Corporate governance delegates tremendous authority to the Chief Executive. Yet authority alone provides a limited license to lead. We listen to those in authority because we’re required to do so; authority motivates via a follow-the-rules mechanism that will never encourage someone to go above-and-beyond the call of duty.

A greater level of executive influence comes from a new leader’s competence — that is, credibility that comes from displaying intelligence, poise, or performance that helps followers recognize why the leader was chosen for the role. Although a leader who demonstrates competence inspires some faith, even competence-based leadership is ultimately fragile. If performance falters, even temporarily, the leader’s credibility may be questioned, reducing people’s willingness to follow.

Legitimacy is a higher-order quality that gives a CEO an ongoing license to lead through good times and bad. A legitimate leader engenders goodwill and a feeling of personal connection with followers. CEOs who enjoy legitimacy can motivate loyalty and inspire confidence. They can mobilize others to rise beyond minimum job requirements and give it their all. Legitimacy creates trust, which is a valuable currency in any organization. Enhanced trust increases people’s willingness to expend effort or give their all because they feel confident that others will do the same, that they will be recognized, and that they will be treated fairly. When people trust the CEO, they will be more open to making longer-term investments in the organization with uncertain personal payoffs, feeling confident they will not be taken advantage of. CEOs with legitimacy can perform better because people give them the moral support that increases their influence.

What, then, allows CEOs to gain and sustain legitimacy? Here are seven behaviours corporate leaders should aim to exhibit in the role:

Communicating clearly

Employees are drawn to leaders who can tell a compelling story — a narrative that helps them understand where the organization is coming from and where it is going. It helps even more if the leader can clearly explain how the organization needs to adapt to critical external changes to win and each employee’s role in contributing to the organization’s success. It’s easier to follow someone with all your heart if you know where you are headed, if the path chosen makes sense, and if the role you can play on the journey is clear.

Consider the example of Jan Carlzon, the CEO of SAS Group (formerly known as Scandinavian Airline Systems), from 1981 to 1994. In public remarks during his first days in the role, he described the main economic drivers of the airline business with preternatural clarity, connecting the dots between the details that each employee could influence to big-picture outcomes in a way that even people unfamiliar with the company find understandable. (You might think every CEO has this ability, but this ability can vary tremendously.)

SAS’s stakeholders took comfort in seeing someone who clearly understood the business in charge — and Carlson immediately increased his legitimacy to lead.

Demonstrating fairness

Because CEOs have so much power over others, they must be perceived to be even-handed. “That’s not fair” are words that undermine a CEO’s legitimacy. As the person who sets the tone for the rest of the organization, the CEO should be caring and just. If the CEO is seen to be partial to some, be unfair in judging the merits of proposals or people, or to show favouritism in meting out praise and rewards, the CEO loses legitimacy. When this happens, people won’t give maximum effort and will engage in self-protective and political behaviour.

Behaving with integrity

Integrity is a measure of the consistency between what the CEO espouses and how they behave. The closer the match, the greater the legitimacy of the CEO. People may not listen to every word the CEO says, but they watch the CEO’s every behaviour very closely. They constantly judge whether the CEO walks the talk, which greatly matters to the CEO’s legitimacy.

A CEO’s legitimacy is boosted when they commit to espoused values, especially when doing so is costly. The CEO who shows no hesitation in recalling an unsafe product, whatever the cost; who continues to fund key R&D projects even when the company is losing money; or who takes responsibility for a failed investment even if the decision wasn’t entirely theirs will significantly enhance their legitimacy. CEOs who are seen to forsake their values when the going gets tough are more likely to diminish their legitimacy and diminish commitment to themselves and the organization. Having the courage to do the right thing when tested is a powerful way of gaining legitimacy.

Showing authenticity

Authentic CEOs are open about their successes and failures, strengths and weaknesses. They actively seek input and feedback from others. They avoid artifice and exude a sense of “This is who I am.” When people encounter an authentic leader, they say: “I am seeing the real person here.” This openness about who they are as individuals beyond their role as CEO makes authentic CEOs more relatable and approachable as they connect with people personally, inspiring others to follow their lead.

Putting the company first

Becoming a CEO may be a prize for many years of contributions to the company, but it is also an honour. CEOs gain legitimacy to the extent their behaviour demonstrates that they put the company’s interests above their own. One CEO observed: “People need to know it’s not about you, that you are committed to serving the company.” Although people may raise eyebrows over a CEO’s pay or privileges, it truly galls them when one puts their interests above those of the company.

CEOs who use every opportunity to acknowledge their privilege to lead the company, are generous in giving others credit for success and quick to assume responsibility for failures, and who share sacrifice themselves before they ask others to do so are more likely to enjoy legitimacy.

Staying grounded

Leaders need to remain human, humble, and approachable to maintain their legitimacy. The CEO job does change people, with experts like Rakesh Khurana describing the risks of the job as structurally induced narcissism. The perquisites of the job are so numerous and the admiration so constant that it is hard for CEOs not to begin to believe in their self-importance and superiority to others.

Consider the example of former General Electric chairman Jeff Immelt. His reputation has never fully recovered from the revelation that GE sent a spare plane to accompany him as a backup whenever he flew on a corporate jet in case the first jet became inoperable. Even though Immelt later insisted he was unaware of the arrangement, the fact that his staff felt his time was so important that he required a backup jet shows the structurally induced self-importance the CEO role can create. Beyond the self-importance that some CEOs begin to exhibit, some suffer a related malady: they start thinking that others’ opinions are unimportant, which leads to arrogance.

Staying grounded can include ensuring adequate time with family or off-the-job pursuits. In our research on how CEOs manage their time, we found that CEOs often sacrifice time for their family or themselves. Getting lost in their work can detach a CEO from their anchors to family and self. A growing distance from their family can sometimes draw CEOs into other relationships that cross organizational norms and boundaries. Losing anchors to relationships that ground them can cause damage to their personal life, but it also risks a CEO’s legitimacy.

Maintaining a sense of purpose

CEOs who can provide others with a greater sense of purpose and meaning enjoy greater legitimacy. Since CEOs are judged for the underlying motivations that guide their conduct, those whose work is seen as being in service of some larger goal, such as serving society or creating real value for customers, enjoy greater legitimacy than those whose actions are seen to be motivated by more mundane goals such as increasing shareholder wealth.  Infusing the organization with a sense of purpose is one of the hallmarks of great leaders. Moreover, people don’t just look to leaders to enhance the performance of an organization; they also look to them to provide a greater sense of meaning from their work.

In short, while authority-based leadership is based on formal power and decision-making rights, and competence-based leadership focuses on performance, legitimacy-based leadership is based on behaviours and actions that inspire others’ trust, respect, and commitment. While all three forms of leadership can be effective in certain situations, legitimacy-based leadership is more sustainable and effective in the long run.

Nitin Nohria     HBR Jun 2023