need identified
for members of their leadership teams by some CEOs was the ability to recognise the ‘core
offering’, the essence of what the enterprise did best, and to spot opportunities in the
marketplace which would fit well with this.
When it came to managing the performance of people in the organisation, another
specific development need cited by many was the reluctance of managers to confront
behaviour and performance problems promptly and robustly enough. There was a sense that
working in a social enterprise remained inconsistent, in some people’s eyes, with being tough
on performance. This had been a misconception that most CEOs had had to overcome:
What's got in the way? I think it's been the converse of us being a nice bunch of
people...We've been unable to confront bad behaviour ...or poor performance
effectively. …A slightly misplaced niceness...I think at times we don't have the
necessary scepticism and rigour...
There were noticeable differences here between the priority needs of smaller and
larger enterprises. Regardless of maturity, the larger enterprises (150 employees +) on the
whole had leaders more capable of dealing professionally with poor performance. This
suggests that smaller social enterprises were subject to the kind of family-style dynamics and
relationships, common to many other small firms, which make such performance
management techniques difficult for many managers to adopt.
9
Communicating – Regular, clear and open communication with employees was
another skill consistently highlighted by our chief executives, and one which very much
differentiated more successful leaders from the rest, in their eyes. There is nothing new about
communication as a leadership skill, but it is worth noting that the characteristics of good
communication most consistently identified by this population were authenticity and
openness, stemming from a lack of affectation and ‘rehearsal’. Harder to achieve in larger
organisations, this was sometimes demonstrated via the maintenance of a limited number of
informal relationships with key individuals at different levels in the organisation, whose
feedback was highly-valued.
...quite a lot of people said 'We really appreciate the fact that, whatever we think
about what you're saying, you've set your stall out and... you've not gone for a kind of
processual management message with us. …….and I think the perception is, you
know, being accessible, being open, being unscripted is very important, because they
know that what you're saying is going to be believable and they know that you don't
have any affectations or anything….
It is significant that, when asked to describe their role, seven of the nine chief
executives prioritised communicating the strategy and vision of the enterprise, both internally
and externally, along with building the profile of the organisation in the world at large. These
were the only really common themes in descriptions of the CEO role and both require heavy
use of well-developed communication skills.
Building a strong team – Often arising from a reflection on their own successes and
failures, the importance of building a senior team which had the leadership ‘horsepower’ to
sustain continued growth and development was another critical skill for those at the top of
these enterprises. It was particularly crucial at step change points in the organisation’s
evolution, when the ability of the Founder/CEO to shift the emphasis of their responsibilities
10
depended not only on their own will and ability to do so, but also on having resource and
expertise in place to take over aspects of their role which they needed to relinquish.
I think I now appreciate the absolute importance of really strong senior teams, and I
don't think I quite grasped that central point for a very long time. If you've got that
you really can motor on much faster than if you haven't got that cohesiveness.
Delivering Results – A behaviour that many CEOs identified as an important part of
their own success, as well as essential in those leaders who worked for them, was delivery.
There was nothing complicated about it. It can be described as:
Demonstrating staying power and commitment to a task. Seeing things through
properly. Working hard, judging yourself by what you deliver, and reliably doing as you
have agreed, or seeking help if unable to do so.
….when people come into the sector.... they think that it's lovely and cosy. And they
can come in with their sandals on and their cardigans and chat and....as long as
they're nice and they care about the young people, then that's all that matters.....That
doesn't cut it. …..Actually, yes you will give something back here, but it is gonna be a
difficult, full-on, challenging job. And just because you took a cut in salary doesn't
mean it's gonna be easy. And I'll say this to people at the interview stage and at the
beginning. And they'll be like 'Oh, yeah, yeah, yeah....' And then they get here and
they're like 'Ooohhhh crikey!....ok....I'll put me slippers back in the car then!..
Taking Responsibility – Arguably a sub-set of Delivering Results, I have separated
this behaviour out on the grounds that people can deliver reliably under instruction without
necessarily taking the initiative to do things unbidden. Taking Responsibility may be defined
as:
11
Adopting a sense of group responsibility as a leadership team, showing commitment
to the success of the enterprise and taking the initiative to address problems or make
improvements, even if it means stepping outside the strict parameters of your role.
It also means looking out for the interests of colleagues when you think they may
have made a mistake, and owning up when you yourself have made an error.
This isn't an organisation that will provide micro-management, or....lots of structure
and lots of boundaries.... so for example one of the members of staff, every time we
had a new task it was like...'Well I need more guidance on this. I need more
guidance...' I'm just like...'Actually, you're never gonna get that here..'
Review of findings
A number of things about these findings are striking:

Broadly, the factors identified seem to support both trait and behavioural theories,
falling into what I have described as ‘being’ and ‘doing’ dimensions (see conclusions
below).

Overall the list of success factors has far more similarities with good leadership
criteria of organisations in the for-profit sector than it does differences. In this respect,
the findings echo recent research by Hamlin, Sawyer and Sage (2011) in suggesting
that, contrary to the view of some commentators (Baldwin 1987; Fottler 1981;
Peterson & Van Fleet 2008), leaders in public or third sector organisations do NOT
need to adopt different managerial behaviours from those in the private sector in order
to be effective. Earlier comparative work on for-profit and not-for-profit leadership
competencies in the U.S. reached similar conclusions (Thach and Thompson 2006).
The overwhelming message is that good leadership looks largely the same whether
you are engaged in making aircraft engines or running a social enterprise.
12

The differences, whilst more of emphasis than of basic structure, are nevertheless
significant, and may hold lessons for leaders in other sectors. They relate to two key
factors: values and caring for others. A relatively new and still infrequent element in
the wider leadership literature, the importance of compassion and caring for others
has been noted by some ( e.g. Boyatzis and McKee 2005) and can sometimes be
found in specific contexts, such as Corporate Social Responsibility (Wilson, Lenssen
and Hind 2006). But the degree of emphasis on caring for people, though cited by
Hamlin et al. (2011), seems to me a rarer occurrence in the wider corporate world
than it is in this sector, and the ‘C’ word remains a rather awkward one for big
business. Where it is incorporated into leadership frameworks, it tends to be described
in largely functional, behavioural terms, rather than as a genuine state of mind
(Kuchinke and Han 2005). and more often mediated through euphemisms such as
‘mindfulness’. Likewise, the importance of strong values and a ‘moral compass’ have
become much talked about in private sector circles, especially following a decade
marked by corporate scandals, such as Enron & World Com, and near-collapse of the
banking system. However, there is some considerable room for debate as to whether
this perceived ethical shift is merely the product of media and academic debate, or a
genuine realignment of priorities by business leaders (Hannah and Zatnick 2008;
Coleman, 2010).

The challenge for the sector, as identified by these leaders, is to retain this
commitment to values-driven leadership and real concern for the individual, whilst at
the same time dispelling some myths about social enterprises being less rigorous with
regard to outcomes, delivery and finances, and ‘soft’ on people issues.
13
Evidence for situational/contingency models of leadership
None of the elements of leadership identified appeared to vary according to typology
of social enterprise, stage of growth/maturity, or the background & career history of the
individual leader.
When set against size of enterprise and prevailing challenges, however, the ‘doing’
aspects of leadership did show some minor variation across organisations. This variation
supports the importance of style of leadership, or what we might describe as ‘the varying
emphasis placed on the combination of behaviours deployed in different circumstances’.
Anecdotal evidence would also suggest this is the case. For example:
I can feel it already.....I think I've been catapulted back into the style of leadership I had
when I first came into XYZ, which was there was a job to do, but there was an iceberg
coming and I had to lead from the front and do something fairly critically, fairly quickly,
and very practical and there wasn't time for a lot of negotiation round it, to be
honest………
Identifying categorically what impact environment and behaviour of followers had on
leadership style, however, is problematic. Although the interviews contained numerous
descriptions of how these chief executives behaved under various conditions, there are too
many variables to make any detailed analysis valid.
Conclusions and further research
We can draw a number of tentative conclusions from this work with a relatively small
number of leaders:

Competencies alone are an insufficient indicator of leadership success
14

Clear evidence exists for the impact of traits or ‘ways of being’ forged by a
combination of personality, values and beliefs interacting with key formative
experiences

Impact of prevailing environment and follower behaviour suggests adaptation plays a
major role in leadership success
This enables us to begin constructing a model of leadership in social enterprise which
encompasses all three aspects of being, doing and style:
Being
Aspects of leadership which derive primarily from who we are and the in-built
traits and attributes we display, as a result of our personality, values and
beliefs about the world.

Self-awareness – Authenticity & Humility

Courage & Calm – Self-confidence & risk-taking

Strong values – ‘Moral compass’ & belief system

Caring for others – Leadership based on concern for individual
I have chosen to reject the notion of caring as a ‘behaviour’. A definition of caring
based exclusively on ‘behavioural anchors’, though consistent with the categorisation of
others, such as Sashkin and Sashkin (2003), can be accused of missing the underlying
authenticity required for such a quality to have any impact (Kuchinke & Han 2005).
Likewise, I have characterised self-awareness also as more of a trait than a behaviour.
To those positive factors listed above, we can add a number of ‘contra-indicators’, or
dimensions which these CEOs specifically identified as preventing effective leadership:

Fear of failure

A belief in perfection. Striving against the odds for an ideal result

Ruthlessness and cynicism, resulting in Machiavellian scheming, the manipulation of
others, or behaviours associated with bullying
15

Over-inflated egos & arrogance. Talking down to people

Poor self-awareness- demanding one standard of behaviour, but demonstrating
something less yourself
Doing
Aspects of leadership which derive primarily from learned skills and
knowledge. These are the behaviours we can develop most successfully
through management & leadership training.

Managing performance
o Business performance

Focusing on measurable outputs

Financial sharpness – Controlling costs

Commercial nous – Understanding the ‘core of the business’ - spotting
opportunities

Moving between the ‘big picture’ and the detail
o People performance


Regular feedback & appraisal

Confronting poor performance promptly & appropriately
Communicating
o Authenticity and openness, a lack of affectation and ‘rehearsal’, highlypersonalised communication, informal relationships with key individuals at
different levels

Building a strong team
o Taking difficult recruitment decisions
16
o Developing others – Face time / Delegating / Opportunities for professional
development

Delivering results

Taking responsibility
Consistent contra-indicators were also identified. These included:

Over-formal or patronising communication

Avoiding tough decisions about people’s performance

‘Blagging’ – All talk and no action

Over-reliance on processes & systems

Opting out of group decisions
Style
Aspects of leadership which derive primarily from the way we choose to
respond to certain circumstances. These involve applying elements of being
and doing in combinations which we deliberately vary according to
environmental factors such as size of organisation and prevailing challenges.
Conclusion
I have attempted to capture the way in which these aspects of leadership interact in the
diagram shown in appendix one. It suggests that superficial proficiency in a range of
competencies may lead to gaps in performance caused in two different ways. An insufficient
combination of key leadership traits can create ‘phony’ leaders, ostensibly competent but
displaying the kind of contra-indicators described by our chief executives. Additionally, too
narrow a range of leadership styles will produce ‘one-trick ponies’, capable of operating well
under certain conditions, but unable to adapt to changes in organisational circumstances, and
17
over-reliant on systems and processes. Understanding these impacts on leadership
performance ensures a more realistic and appropriate response to their development needs.
Further research is needed to really stress test the elements identified here with a
much larger sample of varied social enterprises, but the model could eventually form the
basis of processes such as 360 degree feedback, talent management and leadership
development for organisations within this sector, particularly those without the time and
resources to develop such processes for themselves.
There was insufficient data to suggest a detailed taxonomy of leadership styles
specific to the social enterprise sector, or indeed to indicate whether this was necessary.
Again, additional research would be needed to develop this further.
18
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