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Authentic managers help their organizations achieve +50% net profit margins. How do they do it?

Authentic managers help their organizations achieve +50% net profit margins. How do they do it?
What science says is the sweet spot for ongoing manager development
  • Authentic leadership is more than bringing your whole self to work; it’s about letting direct reports see you
  • We found that authentic leaders deliver +50% net profit margin, +79% y/y eps net growth, and +62% y/y revenue growth for their organizations
  • Authentic managers also lead to more team agility, focus, and innovation

Authenticity. It’s one of those traits we’re all searching for in some aspect of our lives. Whether it comes down to seeking a romantic partner or trying to find the best Thai spot in town, how authentic someone or something is can carry immense emotional and cultural capital. Authenticity is something we value. It helps us establish trust. It makes the world around us feel more grounded, solid. 

But is authenticity something leaders should be championing for themselves at work?  

Despite significant gains made around mental health awareness during the pandemic, there is still a lingering stigma about being too authentic in the workplace. Some view it skeptically or deduce it as “bringing all your baggage” along with you. But this isn’t what authenticity is about. 

Bringing your whole self to work doesn’t mean that you have no filter, that you have to reveal personal details to your team, or that you behave in the same way you would in the privacy of your home or when hanging out with close friends. It means the “you at work” should also be recognizable and coherent with the “you at home.” There shouldn’t be a personality change — if you’re enthusiastic and outgoing at home, that’s how your coworkers and team should know you, too. 

Authenticity ultimately comes down to not misrepresenting or obscuring who you are — that you provide an on-ramp for people to understand what interests and engages you and that you reveal your humanity when you and your team need it. You can always show up as a leader, but you don't always have to show up as someone's manager.

How authenticity drives team performance

Helping your people leaders embrace authenticity may seem like a distraction at a time when there is a lot at stake for your business: boosting efficiency, productivity, and performance are all key, especially in these tough macroeconomic times. Who has time to be authentic? But when developing and promoting authentic leaders is an organizational priority, those are exactly the kind of outcomes that occur. 

Authenticity results in less turnover

With costs to replace frontline employees at nearly half their annual salary, not to mention productivity and performance drag attrition causes teams, authentic managers can act as a preventative measure when it comes to turnover as employees on their teams feel more valued and that their contributions matter more.

We found that individual contributors with highly authentic managers see:

  • Lower turnover intentions (-7%)
  • Higher job satisfaction (+9%)
  • Derive more purpose and meaning from their jobs (+5%)

Authenticity promotes psychological safety 

For teams to innovate, navigate through uncertainty and perform in high stress environments, there needs to be a high level of psychological safety. Authentic leaders help create the kind of environment where employers are not just more invested in their work, but more comfortable pushing innovation forward and taking ownership.

We found that individual contributors with highly authentic managers see:

  • Higher psychological safety (+12%)
  • Higher belonging (+11%)
  • More engagement (+9%)
  • Are more self-efficacious (+7%)

Authentic managers have happier, high performing teams

With the nature of work changing rapidly and continuously, authentic managers help bring an open, honest, and direct approach to work that eliminates unnecessary stress and distraction and helps employees clearly where they can drive the most impact. 

We found that individual contributors with highly authentic managers see:

  • More productive (+13%)
  • Less burnout (-6%)
  • Better work/life balance (+8%)
  • Less stress overwhelm at work (-6%)
  • More resilience (+5%)

How does all this authenticity add up to the bottom line for your business overall? Let’s dive in a bit deeper.

The real deal

As we covered in this issue’s main piece, the management pendulum has significantly swung toward a directive leadership approach. Still, authenticity has always been vital, though a relatively underappreciated attribute for leaders to develop. Authenticity enables us to show ourselves, our co-workers, and managers who we are, not just what we do. Authenticity makes leaders seem human. Authentic leaders make mistakes, just like anyone else, which can help direct reports feel more comfortable coming to them when facing a challenge or needing guidance.

In fact, the original impetus for the idea of “bringing your whole self to work” was an invitation for folks to show up in a way that could counter perfectionist projection. Marianne E. Etherson, Ph.D., a researcher at the University of Glasgow who focuses primarily on examining why perfectionism leads to mental health outcomes, notes that “perfectionists have a compelling need to conform to the expectations of others. With their shaky self-worth, they strive to behave in a way they think others will favor. Perfectionists see an idealized self in their irrational imagination; they struggle with self-criticism and ultimately have a perpetual need to win the approval of others.” Not ideal for direct reports, worse for people managers who have an outsized influence on the day-to-day health of your teams. 

But to promote authenticity in the workplace (and the leaders who embrace it), you must do more than decree it a company value. Employers need to establish norms of psychological safety in the workplace, so employees can be authentic without fear of retribution or embarrassment. This starts with managers since they are vital connectors for all manner of relationships in the workplace and help establish psychological safety. It’s one thing to say this; it’s another to have risk-taking be rewarded, praised, and repeated by others. That’s a critical component — setting the foundation where folks can show up as themselves. 

What does authenticity look like?

Employees want leaders they can connect with who understand them. They seek leaders they can relate to. In other words, they want leaders like them, yet a bit further down the path. Key characteristics of an authentic leader include:

  • Knowing their values and sharing them
  • Being trustworthy
  • Not taking things too personally
  • Having boundaries and saying no when needed
  • Being ethical and transparent
  • Being authentic in their interactions with others
  • Expressing their true feelings to others
  • Opening up to people
  • Allowing people to know the “real them”

In turn, this creates a team environment where

  • Trust is high 
  • Employees feel comfortable taking risks
  • Experimentation and innovation happens
  • Direct reports feel safe to explore new ideas and express themselves
  • Feedback is clear and helpful
  • Conflict and burnout are low

The rest of the business case behind authenticity

We’ve been studying authenticity across a large set of our members (n = 49,456 managers) over the past several years and found that organizations where managers score in the top 25% of authenticity (per their direct report ratings in 360 data) significantly outperform their peers. 

Authentic managers help their businesses outperform on a variety of business outcomes that matter

Authentic managers create a team environment where agility and innovation thrive

Authentic managers are viewed as more effective at their jobs


The hard-dollar ROI of authentic managers

Through our latest research, we’ve also been able to estimate the average monetary ROI to organizations when it comes to investing in manager authenticity. By quantifying an authentic manager’s impact on their direct reports’ resilience, productivity, intent to stay, and more, we’ve concluded that a highly authentic frontline leader saves an estimated $33,229 per person per year in prevented turnover costs (that’s based on an average employee salary of $75,000 a year, which is the national average for knowledge workers).

How Chipotle boosted authenticity

Chiptole takes authenticity seriously. Core to their values and approach is “being real.” Its leaders champion authenticity in their food supply chain and have also made it core to their talent development strategy. Through the power of authentic leadership, their managers’ have gained the ability to connect with their teams and create meaningful relationships by developing trust and mutual respect with direct reports.

At a time when most companies are struggling with the cost of hiring, training, and retaining employees, Chipotle knew something too many companies ignore: Managers are the backbone of your business. That’s why when faced with the target of adding 200+ restaurants starting in 2022, they knew their ethos of investing in employees and promoting from within would help them reach their targets. 

When Chipotle initially partnered with BetterUp to build up the capabilities of its frontline leaders, focusing on authenticity was front and center because of what we know about its powerful ripple effect on teams. But what we found was that within Chipotle, there was a negative relationship between manager authenticity and promotion — meaning more authentic managers were less likely to be promoted. 

However, once we partnered together, Chipotle’s managers leaned into developing their authenticity and over time were able to promote more team energy, enthusiasm, and focus at work for their team members as a result. As a result of our work together, Chipotle scored in the top 1% for authenticity of all our partners.

Authenticity is contagious

The work Chipotle started by helping their managers learn to strengthen their authenticity will have a ripple effect on their workforce in years to come. Our research found that organizations like Chipotle with frontline managers in the top quadrant of authenticity are 99% more likely to have direct reports who rank in the top quadrant for authenticity themselves. In all cases, it appears that it pays to invest in manager authenticity. 

I thought that BetterUp was going to only help my leadership skills, but it ultimately helped guide me to being a better person and also a leader I am proud to be.

Chipotle manager

I have become more confident expressing professional vulnerability, recognizing others, creating relationships, and having the confidence to be myself.

Chipotle manager

From frontline managers up to the organization's top, authenticity radiates positive ripple effects for teams and direct reports in the workplace. We now know that the core attributes that make us authentic can be strengthened and learned, and authenticity isn’t something you either have or don’t have (i.e., the “natural born leader” myth), but rather a mindset that’s waiting to be embraced by being open, honest, and yourself. 

Traditional organizational structures are being challenged. Top talent is seeking work that is both meaningful and impactful. Authentic leadership offers an edge that can’t be ignored.

Kristi Leimgruber, PhD is a Behavioral Scientist, DEIB on the BetterUp Labs team with a particular interest in understanding how work life is differently challenging for those belonging to historically underrepresented groups. Prior to joining BetterUp, Kristi was professor and a research psychologist focusing on the roots of uniquely human cooperation & generosity. Kristi’s expertise in human decision-making gives her a unique perspective into the ways behavior changes can spark positive social change.
Adam Wood is a Principal Content Marketing Manager at BetterUp, where he writes about the future of work through the lens of behavioral science. Over 15+ years, Adam has worked as a content marketer, writer, and strategist for Fortune 500 companies and hyper-growth startups with a particular focus on healthcare and employee benefits. His work has been featured in the Wall Street Journal, Entrepreneur, Fast Company, Vox, HR Dive, Worklife, Time, Bloomberg, Inc., and more.
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Authentic managers help their organizations achieve +50% net profit margins. How do they do it?

What science says is the sweet spot for ongoing manager development