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Because leadership is hard, boundless appetite exists for someone to come along and offer a simple solution to your problems by saying, “Here’s the ONE thing you need to know about leadership.” If only life provided for such simplicity.

In fact, many often wonder what makes a good leader. For any who have tread the leadership path, they will tell you effective leadership implies considerable complexity because people are vast and they contain multitudes, as Walt Whitman observes.

Often, leaders need the humility to recognize that they do not know the answer, however possess the confidence to make a decision amid ambiguity.

What Makes a Good Leader

To thrive, leaders need to motivate people to follow their cause and create buy in through charismatic leadership.

The best leaders handle uncertainty by relying on charisma, humility, and accountability while having receptivity to feedback from their followers. However, charisma has dark elements if used for nefarious purposes.

When charismatic leaders harness their influence for good and maintain open lines of communication, they lay the groundwork for a dynamic group capable of handling most situations, both with and without order.

In fact, operating in a chaotic environment can foster creativity and innovation, though too much can straddle the border of anarchy. To cope, effective leaders need to employ empathy, care about people, and have a willingness to let go of those toxic personalities if they drag down the broader team.

In short, a solid philosophy of leadership calls for having the charisma to lead, representing ideas fairly on how things should differ and then having the confidence to make tough decisions.

These management skills can help a leader to create a sense of urgency but also instill the patience necessary to bring the team along. Competent leaders enhance this dual-responsibility of listening and leading with charisma.

However, employing charisma differs between leaders vs. managers. The former (authentic leaders) hold it in great quantity while the latter (transactional leaders) lack it altogether.

This post examines what makes a good leader by exploring charisma’s role in three primary leadership styles and how the presence of charisma does not necessarily equate to good leadership.

Authentic Leadership and Knowing it When You See It

With some reflection, I have found my impression of authentic leadership echoes the same sentiment famously expressed of obscenity by the United States Supreme Court Justice Potter Stewart who wrote, “I know it when I see it.”

Everyone can quickly point to examples of inspiring leaders from history but thinking they can easily replicate their traits proves foolhardy. Most any manager who supposes he or she can base their sense of leadership style on Abraham Lincoln, Nelson Mandela or Harriet Tubman almost certainly suffers from delusions of grandeur.

What these leaders all share is charisma, or a magnetism which motivates people to follow them in effort or cause. These noted leaders utilized their charisma to buck the consensus of the day and held to their conviction to install their vision for the future. Doing so operationalized their vision into a mission by giving their actions purpose.

Not only did they unlock the value of their visions, they chose not to operate within the accepted norms of their time. Instead, they saw a desired future state where they thought the world belonged and led us there.

Managers, on the other hand, might not have these same qualities, despite having people follow them. Great managers may not possess the same magnetism of charismatic leaders who dismiss the status quo, but they have a sense of drive for accomplishing the task at hand.

And while most effective leaders possess charisma, this does not serve as a necessary and sufficient precursor for becoming an authentic (great) leader. Rather, leaders often have their status defined more by their mission than by their ability to motivate people toward realizing its actualization.

In fact, famed management thought-leader Peter Drucker opined the most charismatic leaders of the previous century often harnessed it for nefarious purposes.

The three most charismatic leaders of [the 20th Century] inflicted more suffering on the human race than almost any trio in history: Stalin, Hitler and Mao. What matters is not the leader’s charisma. What matters is the leader’s mission.

Some people possess charisma and harness it for instituting transformational change at the micro level, such as keeping the ship afloat during a crisis.

Authentic leaders tend to have more success at the macro level by driving significant change on a larger stage. Borrowing from our aforementioned authentic leaders: ending slavery or Apartheid.

Finally, authentic leaders come equipped with competence and not just capability. Stated succinctly, just because you have a good idea or understand the situation (proving capability), does not necessarily indicate you can serve as a competent leader in that situation.

Knowing when and how to lead and allowing those following you to lead instead proves tricky. Perfecting this skill makes for a competent leader.

Sensing what a group needs from them and adjusting as necessary might serve as the most important element of competent leadership. Not all situations call for the same type of leadership.

Transformational Leadership

Some of the greatest leaders in history possessed great charisma, vision and competence. Granted, if leaders should lack any of these qualities, charisma usually counts least. If you found a leader who lacks this component and fits this mold, you have found a transformational leader.

In the wide gulf between authentic and transactional leadership styles comes those of the transformational variety. These leaders exhibit qualities of both though lack the true vision of authentic leaders and possess more charisma than their transactional peers.

Warren Bennis, another notable management thought-leader, summed up the primary differences between managers (transactional) and leaders (authentic) as the following:


  • Do things right
  • Have an eye on the bottom line
  • Help you get to where you want to go


  • Do the right thing
  • Have an eye on the horizon
  • Inspire what you want and how to get there

leaders vs. managers

When highlighting these primary differences on what makes for a good leader, he thought we should not focus on the former at the expense of the latter. In fact, he observed, “failing corporations are usually over-managed and under-led.”

Bennis also believed that leaders are made, not born. He argued leadership comprised a set of skills which someone can learn through hard work. He likened it to actors performing on stage, saying leaders must practice their lines, play off others in the production and ultimately inhabit their roles.

This distinction is partly true, where leadership skills can be learned, though vision is not one of them. That comes innately and places a manager for consideration as an authentic leader described before.

Perhaps the greatest descriptor of leadership encapsulates someone who can operate with flexibility, both in their period and circumstances. To that point, what constitutes a good leader changes over time, as new times require new leadership attributes.

In an era of overcoming unconscious bias to promote greater diversity, equity, and inclusion, leadership too must adapt. In other words, leaders must work to accommodate new societal norms and can no longer crack the whip and expect people to jump through hoops and rely on hierarchical structure to drive progress. Walking this fine line defines a transformational leader.

Instead, transformational leaders now need to act more like mentors and coaches than drill sergeants ordering soldiers on the field. In fact, top-down leadership with one-way communication not only risks alienating workers, it threatens to squander the most important resource held by an organization: knowledge.

With poor leadership, comes turnover and lack of opportunity to employ knowledge in new ways for societal benefit.

Transactional Leadership

Transactional leadership involves relying on a top-down, centralized authority approach. These leaders exhibit little charisma and instead focus on the supervision, organization and performance of their groups.

Describing leaders in this group is best done through the prism of command and control. Transactional leaders do not have followers, rather they have subordinates or direct reports. They monitor their employees and adhere to a structure grounded in instructions and orders.

These managers count value as opposed to unlocking it. However, not every situation requires authentic leaders to deliver effective results. Transactional leadership can suffice for making a good leader if the circumstances call for it.

How the Grinch Stole Charisma

A grave mistake of attempting to identify leaders is falsely equating leadership entirely with charisma. Countless examples exist of people with immense charisma but less-than-well-intentioned motives. Paired traits to be wary of include narcissism and confidence.

According to research about visionary communication qualities, narcissistic leaders have the perception of being charismatic because they appear passionate, daring, risk-seeking and having no fear or hesitancy.

Yet, their visions lack in collective appeal and consideration of the greater good, often to the detriment of followers. Drucker touches upon this with his quote from above about charismatic, though evil, leaders. Likewise, T.S. Eliot observes a similar dynamic of harm or indifference from unscrupulous leaders toward the fates of their followers in The Cocktail Party.

“Half the harm [done] in this world is due to people who want to feel important. They don’t mean to do harm, but the harm does not interest them. Or they do not see it, or they justify it because they are absorbed in the endless struggle to think well of themselves.”

On a related leadership quality, confidence, research from Tomas Chamorro-Premuzic in “Why Do So Many Incompetent Men Become Leaders? (and How to Fix It)” shows people tend to assume confident individuals are competent, when no directly observable relationship exists.

Those confident people are often believed and promoted to new heights. However, confidence alone does not suffice, especially in combination with narcissism and charisma.

Take, for example, Elizabeth Holmes, the founder of Theranos, a fraudulent blood-testing company. She convinced some of the most shrewd individuals to serve on the company’s board and share in her vision; through her personal branding and charisma she managed to hold off numerous regulatory inquiries on the promise her product performed admirably; and finally, she sold a behemoth retail pharmacy chain on her product’s benefits with manufactured evidence to substantiate them.

All of them fell victim to her persuasion and confidence because they bought into her words without assessing the facts. In the end, the Theranos technology did not work and this example serves as a stark reminder that charisma plus narcissism minus competence is a dangerous formula for leadership.

Another recent example comes from Billy McFarland’s failed Fyre Festival, made famous for the luxurious experiences promised to millennial attendees, only to be met with cheese sandwiches and inadequate accommodations. Hardly the event promised.

Billy McFarland sold a vision to investors, attendees and the media that persuaded numerous young people to work for him. His innate salesmanship and charisma wowed most who came into his sphere of influence, and yet he lacked the skills to put his vision into reality.

In the end, Billy McFarland showed more interest in promoting his vision through partying on social media than he did focusing on the logistics necessary for putting the event into action. The rest is #EpicFail history.

Caveat Emptor

Clearly, charisma and narcissism can easily go hand-in-hand with leadership. The intentions of good leaders should be apparent but not all can meet the eye, especially as many indicators flash trustworthiness and credible signaling.

The important task of followers is to identify the mission of a leader and assess for themselves if this vision is worth following and if the leader is competent.

As a good follower: don’t follow the leader, follow the vision.

As a good leader: focus on the vision and purpose, then follow through.

About the Author

Riley Adams is the Founder and CEO of WealthUp (previously Young and the Invested). He is a licensed CPA who worked at Google as a Senior Financial Analyst overseeing advertising incentive programs for the company’s largest advertising partners and agencies. Previously, he worked as a utility regulatory strategy analyst at Entergy Corporation for six years in New Orleans.

His work has appeared in major publications like Kiplinger, MarketWatch, MSN, TurboTax, Nasdaq, Yahoo! Finance, The Globe and Mail, and CNBC’s Acorns. Riley currently holds areas of expertise in investing, taxes, real estate, cryptocurrencies and personal finance where he has been cited as an authoritative source in outlets like CNBC, Time, NBC News, APM’s Marketplace, HuffPost, Business Insider, Slate, NerdWallet, Investopedia, The Balance and Fast Company.

Riley holds a Masters of Science in Applied Economics and Demography from Pennsylvania State University and a Bachelor of Arts in Economics and Bachelor of Science in Business Administration and Finance from Centenary College of Louisiana.