A tyrant makes statements like, “These people are: entitled, lazy, ignorant, and clueless about how to manage gross profit. I need you to define what we need in the next manager and to show us how to turn this team around.” The owner had is game face on as he told me this. I suppose it was to impress on me the weight of the job he was asking me to do – it wasn’t working. He wanted to hire our company to define what he needed to do to turn around his struggling sales team. I wasn’t impressed nor was I sure I wanted the contract.
A Pollyanna makes statements like, “I have the greatest team in the world – they are awesome world champions.” However, when I asked why the owner needed us to do employee assessments he simply stated that he needed help. I learned that their profits were non-existent and their cash flow was inverted. I did not learn this from the owner – I stumbled on it when interviewing the office manager. A Pollyanna boss can’t see problems nor do they see reality. They simply wring their hands and hope that everything will be ok.
A leader makes statements like, “We have had a successful track record. Our team is mostly working well and they are engaged, disciplined, and learning. However, I need you to coach Sue (not her real name); she is struggling in her performance. She has the skill sets, I was sure we made the right hire but for some reason she has withdrawn and become unresponsive. I will have to let her go if she doesn’t change but I need another perspective to let me know if I missed something.”
Listening to managers, owners, and C-suite positions talk about their employees tells a lot about an organization. Why bad bosses who describe employees as incompetent ignoramuses don’t correlate the fact their description of employees is a direct reflection of their lack of skill as a leader is always amusing to me. On the other hand, watching great leaders set high expectations and live those expectations out in front of their team is always inspiring to me.
Over the years I have observed five principles that make or break the success of a company in the short-term and the long-term that are directly related to the behavior of a leader. Look at the principles below and then think about your own behavior as a leader or manager. What does it take to change these insights from a negative to a positive outcome?
Principle 1 – how you talk about your employees is a direct reflection of your skill as a leader. If they are bad employees you are a bad boss. The fact is that great leaders hire great people. They inspire them to carry out outcomes they could not do alone by giving them a sense of purpose higher than the job itself and authenticating their contribution and their skills. I found that companies who think highly of their employees not only develop them consistently but also show sustained success over time. Conversely companies that have a low opinion of their employees typically make bad hires and struggle from financial crisis to financial crisis with poor performance over time.
Principle 2 – employees behave in direct correlation to what you believe about them. If you believe they are successful they will act that way. If you believe they are losers they will act that way. This insight was first found in education then also seen in business. It is called the Pygmalion effect and is used by great leaders to improve overall performance.
Principle 3 – employees know no more about the business than you are willing to teach them. Complaining about ignorance when you do not train and develop your employees is ridiculous. In one company we asked cost accounting to give us an itemized cost of each product. We put together an excel sheet for their sales team from which they could calculate the impact of discounts on their gross profit while paying attention to the product mix and overall revenue targets. We trained the sales team in how to use this sheet and trained the sales manager to reject discounts that did not show the impact on gross profit based on the excel sheet. Not surprisingly the team loved this. It helped them feel they had more control over their own sales tactics. The managers were shocked at this new-found enthusiasm and business acumen. However, the wish to know how to exercise business acumen existed all along. No one ever trained the team or gave them the data they needed to make smarter decisions.
Principle 4 – the harder you work to control your employees’ behaviors the greater the cost of labor you will generate. Extrinsic motivations generally work to cut employee motivation, remove employee engagement, and drop employee commitment – yet it is the first tool every bad manager uses to assert their superiority. Recognize the difference between algorithmic tasks (established instructions down a single path) and heuristic tasks (tasks requiring experimentation to find a novel solution). The point is that reward/punishment motivations work ok with algorithmic tasks but they are devastating in heuristic tasks because they often yield unexpected reactions and impaired performance. Great leaders understand this difference and use it to leverage the intrinsic motivations of their people. The point is that people are intrinsically motivated purpose maximizers not extrinsically motivated profit maximizers in their performance and decision-making. In contrast I worked with one client that defined every job as an algorithmic task. He could not (or would not) see that the tighter he pulled the noose around his people the more inefficient they became. This showed up in increasing sick days, constant internal complaints, losses due to flagging quality, higher rates of turnover, and increasing number of legal actions against the company by the EEOC. His response to these negative results was to lower the boom and get people in line. How do you think this is working?
Principle 5 – the cost of a bad hire is about 5 times their annual salary over the first year of their employment. Bad hires ruin great teams. It is especially devastating to performance when a manager protects a bad hire or truly incompetent employee or even promotes them to avoid unpleasant conflict. In one company I watched an incompetent and poor performing employee run the company with the threat of law suits and complaints to the EEOC. There was ample evidence to terminate the employment and to discipline the manager of that department for failure to discuss flagging performance issues. Instead company penalized top performers for questioning why this incompetence was allowed to remain. In another company we tracked the lack of discipline of poor performance to an affair the owner had with one female employee. She had effectively been paid to remain silent, she did not have to show up to work, and she hated everything about the company. (The company went under about six months after this all came to light.)
What needs to change in your leadership behavior? What kind of boss are you? Change is possible though not necessarily painless. Do you see the need to change? Then act quickly and decisively. Hire a coach (and in some cases legal counsel) to avoid impulsiveness and violation of labor laws. Be honest with yourself, are you a tyrant, Pollyanna, or leader? What kind of leader do you want to be?