What’s eating leaders for breakfast

Robert Hall, an author and consultant and recent speaker at the Relational Thinking International Conference, has recently published a fascinating article in the Huffington Post about Relational Leadership. Entitled ‘The Follower Revolt: What’s Eating Leaders for Breakfast?’, he writes about the growing distrust from followers in leaders and the increasing incidence of followers rejecting leaders whom they are no longer willing to follower.

He recommends three steps for leaders in the light of this developing distrust:

Relational risk – name it

Leaders must begin by identifying and naming Relational Risk as a new, compelling component of risk management. Often the signs are present but ignored. The New York Times reports “Volkswagen’s command-and-control structure probably made it difficult for Winterkorn to escape responsibility, even if no direct culpability. Critics long faulted a company culture that hampers internal communication and discourages mid-managers from delivering bad news.” Millions of customers threatening class-action lawsuits were a product of a leader’s unidentified Relational Risk.

Of the University of Missouri, the New York Times wrote, “Wolfe didn’t do himself any favors. A former corporate executive, Wolfe possessed a command-and-control style that didn’t jibe well with campus life. And he clearly didn’t know how to respond to the protests.”

Relationship crisis does not devolve from a single incident but from a series of episodes where relationship damage accumulates because it is ignored or handled ineffectively – incubating risk.

Spineless acquiescence or reactive overkill are traps for leaders who fail to name and respect relational risk.

Relational leadership – lead it

Relational risk demands relational leadership. I define Relational Leadership as the ability to deliver and sustain productive engagement with widely different groups. It means being engaged with your employees, your customers, your shareholders and especially with outspoken groups that feel powerless – that may seem oppositional or even hostile. Yesterday’s wisdom was: Hold your friends close and your enemies closer.

Today’s wisdom requires leaders with the humility to recognize that those who oppose them constitute one of their most valuable resources. Competitors push leaders to perform better; philosophical opposition introduces differences that may reveal blind spots or opportunities for innovative improvement. Critics push them to get clearer on what they believe and why. A recent study found that highly regarded CEOs were six times as likely to be viewed as humble when compared to least-highly regarded CEOs.

Leaders coddled by uncontested power are often unprepared to lead during a relational crisis. In fact coddled leaders often unwittingly make coddled followers stronger. Today like never before, in both selecting and developing leaders, Relational Leadership skills must be a priority for successfully addressing this new risk of highly critical, sometimes entitled followers.

Relational metrics – measure it

The growing relational risk that leaders face is changing the metrics that boards, key shareholders and regulators pay attention to. I recently spoke at a Relational Risk conference at Cambridge University in England with attendees from about 20 countries. A fellow speaker addressed a growing movement requiring more integrated reporting from public companies beyond just financial information to include metrics regarding social and relational capital – a Relationship Scorecard, you might say. This broader reporting is now mandated in Brazil and South Africa and voluntarily being addressed in 20 percent of the FTSI 100 companies in the UK. Governments and shareholders recognize that financial reporting is a pretty narrow, after-the-fact instrument for understanding and anticipating relational risk with customers, employees, communities and the environment.

Instituting a Relationship Scorecard to track and understand the strengths and weaknesses of key constituent relationships is an important step to proactive Relational Leadership.

If we want a more accountable, less-entitled society, it must start with leaders competently and plan-fully addressing follower dissonance.

Simply blaming the “victims” will not be a viable strategy. In medicine it often leads to medical malpractice. In leaders it risks leadership malpractice. Leadership is similar to medicine where what most often gets you sued is not substandard medical treatment, but callous relationship treatment.

The risk of followership revolt is real. Self-righteous dictators, Pharisees, and command-and-control leaders are no more attractive than self-righteous followers. Relational leaders must be the grown-ups that engage proactively, productively, and relationally; anything less fuels revolt. Relational leaders will view these challenges as opportunities to strengthen leadership, build relationships with dissident groups and grow their relational currency. The time to build Relational Leadership is not in the midst of a crisis – it is now!”

You can read the full article here.

Photo:  Timothy Wolfe, who resigned as President of the University of Missouri amid a race row at the University. (By UKMC from Flickr)

Mind the Wage Gap

What do you think is the pay differential between the CEO of a company and its lowest skilled worker? And what do you think should be the pay differential?

In research published last November in ‘Perspectives on Psychological Science’, Kiatpongsan and Norton investigate what pay differentials people desire and whether these differentials are consistent among people from different cultures. Gretchen Gavett has written a helpful article summarising their research. You can read it here.

Norton says:

“My coauthor and I were most surprised by the extraordinary consensus across the many different countries in the survey. Despite enormous differences in culture, income, religion, and other factors, respondents in every country surveyed showed a universal desire for smaller gaps in pay between the rich and poor than the current level in their countries.”

What is also extraordinary from the research is the sheer size of the pay differentials, for example around 350 to 1 in America. And most people are completely unaware of the size of the staggering pay gap.

Gavett writes in her article:

“We’re currently far past the late Peter Drucker’s warning that any CEO-to-worker ratio larger than 20:1 would “increase employee resentment and decrease morale.” Twenty years ago it had already hit 40 to 1, and it was around 400 to 1 at the time of his death in 2005. But this new research makes clear that, one, it’s mindbogglingly difficult for ordinary people to even guess at the actual differences between the top and the bottom; and, two, most are in agreement on what that difference should be.”

Indeed, Norton says: “The lack of awareness of the gap in CEO to unskilled worker pay — which in the U.S. people estimate to be 30 to 1 but is in fact 350 to 1 — likely reduces citizens’ desire to take action to decrease that gap,”

Over the years Relational Thinking developed a tool (Relational Proximity® Framework) that can help people, organizations and businesses to measure the closeness and health of their relationships. For this it looks at five factors or dimensions of a relationship: the fourth of these is power. While inevitably in companies some people will have greater power than others, the goal should be parity, so that people will be treated fairly and with mutual respect and understanding. As the research shows, everyone agrees that the huge pay gaps of the kind we see today are unfair. There is no parity between the low paid in the company and CEO at the top.

In ‘Transforming Capitalism From Within’, Jonathan Rushworth and Michael Schluter write “If, for instance, senior executives are paid more than 100 times the amount paid to lower-paid employees, which is not unusual, this can be seen as suggesting that the lower-paid employees have a worth to the business of less than one percent of the highest paid employee. Is it fair that the contribution to the business of the lower-paid employees is regarded as so insignificant as to be valued in this way?”

There are also wider relational consequences outside of the workplace  in undermining social cohesion. The highly paid will live in different locations, use different means of transport and different shops and go to different countries on holidays.

Higher rates of remuneration are certainly justified to reward greater responsibility and experience, longer working hours and often longer training, but there should be a regard for others. The key is not the same pay, but fairness.

In ‘Transforming Capitalism From Within’, the authors argue for a Relational Business Charter, which sets out ten principles which in a practical way provide a framework to indicate whether companies are being managed and operated in a Relational manner in the interests of all stakeholders. The sixth principle is that “[t]he dignity of all employees is respected by minimising remuneration differentials within the business”.  They recommend a maximum pay differential of 1:20, so that there is parity within the company. And as Kiatpongsan and Norton’s research  shows, most people would agree.

What are the pay differentials in your organisation? How can you encourage greater parity within your organisation? How can you improve its relationships?

To find out more, you can buy Transforming Capitalism From Within as hard copy here or here as an ebook.

Photo: Mind the Gap by gmacfadyen.