Leadership Values in Tough Times: A Litmus Test

A Litmus TestIn the shadows of an announcement of an additional 87 workers being laid off from a local Fortune 500 company this week, I happened upon a rather caustic tweet to the company’s CEO.  In it, the author expressed disgust at the layoffs and corresponding press release, which explained these necessary moves as brought about by expense efficiency efforts to combat an unacceptably high expense ratio and floundering company financials (my words, not theirs).  But it wasn’t the decision to lay off nearly 100 employees (on top of those “lost through attrition”….a poorly spun misnomer at any organization) that bothered the “tweeter,” but rather the exorbitant raises the company’s executives received in the past year.  Quite honestly, it’s a sentiment I share…..

I think back to the federal government’s bailout of AIG several years ago and the uproar brought about by continued payout of huge bonuses to top officials of that beleaguered company.  The explanation offered to the public was that to forego this piece of compensation would result in the loss of many of the senior leaders, those who would flee to “greener” (pun intended) pastures.  I’m sure similar arguments would be posited by this Fortune 500 company.

“But, we can’t afford to lose these executives.”

I’ve never understood that reasoning.  You can’t afford to lose the leaders whose leadership has brought you to the brink of financial disaster????  Who can you afford to lose, if not them??

Instead of holding executives accountable for lack of results, the punishments are pushed downward.  Worker bees lose their jobs, and those who are “lucky” enough to be retained are subjected to stagnant compensation (less than cost of living and/or frozen entirely), increased workload (due to layoffs), reduced benefits, etc.

I’ve always held extreme respect for organizational leaders who, in times of financial crisis, forego their salaries (or bonuses), restructuring and aligning incentives with the actual financial goals of the company.  And we’re not talking about investment income, but those goals tied directly to core operational profit.  Leaders willing to put their money where their mouths are find increasing respect and a sense of “we’re in this together” emanating from their employees.  The leadership values are intense and inspiring.

Those who don’t….well, they also demonstrate their values, albeit in slightly different (and not so inspiring) ways.

2 thoughts on “Leadership Values in Tough Times: A Litmus Test

  1. Trevor this is why I love being an entrepreneur. There is no overlooking the idea that my income, net worth, and success is tied directly to how I lead and influence others. Great thought.

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