Credibility hinges on perceptions of competence and trustworthiness.
Leadership is the relationship between people who aspire to lead and those who choose whether or not to follow.1 And it hinges on the leader’s credibility, which is difficult to build and easy to lose. In recent years, numerous corporate executives — including the CEOs of BP, Wells Fargo, and Volkswagen — have learned that tough lesson through high-profile scandals that swiftly damaged their reputations.2
But what’s at the heart of credibility? Two critical elements: perceived competence (people’s faith in the leader’s knowledge, skills, and ability to do the job) and trustworthiness (their belief in his or her values and dependability).3 Such views are formed through direct and indirect observation of the leader’s work and performance. And these perceptions are extremely important in a digital age, when vast amounts of information about people can be captured and scrutinized through technologies like smart sensors and artificial intelligence systems. Employees also seek assurance that those who are managing them and assessing their performance are competent and trustworthy.
Researchers have identified several broadly defined behaviors that influence whether leaders are perceived that way.4 These behaviors include knowing oneself, appreciating one’s constituents, affirming shared values, developing new capabilities, serving a purpose, and sustaining hope. However, not much has been written about concrete actions that enhance or harm a leader’s credibility. Indeed, it’s widely assumed that behaviors that don’t increase credibility naturally decrease it. Research has begun to challenge this assumption,5 but we had many unanswered questions, so we set out to learn more.
In several field studies, we explored the specific behaviors that affect how people assess their leaders’ competence and trustworthiness and, in turn, their credibility. From this work (see “About the Research”), we have gleaned the following insights into what causes leaders to gain or lose credibility with their employees and what leaders who have lost credibility can do to regain it.
How Leaders Build Credibility
Based on input from employees we surveyed from a range of organizations, we found that leaders are perceived as competent when they place an emphasis on the future, on organizational outcomes, and on employees, as well as when they take action and launch initiatives, communicate effectively, and gain knowledge and experiences.