Credibility Economics

Edwin P. Hollander in Leadership Dynamics (MacMillan, 1978) says leaders do two things for an organization: help it do what it is already doing—but better; and they help it begin doing what it is not but should be doing. To do the second task, a leader must gain a good reputation for doing the first. To be effective, leaders need “status,” which is earned by helping the organization do better what it was already doing before the leader arrived.

This obviously applies in the church. When pastors arrive, people expect them to do a good job of preaching, Bible teaching, and visiting. These are the routine activities any good church wants done. The better new pastors do these tasks, the more status they will have.

If, however, new pastors want to sponsor a new foreign mission or start a day-care center for working mothers before showing the church they can do a good job of preaching, teaching, and visiting, the church is likely to resist because they do not have enough status.

Hollander calls this effect “leadership credit.” The more status, the more credit. Leaders need credit before people will follow. Leadership credit is like money in the bank: it can be accumulated or drawn upon. If leaders have no credit, they will not be effective. If they have credit, it can be spent—that is, the organization will support the leader’s new ideas.

Members also award credit to leaders not only on the basis of how well normal activities are going, but on whether their innovations in the past have proven effective. Are new investments likely to be solid?

The degree to which leaders can deviate from the expected is a function of how much credit they have accumulated in the organization bank. The greater the amount of credit ...

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