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Psychology of Leadership for Executives: 5 Key Principles

Whether closing a deal with a customer or motivating a team to meet a goal, business is all about people. Even the largest corporations are a collection of individuals, and as such, an understanding of what makes those individuals tick and how they relate to those around them is of huge benefit to all business leaders. Luckily, there are some very straightforward principles of psychology that can be successfully applied in almost any business environment to strengthen relationships and improve performance.

Let’s examine a few of those principles and how executives, managers and leaders can put them to work to get the most out of everyone around them.

Recognition As Reward

The idea that rewards are the key to motivation in business environments is not new, but ever since Frederick Winslow Taylor laid out The Principles of Scientific Management in 1911, reward has often been considered a synonym for money. As a cognitive neuroscientist, I understand the brain’s reward system well, and I’m keenly aware of how non-monetary rewards impact it just as strongly as financial ones.

The brain’s reward system essentially does three things: It helps us learn, steers our decision making towards or away from certain stimuli, and elicits positive emotions. The neurotransmitters that make those things happen respond to a lot more than just money. Good leaders understand that, and they know that the recognition for a job well done — even something as simple as a thank you — lights up the same neural pathways as a big bonus check. When that happens, it chemically reinforces the desire to work hard towards organizational goals.

So, while HR departments often treat reward and recognition programs as two different things, from a psychological perspective, they are one and the same. Executives and managers can gain a lot from understanding that because it costs nothing to show an employee that their work is honestly appreciated, but the value gained in return is enormous.

Social Identity Theory

Social identity theory tells us that group membership is a big part of how people define themselves. From the earliest days of our development, being part of a group meant all-important security. In the business world, that age-old psychological characteristic can be leveraged to increase performance by creating a strong sense of personal association between employee and organization.

Accomplishing that goal is all about building a strong team identity — something heavily tied to organizational culture. The military is an example of near-perfect development of team identity, where individuals feel fierce pride in their membership to the group. There are a lot of factors that go into that, but among the most important are a sense of exclusivity, a sense of purpose and a sense of competition.

Businesses can utilize the same model to develop identification within their teams. Leaders can foster a feeling of exclusivity by reminding their team about what makes them special. They can foster a sense of purpose by constantly reinforcing the importance (beyond just profit) of the team’s goals. A sense of competition can be developed by tapping into the natural “us versus them” mentality regarding a competitor, or — if done with care — even other teams within the organization.

Authority And Power

Authority comes in many different forms, and not all are created equal. Understanding the different types and how they impact a work environment can enable executives and other business leaders to understand the perceptions of their team members and to tailor their leadership styles for different situations as needed.

Authority is derived from power, and the five main types of power are:

• Reward Power

• Coercive Power

• Legitimate Power

• Referential Power

• Expert Power

Reward and coercive power are straightforward. Legitimate power is power that is perceived to be warranted, like a police officer’s arrest authority. Referential power is power derived from earned influence and respect, and expert power is power derived from the perception of superior knowledge or skill.

While each type has a place in the business world, it’s clear that some are more ideal sources of authority than others. For instance, a leader who can derive their authority from referential and expert power is more likely to be successful at accomplishing difficult goals like transformational change. Likewise, an underqualified manager dependent on coercive and reward power will never be able to motivate a team as successfully as a charismatic leader drawing on the other types.

In my work as a cognitive neuroscientist, I’ve studied human performance and motivation from both a physiological and psychological standpoint, and as a coach, I’ve helped many of my clients understand and apply psychological principles to become more effective businesspeople. But the benefits of striving for an expanded understanding of how those around us think and feel can extend well beyond the office, and managers and executives who make the effort will surely find themselves more successful, not only as business leaders but in all other aspects of their lives as well.

The original publication can be found by visiting Forbes.

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Dr. Sydney Ceruto

A Pioneer in Neuroscience-Based Coaching

As the founder of MindLAB Neuroscience, Dr. Sydney Ceruto has been a leading force in integrating neuroscience into coaching and counseling for over two decades. With three master's degrees in psychology and two PhDs in behavioral and cognitive neuroscience, she is widely considered a top expert in her field.

Harnessing the power of neuroscience-based coaching, Dr. Ceruto's innovative approach focuses on neuroscience, neuroplasticity, and neural pathway rewiring to foster lasting positive change in mental health.

Dr. Ceruto holds esteemed memberships in the Forbes Executive Council, Positive Performance Alliance, Wharton Executive Education Program, the International Society of Female Professionals, and executive writing positions for Alternatives Watch, Brainz Magazine, and TED: Ideas Worth Spreading.

Dr. Ceruto's accomplishments include:

  • The 2022 CREA Award.
  • A lead research position at NYU Steinhardt.
  • Volunteer work with Covenant House and the National Alliance for Mental Health (NAMI).

Her science-backed method of Neural Rewiring has successfully guided thousands of clients toward happier, more productive, and more resilient lives.