In the November 6 issue of The Wall Street Journal (page B1), there was an article by Erin White and Gregory Zuckerman titled “The Private Equity CEO,” which explored how life for a CEO changed when a company went from being publicly held to being owned by private equity investors.
What caught my attention was this excerpt:
“Mr. Bilborough [the CEO of privately held Generation Brands] says that one of his biggest challenges is motivating employees amid uncertainty. Most companies controlled by private equity are sold within three to seven years. Senior executives receive equity, which can be lucrative. But middle managers and lower-level staffers typically don’t get stock. ‘You’re trying to lead an organization when everybody knows we’re going to be sold,’ said Mr. Bilborough. ‘It just hangs over them like a cloud as a constant distraction for people.’”
Exactly!
Whether it is in client companies or in consulting firms, management is always trying to get people to do the things that are good for the firm, but mutual suspicion about incentives and motives can destroy all of these efforts. When seniors and juniors (management and employees) have very different vested interests and incentives, the juniors really begin to question whether everyone’s on the same side.
They begin to ask, “Is management making decisions because it’s good for the company, or because it’s good for them?” They go on to ask themselves, “Should I commit my efforts to doing what’s good for my firm, or should I worry about myself?”
By the way, don’t think that I’m talking only about “them.” These tensions apply to all of us, even if we manage only a small project team. They apply even if we don’t manage anybody, but just have to collaborate with others on a project or across departments. People will always be asking of management (or you) two questions: What time frame is being used for decisions? Are we in this together or not?
The time frame issue is crucial, because it’s hard to get your team to accomplish things that take time if they think that you, their manager, is acting with a shorter-term horizon.
This is not a matter of morality (like some Animal Farm chant of “long-term good, short-term bad”). It’s OK to be either at different times, but you need to be honest and self-aware about which game you’re playing. Managers need to learn that they rarely fool anyone else about their time frame, and it’s dangerous to try to fool themselves!
We are all tempted by (and seek) immediate gratification and doing things that pay off in the short term. Underinvesting in the future is something we all do as individuals and human beings, not just as organizations. But we must not be naïve as leaders. The people we lead will never have a longer-term horizon than we do.
Similarly, we’ve all probably done something, sometime, that’s caused us to be seen as looking out for ourselves rather than the team. But — bet on it — this shows immediately. And if you, the manager, are not credibly putting the team first, neither will anyone else.
Putting all of this together, there could be four outcomes for how people view you as a manager (or leader):
(1) You’re in it for yourself and want a quick payback for your efforts. (2) You’ll “play ball” as a team player as long as the team is working, but will bail out if it stops working for you. (3) You’re in it for the longer term, but you’re still primarily focused on yourself. (4) You’re both a team player and in it for the long haul.
Which way do your people see you? And what do you think your effectiveness will be under each of these circumstances?
Note that these questions don’t necessarily have to have permanent answers. People will come to a judgment about which game you are playing this time.
In a recent article (on my Web site) called “Accountability: Effective Managers Go First,” I argue that the best managers work hard to remove the distance between themselves and those they manage. By this phrase, I don’t mean that you have to get “buddy, buddy” with those whom you manage, but, if you do want them to pull out all the stops on behalf of your team, then those being managed need to feel that the manager is part of the team, not separate from it. Managers and the managed need to be “on the same side.” All too often, they are not.
If the people you are trying to manage think that you’re not on their side or are only trying to meet short-term goals, you’ll have a lot less ability to influence them. You’ll be able to manage them because they (temporarily) want to keep their jobs, but it’s unlikely that they are going to put their hearts and minds into your team’s activities. You’ll get today’s sausages made and shipped, but you won’t be going anywhere new as an organization.
David Maister is widely acknowledged as one of the consulting world’s leading authorities on the management of professional service firms. He can be reached at david@davidmaister.com.
Comments
Comment #1
(Posted by Charles H. Green) Unrated
David is not only right, but very on point.
The long-term vs. short-term issue is getting way more ubiquitous. Employee turnover is up. Shareholder churn is up. Customer turnover is up. Financial instruments are stripped and re-constituted and tranched, so that home equity and credit card interests can be sold. Residential property is bought to be flipped. Companies are bought to be flipped.
Most unsettling, however, is a tendency to link more and more detailed and short-term metrics to "shareholder value."
When this mania for dissection and immediacy confronts the human relationships of business, it is fertile ground for cynicism.
This is not a plea for Ludditism, but a simple reminder that people respond better to being treated as ends in a relationship than as means to a transaction.
David is quite right to ask us to be more clear. There's nothing wrong with treating someone like an object, in prniciple: what's wrong is treating them like an object and lying about it. And even if you're truthful about using people, they'll respond a lot less positively than if you actually give a damn.
Right on David.
Comment #2
(Posted by steve) Unrated
form is messed up, can't rate it.
good article..... u.s. managers have forgotten this.....
Comment #3
(Posted by Steve Player) Rating
Leaders actions wlways speak far louder than their words.
Are We on the Same Side by David Maister
In the November 6 issue of The Wall Street Journal (page B1), there was an article by Erin White and Gregory Zuckerman titled “The Private Equity CEO,” which explored how life for a CEO changed when a company went from being publicly held to being owned by private equity investors.
