personality and leadership composition in top...

PERSONNEL PSYCHOLOGY2014, 67, 351–387

PERSONALITY AND LEADERSHIP COMPOSITIONIN TOP MANAGEMENT TEAMS: IMPLICATIONSFOR ORGANIZATIONAL EFFECTIVENESS

AMY E. COLBERTUniversity of Iowa

MURRAY R. BARRICKTexas A&M University

BRET H. BRADLEYUniversity of Oklahoma

This study examines whether top management team (TMT) personalityand leadership are associated with organizational effectiveness beyondthe effects of CEO personality and leadership, as suggested by upperechelons theory. Using direct measures of personality and leadership,rather than proxy variables from archival sources or demographic data,we found that mean levels of conscientiousness among TMT memberswere related to lagged indicators of organizational performance, as wereCEO conscientiousness and transformational leadership. Follower com-mitment to the organization was found to be associated with higherlevels of transformational leadership from both the CEO and TMT. Theresults are consistent with the upper echelons perspective that organi-zational effectiveness is influenced not only by the CEO but also by adominant coalition of leaders. Yet, the results also show that the CEOplays a distinct role in influencing organizational financial performanceand collective organizational commitment. Theoretical and practical im-plications of these results are discussed.

Practitioners and scholars of management have long been captivatedby the characteristics of the CEO as a crucial predictor of firm success(Katz & Kahn, 1978; Waldman & Yammarino, 1999). Yet, the com-plexity of creating and carrying out the strategic decisions of an entireorganization demands more skill and effort than a single leader can ef-fectively provide. Instead, it requires the collective ability and motivationof a dominant team of leaders within the firm (Cyert & March, 1963;Finkelstein & Hambrick, 1996; Hambrick & Mason, 1984). Consistentwith this view, Hambrick noted, “leadership of a complex organization is

This research was supported by the Filene Research Institute.Correspondence and requests for reprints should be addressed to Amy E. Colbert, De-

partment of Management & Organizations, Henry B. Tippie College of Business, Universityof Iowa, 108 Pappajohn Business Building, Iowa City, IA 52242; [email protected].

C© 2013 Wiley Periodicals, Inc. doi: 10.1111/peps.12036

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a shared activity” (2007, p. 334). Thus, strategic leadership researchershave advocated examining the impact of a dominant coalition of leaders(Cyert & March, 1963), not just the CEO, on organizational effective-ness. Recognizing that the top management team (TMT) is charged withleading the organization, scholars have recently begun to consider theconsequences of the psychological makeup or composition of the innercircle of executives for organizational effectiveness (Cannella & Monroe,1997).

The upper echelons perspective proposes that the experiences, values,and personalities of the firm’s CEO and TMT members shape their inter-pretation of the environment, which in turn influences strategic choice andorganizational effectiveness (Hambrick, 2007). However, because accessto TMTs is limited, TMT research has primarily relied on demographicdata from archival sources as proxies for team member psychologicalcharacteristics (Carpenter, Geletkanycz, & Sanders, 2004). The aim ofthis paper is to integrate personality and leadership theories with the upperechelons perspective in an effort to better understand how key character-istics of top executives influence organizational effectiveness and to testthese proposed linkages using direct measures of executive personalityand leadership. We propose the composition of executive personality andleadership within the TMT will be related to the success realized by theteam of executives (Hollenbeck, DeRue, & Guzzo, 2004; Levine & More-land, 1990; Stewart, 2006) and, consistent with upper echelons theory,that these effects will augment the effects of CEO personality and lead-ership on organizational effectiveness. We examine these relationshipsusing two indicators of organizational effectiveness: firm financial perfor-mance, which is the most commonly used measure in the upper echelonsliterature, and aggregated employee organizational commitment. Collec-tive organizational commitment is critical to the organization because itnot only is related to retention within the firm but also to employee en-gagement (Cole, Walter, Bedeian, & O’Boyle, 2012; Griffeth, Hom, &Gaertner, 2000).

Our research makes four primary contributions to the literature. First,we consider how TMT personality composition and CEO personalityjointly influence organizational effectiveness. A recent review of TMTresearch noted “personality variables have long been included in theparlance of the UE [upper echelons] literature but rarely incorporatedspecifically in studies” (Carpenter et al., 2004, p. 771). Prior research hasshown personality composition influences the effectiveness of other workgroups within organizations (Bell, 2007; Mount, Barrick, & Stewart, 1998;Stewart, 2006). In this study, we draw from that research and consider theunique nature of TMTs as we build theoretical links between TMT per-sonality composition and organizational effectiveness. Recognizing that

AMY E. COLBERT ET AL. 353

CEOs hold a unique position within TMTs (Finkelstein & Hambrick,1996), we model the effects of CEO personality separately from the ef-fects of TMT personality composition to fully understand the impact oftop executives’ personality on organizational effectiveness.

Second, because TMTs are charged with leading organizations, weexpect that the leadership exhibited by top executives is also related toorganizational effectiveness. Past research has highlighted the relation-ship of the CEO’s leadership style with organizational outcomes (e.g.,Colbert, Kristof-Brown, Bradley, & Barrick, 2008; Ling, Simsek,Lubatkin, & Veiga, 2008; Waldman & Yammarino, 1999). However,drawing on upper echelons theory, for the first time we test whetherfirm performance and employee commitment to the organization are alsorelated to the leadership composition of the TMT. Based on suggestionsthat transformational leadership theories may provide insight into the pro-cesses by which TMTs make and implement strategic decisions (Boal &Hooijberg, 2001; Cannella & Monroe, 1997), we focus on the relationshipsof TMT transformational leadership composition and CEO transforma-tional leadership with organizational effectiveness.

Third, we explicitly examine the proposition from upper echelons the-ory that executives’ personality traits influence leader behaviors. In doingthis, we develop a theoretical model that provides insight into the waysin which executive characteristics are interrelated. Two particularly com-pelling pieces of evidence support the view that executive personalitycauses leadership behaviors. First, research has shown that personalityis partially heritable and relatively stable during adulthood (Roberts &DelVecchio, 2000). Thus, it is unlikely that leadership behavior shapespersonality. Further, longitudinal analyses have shown that personalityassessed in childhood predicts performance over 50 years later (Judge,Higgins, Thoresen, & Barrick, 1999). The existence of significant effectsof personality on performance through proximal task-specific motivationalprocesses across numerous and varied situations over 50 years is convinc-ing evidence that personality causes behavior. Based on this reasoning, inthis study we examine transformational leadership as a potential mediatorof the link between executive personality and organizational effectiveness.

Fourth, rather than infer TMT member and CEO personality and lead-ership from proxy variables, we used direct assessments that are moreprecise empirical indicators of the psychological constructs and behav-ioral tendencies that are theorized in our model to influence organiza-tional effectiveness. Although team composition is at the core of muchTMT theory (Carpenter et al., 2004), nearly all prior empirical researchhas relied on demographic data from archival sources to assess TMTcomposition effects (e.g., Bantel & Jackson, 1989; Cannella, Park, &Lee, 2008; Wiersema & Bantel, 1992). However, demographic variables


are, at best, proxies of the underlying psychological characteristics andbehavioral tendencies that actually influence TMT functioning (Carpen-ter et al., 2004; Priem, Lyon, & Dess, 1999). In response to these con-cerns, our research directly assesses the psychological makeup and lead-ership attributes of the executives in TMTs (Cannella & Monroe, 1997;Edmondson, Roberto, & Watkins, 2003; Lawrence, 1997; Pettigrew,1992). These individual-level characteristics have been overlooked byresearchers, even though they are expected to be important to the team’sfunctioning, leaving critical gaps in what we know about TMTs.

Hypothesis Development

In this study, we examined the CEO’s impact on organizational ef-fectiveness separate from that of the TMT. Given the power and statusdifferences between the CEO and the rest of the TMT, we modeled theeffects of the personality and leadership characteristics of the CEO sep-arately from the personality and leadership composition of the TMT tobetter understand the unique effects of each. Because past research hasfocused on the impact of CEO personality and leadership on organiza-tional effectiveness, this strategy allows us to examine the unique effectsof TMT personality and leadership beyond the effects of the CEO thathave been established in previous research. In the following section, webegin by developing theoretical support for the hypotheses that CEOand TMT member personality traits and leadership behaviors are relatedto organizational effectiveness. We then propose linkages between theseexecutive characteristics, suggesting that the transformational leadershipexhibited by the CEO and TMT is a critical mediator that can help explainthe link of top executives’ personality with organizational effectiveness(Carpenter et al., 2004; Hambrick, 2007). The hypothesized model isshown in Figure 1.

We assess organizational effectiveness in two ways, based on finan-cial indicators of objective organizational performance and on collec-tive organizational commitment. Consistent with Gardner, Wright, andMoynihan (2011), we conceptualize collective organizational commit-ment as a shared unit property (Kozlowski & Klein, 2000). Organizationalcommitment originates as an individual-level perception of the psycho-logical bond between an employee and the organization (Meyer & Allen,1997). These individual perceptions of commitment may be influencedby organization-level practices and leadership from the TMT (Mathieu& Zajac, 1990). Consistent with composition or direct consensus mod-els of emergence, individuals within the organization interact with eachother, sharing their perceptions of the organization’s practices and the


CEO Transformational

Leadership

Org. Effectiveness Performance Commitment

TMT Mean Transformational

Leadership TMT Mean Personality

CEO Personality

H1, H2, H3, H7

H9, H11

H4, H5, H6, H8

H10, H12

H11

H12

Figure 1: Hypothesized Model of the Relationships of TMT and CEOComposition With Organizational Effectiveness.

Note. TMT = top management team.

desirability of those practices (Chan, 1998; Kozlowski & Klein, 2000;Morgeson & Hofmann, 1999), yielding some convergence of individualperceptions of commitment. Those who have stronger and more definedcommitment to the organization may influence those whose commitmentis ambivalent (Gardner et al., 2011; Ostroff, 1992). In addition, becauseorganizational commitment includes an affective component, emotionalcontagion also may result in the emergence of a more homogenous levelof collective organizational commitment (Barsade, 2002). Thus, consis-tent with Gardner et al. (2011, p. 318), we define collective organizationalcommitment as an organization-level concept that represents “a sharedmindset and a shared psychological state among a delimited collectiveof individuals” that characterizes the bond between the collection of em-ployees and the organization.

Personality Composition and Organizational Effectiveness

Personality traits influence how we habitually think, feel, and act(Saucier & Goldberg, 2003). Within the workplace, personality has beenshown to influence leadership (Judge, Bono, Ilies, & Gerhardt, 2002),employee attitudes (Judge, Heller, & Mount, 2002), and job perfor-mance (Barrick, Mount, & Judge, 2001). Similarly, at the team level,personality composition has been shown to influence team functioning,


satisfaction, and performance (Bell, 2007; Mount et al., 1998). Upperechelons theory suggests that these effects extend into the top levels oforganizations, proposing that personality traits of executives may influ-ence their interpretation of the environment, their strategic choices, andultimately firm effectiveness (Hambrick, 2007). Although little empiricalresearch has directly assessed the personality traits of the CEO, Peterson,Smith, Martorana, and Owens (2003) used archival sources to rate thepersonality of 17 CEOs. Ratings of CEO conscientiousness, emotionalstability, openness to experience, extraversion, and agreeableness werepositively related to the functioning of the TMT, which in turn, relatedto organizational performance. Resick, Whitman, Weingarden, and Hiller(2009) used a similar approach to assess core self-evaluations and narcis-sism of CEOs in Major League Baseball. They found that CEO core self-evaluations were indirectly related to organizational performance throughpositive effects on transformational leadership behaviors, and CEO nar-cissism was indirectly related to organizational performance through itsnegative effect on contingent reward leadership behaviors.

In this study, we propose that CEO personality as rated by the CEOsthemselves, rather than as coded from archival sources, is likely to berelated to organizational effectiveness. However, we extend these argu-ments to suggest that the personality traits possessed by TMT membersmay also be related to the success of the organization. The complexity ofcreating and carrying out the strategic decisions of an entire organizationdemands more skill and effort than a single leader can effectively provide.Instead, it requires the collective ability and motivation of a dominant teamof leaders within the firm (Cyert & March, 1963; Hambrick & Mason,1984). TMT members work together to craft the organization’s strategicdirection, and then each member of the TMT is given a specific role toplay—implementing the organization’s strategic direction in his or herfunctional area. In the implementation process, TMT members enact poli-cies consistent with the strategic direction of the organization that mayimpact organizational performance. They also build relationships withemployees, influencing individual employee organizational commitmentand ultimately the shared level of commitment across the organization.Because the success of TMTs is dependent on each of its members, webelieve that the composition of personality and leadership within the TMTis best captured through mean levels of these characteristics. This choiceis consistent with meta-analytic studies of team composition in other typesof work teams, which have shown that mean levels of personality are re-lated to team effectiveness (e.g., Bell, 2007). However, because we aretreating TMT personality as a configural unit property that does not nec-essarily converge within teams (Kozlowski & Klein, 2000), it is possiblethat the TMT member with the highest or lowest levels of a trait may


disproportionately influence the team’s outcomes or that the variability ofa trait across team members may impact team functioning. We return tothat possibility in the results section.

We used the five broad personality traits reflected in the five-factormodel (FFM) of personality (conscientiousness, emotional stability, open-ness to experience, extraversion, and agreeableness) to comprehensivelydescribe the sphere of normal personality (Barrick & Mount, 1991). Thepersonality traits of leaders are often seen as either task-oriented (con-scientiousness, emotional stability, and openness to experience) or in-terpersonally oriented (extraversion and agreeableness; DeRue, Wellman,Nahrgang, & Humphrey, 2011). Because a critical task of senior executivesis to direct and channel employees toward goal attainment, task-orientedtraits may be especially relevant in the TMT. The task-oriented traits ofconscientiousness, emotional stability, and openness to experience havebeen shown to be important predictors of leader emergence (conscientious-ness: ρ = .33; emotional stability: ρ = .24; openness to experience: ρ =.24) and leader effectiveness (conscientiousness: ρ = .16; emotional sta-bility: ρ = .22; openness to experience: ρ = .24; Judge, Bono et al., 2002).

Conscientious executives are persistent, disciplined, and achievement-oriented individuals. Such traits are fundamentally related to performanceoutcomes in many, if not all, jobs (Barrick et al., 2001). Similarly, emo-tionally stable executives who are neither prone to insecurity nor overlyanxious or distracted from their work are also better performers. Thebreadth of task-related behaviors that conscientiousness and emotionalstability reflect explain why these traits are “universal predictors” ofindividual-level performance (Barrick et al., 2001) and are expected torelate to overall organizational effectiveness; that is, they are importantpredictors in all jobs including executive jobs. Because the job of exec-utive includes both enhancing organizational financial performance anddeveloping a committed workforce, we expect that conscientiousness andemotional stability among executives will help them achieve both of thesegoals and are likely to be related to both organizational performance andcollective organizational commitment.

In addition to their impact on individual-level performance, priorresearch has also shown the behaviors and tendencies associated withconscientiousness and emotional stability to be related to team-level ef-fectiveness in work contexts (Bell, 2007; Mount et al., 1998). Consci-entious team members are disciplined, diligent, hardworking individuals.Two meta-analyses (Bell, 2007; Mount et al., 1998) found the higher theteam’s mean level of conscientiousness, the higher the team’s success inorganizational settings. The FFM trait of emotional stability (e.g., calm,steady, secure) reflects how an individual tends to think and react emo-tionally. Teams composed of more emotionally stable members are able


to deal with conflict more effectively and remain focused on the task it-self (Barrick, Stewart, Neubert, & Mount, 1998). Not surprisingly, highermean levels of emotional stability in teams have also been found to leadto higher team performance in work contexts.

The last task-oriented personality trait is openness to experience.Whereas openness to experience has not been found to predict individualperformance in lower level jobs (Barrick & Mount, 1991), it has beensignificantly related to individual leadership effectiveness (Judge, Bonoet al., 2002). Higher average team scores on openness to experience (e.g.,original, daring, imaginative, broad-minded) have also been found to berelated to team performance in meta-analyses of studies in organizationalsettings (Bell, 2007; Mount et al., 1998). Team members who are higheron openness to experience are posited to be better suited to adapt to themore dynamic environments typically found in team settings (LePine,2003). Would these results also be expected to apply to TMTs using or-ganizational performance and collective organizational commitment asthe measures of team success? The firm’s executives are tasked with theresponsibility of designing the firm’s strategy, implementing commandand control to motivate other employees to strive toward the firm’s orga-nizational performance objectives, and developing bonds with the orga-nization’s workforce. Because of this, an executive’s job is likely to beinfused with uncertainty (Edmondson et al., 2003). Individuals who arehigher on openness to new experiences should be more flexible and adapt-able as well as more creative and innovative (Barrick & Mount, 1991).Consequently, although prior research has revealed that this trait is impor-tant to leader effectiveness and team success in lower-level work teams(Bell, 2007; Mount et al., 1998), due to the increased uncertainty inherentin the work executives do and the relevance this trait has for executiveleadership, openness to experience is expected to be even more critical inexecutive settings.

Theoretically, these findings suggest that TMTs and CEOs with higherlevels of these three task-oriented traits are more likely to complete goalsand effectively solve problems (Stewart, Fulmer, & Barrick, 2005), toorganize and plan work (Marks, Mathieu, & Zaccaro, 2001), and to si-multaneously be cooperative and better team players. Thus, employeeswho are higher on these three task-oriented traits should be more ef-fective at work, thereby enabling them to achieve the dual goals of im-proved organizational performance and greater collective organizationalcommitment.

Hypothesis 1: The TMT’s mean level of conscientiousness is posi-tively related to (a) organizational performance and (b)collective organizational commitment.


Hypothesis 2: The TMT’s mean level of emotional stability is posi-tively related to (a) organizational performance and (b)collective organizational commitment.

Hypothesis 3: The TMT’s mean level of openness to experience ispositively related to (a) organizational performance and(b) collective organizational commitment.

Hypothesis 4: The CEO’s conscientiousness is positively related to(a) organizational performance and (b) collective orga-nizational commitment.

Hypothesis 5: The CEO’s emotional stability is positively related to(a) organizational performance and (b) collective orga-nizational commitment.

Hypothesis 6: The CEO’s openness to experience is positively relatedto (a) organizational performance and (b) collectiveorganizational commitment.

In addition to the task-oriented traits, two separate meta-analyses ofteam-level personality effects in the small groups’ literature (Bell, 2007;Mount et al., 1998) have shown the two interpersonally oriented per-sonality traits of extraversion and agreeableness to be important in teamsettings. Extraversion (e.g., gregarious, dominant, ambitious) is the firstinterpersonally oriented trait. Extraverted team members are more outgo-ing, sociable, and talkative; thus, they prefer to work with others in a teamrather than work alone. Higher levels of extraversion have been linkedto attraction to the team (Kristof-Brown, Barrick, & Stevens, 2005), tobacking up behaviors when others need it on the team (Porter, Hollen-beck, Ilgen, Ellis, & West, 2003), and to the desire to participate andengage members of the team (Barrick et al., 1998). Not surprisingly,prior meta-analyses (Bell, 2007; Mount et al., 1998) found higher av-erage levels of member extraversion were associated with higher teamperformance. Both meta-analytic studies also reported that teams thathave individuals with higher average scores on agreeableness (e.g., con-siderate, trusting, friendly) were found to have higher team performancein work contexts. Based on these findings, agreeableness has been viewedas a particularly important personality trait in team settings, primarilybecause the behaviors associated with this trait drive members to main-tain social harmony and reduce within-group conflict (Graziano, Hair, &Finch, 1997; Mount et al., 1998). Based on the findings from the workgroups literature, we might expect that higher mean levels of extraversionand agreeableness within TMTs are associated with higher organizationaleffectiveness.


In a team composed of top executives, however, the influence of thesetwo interpersonally oriented personality traits may fundamentally differfrom the findings for other work teams. Members of an executive teammust first be leaders within the organization (Boeker, 1997), develop-ing and implementing strategy and fostering organizational commitmentamong employees. Research findings on leaders show that extraversionis the single best personality predictor of leadership (Judge, Bono et al.,2002). Consequently, CEOs who exhibit more social influence and havegreater energy are expected to be more influential, which should lead tohigher levels of both organizational performance and organizational com-mitment. Similarly, because TMTs are responsible for communicating astrategic direction for the organization and influencing all their subordi-nates to coordinate their efforts in support of that direction, the communi-cation and influence skills in teams with high mean levels of extraversionmay be associated with higher levels of effectiveness. Taken together, thissuggests having a predisposition to engage in influencing others, beingsociable, and being ambitious (i.e., highly extraverted) should increase amember’s success as a leader of their business unit and their ability toparticipate effectively in the TMT.

In contrast, although being modest and having a need for affiliation(i.e., high in agreeableness) may be useful characteristics in some workteams, these traits have not been found to contribute to success as aleader. In fact, agreeableness is the only FFM trait that does not mean-ingfully relate to leader effectiveness (Judge, Bono et al., 2002). Fur-thermore, in a team composed of nothing but leaders, there is likely tobe little gained from being modest or overly agreeable. More important,given the importance that creating and setting organizational strategies(i.e., making decisions) has to the TMT, it is critical that the team avoidgroupthink (Janis, 1972). Consequently, there is a role for a devil’s ad-vocate on the team. Thus, contrary to what research and theory in thesmall groups’ arena would suggest but consistent with findings in theleadership literature, we believe neither CEO nor TMT agreeableness willsignificantly influence firm effectiveness. Thus, for the interpersonally ori-ented traits, we expect only extraversion will be a driver of organizationaleffectiveness.

Hypothesis 7: The TMT’s mean level of extraversion is positivelyrelated to (a) organizational performance and (b) col-lective organizational commitment.

Hypothesis 8: The CEO’s extraversion is positively related to (a)organizational performance and (b) collective organi-zational commitment.


Leadership Composition and Organizational Effectiveness

Although the personality traits of top executives may influence orga-nizational effectiveness, a growing body of research has also examinedthe impact of leadership behaviors exhibited at the top of the organization.Again, the majority of this research has focused on the leadership behav-iors exhibited by the CEO not the entire TMT. Although the results ofthese studies are somewhat mixed, evidence suggests that CEO transfor-mational leadership or CEO charisma (one dimension of transformationalleadership) is positively related to objective measures of firm effective-ness, especially under conditions of environmental uncertainty (Waldman,Javidan, & Varella, 2004; Waldman, Ramirez, House, & Puranam, 2001).Further, the relationship between CEO transformational leadership andorganizational effectiveness is stronger in small to medium-sized firmswhere CEOs have more managerial discretion and work in less complexcontexts (Ling et al., 2008; Lubatkin, Simsek, Ling, & Veiga, 2006). Re-search has also linked the transformational leadership of a single leaderto employees’ organizational commitment (Avolio, Zhu, Koh, & Bhatia,2004; Bono & Judge, 2003).

However, research has not yet examined how the transformationalleadership behaviors exhibited by TMT members are related to organiza-tional effectiveness. Given that the TMT is responsible not only for settingthe strategic direction of the organization but also for implementing thechosen strategy, creating structures and systems to ensure the effectivefunctioning of the organization, and creating a bond between employ-ees and the organization, leadership from all members of the TMT isneeded to accomplish these broad objectives. Within the upper echelonsand strategic leadership literatures, researchers have recently called forthe integration of other leadership theories into TMT research to helpexplain how top executives influence organizational effectiveness. Specif-ically, both Boal and Hooijberg (2001) and Cannella and Monroe (1997)suggested that transformational and charismatic leadership theories mightprovide insight into the processes by which TMTs make and implementstrategic decisions. Thus, we examine the role of TMT transformationalleadership composition in influencing organizational performance andcollective organizational commitment.

Transformational leaders motivate others to go beyond self-interestto work for the good of the group or organization (Bass, 1985). Theydo this by communicating a compelling vision of the future, serving ascharismatic role models, encouraging others to challenge the status quo,and providing individualized support for others. Although a large body


of research has shown a consistent link between transformational leader-ship and follower attitudes and performance (Judge & Piccolo, 2004), themajority of this research has focused on close relationships between lead-ers and followers at lower levels of the organization. However, it has beensuggested that transformational leadership is also likely a key to successat the top levels of organizations (e.g., Pawar & Eastman, 1997).

To fully model transformational leadership within the TMT, this studyrelies on the mean of individual scores to capture the aggregate poolof transformational behaviors across all TMT members. As with per-sonality, we treat team-level transformational leadership as a configuralunit property and make no assumptions that levels of transformationalleadership converge within TMTs (Kozlowski & Klein, 2000). Instead,the mean level of transformational leadership captures the average trans-formational behaviors across team members. This operationalization as-sumes that more transformational leadership (collectively) has beneficialeffects on organizational performance and collective organizational com-mitment, regardless of how it is distributed among team members. Justas prior research has revealed team member’s mean levels of cognitiveability and personality consistently relate to team effectiveness (Barricket al., 1998; Stewart, 2006), we expect transformational leadership willalso combine additively because all TMT members contribute to strate-gic decision making and implementation. To ensure that elevation of thebehavior (i.e., mean) is the appropriate aggregation method, we will con-trast this operationalization against methods assessing variability of thebehavior (standard deviation, minimum, and maximum) in supplementalanalyses.

TMT leadership is expected to influence organizational effectivenessthrough several mechanisms, including strategic decision making, im-plementation, the functioning of the TMT, and the creation of bondsbetween employees and the organization. First, high mean levels of trans-formational leadership within the TMT should facilitate the making andimplementing of strategic decisions. The ultimate responsibility for thisprocess is complex, given the need to coordinate the interests of diverseconstituencies in and out of the organization, the need to adapt to changesin the external environment, and the need to implement the strategic direc-tion, not just think and talk about it. By emphasizing a common purposeand encouraging concern for the needs of the organization, transforma-tional leaders may be well suited to resolve differences among divergentinterests. For example, when the interests of TMT members are not fullyaligned, a high mean level of transformational leadership within the TMTmay promote a collective identity necessary to encourage team membersto adapt their goals and objectives from disparate departmental units toeffectively carry out organizational initiatives (Hambrick & Mason, 1984;


Shamir, House, & Arthur, 1993). In addition, environmental changes re-quire innovative responses to maintain organizational effectiveness. Trans-formational leaders tend to challenge the status quo and encourage othersto develop innovative solutions to existing problems (Bass, 1985). Asa result, transformational team members should encourage innovativeor adaptive climates within the team (Eisenbeiss, van Kneppenberg, &Boerner, 2008; Waldman & Yammarino, 1999).

In addition, and perhaps even more important, transformational leadersmay be well suited to implement the strategic direction of the organization(Cannella & Monroe, 1997). Through communicating a compelling or-ganizational vision and exhibiting symbolic behaviors that are consistentwith the vision, transformational leaders impact constituents throughoutthe organization, inspiring distant followers to coordinate their efforts toachieve the organization’s vision (Waldman & Yammarino, 1999). Trans-formational leaders also emphasize the intrinsic value of achieving thevision and indicate how each employee contributes to achieving the vi-sion (Shamir, House, & Arthur, 1993). As a result, employees feel moreempowered and set individual goals that are self-concordant, creatinga stronger bond between employees and the organization (e.g., Avolio,Zhu et al., 2004; Bono & Judge, 2003). These influences on individual-level organizational commitment are likely to be contagious through-out the organization as more employees take ownership of the vision.Thus, when TMTs have a high mean level of transformational leader-ship, they are better able to manage diverse interests, adapt to externalevents, and effectively execute the strategic efforts of the TMT, therebyenabling the organization to more effectively achieve its goals and mo-tivating employees to more strongly identify with the organization as awhole.

As noted before, much research suggests that a transformational CEOmay positively influence other TMT members as well as more distantfollowers throughout the organization (Waldman & Yammarino, 1999).Although we agree that CEOs are likely to have a substantial impactthroughout the organization, we expand this perspective to suggest thatTMTs with high mean levels of transformational leadership will similarlyinfluence and motivate others to action that is consistent with the organiza-tion’s strategic direction and create conditions that encourage high levelsof organizational commitment. Thus, we hypothesize the following, againseparating the TMT from the CEO:

Hypothesis 9: The TMT’s mean level of transformational leadershipis positively related to (a) organizational performanceand (b) collective organizational commitment.


Hypothesis 10: The CEO’s transformational leadership is positivelyrelated to (a) organizational performance and (b) col-lective organizational commitment.

Transformational Leadership Mediating the Relationship Between ExecutivePersonality and Organizational Effectiveness

Although we propose that both TMT and CEO personality and trans-formational leadership influence organizational effectiveness, it is likelythat transformational leadership behavior at least partially mediates the re-lationships of personality traits with organizational commitment and firmperformance. At the individual leader level, personality has been foundto be related to who emerges as a leader and who is an effective leader(Judge, Bono et al., 2002). In addition, personality influences the specificleadership behaviors exhibited by leaders. With regard to transformationalleadership, a recent meta-analysis (Bono & Judge, 2004) showed that thehighest relationship between personality and transformational leadershipat the individual level was with extraversion. Perhaps unsurprisingly, lead-ers who are dominant and sociable with higher levels of positive affectare more likely to communicate a compelling vision and motivate othersto work toward that vision. In addition, conscientiousness was also foundto have a small positive relationship with transformational leadership,perhaps because leaders who are goal oriented are more likely to attendto putting a system of goals in place that enable employees to see howtheir efforts contribute to the achievement of the firm’s vision. Further,leaders who are more emotionally stable and score higher in opennessto experience are also more likely to be transformational leaders. Emo-tionally stable executives view the world through a positive lens and areconfident and resilient, which helps them to posit a positive, compellingvision of the future and to model behaviors that are necessary to reachthis vision. Finally, leaders high on openness to experience are creative,visionary, and even open to new ways of doing things, tendencies thatenable them to craft a new direction for the organization and to encouragetheir employees to challenge the status quo.

Thus, at the level of the individual leader, personality—especiallyextraversion, conscientiousness, emotional stability, and openness toexperience—has been found to be related to transformational leader-ship behaviors. Although evidence supports these relationships at theindividual level, we propose that these relationships will also hold at theteam level. Specifically, TMTs with higher mean levels of extraversion,conscientiousness, emotional stability, and openness are likely to exhibithigher mean levels of transformational leadership. The composition of


both the team member’s personality and transformational leadership re-lies on mean configural scores. Thus, when teams have higher mean levelsof extraversion, there are more individuals on the team who have the ten-dency to be dominant with high levels of positive affect, resulting inhigher levels of transformational leadership within the team. The samelogic should apply to teams with higher mean levels of conscientious-ness, emotional stability, and openness. Thus, we propose that TMT meantransformational leadership mediates the relationships of TMT mean per-sonality with organizational performance and collective organizationalcommitment. However, it is likely that CEO and TMT personality alsoinfluence organizational effectiveness through other mechanisms, such asthe choice of strategic direction and the management of external relation-ships. Thus, based on the conceptual and empirical evidence reviewedabove, we posit:

Hypothesis 11: The TMT’s mean level of transformational leader-ship partially mediates the relationships of the TMT’smean level of conscientiousness, emotional stability,openness to experience, and extraversion with (a) or-ganizational performance and (b) collective organiza-tional commitment.

Hypothesis 12: The CEO’s transformational leadership partially me-diates the relationships of the CEO’s level of conscien-tiousness, emotional stability, openness to experience,and extraversion with (a) organizational performanceand (b) collective organizational commitment.

Method

Participants and Procedure

The data for this study were provided by CEOs, vice presidents andother senior executives (TMT members), and direct reports of these ex-ecutives from 96 credit unions across the United States. We also col-lected indicators of organizational performance from the National CreditUnion Administration, a federal agency that oversees credit unions. Weremoved two credit unions from the data set because fewer than three TMTmembers responded, resulting in a final sample of 94 credit unions. TMTsize ranged from 4 to 14 members, with an average size of 6.4 (SD = 1.9)members. Of the 94 CEOs surveyed, 93 (98.9%) responded. CEOs wereon average 48.2 years old (SD = 15.2). They had been members of theTMT for an average of 16.0 years (SD = 8.9). They were 78.5% male, and


80.7% held bachelor’s or graduate degrees. In addition, we received 424(83.6%) responses from the 507 TMT members surveyed. Of the TMTmember respondents, 54.1% were male. Seventy percent of respondentsheld bachelor’s or graduate degrees, and they were, on average, 44.7 yearsold (SD = 8.7). They had been TMT members for an average of 7.1 years(SD = 5.8).

CEOs provided lists of the TMT members who they relied on to formu-late and implement strategic and tactical initiatives and of the TMT mem-bers’ direct reports. Approximately 4 months later, we surveyed CEOs,TMT members, and three randomly selected direct reports of each TMTmember. CEOs provided ratings of their own personality traits. TMT mem-bers provided ratings of their own personality traits and CEO leadership.Of the 1,026 direct reports surveyed, 760 (74.1%) provided leadershipratings for the TMT member to whom they reported and rated their ownorganizational commitment. Approximately 1 year after the collectionof survey data, we assessed organizational performance using archivaldata.

The data reported in this manuscript were collected as part of alarger data collection effort. Because of the breadth of the variables inthe data set, findings have been reported in two previously publishedmanuscripts (Barrick, Bradley, Kristof-Brown, & Colbert, 2007; Colbertet al., 2008). This manuscript has a different focus than either of thetwo published papers. More important, it would have been impossibleto combine the analyses that are reported in this manuscript with ei-ther of the previous papers. The first published paper (Barrick et al.,2007) examined how team processes (cohesion and communication) im-pacted TMT and firm-level performance differently across varying levelsof team interdependence. The second article (Colbert et al., 2008) exam-ined the CEO’s role in facilitating dyadic goal congruence (between theCEO and each vice president) and within-team goal congruence (amongall members of the TMT). In that study, we found that CEO transfor-mational leadership was positively related to both dyadic and within-team goal congruence, which in turn influenced VP attitudes and firmperformance.

This study is the first to include measures of TMT composition basedon personality and transformational leadership concomitantly with CEOpersonality and transformational leadership and to examine the rela-tionship of these variables with organizational performance. Firm-levelorganizational commitment, an aggregation of ratings provided by TMTmembers’ direct reports, has not been included in previous studies either,although the commitment of employees is a key indicator of organi-zational effectiveness. However, the measures of CEO transformational


leadership (Colbert et al., 2008) and firm performance (Barrick et al.,2007; Colbert et al., 2008) have been reported in prior publications. Ex-cluding CEO transformational leadership, none of the variables examinedin this study have ever been linked to firm performance nor studied alongwith CEO leadership. Thus, this manuscript includes a number of vari-ables not included in prior studies and uniquely focuses on TMT com-position and its effects on firm performance and collective organizationalcommitment.

Measures

Personality. The Big Five personality traits were assessed with 96items from the Personal Characteristics Inventory (PCI; Mount, Barrick,Laffitte, & Callans, 1999). The executives rated each item on a five-point scale (1 = strongly disagree; 5 = strongly agree). Coefficient alphawas .87, .87, .79, .86, and .80 for conscientiousness, emotional stability,openness to experience, extraversion, and agreeableness. Evidence hasdemonstrated the PCI’s convergent validity and divergent validity withother FFM measures (Mount et al., 1999).

Transformational leadership. We used 20 items from the MultifactorLeadership Questionnaire (MLQ Form 5X; Bass & Avolio, 1995) to as-sess transformational leadership for the CEO and each member of theTMT. The MLQ provides four-item scales to assess each of the fivesubdimensions of transformational leadership: attributed idealized influ-ence, behavioral idealized influence, inspirational motivation, intellectualstimulation, and individualized consideration. An average of 4.5 TMTmembers rated transformational leadership of each CEO, and an averageof 1.8 direct reports (of the three direct reports per TMT member who weresurveyed) rated transformational leadership of the other TMT membersusing a five-point Likert response scale (1 = not at all; 5 = frequently, ifnot always). We averaged across raters to obtain aggregated transforma-tional leadership ratings for each executive (F = 2.07, p < .01; ICC[1] =.27; ICC[2] = .52; mean rwg(J) = .76, with slightly skewed distribution).Because we did not expect the subdimensions of transformational lead-ership to have differential relationships with organizational effectiveness,we estimated a higher-order measurement model with transformationalleadership as a second-order factor that explained the shared variance inthe five subdimensions. This approach is consistent with a number of otherstudies of transformational leadership (e.g., Bono & Judge, 2003; Piccolo& Colquitt, 2006; Walumbwa, Avolio, & Zhu, 2008). The higher-orderconfirmatory factor analysis was a good fit to the data (χ2

165 = 973.57,p < .01; SRMR = .06, NNFI = .96, IFI = .96). The aggregated


transformational leadership ratings exhibited high internal consistencyreliability (α = .93).

Organizational commitment. Organizational commitment was assessedusing the nine positively worded items from the Organizational Com-mitment Questionnaire (OCQ; Mowday, Porter, & Steers, 1979). Directreports of the TMT members rated their own commitment to the organi-zation (e.g., I am proud to tell others that I am a part of this organization).To obtain an assessment of commitment at the organization level, we ag-gregated across direct report ratings (F = 1.80, p < .01; ICC[1] = .09;ICC[2] = .45; mean rwg(J) = .85, with slightly skewed distribution). Anaverage of 8.5 direct reports rated their commitment toward each organi-zation. The aggregated organizational commitment ratings exhibited highinternal consistency reliability (α = .90).

Organizational performance. Approximately 1 year after survey datawere collected, we assessed the organizational performance of each firm.According to the National Credit Union Administration, four primaryindicators of organizational performance are used in the industry. Thesefinancial ratios include return on average assets, net worth to total assets,delinquent loans to total loans, and net charge-offs to average loans. Wereverse scored the latter two ratios, created a z-score for each of the fourindicators and then averaged them to form a lagged overall assessment oforganizational performance.

Control variables. Because prior upper echelons research has primar-ily used the variability of demographic variables as proxies for TMTcharacteristics, we considered the variability of a number of demographicvariables as potential control variables. We operationalized the variabilityof TMT members’ age and team tenure using the standard deviation ofthese measures, and we operationalized the variability of TMT members’sex and education using the Teachman’s index. Further, we coded thefunctional area that was the focus of each TMT member’s responsibilitybased on job titles (1 = accounting, 2 = administration, 3 = finance,4 = human resources, 5 = information technology, 6 = marketing, 7 =operations, 8 = service) and used the Teachman’s index to operationalizefunctional diversity within the TMT. Consistent with the recommendationof Carpenter et al. (2004), we also considered team size as a potentialcontrol variable. Finally, given our focus on the role of both the TMT andthe CEO in shaping organizational effectiveness, we considered CEOs’tenure on the TMT and mean TMT tenure for other TMT members aspotential control variables. Of these variables, only mean TMT tenure forTMT members was significantly related to our outcome variables. Giventhese results and to minimize the number of parameters that were requiredto be estimated in our path model, we included only TMT mean tenure asa control variable in our final path model.


Results

Table 1 presents the descriptive statistics and intercorrelations of thestudy variables. Although we did not expect that TMT mean agreeable-ness and CEO agreeableness would be related to collective organizationalcommitment or organizational performance, we included these two vari-ables in the correlation matrix for comparison. To ensure these predictorsdid not explain practically useful levels of variance, we also estimated pathmodels that included TMT mean agreeableness and CEO agreeableness.As expected, TMT mean agreeableness and CEO agreeableness were notsignificantly related to either organizational commitment or firm perfor-mance. Therefore, we excluded agreeableness from the remainder of theanalyses.

We tested the hypotheses with path analysis using LISREL 8.8(Joreskog & Sorbom, 1993). TMT mean team tenure was included asa control variable with direct relationships to organizational performanceand collective organizational commitment. Although the hypothesizedmodel fit the data well (χ2

12 = 10.59, p < .05; NNFI = 1.00, IFI = 1.00,SRMR = .04), it was compared with two alternative path models (seeTable 2). Given the modest relationships that have been found betweenpersonality and transformational leadership in past research (e.g., Bono& Judge, 2004), the first alternative model constrained the paths fromTMT mean personality to TMT mean transformational leadership to 0.This model was not a significantly worse fit to the data than the hypoth-esized model (�χ2 = 3.26, �df = 4, p > .05); therefore, it is preferableto the hypothesized model because it is more parsimonious. A secondalternative model, in which paths from CEO personality to CEO transfor-mational leadership were constrained to 0 resulted in a significantly worsefit than the hypothesized model (�χ2 = 12.15, �df = 4, p < .05). Thus,the first alternative model was the best fit to the data and is depicted inFigure 2. The path coefficients from this model were similar to the pathcoefficients from the hypothesized model, and the substantive conclusionsdrawn based on the two models did not differ.

To test specific hypotheses, we examined the path coefficients in themodel. As shown in Figure 2, TMT mean conscientiousness (γ = .25,p < .05) and CEO conscientiousness (γ = .22, p < .05) were directlyand significantly related to organizational performance. We did not findevidence that TMT mean personality or CEO personality was directly re-lated to organizational performance for the other three personality traits.Hence, Hypotheses 1(a) and 4(a) were supported. Further, CEO and TMTmean personality were not significantly related to organizational com-mitment with the exception of an unexpected negative relationship be-tween TMT mean extraversion and organizational commitment (γ = –.33,


TAB

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TABLE 2Path Model Fit Comparisons

χ 2 (df) �χ 2 (�df) NNFI IFI SRMR

Hypothesized model 10.59 (12) 1.00 1.00 .04Alternative 1—No

relationships betweenTMT mean personalityand TMT meantransformationalleadership

13.85 (16) 3.26 (4) 1.00 1.00 .06

Alternative 2—Norelationships betweenCEO personality andCEO transformationalleadership

22.74 (16) 12.15 (4)* .90 .98 .07

Note. N = 94. NNFI = non-normed fit index; IFI = incremental fit index; SRMR =standardized root mean square residual; TMT = top management team.*p < .05.

p < .05). Because the zero-order correlation between these two variableswas near zero and positive (r = .05, p > .05), it is possible this unexpectedfinding is an artifact of the moderately high collinearity between all of thevariables included in this model. To investigate this possibility, we discussresults from relative importance analysis below (see Table 3).

In testing the relationship of transformational leadership with theoutcome variables, we found that TMT mean transformational leader-ship was significantly related to organizational commitment (β = .45,p < .05), supporting Hypothesis 9(b). Further, CEO transformationalleadership was significantly related to both organizational performance(β = .26, p < .05) and organizational commitment (β = .22, p < .05),supporting Hypotheses 10(a) and 10(b). Finally, Hypotheses 11 and 12would be supported if there were significant paths from the personal-ity traits to transformational leadership, from transformational leader-ship to outcomes, and from personality traits to the outcomes controllingfor transformational leadership (James, Mulaik, & Brett, 2006). Theseconditions were not satisfied with respect to TMT characteristics be-cause TMT mean personality was not significantly related to TMT meantransformational leadership. However, consistent with Hypothesis 12,CEO emotional stability (γ = .32, p < .05) and CEO openness (γ = .23,p < .05) were significantly related to CEO transformational leadership,which in turn was related to organizational performance and organiza-tional commitment. However, because there was not a significant directeffect from CEO emotional stability or openness to the outcomes, these


CEO Conscientiousness

CEO Transformational

Leadership

.25

.22

Organizational Performance

R2 = .22

TMT Mean Transformational

Leadership

CEO Emotional Stability

CEO Openness

CEO Extraversion

TMT Mean Extraversion

TMT Mean Openness

TMT Mean Emotional Stability

TMT Mean Conscientiousness

.32

.26

Collective Organizational Commitment

R2 = .47

.22

-.33

.45

.23

TMT Mean Team Tenure

.22

Figure 2: Path Model of the Relationships of TMT and CEO CompositionWith Organizational Effectiveness.

Note. N = 94. χ 2 = 13.85 (df = 16); NNFI = 1.00; IFI = 1.00; SRMR = .06; TMT = topmanagement team. Only paths that are significant at p < .05, two-tailed, are included forclarity.

results are more consistent with full mediation than with partial mediationas hypothesized.

Overall, the percent variance explained (R2) by the structural equa-tions was .22 for organizational performance and .47 for organizationalcommitment. This model was compared to a model in which only CEOpersonality and transformational leadership related to organizational ef-fectiveness. That is, the effects of TMT mean personality and meantransformational leadership were removed from the model. Not onlywas this model a significantly worse fit than the model depicted inFigure 2 (�χ2 = 44.28, �df = 10, p < .05), but the percent varianceexplained (R2) dropped to .13 for organizational performance and .27 fororganizational commitment. This is consistent with the upper echelonsperspective that a dominant coalition of senior leaders has a measurable


TABLE 3Relative Weights as Percentage of R2

DV = organizational DV = organizationalperformance commitment

Independent variables Relative weights % of R2 Relative weights % of R2

TMT meanconscientiousness

.03 13.8% .02 4.1%

TMT mean emotionalstability

.02 9.9% .02 4.1%

TMT mean openness .00 1.8% .02 4.3%TMT mean extraversion .01 4.2% .02 3.6%TMT mean

transformationalleadership

.01 5.9% .19 37.9%

CEO conscientiousness .02 8.7% .04 7.1%CEO emotional stability .02 7.5% .03 6.6%CEO openness .02 9.6% .02 3.6%CEO extraversion .01 2.7% .03 6.3%CEO transformational

leadership.05 22.1% .06 12.2%

TMT mean team tenure .03 13.6% .05 10.2%R2 .22 .50

Note. N = 94. DV = dependant variable; TMT = top management team.

influence on the effectiveness of the organization. To consider the con-verse, we also estimated a model in which only TMT effects were es-timated. To eliminate the contributions from a single leader, the effectsof CEO personality and leadership were removed from the model. Thismodel was a significantly worse fit as well (�χ2 = 34.59, �df = 10,p < .05). The percent variance explained (R2) in organizational perfor-mance dropped to .10, and the percent variance explained in organizationalcommitment dropped to .36. Together, these results suggest that boththe CEO and TMT influence organizational performance and collectivecommitment.

We also conducted relative weights analysis to gain insight into therelative importance of each predictor in explaining the two outcome vari-ables, jointly considering each predictor’s unique contribution as wellas its incremental contribution above and beyond other predictors. Ep-silon weights analysis (Johnson, 2000; LeBreton, Hargis, Griepentrog,Oswald, & Ployhart, 2007) provides useful estimates of the predictivepower of each variable, even in the presence of multicollinearity. Theresulting epsilon values can be rescaled as increments in R2 to reflectthe percent of criterion variance accounted for by each predictor. The


resulting rank order of relative importance establishes the extent to whicheach predictor contributes meaningful variance to the outcome, relative tothe other predictors. The results are shown in Table 3. For organizationalperformance, CEO transformational leadership accounted for the largestpercentage of variance explained (22.1%), followed by TMT mean con-scientiousness (13.8%). Again, this suggests that both the CEO and theTMT have roles to play in shaping organizational performance. Further,these results point to the importance of considering both personality andleadership as relevant characteristics of top managers. For organizationalcommitment, however, relative weights analysis suggests that leadershiphas a stronger influence on organizational commitment than personal-ity does. TMT mean transformational leadership accounts for the largestpercentage of variance explained in organizational commitment (37.9%),followed by CEO transformational leadership (12.2%).

Supplemental Results

It should be noted that this research used only mean scores to captureTMT composition effects, but other operationalizations of team compo-sition (e.g., standard deviation, maximum, minimum) may provide ad-ditional insight into how personality and leadership composition impactorganizational performance and commitment within TMTs. As we arguedin the hypothesis development section, we believe that mean levels ofTMT characteristics are most likely to influence organizational effective-ness because developing and implementing a strategic direction for theorganization requires the combined efforts of all TMT members. However,it is also plausible that a single highly effective TMT member could have adisproportionate effect in shaping the organization’s strategy and influenc-ing its effectiveness. Further, because each TMT member plays a uniquerole in implementing the strategic direction, a single ineffective membercould harm the organization’s effectiveness. Finally, upper echelons theoryalso suggests that variance in team member characteristics may enhanceteam effectiveness through providing a diversity of perspectives or mayconstrain team effectiveness by impeding cohesive functioning (Williams& O’Reilly, 1998). We therefore ran additional analyses to examine theeffects of TMT composition on organizational effectiveness using theseother operationalizations of composition. The means, standard deviations,and correlations with outcomes for these alternative operationalizationsof composition are included in Table 4.

When both mean levels and standard deviations for TMT personalityand leadership were included in a path model predicting organizationalperformance and commitment, we found that no standard deviation scores


TABLE 4Descriptive Statistics and Intercorrelations of Personality and Leadership SDs,Maximums, and Minimums With Organizational Performance and Commitment

Correlation Correlationwith with

organizational organizationalMean SD performance commitment

TMT SD conscientiousness .33 .13 –.14 –.04TMT SD emotional stability .42 .18 –.10 .02TMT SD openness .38 .17 –.05 –.13TMT SD extraversion .35 .16 –.21 –.23TMT SD agreeableness .35 .18 –.18 –.10TMT SD transformational leadership .53 .26 –.17 –.23TMT max conscientiousness 4.46 .23 .01 .10TMT max emotional stability 4.30 .28 –.14 .12TMT max openness 4.33 .29 –.06 .07TMT max extraversion 4.28 .30 –.18 –.13TMT max agreeableness 4.41 .27 –.14 .05TMT max transformational leadership 4.32 .35 –.02 .38TMT min conscientiousness 3.69 .28 .25 .22TMT min emotional stability 3.36 .36 .03 .17TMT min openness 3.43 .40 .05 .19TMT min extraversion 3.46 .29 .13 .15TMT min agreeableness 3.58 .35 .11 .14TMT min transformational leadership 3.10 .64 .16 .36

Note. N = 94. SD = standard deviation; max = maximum; min = minimum.Correlations of .21 or greater are significant at p < .05, two-tailed test.

were significantly related to the outcome variables, and the mean scoresreported in the results section remained significant. In addition, when bothmean and maximum scores were included in a path model predicting or-ganizational performance and commitment, we found that no maximumscores were significant, and the only change in mean scores from whatis reported in the results section was that TMT mean conscientiousnessno longer significantly predicted organizational performance. However,relative weights analysis showed that TMT mean conscientiousness ac-counted for 20% of the variance explained in organizational performance,and maximum conscientiousness only accounted for 4%. These resultsare consistent with the hypothesis that mean levels of TMT attributesare most relevant in predicting organizational effectiveness. Finally, whenboth mean and minimum scores were included in a path model predictingorganizational performance and commitment, we found that no mini-mum scores were significantly related to organizational performance ororganizational commitment, and the only change in mean scores from


what is reported in the results section was that mean conscientiousnessno longer significantly predicted organizational performance. However,relative weights analysis showed that mean conscientiousness accountedfor 11% of the variance explained in organizational performance, andminimum conscientiousness accounted for 22%. Thus, minimum con-scientiousness in the TMT may also be a meaningful driver of organi-zational performance, although it was not found to be so in the pathmodel.

Finally, as noted in the introduction, past research on TMT composi-tion has primarily used demographic variables as proxies for the attributesof TMTs that are expected to influence organizational effectiveness. To de-termine if direct measures of personality and leadership are more stronglyrelated to organizational effectiveness than demographic proxies, we com-pared the predictive validity of our direct measures of personality andleadership to the predictive validity of various demographic variables thathave been commonly used in previous TMT research (including team size,CEO age, CEO education, CEO sex, CEO team tenure, TMT mean age,TMT mean education, TMT mean sex, TMT mean team tenure, TMT vari-ance in age, TMT variance in education, TMT variance in sex, and TMTvariance in team tenure). As noted earlier, the variance explained in or-ganizational performance by personality and transformational leadershipvariables was .22. In comparison, the variance explained in organiza-tional performance by demographic variables traditionally used in TMTresearch was only .12. Similarly, the variance explained in organizationalcommitment by personality and transformational leadership variables was.47, and the variance explained in organizational commitment by demo-graphic variables traditionally used in TMT research was only .22. Theseresults provide a more direct comparison to previous TMT research andfurther support the importance of using direct measures of personalityand transformational leadership to understand the effect of the TMT onorganizational effectiveness.

Discussion

The firm’s top executives are charged with leading the organiza-tion, which gives them the power to influence the firm’s success. Al-though personality and leadership attributes have been identified as criticalcharacteristics of all executives (Boal & Hooijberg, 2001; Cannella &Monroe, 1997; Cohen & Bailey, 1997; Hambrick, 1994; Peterson et al.,2003), extant research has not empirically established whether they are re-lated to organizational effectiveness. In our study, we used direct measuresto assess the personality and transformational leadership of CEOs andTMT members, and we examined their relationships with two measures


of organizational effectiveness: firm financial performance and collectiveorganizational commitment. We found that CEO and TMT mean con-scientiousness were both directly related to organizational performance.Further, organizational performance was higher when the CEO exhib-ited higher levels of transformational leadership. Both CEO and TMTmean transformational leadership were significantly related to collectiveorganizational commitment. Finally, CEO emotional stability and open-ness to experience were indirectly related to both measures of organi-zational effectiveness through CEO transformational leadership. In thenext section, we discuss the implications of these results for theory andpractice.

Theoretical Contributions

Our primary contribution lies in demonstrating significant support forthe importance of both personality and leadership composition amongTMT members. Specifically, we found the higher the mean conscien-tiousness of the TMT, the higher the lagged financial performance of theentire organization. Further, this relationship was unexpectedly robust, re-maining after accounting for the effects of leadership and other personalitytraits in the TMT as well as CEO personality and leadership. Thus, teamsthat on average plan more of their work, exert greater effort, and are morepersistent in doing their work are more likely to arrive at superior strate-gic decisions and are more successful in implementing the establishedstrategy or tactics. This should not be surprising, as conscientiousness isthought to reflect trait work motivation (Barrick et al., 2001), and per-formance is likely to be higher as motivation increases. At the individuallevel, considerable meta-analytic research has illustrated that conscien-tiousness is the one personality trait that consistently predicts individualperformance at work (Barrick & Mount, 1991; Barrick et al., 2001) andthat this likely occurs through gains in motivation, particularly throughgoal processes (Barrick, Mount, & Strauss, 1993; Judge & Ilies, 2002).This study reveals that the prominence of conscientiousness as a pre-dictor of performance extends to TMTs and organizational performance.Future research is needed to explore whether the team-level effect forconscientiousness is primarily driven through task-focused motivationalmediators arising from the motivation and engagement of followers or,alternatively, through improved individual contributions by the TMTmembers themselves, due to members being achievement oriented, dis-ciplined, and diligent toward their work and, consequently, being able toestablish and execute better strategies.

Turning to the examination of leadership composition among TMTmembers, our study contributes to the existing literature by demonstrating


the impact of transformational leadership among all TMT members, ratherthan just the CEO, on organizational effectiveness. Recent developmentsin leadership theory suggest leadership composition is likely to be a crit-ical input variable in TMTs (Barling, Christie, & Hoption, 2010; Boal& Hooijberg, 2001; Cannella & Monroe, 1997). The intricacies andimportance of leadership behavior and leader–follower dynamics sug-gest why leadership, particularly the distribution of leadership amongmembers of a TMT, would be expected to have a significant impacton organizational effectiveness. This is particularly true for transforma-tional leadership, which suggests effective leaders transform the valuesand priorities of followers by creating a shared sense of identity withinthe unit and motivate followers to perform beyond their own expecta-tions (Bass, 1985). As such, transformational leadership among TMTmembers was expected to have a significant impact on organizationaleffectiveness.

Although TMT mean transformational leadership was not significantlyrelated to organizational performance when controlling for CEO transfor-mational leadership, TMT mean transformational leadership was signifi-cantly related to collective organizational commitment. This suggests thatTMT members may impact organizational effectiveness through the in-fluence that they have on employees throughout the organization. It ispossible that employees interact more with TMT members than with theCEO and thus are more influenced by the leadership exhibited by TMTmembers. However, it should be noted that CEO transformational leader-ship was also significantly related to organizational commitment, althoughits relative importance was lower than that of TMT mean transformationalleadership.

Although our focus is on the TMT as a whole, the TMT literaturesuggests that power differences within TMTs cannot be ignored (Priemet al., 1999). Clearly, the CEO possesses more position power than othermembers of the TMT, and studies have shown that CEO personality andleadership significantly impact TMT functioning (e.g., Colbert et al., 2008;Peterson et al., 2003). In this paper, we have argued that the compositionof the TMT influences organizational performance beyond the effects ofthe CEO; however, we also propose that the CEO plays a distinctive roleseparate from other TMT members. The results revealed that both CEOconscientiousness and transformational leadership were related to orga-nizational performance, and CEO transformational leadership was alsorelated to collective organizational commitment. Further, CEO emotionalstability and openness to experience were indirectly related to organiza-tional performance through CEO transformational leadership. The percentvariance explained in both organizational performance and collective or-ganizational commitment was higher when effects of both the CEO and


TMT were included than when only the CEO or the TMT was considered.These findings underscore the importance of both the CEO and TMT ininfluencing organizational effectiveness.

Finally, although our focus was on the mean levels of personality andtransformational leadership across TMT members, we also explored howalternative conceptualizations of team composition, including minimums,maximums, and variance, influenced organizational effectiveness. In gen-eral, when mean levels of personality and transformational leadership werecontrolled for, other operationalizations of composition were not relatedto organizational effectiveness. However, when considering minimum lev-els of personality traits and leadership, relative weights analysis showedthat mean conscientiousness accounted for 11% of the variance explainedin organizational performance whereas minimum conscientiousness ac-counted for 22%. This suggests that a single executive with low levelsof conscientiousness may negatively impact organizational performance.Future research investigating the impact of a single low-performingTMT member is needed to more fully understand the mechanismsthrough which this individual disproportionately impacts organizationalperformance.

Practical Implications

These results have important implications for organizations. First andforemost, as promotion and succession planning decisions are made foran organization’s top leaders, every effort should be made to select in-dividuals who are high in conscientiousness and who exhibit high levelsof transformational leadership. These attributes are important not onlyfor CEOs but also for all members of the TMT. In addition, those incharge of succession planning should note that the relative weights anal-ysis showed that, for organizational performance, CEO transformationalleadership had a bigger impact than CEO conscientiousness, but TMTmembers’ conscientiousness had a bigger impact than their transforma-tional leadership. Thus, both characteristics are important traits of topexecutives.

In addition to selecting leaders who have exhibited transformationalleadership in other roles, organizations should institute formal sys-tems to develop transformational leadership among current and potentialfuture CEOs and TMT members. Training and development opportuni-ties along with leadership experiences that expose leaders to situationsthat demand transformational leadership will help build a pipeline ofleaders who can positively impact the attitudes and performance of theirdirect reports at lower levels of the organization (Judge & Piccolo, 2004;Wang, Oh, Courtright, & Colbert, 2011). This pipeline of leaders can also


impact organizational effectiveness as they move into executive roles. Inaddition, executive coaching, especially when provided to the TMT asa whole, might be used to raise awareness about how team compositioninfluences interactions in the TMT and provides the team with ideas abouthow to maximize effectiveness given the existing composition of the TMT(Feldman & Lankau, 2005; Hackman & Wageman, 2005). Finally, an or-ganization’s board of directors often considers removing the CEO whenorganizational performance suffers, but our results suggest that the boardshould also look at the whole TMT. For example, changing a portion ofthe team that surrounds the CEO may help change the trajectory of orga-nizational performance without removal of the CEO. This new infusionof perspectives, talent, and traits may help augment the CEO’s leadershipand vision, and propel the organization to success.

The results also have important implications for individuals and man-agers in organizations. First, the results show that the performance of anorganization is influenced by the TMT, not just the CEO. Rising execu-tives who understand that they impact the performance of the organizationare more likely to see themselves as influential and seek out more respon-sibilities and leadership opportunities. Second, to the extent that teamprocesses also influence organizational performance (Barrick et al., 2007;Carpenter et al., 2004), our results underscore the key role group dynamicsplay in this process. To have a TMT composed of highly transformationalleaders who can effectively communicate with each other and coordinatetheir efforts will be crucial to the success of the team. In addition, althoughprior evidence shows that both agreeable and conscientious personalitytraits are critical for improving performance of teams at lower levels ofthe organization (Bell, 2007), our results show that, for top teams, con-scientiousness matters a great deal, but agreeableness does not. This isnot to say relationships are not important in the TMT but rather thatachievement-oriented top executives are well-suited to meet the task de-mands placed on a TMT. Finally, TMT transformational leadership had alarger impact on the organizational commitment of lower level employ-ees than CEO leadership did. This may indicate that TMT members areespecially important in fostering employee bonds with the organization.Managers rising in the organization should consider relationship buildingefforts with their direct reports to be a key part of their contribution toorganizational effectiveness.

Limitations and Future Research

Limitations of this study suggest directions for future research.First, we only examined the relationship of one type of leadership—transformational leadership—with organizational effectiveness. Our


focus on transformational leadership was based on its theoretical rele-vance to leading an organization (Waldman & Yammarino, 1999) andcalls in the strategic leadership literature to examine the role of trans-formational leadership in TMTs (Boal & Hooijberg, 2001; Cannella &Monroe, 1997). However, future research might consider how other typesof leadership (e.g., ethical leadership, authentic leadership; Avolio, Gard-ner, Walumbwa, Luthans, & May, 2004; Brown, Trevino, & Harrison,2005) influence TMT functioning and organizational effectiveness. Sec-ond, we assessed TMT transformational leadership by computing themean of the team members’ individual transformational leadership scores,consistent with our treatment of TMT transformational leadership as aconfigural unit property. However, in some situations, leadership may bean emergent property of a team (Day, Gronn, & Salas, 2004), reflectingmore than just the combination of individual leadership styles. Sivasub-ramaniam and colleagues have developed a direct measure of team trans-formational leadership (Sivasubramaniam, Murry, Avolio, & Jung, 2002)that assesses transformational leadership of the team as a whole. Futureresearch is needed to assess the conditions under which ratings of teammember’s transformational leadership converge within teams to create ashared unit level construct.

Third, we relied on leadership ratings from direct reports. The in-terrater reliability of these ratings was somewhat low (ICC[1] = .27,ICC[2] = .52), suggesting that the direct reports had varied perspectivesregarding the transformational leadership exhibited by the leaders. Further,because our focus was on leadership within TMTs, leadership ratings fromother members of the TMT may have provided a better assessment of thetransformational leadership exhibited within the team. Consequently, fu-ture research should incorporate transformational leadership ratings frommultiple perspectives to fully assess the impact of transformational leader-ship on organizational effectiveness. Similarly, collective organizationalcommitment was assessed based only on ratings from direct reports ofTMT members. This was due to limitations placed on the data collectionby the participating organizations. Future research might examine the ex-tent to which the CEO and TMT influence organizational commitment ofemployees at lower levels of the organization.

Finally, questions of endogeneity may be raised, especially regardingthe relationships between transformational leadership and organizationaleffectiveness. Although organizational performance was collected 1 yearafter other study variables, this does not eliminate the possibility thatorganizational performance at the time surveys were administered mayhave influenced both transformational leadership ratings and lagged orga-nizational performance. This concern is less salient for the relationshipsbetween personality and organizational effectiveness given the heritability


of personality characteristics and their stability during adulthood (Roberts& DelVecchio, 2000). Nevertheless, because TMT membership was rel-atively stable (mean TMT tenure for CEOs = 16.0 years [SD = 8.9], forTMT members = 7.1 years [SD = 5.8]), performance at the time the sur-veys were administered was also likely influenced by CEO and TMT char-acteristics. Thus, controlling for concurrent performance would extractrelevant variance—that is, variance in lagged organizational performancethat is influenced by TMT and CEO personality and leadership—out ofthe ultimate dependent variable. Consequently, future research, possiblyusing TMTs with more rapidly changing membership, is needed to dis-entangle the causal direction of the relationship between leadership andorganizational performance.

Future research is also needed to investigate potential mediating mech-anisms and moderators of the relationships of CEO and TMT personalityand leadership with organizational effectiveness. It is possible that CEOand TMT personality and leadership influence decisions about the strate-gic direction of the firm, TMT functioning, and motivation of employeesthroughout the firm. Further, different contexts may trigger different per-sonality characteristics (Tett & Burnett, 2003) or require different lead-ership styles (Avolio, Gardner et al., 2004). Future research is needed toevaluate these possibilities.

Conclusion

Our study contributes to the upper echelons literature by providing aninitial examination of the relationship of TMT personality and leadershipcomposition with organizational effectiveness. The findings revealed thatTMT mean conscientiousness was associated with an objective laggedmeasure of organizational performance, even controlling for the effectsof CEO personality and leadership. Further, TMT mean transformationalleadership, along with CEO transformational leadership, was related toorganizational commitment. Although it is not surprising that collectiveleadership matters given that TMTs are charged with leading the organi-zation, it was relatively surprising to find that both the conscientiousnessof an inner circle of leaders and the conscientiousness of the CEO arerelated directly to a lagged financial indicator of organizational perfor-mance. We also found that CEO emotional stability and openness wereindirectly related to organizational effectiveness through their effects onCEO leadership. By comparison, most demographic characteristics werenot significantly related to organizational performance or collective orga-nizational commitment, which illustrates the importance of using directmeasures of personality and leadership rather than proxies when examin-ing TMT effects.


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