With the increasing demands for innovation and adaption, organizations need employees not in formal leadership roles to take initiatives and exhibit informal leadership among their peers. Prior research has focused on “who” may behave as informal leaders but largely overlooked “when” individuals practice informal leadership. Very little is known about what events may prompt or hinder the demonstration of informal leadership.

We show that occupational progress failure (e.g., failing an important certification test, receiving a negative performance review, being rejected for promotion), as a disruptive event, impedes informal leadership behavior. We also find that ruminative thoughts elicited by occupational progress failures explain the mechanism of this effect. Specifically, when employees do not attain an important occupational benchmark, they tend to dwell on the failure and ruminate about it. Such ruminative thoughts withhold cognitive resources from being allocated to discretionary and complex tasks like informal leadership.

Our research is not suggesting that organization should seek to shield employees from failure. Instead, our research indicates that to encourage informal leadership, organizations can do more to assist employees’ preparation to meet important occupational goals. For employees who recently failed to achieve occupational benchmarks, managers can provide more support and encouragement to reduce their rumination about the failure.