Paying the Price of Leadership

Episode #385 Paying the Price of Leadership

NO ONE TALKS ABOUT THE COST

There are three hidden costs of leadership that nobody warns you about. Everyone loves talking about the upside of leadership: status, money, influence… but nobody talks about what it costs, and unless you’re willing to pay that price, leadership is always going to feel difficult and lonely.

In this newsletter, I give you four invaluable tips to make it easier for you to pay that price.

I’m following a bit of an American football theme this week. In Monday’s Moments With Marty episode, I recounted the story of an NFL kicker who got the yips. He completely lost his confidence, and simply couldn’t perform when it mattered most.

In this episode, I’m going to focus on a speech by the coach of the iconic Georgia Bulldogs football team, Kirby Smart. Smart talks about the three costs of leadership. No one really talks about them, but great leaders understand these costs and they’re willing to accept them.

The first cost is: “You will have to make hard decisions that negatively affect people you care about.”

The second cost is: “You will be disliked despite your best attempts to do the best for the most.”

And the third cost is: “You will be misunderstood and you won’t always have the opportunity to defend yourself.”

For each of these costs, I’m going to interpret it for the business leadership context and give you some examples of how it generally plays out.

Then, I’ll give you a few tips for how to embrace the cost so that you willingly pay the price of leadership upfront rather than trying to bargain or avoid it.

HARD DECISIONS

Let’s look at the first cost: You will have to make hard decisions that negatively affect the people you care about.

In the context of business, every time you make a tough call, this happens, by definition. You should care about all your people. That means caring enough about them to push them to be successful in their role; caring enough to help them grow; and caring enough to tell them the truth.

Sometimes, that will negatively affect them, which can make a decision that would otherwise be pretty straightforward, appear to be very difficult.

Let’s look at a couple of common examples. There are a range of routine decisions that have to be made at every level, and every one of these decisions has winners and losers:

• The decision to promote the best person into a role will negatively affect the second-best person, whom you might respect, value, and care about;
• You might decide that, despite the fact that you have some really good people in your team, none of them is quite ready to step up to the next level, and you bring someone in from the outside;
• Then there’s the bigger decisions like canning a project that’s become commercially unviable when you know that people will lose their jobs;
• Or the decision to outsource a function that’s no longer core to the business;
• Or to automate a manual process that was being done by some of your people.

ONE OF MY HARDEST DECISIONS

I once had a senior person working for me who was simply outstanding. She was two levels below me and her direct manager, who reported to me as part of my executive leadership team, advocated strongly for her.

As soon as the opportunity arose to test her at the next level up, I jumped on it, making her a direct report to me, and part of the executive leadership team. She acted in that role for a number of months while I conducted a process to make the appointment permanent (I was slow rolling the process so that I had plenty of time to assess her readiness for that C-level role).

I worked really closely with her, and I gave her frequent and targeted feedback, as I did with all my execs. The more time I spent with her, the higher I rated her, and my respect for her increased every week.

But, despite that, I knew that she wasn’t quite ready for the exec level role. I knew that, in time she would be enormously successful, but not now.

I wrestled with promoting her and seeing if she could grow into the role. But apart from the potential impact on the business, I knew that it wouldn’t be in her best interests either: it would most likely damage her confidence, potentially setting her career back by years.

So I made the decision to move her back to her previous level and bring in another executive from the outside. I made that decision knowing that it would negatively impact someone I cared about.

I’d like to tell you that this story ended well… and it would have, except that I completely cocked up the external hire by bringing in a complete dud. This would have felt like twisting the knife for the person I chose not to promote.

But despite my recruitment screw up, it did turn out to be the right decision for the individual that I decided not to promote. When I ran into her a few years later, after I’d moved from my role, she told me that while she didn’t understand it at the time, it was the best thing that could have happened to her.

She went away and worked on the areas that I was coaching her to develop. She’d grown in capability and confidence and had eventually been promoted to the executive level… and she was hitting it out of the park.

BEING DISLIKED

The second cost of leadership is: You will be disliked despite your best attempts to do the best for the most.

Let’s put this into the context of business. Not everyone is going to like you, by definition. I used to say at CS Energy that at least 5% of my people, on any given day, hated my guts… for no apparent reason

But that’s okay: you’re not going to like everyone who works for you either. What you will have is this annoying, incessant voice in your head, telling you that you want people to like you.

That voice is going to encourage you to not hold people to the standard that you’ve said you’re setting for the team; it will encourage you to let people work on things that they want to work on rather than the work that you know the company needs.

This is why the mantra of all good leaders is: respect before popularity.

Let’s just look at a couple of examples:

The higher up you go, the less likely it is that you can please everyone. Just think about the number of stakeholders that you have to deal with as a CEO.

First of all, there’s your employees: they want to be looked after, they don’t want to be asked to do anything unreasonable, and they want to be paid well.

Then, there’s the leaders below you: they want to have the freedom to lead and to choose their own settings for how much performance pressure they bring onto their people.

Then, there’s your shareholders: they want you to make money by growing both dividends and long-term company value. In other words, maximizing TSR (total shareholder return).

And of course, there’s the communities you operate in: they want all the benefits of the economic growth that your company brings, without any of the impacts or externalities that come with operating in their neighbourhood.

That list of stakeholders goes on.

How likely is it that you could chart a course that would satisfy all of those competing interests?

It’s impossible…

You will be disliked…

So, you’d better commit to doing the best for the most, because at the end of the day, that’s all you have: the knowledge that you were true to yourself, and to the job that you were being paid to do.

I KNEW I WOULD BE DISLIKED

In a number of executive roles that I took on, I had to implement widespread, high-impact culture change. The businesses were massively underperforming and fortunately, I am most comfortable in a turnaround role: that’s where I’m at my best and it’s the situation most suited to my capabilities and style.

But that means upheaval; it means disrupting the status quo, and I knew it was impossible to do this without disenfranchising the bulk of the frontline workforce.

I was also disrupting every leader in the business by requiring them to lead differently.

So, in terms of being disliked, this was pretty much a sure thing.

As a side note, if you think you’re changing a culture and you’re not meeting fierce pushback, passive-aggressive resistance, and even some outward animosity, then nothing’s really changing. If the bulk of people accept it willingly, then you can bet your bottom dollar that nothing different is happening. No noise equals no change! But, I digress.

I’m a big believer in the premise of a fair day’s work for a fair day’s pay. But in many of these companies, after years of entitlement, union militance, and weak leaders turning a blind eye to individual behaviours, there is nothing fair about the relationship between the work and the pay.

They all had pretty decent conditions. One particular group of workers had a roster that scheduled them for, on average, around 34 hours a week, and their average annual income was well over $200,000!

This was something I couldn’t change, but with conditions as favourable as those, I at least expected them to take accountability for the outcomes that they were supposed to be delivering.

The pushback I got, though, was bordering on the irrational: they were going to fight any and every change to the death.

I must say, I went through leaders faster than I had at any other point in my career. Even the shareholders and board weren’t always in my corner, because sometimes life got really uncomfortable for them, too.

When I left that role, a longstanding lieutenant who was there from the start said (but of course not to my face), “I don’t think anyone is going to miss Marty.”

Well, that was a sure sign that I had paid that price and done the job I needed to do. I did the best for the most, because I wasn’t afraid of being disliked.

BEING MISUNDERSTOOD

The third cost is: You will be misunderstood and you won’t always have the opportunity to defend yourself.

In the business context, often when you make a decision, there are many reasons why you can’t explain how you arrived at that decision: perhaps there’s an individual privacy element; perhaps you’re contractually bound by something that’s commercial-in-confidence and, quite often, it’s simply because you can’t explain everything to everyone (if you did, you’d never get anything done).

But in business, when your people don’t have the full picture on something, they tend to fill in the gaps with their own narrative. They’ll actually make things up to possibly explain your actions, and they’ll even ascribe intent to those actions, ruminating about why you might have done something.

In leadership, you have to expect to be misunderstood.

One classic example of this is, when you have to terminate an employee for misconduct. The company may reach a settlement with the individual to exit them from the business and agree to a set of conditions that each party signs up to.

Commonly, these conditions would have clauses like non-disclosure: that is, neither party can talk about the details of the agreement. Also common in these situations is a non-disparagement clause, so neither party can speak negatively about the other party.

The individual may have done something that any reasonable person would consider to be unacceptable, but because you can’t divulge exactly what happened, people will find it easy to fall into the narrative about the uncaring company terminating a hardworking but helpless employee.

You simply won’t have the opportunity to defend that decision, and the rumour mill is going to wind up to fill in the gaps.

A HIGH-IMPACT DECISION

One really big decision that I couldn’t explain fully was the decision to terminate a large project that the company had been working on for several years. It was a renewable energy project that was initiated well before I arrived in the CEO role.

But it was doomed from the start:

• The financial modelling was, to be kind, fanciful: the spreadsheets should have been filed under “F” for fiction.
• The technology was highly speculative and the supplier of this technology, who was based in France, simply wasn’t able to deliver on their commitments.

But it was incredibly complex and to the naked eye, things seemed to be going pretty well. Sh!t was getting built, and visible progress was being made.

There were also many high-profile investors and stakeholders who wanted to see the project finished.

But, unfortunately, it was a dog. And eventually, I convinced the board and shareholders that terminating the project was the only sensible thing to do.

When the decision was finally approved, I knew that there was no way I could explain the rationale to everyone: for a start, the terms we struck with our French supplier to exit the project were commercial-in-confidence; then, there was the financial settlement with some of the investors.

The only thing that was fully visible was the commentary in the annual report and the $70 million impairment that the company took on the project.

In the absence of me being able to explain the full story to all the stakeholders, there was a lot of speculation about why the decision was made. Even the media made up some of their own reasons for my decision, and the opportunity for me to explain or defend it was severely limited.

FOUR MENTAL FRAMES FOR PAYING THE PRICE

Let’s talk about how to pay the price. These three costs of leadership are going to be part of any role where you accept the challenge of leading other people. You will have to make hard decisions that negatively impact the people you care about. You will be disliked. You will be misunderstood.

You have to be willing to pay that price. This is a battle that you’ll fight inside your own head, and most people won’t even know that you’re wrestling with it.

I’m going to give you some mental drills that are going to push you in the right direction and make it easier for you to choose to pay the price of leadership. Here are my top four mental hacks.

1. Focus on the result.

Making difficult decisions, being disliked, and being misunderstood are unavoidable consequences of leadership. The only thing you can control is the result.

You’re going to feel the pain no matter what, but if you can focus on the result, doing the best for the most, as Kirby Smart says, you’ll at least feel as though the pain is worth it.

2. Be honest with yourself about your intent.

Why are you making the decisions you’re making? Why are you taking the actions you’re choosing? Is it because they’re the best choices for the team and the business? Or are you just following the path of least resistance?

You’ll gain strength from knowing in your heart of hearts that you’re doing things for the right reasons.

But your brain is a sophisticated rationalisation engine and it’s going to try to convince you to not do anything that puts you at risk of not being liked and accepted.

Being clear, honest, and focused about your intent is going to build your strength and encourage you to pay the price of leadership.

3. Choose your mantras.

I found that having a few mantras was really important to keep me on track. It’s how I learned to push through any rationalisation or weakness that might have tempted me to do the wrong things for the wrong reasons.

If I thought a decision might be unpopular, I would use the mantra, respect before popularity.

If I had to make a high-stakes decision that required boldness, and potentially exposed me to reputational damage, my mantra was, I may as well be hung for a sheep as a lamb.

If I chose to remove any non-performers, my mantra was, I refuse to penalise the many good people in my team just because one person’s choosing not to perform.

And my standard for all situations is, I choose to do the right thing, when it needs to be done, just because it’s right.

Mantras like this are going to help you to focus on the necessity of the outcome, not the noise that the outcome generates.

4. Consider the alternative.

What type of leader do you want to be? What type of leader do you tell people that you are?

The only alternative to making the best decision you can (and paying the price of leadership) is being a fraud.

That’s something your brain can’t talk you out of. You’ll know deep down that that’s who you are. And unless you’re a sociopath, it’s going to eat away at you.

DECIDE TO PAY THE PRICE… TODAY!

The hardest part of leadership most often isn’t the skill and capability aspect. It’s the emotional and psychological impact on you and on others. Deciding to pay the price is an important step in the journey to leadership greatness.

If you don’t put that to bed early, then every single time you have to do something difficult, you’re going to try to bargain with yourself. You’ll find yourself agonising over every single decision.

So, use those four mental hacks to get yourself in the right head space. I can’t promise you that it’s always going to be easy, but I can promise you that it will always be worth it.

If you decide to pay the price willingly, you’ll be surprised how much easier leadership becomes.