The Boss Factor - McKinsey

14/10/2020 The boss factor | McKinsey
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McKinsey Quarterly
The boss factor: Making the world

a better place through workplace
relationships
September 22, 2020 | Article
Businesses looking to make an external social

contribution should, paradoxically, look inside:
improving workers’ job satisfaction could be the single
most important thing they do.
By Tera Allas and Bill Schaninger
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 Article (10 pages)
T
oday’s leaders have never been under so much pressure. Even
as they navigate the evolving COVID 19 crisis—keeping their
customers and employees safe and their businesses viable—
expectations are sky-high. Shareholders are calling for foresight, bold
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strategies, agility, and resilience, while governments and communities

increasingly expect businesses to support broader goals, such as
sustainability and social justice.
For purpose-led corporations, this is a de ning moment. How can

they remain committed to additional stakeholder values when the
imperative is to conserve cash and, in many cases, aggressively
restructure? And what about businesses that have only started
de ning their environmental, social, and governance (ESG) ambitions?
When push comes to shove, do their leaders (and shareholders) really
believe in the ESG premium? And, if so, where can they best focus
their attention?
To move forward, rather than stand paralyzed, crystal-clear

prioritization will be key. In this article, we argue that there is one
essential area where companies can create enormous social value:
job satisfaction. Because of the connection between happiness at
work and overall life satisfaction, improving employee happiness
could make a material di erence to the world’s 2.1 billion workers.[ 1 ] It
could also boost pro tability and enhance organizational health.
When it comes to employee happiness, bosses and supervisors play a

bigger role than one might guess. Relationships with management are
the top factor in employees’ job satisfaction, which in turn is the
second most important determinant of employees’ overall well-being.
According to our analysis, only mental health is more important for
overall life satisfaction (Exhibit 1). Unfortunately, research also shows
that most people nd their managers to be far from ideal; for example,
in a recent survey, 75 percent of survey participants said that the
most stressful aspect of their job was their immediate boss.[ 2 ] And
those describing very bad and quite bad relationships with

management reported substantially lower job satisfaction than those
with very good and quite good relationships (Exhibit 2).
Exhibit 1
Shifting the behavior of an entire cadre of managers might seem a

daunting proposition. But McKinsey research on changing
organizational culture indicates the key elements required. Senior
leaders can create a step change in both shareholder and social value
by clearly articulating the sizable upsides to high job satisfaction,

including educating managers on their pivotal roles and embedding
quality of workplace relationships into manager development and
performance appraisals. They can also act as critical change agents
by embracing servant leadership and approaching everyone in their
organization with compassion and genuine curiosity.
Exhibit 2
Good bosses, good performance
It stands to reason that managers would play a crucial role in their

employees’ workplace happiness. The wealth of literature on what
makes for a good workplace highlights two aspects that line
managers directly control: good work organization—that is, providing
workers with the context, guidance, tools, and autonomy to minimize
frustration and make their jobs meaningful—and psychological safety,
which is the absence of interpersonal fear as a driver of employee
behavior. With burnout on the rise, and stress and anxiety a leading
cause of ill health and absenteeism, the emotional health of workers
becomes particularly important.
There are complex interactions between these factors, giving rise to

potential virtuous and vicious cycles. For example, a good manager
instills a sense of trust and con dence, with a clear set of attainable
goals rooted in customer-centric thinking. In such an environment,
frontline workers feel empowered and often receive positive feedback
from customers and colleagues. They are also more likely to raise
issues when things do not go well. A safe and collaborative
environment for joint problem solving generates innovation, a sense
of achievement, and even higher levels of customer satisfaction. With
more loyal customers, lower absenteeism, and low sta turnover
resulting in higher pro tability, a manager may now be in a position to
allocate more resources to their workers.
Such a scenario is not just a theoretical construct. Countless studies

show the empirical link between employee satisfaction, customer
loyalty, and pro tability. For example, in an ingenious piece of
research, academics exploited a so-called natural experiment—
di erent weather patterns in di erent locations at di erent times—to
show that call-center workers’ weekly sales increased by 25 percent
when their happiness increased by one point on a scale of one to ve.

[ 3 ] Similarly, a large-scale meta-analysis found that business units
with top-quartile employee engagement achieved operating-pro t

margins that were one to four percentage points higher than those in
the bottom quartile.[ 4 ] Employee satisfaction has also been shown to
contribute directly to shareholder value (Exhibit 3).
Exhibit 3
Why are servant leaders so rare?
In many ways, there is only one question any manager need ask: How
do I make my team members’ lives easier—physically, cognitively, and
emotionally? Research shows that this “servant leader” mentality and
disposition enhances both team performance and satisfaction.[ 5 ]

Moreover, studies also suggest that managers themselves are happier
and nd their roles more meaningful when they feel they are helping
other people.
Even though most business schools, executive training courses, and

leadership programs espouse servant leadership, few bosses manage
to fully commit to it. Perhaps that’s no surprise. In most organizations,
the average manager has neither the incentives nor the skills to focus
on employee happiness. Consider how most businesses make
promotion decisions: people who get ahead tend to be either current
high performers or those who appear most leader-like. Sadly, neither
of these traits correlates well with servant leadership. For example,
research suggests that the most productive individuals typically have
high levels of technical skills and personal drive, but only 30 percent
of them are likely to become the kind of leaders that prioritize and
support employee satisfaction.[ 6 ] Moreover, Gallup research
contends that only one in ten people possesses the necessary traits
that great managers exhibit, traits that include building relationships
that create trust, open dialogue, and transparency.[ 7 ]
People are also more likely to be promoted when they exhibit self-
con dence, build extensive networks, and navigate organizational
politics with ease. Creating a sense of personal power and toughness
can have positive outcomes for leaders, particularly if they are
confronted with an unchanging status quo. But such self-orientation
is the polar opposite of what is required for building trust.
Organizational psychologist Tomas Chamorro-Premuzic suggests that
many leaders achieve their positions by being self-centered,
overcon dent, narcissistic, arrogant, manipulative, and risk-prone.[ 8 ]
So even if a manager believes, in their heart of hearts, that the right

thing is to support their team members and enhance their job
satisfaction, it might be hard for them to resist the siren call of a more
authoritative style that seems to give them a better chance of
recognition. Moreover, if they have previously excelled in their
individual performance, this same manager and leader may have to
improve their emotional intelligence and actively change their attitude
to discern the frequent occasions when a softer touch is more
e ective than a tougher stance. All of which is more di cult because
of the scarcity of role models to learn from within most organizations.
The self-centered approach gets perpetuated by the hiring practices
and performance evaluations of many organizations. In fact,
companies fail to choose the right talent for management positions
82 percent of the time.[ 9 ]
Organizations that allow such dynamics to persist miss out on the

upside of employee satisfaction. At the extreme, these organizations
also risk creating or enabling a toxic culture that can lead to serious
performance and health issues—and even death.
In many ways, there is only one question any manager need ask: How
do I make my team members’ lives easier—physically, cognitively, and
emotionally? Research shows that this “servant leader” mentality and
disposition enhances both team performance and satisfaction.
How bosses can change
The sizable role a boss plays in employee satisfaction and

organizational performance provides an intriguing contrast to the
simplistic measures needed to improve it. The fundamental elements
are the same as with any other human relationship: mutual trust,
encouragement, empathy, and good communication. These attributes
create a supportive environment where employees can feel
psychologically safe and satis ed and deliver their best work.
Even though managers’ organizational context can blunt their

incentives and restrict their actions, there are, nevertheless, simple
changes bosses can make to improve the workplace happiness of the
people who report to them—no matter what their organization’s
culture is like. In this regard, micro-actions often count more than
larger, structural changes. Here, we highlight four practices that have
proven e ective:
Empathy, compassion, and vulnerability: A manager who

genuinely cares about an employee’s well-being tends to be
curious about it. Sincerely asking, “How are you doing today?”
and showing empathy no matter the answer creates an
opportunity for employees to raise issues and to feel safe when
they do. If the problems relate to the workplace, solving them
together and encouraging initiative taking can give workers a
heightened sense of agency, in turn reducing their stress levels.
Moreover, curiosity and compassion typically go hand in hand. A

sense of compassion, de ned as caring for and being committed
to the happiness, well-being, and quality of life of others in
addition to our own, is at the heart of all great religious traditions
—and of the secular ethics of the “happiness revolution.” The
economist Richard Layard proposes that “we should each of us,
in all our choices, aim to produce the greatest happiness we can
—and especially the least misery.”[ 10 ] For bosses, this is not
merely an ethical choice. Research shows that when employees

perceive compassion or kindness from their leaders, they
become more loyal to them.[ 11 ] Loyalty in turn feeds better
performance at work.
The best managers also open themselves up to others’ empathy

and compassion and share their own emotions in response,
which requires the willingness and ability to feel and show
vulnerability. Doing so will help maintain a leader’s emotional
stability and build a close support network that is essential,
especially during turbulent times.
Gratitude: Being thanked makes people feel valued. Celebrating

small achievements helps people face larger challenges. As
outlined in Teresa Amabile’s book The Progress Principle: Using
Small Wins to Ignite Joy, Engagement, and Creativity at Work
(Harvard Business Review Press, 2011), the experience of
celebrating small accomplishments sets up a positive dynamic
where everyone wants to do better. Routinely, frequently, and
generously thanking team members costs nothing and has
enormous bene ts.
Yet there is a danger here. All of us have built-in radars for fake
expressions of emotion and recognize when bosses and senior
leaders are simply following a script without actually meaning
what they say. To make their gratitude count, managers need to
hone their ability to feel genuine thankfulness and use this
emotion to express their appreciation in a heartfelt way.
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Positivity: Giving positive feedback builds employee con dence

and reinforces bene cial behaviors. Unconditional positive
regard—the practice of validating feelings, withholding judgment,
and o ering support—bolsters motivation and fosters
authenticity. One study compared athletes who received
unconditional positive comments from their coaches with those
who received criticism. The former group experienced an
increase in con dence, greater love for the sport, and stronger
persistence through challenges. The latter group felt less secure,
less motivated, and tended to wear out more quickly.[ 12 ] The
same pattern has been found true for teachers and students, and
it applies to bosses and the people they “coach” in the workplace
as well.
In addition, positive regard is a key contributing factor to

developing an individual’s sense of autonomy and self-
competence, which in turn is directly linked to greater happiness
and well-being (Exhibit 4).
Awareness and self-care: Being a supportive and compassionate

manager is easier for people who are themselves aware of and at
peace with their own inner state of being. Leaders must rst
relate to and help themselves before they can do the same for
others. For example, sharing emotions or letting go of judgment
is often only possible once leaders feel safe themselves.
Managers who prioritize their own well-being can better help

others prioritize theirs. When it comes to self-care, research from
the Wellbeing Project —a coalition of leading social institutions
catalyzing a culture of well-being in support of social change—
shows the bene ts of self-care for changemakers in the social
sector, a group that faces daunting problems and strenuous

circumstances. The recipe for self-care will be di erent for
everyone, but most often includes attention to diet, exercise,
rest, and sleep. For many, mindfulness or other meditation
practices are also powerful sources of resilience.
Exhibit 4
If a manager’s organization does not reinforce such behaviors, it is

important for that manager to build their own system of cues, routines,
and rewards to help consolidate these actions as habits. As long as
the intent is authentic, bosses can simply imitate the new behaviors
they intend as a path toward consolidating those actions into their
daily routines. For example, a manager could set themselves a goal of
speaking less and listening more, and then systematically solicit

feedback and observe the results. In time, they would likely notice the
positive e ects this has on team members, which would feed their
intrinsic motivation to do even better. They could also benchmark
themselves to see if they make it into the top quartile of managers
whose team members rank their relationship with their boss as “very
good.”
However, in a hectic and demanding environment, it is not always

easy to stick to good habits. It is even harder if good management is
not valued or the model of leadership in an organization is primarily
based on authority and personal achievement. In those
circumstances, managers need their leaders to help.
The best managers open themselves up to others’ empathy and

compassion and share their own emotions in response. Doing so will
help maintain a leader’s emotional stability and build a close support
network that is essential, especially during turbulent times.
How organizations can support
better bosses
Although this article focuses on the role of individual managers,

leaders of organizations have a fundamental duty as well to create an
environment that enables good management, and good relationships
more generally. Not only do they owe this to their shareholders, but
there is also a clear moral imperative. While there are many sources of
misery in the world—including poverty, illness, and discrimination—

the one aspect of people’s lives that is clearly within an organization’s
sphere of in uence is the behavior of their bosses and supervisors.
Leaders who take this message seriously can draw on well-

established literature for how to change mindsets and behaviors in an
organization. Four ingredients are required:
. Understanding and conviction conveyed through a compelling

change story that solicits better behavior from bosses and
supervisors. A compelling story is one that builds in multiple
narratives. Leaders might start by educating bosses and
supervisors about the enormous positive and negative impact
they have on the lives of the people who report to them.
(Research shows that leaders consistently fail to recognize how
their actions a ect and will be interpreted by others.) The story
might also connect the dots for everyone in the organization—for
example, by relating how the aspiration for employee well-being
explicitly matches the organization’s social responsibility agenda.
Similarly, the narrative might link the company’s overall purpose
statement to the individual purpose people feel in their working
lives—the aspects of work they nd most meaningful. A
compelling change story might also connect ethical behavioral
imperatives with the performance improvement of the
organization as a whole.
. Role modeling that demonstrates a leader’s personal belief and

commitment to employee well-being. Many senior leaders
consistently overestimate how much they are part of the solution
and not the problem in a range of organizational matters. But
nothing undermines a cultural-change initiative more thoroughly
than lip service to a cause that leaders fail to follow through on

themselves. Consider how one survey found that 27 percent of
organizations have placed many of their inclusion and diversity
initiatives on hold because of the COVID 19 pandemic,[ 13 ] even
though doing so negatively a ects trust in leadership and leads
to lower employee engagement and performance. In their own
e ort to bolster employee well-being in their organizations,
leaders can start with self-re ection to identify biases and
actions that either support or undermine change.
. Skill- and con dence-building approaches to help managers

create better employee experiences. Research shows that as
people gain power, they lose the ability to judge a situation
accurately, particularly with regard to how others will perceive
their actions. They also lose some of their ability to empathize
with people in positions of less relative power.[ 14 ] Organizational
leaders can tackle this tendency directly. While training courses
for soft skills—such as providing and receiving feedback —need
to become a more standard part of the corporate curriculum,
organizations should also explore novel ways to address the loss
of empathy that accompanies gains in authority.
To accomplish this, organizations can follow the experiments of

academics such as Yale School of Management psychologist
Michael Kraus. In his experiments, Kraus managed to “re-anchor”
powerful people’s sense of their own power by forcing them to
rank themselves against people they perceive as even more
powerful, such as billionaires and political leaders.
Organizations can also provide access to meditation apps and

training courses that encourage mindfulness and self-
awareness. Senior leaders can build on design-thinking
practices that question established behaviors and reframe
solutions to meet the unique needs of di erent employees . Skills
and tools aimed at improving a set of employee experience
factors—including trust in leadership and the relationship with a
company—can further support employee engagement, well-
being, and e ectiveness.
. Formal mechanisms that reinforce the right behaviors. Unless

employee satisfaction, including satisfaction with an immediate
boss, becomes a core part of a company’s performance
evaluations, behavior is unlikely to change. By praising and
promoting the best managers, organizations also help ll their
ranks with the right kinds of role models. Companies that
combine this approach with new HR screens to identify people
with the desirable servant-leader traits can begin to form a
supporting ecosystem for better management practices.
Companies such as GE have begun substituting their top-down
performance appraisals with novel approaches that emphasize
continuous learning and coaching rather than criticism.
Few managers realize what a dramatic impact—either positive or

negative—they have on the world through their everyday behavior. It is
the responsibility of senior leaders to enlighten them and provide the
organizational context that consistently fosters high-quality
relationships between bosses and the people who report to them.
1. Excludes the self-employed, who make up around 1.2 billion of the 3.3 billion
people employed worldwide.
2. Mary Abbajay, “What to do when you have a bad boss,” Harvard Business
Review, September 7, 2018, hbr.org.
3. The study found that workers reported being less happy on days with
inclement weather. This allowed researchers to determine that the happiness
of call-center workers caused the sales jump, and not the reverse. For more,
see “Does employee happiness have an impact on productivity?,” Saïd
Business School WP2019 13, October 2019, psycnet.apa.org.
4. James K. Harter, Theodore L. Hayes, and Frank L. Schmidt, “Business-unit-
level relationship between employee satisfaction, employee engagement, and
business outcomes: A meta-analysis,” Journal of Applied Psychology, 2002,
Volume 87, Number 2, pp. 268 79.
5. Denise L. Parris and Jon W. Peachy, “A systematic literature review of
servant leadership theory in organizational contexts,” Journal of Business
Ethics, 2013, Volume 3, Number 3, pp. 377 93, springer.com.
6. The Politics of Potential: How Organizational Politics Are Poking Holes in
Your High-Potential Program, hoganhipo.com.
7. Randall Beck and James Harter, “Why great managers are so rare,” Business
Journal, gallup.com.
8. Tomas Chamorro-Premuzic, “Why do so many incompetent men become
leaders?,” Harvard Business Review, August 22, 2013, hbr.org.
9. Randall Beck and James Harter, “Why great managers are so rare,”
Business Journal, gallup.com.
10. Richard Layard, Can We Be Happier?: Evidence and Ethics, London, UK:
Pelican, 2020.
11. Emma Seppälä, “Why compassion is a better managerial tactic than
toughness,” Harvard Business Review, May 7, 2015, hbr.org.
12. Lauren Kelly McHenry, “A qualitative exploration of unconditional positive
regard and its opposite constructs in coach-athlete relationships,” University
of Tennessee, May 2018, trace.tennessee.edu.
13. “COVID 19 response: Diversity and inclusion,” Institute for Corporate
Productivity, March 25, 2020, i4cp.com.
14. Jerry Useem, “Power causes brain damage: How leaders lose mental
capacities—most notably for reading other people—that were essential to their
rise,” Atlantic, July–August 2017, theatlantic.com.
ABOUT THE AUTHOR(S)
Tera Allas is director of research and economics in

McKinsey’s London o ce, and Bill Schaninger is a senior
partner in the Philadelphia o ce.
The authors wish to acknowledge Saïd Business School

professor Jan-Emmanuel De Neve for his contributions to the
development of this article.
This article was edited by Astrid Sandoval, an executive editor

of McKinsey Quarterly, based in the London o ce.
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14/10/2020 The boss factor | McKinsey

The boss factor: Making the world

Businesses looking to make an external social

strategies, agility, and resilience, while governments and communities

For purpose-led corporations, this is a de ning moment. How can

To move forward, rather than stand paralyzed, crystal-clear

When it comes to employee happiness, bosses and supervisors play a

those describing very bad and quite bad relationships with

Shifting the behavior of an entire cadre of managers might seem a

by clearly articulating the sizable upsides to high job satisfaction,

Good bosses, good performance

It stands to reason that managers would play a crucial role in their

There are complex interactions between these factors, giving rise to

Such a scenario is not just a theoretical construct. Countless studies

when their happiness increased by one point on a scale of one to ve.

with top-quartile employee engagement achieved operating-pro t

Why are servant leaders so rare?

disposition enhances both team performance and satisfaction.[ 5 ]

Even though most business schools, executive training courses, and

So even if a manager believes, in their heart of hearts, that the right

Organizations that allow such dynamics to persist miss out on the

How bosses can change

The sizable role a boss plays in employee satisfaction and

Even though managers’ organizational context can blunt their

Empathy, compassion, and vulnerability: A manager who

Moreover, curiosity and compassion typically go hand in hand. A

merely an ethical choice. Research shows that when employees

The best managers also open themselves up to others’ empathy

Gratitude: Being thanked makes people feel valued. Celebrating

Positivity: Giving positive feedback builds employee con dence

In addition, positive regard is a key contributing factor to

Awareness and self-care: Being a supportive and compassionate

Managers who prioritize their own well-being can better help

sector, a group that faces daunting problems and strenuous

If a manager’s organization does not reinforce such behaviors, it is

speaking less and listening more, and then systematically solicit

However, in a hectic and demanding environment, it is not always

The best managers open themselves up to others’ empathy and

How organizations can support

Although this article focuses on the role of individual managers,

misery in the world—including poverty, illness, and discrimination—

Leaders who take this message seriously can draw on well-

. Understanding and conviction conveyed through a compelling

. Role modeling that demonstrates a leader’s personal belief and

than lip service to a cause that leaders fail to follow through on

. Skill- and con dence-building approaches to help managers

To accomplish this, organizations can follow the experiments of

Organizations can also provide access to meditation apps and

. Formal mechanisms that reinforce the right behaviors. Unless

Few managers realize what a dramatic impact—either positive or

ABOUT THE AUTHOR(S)

Tera Allas is director of research and economics in

The authors wish to acknowledge Saïd Business School

This article was edited by Astrid Sandoval, an executive editor

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