Entrepreneurial leadership styles: what works and what doesn't.

Author:von Bergen, C.W.


Many entrepreneurs claim to use common sense as their management philosophy. An example is the Golden Rule as a managerial guide for personnel decisions. Since this adage was never meant as a management philosophy, but as a statement of respect and concern for others, it may be inappropriate. Employees want to be understood as unique individuals and as such, they respond to different supervisory methods than entrepreneurs might assume. Entrepreneurs must realize that what works to motivate one employee may not work well with other employees. Examples of effective methods and the principles on which they are based are provided.


Entrepreneurs have many options when deciding how to provide leadership. Some leadership styles are more successful than others and which is which is well documented though not always well understood, disseminated, or utilized. Common sense is sometimes claimed to be the leadership style of choice. Unfortunately, common sense does not always provide the best direction. An oriental fable dramatizes the negative consequences of following common sense, i.e treating others as we would like to be treated.

Once upon a time, there was a great flood; and involved in this flood were two creatures, a monkey and a fish. The monkey, being agile and experienced, was lucky enough to scramble up a tree and escape the raging waters. As he looked down from his safe perch, he saw the poor fish struggling against the swift current. With the very best of intentions, he reached down and lifted the fish from the water. The result was inevitable (Adams, 1969, p. 22).

Just as the monkey assumed that the fish's needs were similar to its own and behaved accordingly, so do many entrepreneurs assume that their employees think, feel, and want to be treated as they do. Such well-intentioned behavior frequently results in similarly unfortunate circumstances. Let us move from an old tale to a current scenario:

An owner of a small e-commerce business was being interviewed by a local newspaper official. The reporter asked him about his philosophy of management. The owner responded, "I just trust my gut and go by the Golden Rule, treating others the way I would want them to treat me."

The intent of people like this owner is admirable yet "the trick is not to learn to trust ... gut feelings, but rather to discipline yourself to ignore them" (Lynch, 1997, p. 419). In this case the Golden Rule is touted as a rationale for relying on common sense. The Golden Rule is used in a way not intended, i.e. as a management philosophy. Many entrepreneurs believe the Golden Rule is the ideal principle for guiding management practice (e.g. Manz, 1998; Schonfeld, 1994). However, difficulties arise when we use ourselves as the measure of how to treat others (Perreault, 1996), assuming we understand their perspectives, rather than assessing those perspectives.

Treating others as we wish to be treated is based on one's own wants, needs, and perceptions, which does not take into account others' perspectives and preferences. Such an approach implies that entrepreneurs use themselves as models for understanding how to manage people. A corollary is that entrepreneurs treat employees the way they themselves want to be treated. "Our tendency is to project out of our own autobiographies what we think other people want or need. We project our intentions on the behavior of others" (Covey, 1989, p. 192). Often, however, employees do not want to be treated as their employer would like, but respond to different methods (Hill, 1992). Hence, using the Golden Rule is not an appropriate model for entrepreneurs. Given these considerations, the management philosophy of the e-commerce business owner discussed above may be problematic.


How can such an ingrained, common sense adage, one of the oldest ethical maxims (Matthew 7:12, 1979), not be the best way to manage people? The reality is that what one employee appreciates, another may despise. This is because most of our preferences in life are learned and are highly individualized (Zimbardo & Weber, 1994), including how we like to be treated by the boss.

The tendency to assume that others share our opinions, feelings, and behavior is called the false consensus effect by social psychologists and is considered a fundamental bias in our thinking about other people (Dawes, 1989). We commonly think that others hold similar political opinions, find the same movies amusing, or believe that everyone feels baseball or football is the distinctive American game. Individuals tend to overestimate the proportion of other people who agree with their attitudes about drugs, abortion, seat belt use, university policies, politics, and even Ritz crackers (Nisbett & Ross, 1991; Suls, Wan, & Sanders, 1988). In other words, we assume that people agree with us to a greater extent than they actually do across a wide variety of issues. The adage, "The thief thinks everyone else is a thief," aptly applies.

The bias of assuming that others behave, think, or feel as we do is an error in perceiving that arises because most people want to believe that others agree with them (Mullen, Atkins, Champion, Edwards, Hardy, Story, & Vanderklok, 1985). This way of viewing the world tends to enhance people's confidence that their own judgments, actions, and lifestyles are normal or appropriate which serves as an affirmation of the correctness of their own views (Marks & Miller, 1987; Sherman, Presson, & Chassin, 1984). However, overestimating the trustworthiness of our ideas can be a significant hindrance to rational thinking. We can always believe there is plenty of support "out there" for our opinions, no matter how egocentric they may be. Hence, people may operate under the false assumption that their beliefs are widely held. Thus, false consensus bias can serve as justification for imposing one's beliefs on others. Surely they think, feel, and act as we do, anyway (Fiske & Taylor, 1991)!

The deleterious effects of false consensus may likewise operate in groups and lead to obstacles in their decisions. Cohesive groups of highly qualified, experienced individuals often share the false belief that everyone in the group agrees with the group's judgments (Janis, 1982). Such an illusion of unanimity is a key symptom of faulty decision-making called groupthink that has been cited in a number of poor decisions. Notable examples include: the ill-fated Bay of Pigs invasion of Cuba in 1962 by President Kennedy and his advisors, decisions made by President Johnson and his counselors between 1964 and 1967 to escalate the Vietnam War, the decision made by President Nixon and his top team to cover up the Watergate...

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