When Nike recently announced that it was bringing back Elliott Hill, a retired veteran who spent more than 32 years with the sportswear giant after starting as an intern in 1988, it was reported that an audible cheer could be heard on the Nike campus.
Hill is seen as the ideal CEO for Nike today: someone who can rally employees the same way a sports team rallies fans. According to former Nike staffer Stephen Holmberg, who spent more than 16 years as a director of marketplace trends and consumer insights, Hill is “a leader people want to work for.”
At a time when leadership is under more scrutiny than ever, who a company chooses to lead – and more importantly, how they choose to lead – can make or break an organization. Which is why Hill’s appointment was met with such enthusiasm. Following the announcement, Nike shares jumped 10% in aftermarket trading and many employees were reported to have left work early to celebrate.
Pressing business priorities aside, what will matter most for Nike is the culture that Hill fosters upon his return. Research consistently shows that people-centered cultures – those that prioritize employee well-being, engagement, and development – tend to outperform financially compared to those with less focus on employees.
According to Gallup’s research on employee engagement, highly engaged teams show a 21% increase in profitability compared to disengaged teams. In addition, companies with engaged employees also experienced a 41% reduction in absenteeism and a 17% increase in productivity. Lastly, the study found that high employee engagement also leads to a 20% improvement in sales and a 10% increase in customer loyalty.
This begs the question: why aren’t more companies building people-centered cultures that focus on the emotions of their employees at the forefront of their leadership?
Often, when people think of leadership, they think of the profits a CEO oversaw during their tenure. But the common mistake that many make is not understanding that true leadership is about people and creating a culture where your teams feel positive emotions like purpose, passion, hope, sense of community, belonging, trust, self-esteem, self-confidence, pride, engagement, happiness, and other positive states of mind. These emotions are linked to performance in many different ways.
Corporate culture is directly linked to financial success. Companies with strong, positive cultures that focus on employee well-being outperform their peers by a wide margin.
As Jorge Valdano, Argentine former football player, coach, and former general manager of Real Madrid, said: “When people feel what they are doing, when people feel committed, they are capable of passing this attitude onto the whole group. A team is a state of mind.”
“The best or ultimate tool we have to create and manage emotions and states of mind in a team and organizations is what we call ‘culture.’ With that in mind, it is important to note that we are all leaders and are responsible for the emotional impact on those around us.
A study by HBR found that corporate culture is directly linked to financial success. Companies with strong, positive cultures that focus on employee well-being outperform their peers by a wide margin. These companies saw a 682% revenue growth over an 11-year period, compared to just 166% for companies without a strong culture.
It also found that shareholder returns for companies with a strong culture were 901% higher over the same period compared to 74% for companies with weaker cultures.
Leadership is about inspiring teams and getting behind an idea with a purpose; CEOs are the ones who set the tone for an organization, and whose job it is to lead with emotions.
When leaders ask how they can inspire their employees, they must first connect with and develop these emotions in themselves, because they cannot inspire emotions if they do not feel them. You cannot inspire a sense of purpose if you are not yourself truly engaged with that purpose.
Take Southwest Airlines, whose motto is “connecting people to what’s important in their lives through friendly, reliable, and low-cost air travel,” and whose values were: warrior spirit, a servant’s heart, and a fun-loving attitude. Within those values were behaviors that its former CEO Herb Kelleher himself demonstrated clearly to others: to work hard, persevere, innovate, treat others with respect, show proactive customer care, enjoy work, maintain balance, and celebrate success.
If you look carefully at these values and behaviors, they are all about emotions and attitudes, and Kelleher lived them passionately. This passion was contagious and inspired all the workforce because it was all about emotions. And the proof?
In the early 2000s, Southwest Airlines’ market capitalization exceeded that of its nine largest US competitors combined. So, in a nutshell, you need emotions to lead.
Here are five key questions that leaders should ask themselves and their teams.
All leaders should have a vision, one that is ambitious but achievable, simple to communicate, and inclusive. What is it about this vision that you believe in and what are you inviting people into?
A vision must be beyond ideas, it’s about the emotions that lead to them. To be part of a vision helps foster pride and a sense of belonging, you must show your teams that you are working towards something.
Take Microsoft, which under its CEO Satya Nadella has become one of the largest companies in the world. In February 2014, Microsoft had a market capitalization of around $300bn. It is now valued at over $3tn.
Nadella has become known for changing the company’s focus from client services to cloud computing as well as partnering with OpenAI, to help it become one of the world’s leading companies in AI. Indeed, one of his most famous quotes is: “Listening was the most important thing I accomplished each day because it would build the foundation of my leadership for years to come.”
The Great Resignation did not just happen. It happened because employees were fed up with limited career advancement opportunities, inflexible remote-work policies, and long-lasting job dissatisfaction, amongst many other reasons. And most importantly, it happened because companies were not putting their people first.
How many leaders can say that they deeply care about their employees? That they care, and want to take care of them, and develop a sense of community and belonging in the workplace where being concerned about their well-being, development, and how engaged they are matters.
A recent McKinsey report stated: “Organizations that make learning and development a priority and part of their mission can create a virtuous circle and improve the chances of success in attracting, promoting, and retaining talent. Our research shows that incentivizing a development mindset among leaders and employees, for example, through training and internal career advancement opportunities, is the cornerstone of effective organizations.”
Indeed, some companies, like Pixar and Globant, provide people with resources to train not only in the topics the organization needs but also in others exclusively related to their individual interests. They also offer incentives such as flexible work from anywhere in the world, email or phone-free weeks as seen at Spotify, among other benefits. And some go even further by offering benefits like reimbursement for fertility treatments or egg freezing.
Leaders need to genuinely care about the people they work with, because when you care about your people, you help them to develop professionally (through feedback, training, and their career path) and personally (for example, by simply asking how they are doing).
By working on developing a “generosity gene,” leaders can show that they want to know about a person and who they are. This helps them to seek how to bring out the best in people and gives them recognition for the work they do.
“When you empower your team, you help them build self-esteem and self-confidence, and it is particularly important because as a leader, you grow leaders by empowering them.”
Communication practices have a tremendous impact on how your team works. The question here is: do you connect with people or what is your system of communication? Communication develops connection, and that builds trust and fosters a sense of belonging and pride, which means talking with candor but also allowing people to be heard and listening to what they have to say.
Leaders need to empathize with what people are feeling, and then walk the talk. Show them that you care by being a ‘chief reminding officer’ who celebrates and tells stories of others. All these things tend to help you connect and build trust with people.
A great example is Ray Dalio of Bridgewater Associates, renowned for its radical transparency and unique culture of openness. Almost all meetings at the investment management firm are recorded and made available to employees, regardless of seniority, as part of its commitment to fostering accountability and trust.
This practice is rooted in the belief that open access to information encourages candid feedback, honest opinions, and greater transparency in decision-making processes, which are central to the firm’s management philosophy.
How your organization makes decisions determines how talent develops. Do you empower your team? When you empower your team, you help them build self-esteem and self-confidence, and it is particularly important because as a leader, you grow leaders by empowering them.
Take the example of Nadella again, who initiated a significant cultural transformation at the company. He shifted Microsoft from a “Know-it-All” to a “Learn-it-All” Culture, emphasizing a growth mindset, drawing from psychologist Carol Dweck’s concept. This meant encouraging continuous learning, experimentation, and adaptability instead of rigid expertise or defensiveness. Nadella fostered curiosity and openness to new ideas throughout the company. This shift helped drive innovation and collaboration within the company.
Under previous leadership, Microsoft was known for internal competition between departments and a siloed organizational structure. Nadella worked to break down these silos, encouraging greater collaboration across teams, divisions, and even with external partners. (e.g., partnerships with Linux and open-source initiatives).
Nadella emphasized empathy as a cornerstone of leadership. His personal leadership style, focusing on understanding others’ perspectives, influenced how teams operated. He also promoted a leadership approach that encouraged managers to empower their teams rather than control them.
To implement a people-centered culture, you need to have constant communication, formal and informal storytelling, and talent – hiring and firing.
Culture is about the heart, and strategy is about the mind, but the mind and the heart must be aligned to make it work. Take Napoleon. When he was around a table with his generals in Paris deciding how to invade Russia, they were discussing strategy. But to then get one million men marching over Moscow, that is culture. It is about all the four questions above combined to create a culture where what you preach happens in practice.
The only way people work well with each other is to have a human connection and a common purpose. If you just have values and behaviors and purpose in your culture, you align people, but it is only when you have emotions that you multiply performance; culture multiplies results.
To implement a people-centered culture, you need to have constant communication, formal and informal storytelling, and talent – hiring and firing. For example, the best way to have people who love their clients is to hire people who are naturally service-oriented. As Kelleher said, “I hire for attitude and then train for skills.”
You need to create tools and processes to help you accomplish your goals, from celebrating errors as the Tata Group does with the “mistake of the month” award, to setting out KPIs and measuring employee engagement because once you implement it, you need to monitor it.
Leadership is a long journey into your soul, so it is hard to prepare experiments and research to show a point. This is why many notable examples of great leadership are very people-centric. It is not so simple as to hire consultants to change and adapt a company’s culture over one fiscal year.
However, most strong cultures mimic their leader’s personality. In the case of Richard Branson’s Virgin, it’s about doing things differently: its purpose, its values, its behaviors, and the way it solved its challenges. Likewise, Nadella did a cultural transformation at Microsoft after Steve Ballmer, who was a salesperson and had a salesman’s culture for Microsoft for many years. Undoubtedly, Elliott Hill’s tenure at Nike will be marked by the different values he embodies.
Perhaps the most important reason why every leader should be a Chief Emotions Officer is that it allows us to become masters in understanding and managing emotions.
Most leaders, when I ask them in surveys around the world if they use emotions to lead, tell me that they actually need to control them – both in themselves and their teams. This is because emotions are often perceived negatively and associated with outbursts, anger, sadness, or tears. In reality, however, emotions can carry a wealth of information – all we need to do is to learn how to decode them.
Each emotion reflects how our unconscious mind and body perceive the world. So before trying to control or manage emotions, it’s necessary to understand them. For example, if I feel distress, why is that? If it is because I have to deliver a report and I haven’t made enough progress, I can then focus on that. If I feel anxious, what’s happening? Maybe there are important decisions that need to be taken in the team that might affect my future. I can then focus on that, and so on.
Emotions also bring a message about how our unconscious is interpreting the world. If we can understand them in ourselves, we will then be able to truly empathize with others. We will be able to decode in their behavior the fears, distress, excitement, and other emotions they are experiencing.
In conclusion, true leadership is about more than driving profits; it’s about fostering a people-centered culture that prioritizes employee well-being and emotional engagement. Leaders, who are deeply connected with their teams, can significantly impact an organization’s performance by inspiring trust, commitment, and a shared purpose.
The success of such leadership is evident in the positive reactions from both employees and shareholders, highlighting the direct link between emotional engagement and business outcomes. This way, a CEO who leads with empathy, trust, and empowerment can create a thriving culture that drives sustained financial success.
Eduardo P. Braun will be chairing this year’s Global Peter Drucker Forum on 14 Nov in Vienna. This year’s theme is ‘The Next Knowledge Work. Managing For New Levels of Value Creation and Innovation.’
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