Tuesday, November 6, 2007

Leadership and Character

"Leadership means setting an example. When you find yourself in a position of leadership, people follow your every move." - Lee Iaccoca

When it comes to judging our leaders, we people aren't nearly as stupid as we look. (Well, let's keep politics out of this discussion for now).

We look at our leader's actions. If they do not match his words, then we lose respect and trust. Without those, a leader can only lead by coercion (with threat of unemployment if we do not obey, for example). Many leaders continue at their posts for many years without trust or respect, ruling instead by coercion - but when you lose the hearts of your followers, you will not get their best efforts; instead, they'll do only what is required to keep getting that paycheck. Your leadership effectiveness suffers drastically.

I know a CEO whose organization looks to be going union. I'll write more about that in the future. For now, let me say that I also know quite a number of his employees, from top to bottom in his company.

Why are they choosing to unionize? One piece of the puzzle is this: he reduced employee pay dramatically and laid off a large number of his workers, claiming that the business was in dire financial straits. His remaining staff is now suffering because they are under-staffed, forcing them to serve frustrated customers with below-par resources.

This CEO successfully turned his organization around - so successfully that his board awarded him and his top leaders generous bonuses... which they accepted.

On the one hand, one can argue that if your board offers you a bonus, you should take it! Why would someone turn down money?

On the other hand, I'd argue that if pleading poor and slashing employee payroll gets you that bonus, then you have no business taking it.

If your coffers are empty, they're empty, and concessions are reasonable to demand. But if those coffers subsequently fill up enough for your bonus, then they should be full enough to pay your remaining staff on par with their previous level, too. Isn't that reasonable? Is that too idealistic?

Leaders deserve a bonus for performance, and integral to that performance is making sure that the employees are taken care of first. Morale, though harder to measure than net operating income, is no less important a yardstick of successful leadership.

Let's compare this to Lee Iaccoca at the helm of Chrysler in its direst days. He went hat-in-hand to ask Congress for a bail-out, to prevent his company from going out of business. To prove his commitment and contrition, he accepted only $1 as salary until the company was able to repay its debts.

His board would surely have paid him handsomely, as the leader and eventual savior of their company. But he wouldn't have it - once Chrysler was financially healthy, Iaccoca was paid quite well for his work. But not until it was fixed.

Lee Iaccoca didn't ask anyone what he should do about his pay; he knew what the right thing was, and he did it.

Let me restate my conviction: leadership is character. A true leader, a person of character, is rare indeed - and worth paying a fortune. This CEO is not.