Friday, September 14, 2007

Leadership or Abdication

Recently I was reading a letter to the editor in a business publication directed at small business owners. The letter, from a business owner, stated that he had two principals, a CFO and VP who seemed to always be at odds. He was concerned over the disruption in his business even though these two individuals were very productive.

The magazine editor quoted an HR consultant whose response was that many times the owner’s behavior or lack of leadership helps to create infighting. She then referred to a study stating that most employees blame conflicts on line managers and that there are some common reasons for infighting like compensation, jealousy, and advancement opportunities. Her solution was what she describes as management tactics like reasoning, pleading and threatening. This is where she lost me. She had the research that pointed to a lack of management and leadership skills but instead of recommending training for the owner she suggested tactics that only would continue to excuse the owner from the problem. The editor goes on to quote a University professor who concedes that the business owner may have to let go one of the employees for the sake of harmony within the organization and that these types of situations can undermine the whole organization. I certainly agree that the infighting can undermine the organization but to blame the employee for the problem is a complete and total abdication of the owner's responsibility.

So, the experts had the research and understood the risks but instead of offering a solution, which would be some leadership and management training for the owner, they suggested that the owner direct his attention externally and blame the executives.

Going through the process of letting someone go, especially someone who is productive and has a stake in the company, can be very painful emotionally and financially.

Imagine firing one of your productive senior managers. Many times the company not only loses a leader and the associated revenue and productivity but also loses the people, emotionally and/or physically, who worked under and alongside this individual. The financial costs are great as conservative estimates for replacing an employee are 1.5 times the exiting employees salary. (cost of severance + recruiting + hiring + training + loss of productivity etc...)

Employees with leadership skills are sometimes seen as a threat to their peers because they try to set goals and evangelize their vision for the future. Being goal oriented is a personality characteristic that has obvious value in any organization unless, of course, the individual goals do not coincide with those of the boss. Sometimes the leader will not make any decisions at all. This enables the leader to deny any involvement and be able to blame an employee who does make a poor decision. Actually the decision can be the right one but without support from coworkers the employee will be hung out to dry. Without a corporate vision (direction), objectives (goals), standards and values, the employees are left to enact their own personal objectives, perceptions, beliefs, values, etc. Companies that lack leadership tend to be wastelands for people who are goal oriented. Even the overachievers are left to overachieve in so many directions that they burn out or give up.

Employees in an organization without a clear vision and objectives learn not to spend too much time or energy on any one objective as the objective can change at any moment depending on the whim of the boss. They learn that when there is no direction, any direction will do as long as it's the direction the boss is going in at that moment. They learn not to stick their neck out and offer solutions because even if you did get approval they would not likely be given the time or resources to complete it as there are seemingly always new problems to fix which take priority. Managers learn that it is easier and best just to say "NO" when asked about new opportunities or possible changes. A "Yes" one day from the boss will undoubtedly be a "No" on another day and the manager will be blamed for any decision. The status quo becomes the objective.

How do you know you are in this type of organization?

  • Recurring problems and issues
  • Employee conflict
  • Inconsistent product and/or service delivery and support
  • A lack of employee accountability and responsibility
  • A culture of "NO"
  • Slow or no growth
  • High employee turnover
  • High client and partner turnover
  • High failure rates
What do employees learn?
  • Not to stick their neck out
  • Band-Aid it and continue on
  • Do enough to get by
  • Bide their time until another opportunity comes along
Companies without effective leadership typically have employees who have no real responsibility or accountability at all. The most basic decisions are made by the leader and sometimes decisions are just avoided to maintain the status quo. If this sounds like your company you can be reassured knowing that many companies share the same symptoms.

I've personally been in an organization that had 7 layers of management, none of which was accountable as the person at the top made all the decisions. The managers could only point fingers up and down the line and the employees who were ultimately held responsible for any problems were the front line staff. The turnover rate for front line staff was over 40% and senior managers seemed proud of that fact. The statistic justified their belief that they just couldn't find good people. None of the 7 layers of management recognized that high staff turnover was a symptom of poor management. The managers were only accountable to being liked by their leader.

So how can you become an effective leader? Define how big, how much and where you want your business to go and what values and standards you want your business to embrace and deliver. The answer to these questions will become the corporate vision and objectives that you communicate to your staff.

To better understand this let’s separate the role of leader from the role of manager and the tactical or technical roles. The leader's role is to communicate a bold and compelling vision of the future, spotting opportunities and threats, considering "what if" scenarios and ensuring the company’s future viability. The manager’s role is to organize and coordinate, building the systems and processes to achieve the vision and objectives.

Many business owners and managers state that having control over decisions was a primary reason for starting their business or taking management positions in the first place. When they finally create that opportunity for themselves, meaning their own business or attaining a leadership position, they realize that control over decisions or direction is too overwhelming or that they are unprepared for the responsibility. Effective leadership is apparent as the followers are simply following. The followers all move in the same direction at once creating a dynamic that is exponentially greater than any individual. These productive people typically are passionate about, and believe in, what they are doing. The passion comes from a belief in where they are going and what they are achieving together collectively .

So, to answer the question posed by the CEO, I would recommend that the CEO has 3 options:
  • Learn how to be an effective leader

  • Hire an effective leader

  • Promote one of the 2 productive employees to leader

All other solutions will lead to continued problems in the organization.

Dave Soteros provides executive coaching services to start-ups and fortune 500 companies.

For more on Leadership and Management insights please stop by his blog at


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