Fear Kills Yet Again

CEOs: what would you do if you learned that one of your staff is a tyrant, a leader who instills so much fear in his reports that they refuse to even suggest new ideas for discussion?

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So I'm meeting with an operations executive who is only one removed from the CEO of an Enterprise-sized company. They're on a first-name basis (we'll call the CEO John), and said exec. has regular access to the big guy.

While this company is doing well, I was invited to this particular meeting because the company is clear that it can do better. As you can imagine, I'm present to give some advice.

Prospering company wants to up its game. So far so good.

Our conversation leads to the sales organization. The exec says this:

"I've been in operations for years. Variable compensation for our sales force is always our biggest headache. We spend much more time on it than on anything else."

"Why is that?" ask I.

"No matter what we do, the sales reps and their managers figure a way to game the system. So we tweak it, and fiddle with it, and sometimes drastically change it so we can stay a step ahead."

Just to be clear, I say, "So you create incentive pay schemes to inspire your sales force to sell more, and instead a lot of what they do is monkey with the scheme. If I hear you right, they're putting a lot of effort into maximizing their pay at the company's expense, rather than maximizing their sales as you intended."

"Exactly," he confirms. "Which means that we have to go back and close the loopholes they've found, and then they end up finding new ones."

There's nothing new about this at all, as I'm sure you appreciate if you've either been in sales or helped lead a company. So we discussed his very-common predicament, and I brought up Daniel Pink's book, "Drive," which lays out quite nicely the way some companies have embraced the notion that people - even sales people(!) - do not work primarily for money, and so there are much more effective ways to inspire them to perform than through incentive pay.

"Oh, that's a great book," he agrees. "Really terrific."

We discuss some of the finer points and examples at length. It's clear he's read it thoroughly, even discussed it in detail with his co-leaders.

"Have you considered moving from commission pay altogether," I ask, "and trying something possibly more effective to get your sales force to perform the way you tell me you'd like them to?"

He blanches. I swear to God, this grown executive's face loses color at my question!

"If I suggested to John that we take incentive pay away from our sales force, he'd can my ass in a heartbeat!" he told me. "And he should!"

STOP RIGHT THERE!!

This post isn't about incentive pay as a motivating force behind driving desired behavior at work. This post is about fear at work. Specifically, the fear of a top executive to even mention an idea to his CEO that he honestly thinks might work. Remember, he'd told me that himself; we had discussed Pink's book in detail, and he agreed with it.

Leaders, is this you? Are you John, the CEO of this mammoth company? Do you pay your executives hundreds of thousands of dollars a year to help you run your company, then instill in them such a fear of your disapproval that they're unwilling to even suggest new ideas?

The Twentieth Century is over. Fear is just plain inefficient. One leader cannot have all the right answers - and if he does, why does he bother to employ intelligent, experienced, competent adults to help him run his business?

I hope you agree that this company is in trouble. And I don't blame the executive at all, not even one iota.

The fish stinks from the head, as the Jewish saying goes. CEOs, if your company stinks... you are the head. You are the problem. Unfortunately, I don't see much this CEO can do short of firing himself - and I'm not too optimistic about that.

It's a new century, my friends. To compete, we've all got to start obeying a new set of rules. Removing the cause of fear is paramount among them.