Extract from “The 3 Sins of New Leaders”:
My father always insisted that our business was successful because of good systems. Sure, we put people right up front, but only because we built the right systems for them to succeed. Not too much, not too little. Just enough to ensure that everyone had the right amount of freedom to rock out.
The leader's responsibility is to clear the way for their people. That means getting out of the way and enabling them to shine. It entails empathy and execution in equal measure, a continuous balancing of the needs of the individual and the requirements of the whole. It is marrying the right person to the right role and reinforcing the company's DNA - its values -constantly and unrelentingly.
And it needs to be done in the context of conflicting demands from other stakeholders. The workforce is just one stakeholder in the company’s ongoing success. There are also suppliers, clients, society at large, and the almighty shareholder. This last group wants profit above all other things, but they also want them consistently and sustainably.
It’s a hell of a balancing act.
What often happens - and that's when the cracks start to show - is that leaders start looking for short-term wins with the full knowledge that it will damage long-term relationships.
The incentive structures for executives often play into this: I can fire a bunch of people, shut down a whole lot of product lines and factories, and show incredible short-term profits because I haven't lost all my revenue (yet) but I’ve drastically cut costs. That means I make my bonus, and that's ok because next year I plan to move on to a role somewhere else and do it again, leaving someone else to pick up the pieces.
There is a temptation for new leaders to do this: To overhaul processes for efficiency, to focus on drastic cost-cutting by slashing the workforce, or to irresponsibly raise the price of the product. Of these three actions, only a process focus has any real long-term merit in terms of the way the team will respond to you in the future.
But the pressure is there, and the obvious moves (the moves supported by shareholders, who call the shots) are available. How does one resist the pressure, and focus on value creation instead of value-destroying actions?