Leadership is the relationship between people who aspire to lead and those who choose whether or not to follow. And it hinges on the leader’s credibility, which is difficult to build and easy to lose. In recent years, numerous corporate executives — including the CEOs of BP, Wells Fargo, and Volkswagen — have learned that tough lesson through high-profile scandals that swiftly damaged their reputations.
But what’s at the heart of credibility? Two critical elements: perceived competence (people’s faith in the leader’s knowledge, skills, and ability to do the job) and trustworthiness (their belief in his or her values and dependability). Such views are formed through direct and indirect observation of the leader’s work and performance. And these perceptions are extremely important in a digital age, when vast amounts of information about people can be captured and scrutinized through technologies like smart sensors and artificial intelligence systems. Employees also seek assurance that those who are managing them and assessing their performance are competent and trustworthy.