Companies & Industries

Are You an Enlightened Leader? Here's a Litmus Test


Are You an Enlightened Leader? Here's a Litmus Test

Photograph by Altrendo/Getty Images

Executing effectively isn’t rocket science. Whether you have graduated from a well-regarded MBA program or studied the time-tested classic Execution by Larry Bossidy and Ram Charan, the answer is simple: You need a workforce that feels respected and appreciated.

The evidence of failure is all around: Chief executive officers are routinely ousted because they fail to produce promised results; a merger falls apart; a product launch does not live up to its hype; or a technology never goes mainstream. Sure, other factors may come into play, but if you dig down, you’ll find a direct line between effective (or ineffective) execution and employee satisfaction (or dissatisfaction).

Successes, however, are inextricably linked to the folks on the front line—your workforce. Here are a few essential points to consider:

Lack of insight
Abercrombie & Fitch’s (ANF) CEO was recently criticized for being out of touch with both employees and customers. Shareholders, too, were up in arms about his insensitive remarks. How can you expect employees to perform well when the organization’s leader insults potential customers?

The right balance
Successful leaders pay attention to the details without losing sight of the big picture. You need to trust your team, but let them know you ultimately accept responsibility. Delegating isn’t a license to pass the buck. One of the many problems that plagued the launch of healthcare.gov was too much delegation. If your troops know you are willing to fall on your sword for them, they’ll go to war for you.

Take care of your employees
People want to feel appreciated, not taken advantage of. At Dillard’s (DDS), employees were paid an average of $10.72 per hour, while the top three executives raked in $54 million. The point is not whether those executives deserved their salaries; what matters is the perception by employees that they are being taken advantage of. When someone feels that way, it’s hard to give your best—and morale suffers. Take care of your employees, and they’ll take care of you: Pay them a decent wage and provide good benefits. Most important, respect them.

Unclear metrics
Before you launch a new initiative, have a clear understanding of how you will measure success—and stick with it. If a change in direction is required, communicate that quickly. If it fails, be sure you incorporate the lessons learned next time around.

When Starbucks’s (SBUX) strategy to expand a few years ago did not meet expectations, its reputation suffered. Founder and CEO Howard Schultz turned that around by refocusing on the brand’s hallmark: delivering an outstanding customer experience. Starbucks’s turnaround was successful, in part, because Schultz was clear with employees about the shift in strategy.

Sending the wrong message
Layoffs often breed animosity among employees, and even customers. They can destroy the morale of remaining employees who are expected to pick up the slack—often without additional compensation or other benefits.

While the CEO and Wall Street may celebrate lowering expenses, there’s a good chance many of the employees who were laid off took a great deal of knowledge and expertise with them—something often not appreciated until it’s too late. Productivity among remaining employees often stagnates as they grapple with new responsibilities and an often steep learning curve.

Market forces can change quickly and even the most prudent decisions may backfire; nonetheless, layoffs should be the last resort. Having experienced several mergers, acquisitions, and the resulting devastation that can occur when organizations “restructure, transform, or streamline,” it became apparent to me that the full cost of layoffs is often miscalculated. Before taking that drastic step, make every effort to find alternatives such as work sharing, moving nonessential personnel off-site, hiring freezes, unpaid leave, and wage and benefit cuts. Also, always cut consultant or contractor fees before eliminating employee positions.

The time has come for corporate boards to not only reward executives for improved financial performance but also for employee retention and morale, both of which are measurable—and both of which hit the bottom line.

Eich is president of Eich Associated, a leadership and management consulting firm. He is the author of Real Leaders Don’t Boss and Leadership Requires Extra Innings.

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Companies Mentioned

  • ANF
    (Abercrombie & Fitch Co)
    • $41.59 USD
    • -0.17
    • -0.4%
  • DDS
    (Dillard's Inc)
    • $115.7 USD
    • 0.16
    • 0.14%
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