Extroverts command attention. They inspire confidence and always make a great first impression. That’s part of why ‘extrovert’ and ‘executive’ have become almost synonymous. There’s no denying that extroverts excel at winning over stakeholders. Recent research suggests, however, that charismatic, energetic extroverts might not always excel at driving results.
A new study identifies a link between CEO extroversion and expected cost of equity capital. In summary, the more extroverted a company’s leader, the riskier that company looks to investors. Led by Biljana Adebambo, an associate finance professor at the University of San Diego, the researchers believe their findings could inspire firms to approach hiring differently in the future. Operating with a high cost of equity means fewer profitable projects and, in the long run, could mean losing stakeholder support. In an increasingly unpredictable global economy, that risk should continue to look more and more unwelcome.
This is not the first study to suggest that extroversion is often a double-edged sword. The CEO Genome Project, a 10-year survey of C-suite executives, found that high-risk behavior had caused “career blowups” for nearly half of respondents. It also confirmed that the stereotype of the hyper-confident CEO exists for a reason. Particularly confident professionals, the report found, have double the chance of earning executive positions. They are not, however, any more successful in those positions than their more introverted peers. In fact, the project came to the surprising conclusion that introverts “are slightly more likely to surpass the expectations of their board and investors.”
That isn’t the result of setting a low bar. After their years of study, the project’s researchers identified four traits that define great leaders. The most important, outranking adaptability, high-impact engagement, and decisiveness, was reliability. It’s a quality that introverted leaders embody and one that makes any leader 15 times more likely to succeed. Introverts are rarely flashy, but they’re unfailingly reliable. That’s why they’re uniquely equipped to lead procurement units. If high-risk behavior is discouraged at the executive level, it’s all but forbidden within procurement. More than any other business unit, it requires a mix of both careful planning and quick, decisive action.
The researchers behind the CEO Genome Project describe the approach favored by reliable (and potentially more introverted) leaders as both thorough and strategic. “They dig into budgets and plans, and engage with board members, employees, and customers to understand expectations … At the same time,” the researchers write, “they rapidly assess the business to develop their own point of view on what’s realistic and work to align expectations with that.” While they’re technically describing the work of CEO, they could just as easily be describing an effective CPO. After all, procurement groups are widely evolving into cross-functional risk managers with organization-wide impact.
Stereotypes still plague introverts in the workplace. As these professionals move up the corporate ladder, these lingering misconceptions can grow from annoyances into obstacles. For example, executives might assume their introverted peers aren’t up to the challenge of engaging with the company as a whole. This all-too-popular assumption is totally misguided. Though they tend to favor quiet reflection, introverts are no less effective than extroverts when it comes to collaboration.
Introverts are great listeners. While they might seem disengaged or disconnected during a meeting, it’s more likely they’re carefully absorbing insights and developing a plan for the future. Rather than talking to hear themselves talk, an introverted CPO will come to meetings ready to gain a new perspective and devise solutions alongside their teams. This helps them foster an environment where everyone feels empowered to speak up and offer their own unique points of view. The workplace will also enjoy a culture where genuine connections flourish, productivity soars, and mediocrity is never an option. An introverted CPO won’t jump into hasty initiatives, talk over their team members, or stifle creativity. They’ll instead build a procurement team that’s perfectly equipped to enable the organization as a business partner.
Procurement is evolving every day. The function’s role and responsibilities are changing. The qualities that define its leaders will need to change as well. Thriving – or even surviving - in a volatile global economy will mean presenting creative solutions and approaching classic challenges from new angles. Appointing a more introverted and introspective leader could be a great first step into this new era.