Not only does garnering feedback from top employees give company leaders insight into how they are performing, it can also boost their organization's bottom line, new research finds.
The study, which was recently published in the Journal of Organizational Behavior, revealed that CEOs who ask for opinions on their performance from their direct reports helps improve their executive team's confidence, which, in turn, can improve the company's overall performance.
"CEO actions that encourage a sense of potency among [top management teams, or TMT] members are viewed as critical for CEOs seeking to enhance firm performance," the study's authors wrote.
The research also discovered that gathering opinions from their managers can be a just as effective a form of leadership for CEOs as a more "heroic" visionary approach.
"We provide the first evidence that seeking feedback from top management team members is an important avenue through which CEOs can strengthen the team and improve firm performance," said Sue Ashford, one of the study's authors and a professor at the University of Michigan, in a statement.
For the study, researchers surveyed the executive teams, 422 employees, from 65 organizations in the United States and Belgium. The organizations were from a wide range of industries, including manufacturing, professional services, finance, construction, health care, retail, real estate and transportation. On average, the firms had four levels of formal hierarchy and CEOs with relatively lengthy tenures, about 13 years.
In the surveys, top management team members were asked to rate how often their CEOs asked for their feedback and the effectiveness of their team. In addition, executive team members were asked about their CEOs' vision for the future. [Are you a company leader? Here are 5 mistakes you might be making]
The study's authors found that CEOs impacted the confidence of top management teams by both seeking feedback on their behavior and management style and clarifying their vision for the organization. Feedback-seeking was especially effective among CEOs who had less of a prowess for visionary leadership.
"We found that seeking feedback from [top management teams] members was especially helpful to CEOs who engaged in lower levels of the vision articulation that customarily has been associated with effective top‐level leadership," the study's authors wrote. "Our findings highlight [feedback seeking behavior] as a humble means through which CEOs might enhance firm performance."
The research also found that CEOs who are strong visionaries don't see the same positive impacts of gathering opinions on their performance from his or her managers as those who have trouble articulating their vision for the company.
"Although more research is needed, this finding raises the possibility that CEOs may be better served to employ either a more or less humble leadership style, rather than blending elements of these styles," Ashford said.
In the end, the researchers believe the study's results should show organizations that they can still benefit from hiring CEOs who aren't adept at articulating their vision for the future.
"In the end, even the highest levels of organizations are populated by people: people who are responsive to the behaviors of their supervisor (in this case the CEO), who feel various levels of confidence about their tasks (TMT potency), and whose contributions help determine the organizations' performance," the study's authors wrote. "Our study suggests a new and important means through which CEOs might lead these people – by asking them for their feedback about their work behaviors and style."
The study was co-authored by Ned Wellman and Mary Sully de Luque of Arizona State University, Katleen De Stobbeleir of the Vlerick Business School in Belgium, and Melody Wollan of Eastern Illinois University.