Friday, October 9, 2009


There is an article in the WSJ entitled Are Most CEO's "Wusses"? The author explains that being a "wuss" has nothing to do with being willing to fire people for poor performance. Instead, it is not b eing willing to hold employees accountable for their behavior before the poor results register.

To me this is about being a leader and having the courage of your convictions. If all a person does is wait for the poor performance results to show up in the numbers before they take action on an employee (especially an executive), I would argue that by definition they did not lead but rather followed the numbers. Anyone can take action after the fact. A leader is someone who is looking at the quality of the person and the quality of the numbers. We have certainly learned from this recession that very good numbers can precede very bad numbers. This is particularly true if the individual is sacrificing long term value for short term results or taking unusually high risks without the correct risk mitigation steps. This brings us to the courage part of the discussion. It is difficult when an employee is driving strong financial performance, to fire them for bad behavior. It is human nature to not want to risk your own srong financial performance. But that is exactly what a good leader must do.

Holding people accountable for financial results AND proper behavior is a leader's job and key to long term value creation. If an individual is driving strong financial performance but has questionable business ethics the risk is too high that long term they will destroy value. Also, I am a strong believer in the concept of the shadow of the leader. If you say something but do not follow through with action, the bad behavior can spread like a virus through the organization. The opposite is also true. If the leader demonstrates by their actions that their ethics and corporate values are not just empty words, the entire employee base will follow that lead. So you get a bigger benefit than the one employee for which you took action.

If all leadership required was looking at the historical financial performance to determine action, companies could be led by computer spreadsheets. Leadership requires judgement and courage but most of all action. I have heard too many times someone say that they know someone is not exhibiting the right behavior BUT their numbers are great and so no significant action is taken.

Be the courageous leader. Don't be a "wuss".
Until Next Time,

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