We are to rejoice evermore. There is no sadness in the spirit. It is happy and free, for it knows neither depression nor confusion, and we belong to It, are in and of It. – Ernest Holmes
Today we conclude our week of reflection on leadership as a tribute to the Veterans Day Holiday. We will return next week with a continuation of the analysis we began on effective decision making.
Until then … we hope you enjoyed our Veteran’s Day Celebration Series!
(Original post December 2012)
Executives and business thinkers believe that ethical competence in leadership simply translates as leaders having good character. An ethical leader with the right values can set an example for others and resist temptations that may occur. Recent portrayal of business executives however, is often viewed as greedy, competitive and only concerned with compensation. Many of us agree that the basics of capitalism, which include personal gain associated with risk and rewards are ethically acceptable concepts.
Business leaders have become the focus of criticism however, through the revelations of numerous scandals, bad behaviors and outrageous compensation packages. As a result, organizations are under extreme pressure and unparalleled scrutiny to reframe the criteria for what constitutes ethical leadership with emphasis on: (a) behavioral accountability, (b) decisions that affect the enterprise, and (c) establishing reasonable executive compensation – an intensely complex topic that in its simplest terms focuses on the alignment between executive pay and performance. Adding to this is the pay gap between boss and workers that has stretched to such levels, that many find difficult to comprehend as ethical. While incentives intrinsically motivate top executives, arguments and ethical controversies about high sums paid for executive salaries are rarely discussed.
The Ethical Leadership Factor
The demand for ethics in leadership is rising, yet resources remain low as evidenced by the global recsession. This generation of leaders seem equipped to navigate rather than inspire and guide. One such instance is former Home Depot CEO, Robert Nardelli who came under fire for his management style as well as for the emormity of his pay package. His methods and actions during his reign at Home Depot were considered unorothodox which indicates a lack of emotional intelligence and ethical incompetence. He was described as an individual who radiated enormous energy that always had a need to be front and center.
This attitude wore on the board and employees after a while (Grow, et al., 2007). His specific job-centered and production-oriented militaristic approach reflected a leadership style identified as the behavioral theory which is based on production and task centered outcomes (Baack, 2012). For example, Nardelli implemented systems of operation that concentrated on the technical aspects of production goals, keeping costs in line, following schedules and did so in a warmongering manner using fear and intimation as primary tactics for motivation. Although this method of political intelligence can be effective, most would agree it is an old fashioned mode of leadership that wreaks havoc with employee motivation and participation.
The former Home Depot CEO’s militaristic leadership style created a climate of anxiety and coercion as the norm. It was a style he adopted as former head of General Electric that was enforced by hiring as many people from the military as possible to maintain this atmosphere. Although this behavior is not considered unethical, his drill sergeant method of management and philosophy along with his command and control style was viewed by the company’s civilian subordinates as counterproductive in an era where collaboration trumped intimidation in getting the job done (Firms of Endearment, 2006). According to insiders, Home Depot staffers never really embraced his leadership style and everyone’s eyebrows were raised by the staggering compensation package he received, especially given the significant loss in profits Home Depot suffered after his taking the helm.
The Incentive Factor
The emblematic philosophy of nearly every board in America states that executive performance and pay should be aligned. The market for executive labor is highly compliant in paying more for an executive whose performance delivers great results over one who does not; naturally for these reasons incentives matter. Top executives are intrinsically motivated by incentives because they serve as a powerful messaging and focusing device (Ferracone, 2010). The inherent focus is whether there are too many instances when executive pay is high but performance is low.
Within six years of Robert Nardelli’s dynasty, for example, anger stirred among shareholders who saw almost no gains in their share value. Their frustrations were exacerbated by his compensation package that included more than $200 million in salary, bonuses, stock options, restricted stock, and other perks (Grow, et al., 2007). Retired Exxon Chairman, Lee Raymond was reportedly paid $51.1 million in 2005; the equivalent of $141,000 a day, which translates to nearly $6,000 an hour. His salary came with a generous retirement package of nearly $400 million including pension, stock options and other perks like a $1 million consulting contract, two years of home security, personal security, a car and driver, and the use of an Exxon corporate jet for professional purposes. Exxon however, defended Raymond’s compensation as justified, noting that during the twelve years he ran the company, Exxon became the world’s largest oil company shooting their stock up 500% (Hall & Lipman, 2008). Nevertheless, as a result of exuberant compensation packages, executive salaries are now being examined more thoroughly and ethical controversies about the high sums paid are being addressed.
Close Examination of Compensation Plans
When establishing pay plans, experts ask the following questions to help determine the best executive compensation practices: (a) what is considered fair pay; (b) how much is enough; (c) how much is too much, or too little; (d) what constitutes good performance; (e) how much is good performance worth; and (f) how to maintain a fair relationship between performance and pay, particularly when the market for executive talent is tight. According to Robin Ferracone (2010) in her book Fair Pay Fair Pay, median executive compensation is not an issue. Her analysis takes into account inflation and the increase in median company size over a period of time and concludes that real size and performance adjusted CEO pay, has increased approximately 1.6 times since 1995. This implies a compound annual increase in real performance-adjusted CEO pay of 3.6% (Ferracone, 2010). However, as more executive pay packages like Raymond and Nardelli are exposed, executive compensation practices are under the radar from activist shareholders, corporate governance rating groups, the media, and lawmakers for active change and reformation.
Recommendations for Pay Reform
The public controversy over executive pay has resulted from the failure of compensation committees to use better practices in establishing CEO recompense. It also constitutes a failure to adequately explain to shareholders both the methodology used and the growing competition for executive talent with private equity funds (Hall & Lipman, 2008). To bring balance to this subject, board of director compensation committees for both profit and nonprofit organizations, are formulating executive compensation reformation plans that provide comprehensive compensation guidance for all board members.
Restoration in equity to the system is imperative. Some strategists believe that better practice tactics should include thorough strategic plans of the company as well as the year-to-year budget policies as factors in the routine operations of compensation committees to help establish goals and objectives for ideal executive performance. Many theorists believe problems with compensation are symptoms of a larger issue of ethics. If leaders are to be encouraged to perform the role of company stewards, then ethics and ethical leadership skills belong at the heart of compensation discussions. Organizations that are recognized and established as ethical institutions set the stage for effective compensation plans.
The political intelligence displayed by Home Depot’s former CEO limited worker freedom in the workplace and created an atmosphere that lacked joy and pleasure. As a linking pin to employees at lower levels, this style of leadership encourages a certain disconnect within the organizational troops. Although a method that adheres to strict codes of conduct is an excellent discipline, in today’s American society, Nardelli’s outmoded approach left an unethical impression on many who worked for him.
For those of us with a deep appreciation and respect for the many who enroll in the military, where a strict disciplinary code is required, especially in combat situations, as civilians we enjoy a more relaxed environment. In other words, most individuals outside the military will not easily become “an organizational fit” working at an institution spearheaded by a leader with militaristic qualities like those Nardelli displayed. Most organizations thrive with individuals whose leadership skills are more in alignment with a leadership approach that centers on the following five basic personality traits: (a) extroversion, (b) agreeableness, (c) conscientiousness, (d) emotional stability, and (e) openness (Baack, 2012). Nardelli, however, displayed a leadership style that was not the touchy-feely type, nor was he open to evolving from a task oriented strategist to focus developing his skills as a relationship focused tactician. He either was either unable or unwilling to adapt and match his leadership style to the atmosphere created in the Home Depot arena described earlier.
To sum up, while high salaries and incentives intrinsically motivate top executives, leadership behavior (especially with the presidential elections drawing near) is now being more closely scrutinized to reveal those who express management styles that lack ethical qualities and emotional intelligence. Although a militaristic approach to leadership is not considered unethical, Nardelli’s governance style was ultimately a model that did not work successfully for the home improvement industry. In addition, the fairness of his compensation package was highly criticized especially since under his leadership the company yielded considerably lower profits. His inability to self-examine, reassess and make changes in his leadership style to blend with his new environment ultimately brought forth an untimely end to his reign at Home Depot. In the meantime, as we witness the current presidential debates, the jury is still out on what constitutes ethical leadership and the parameters that define it.
“The love of what you do, combined with your belief in what you do, will not determine your success. It will determine how hard you will work and how dedicated you will be to achieving it.” ― Jeffrey Gitomer
For more information on Media Magic’s digital publications, or to purchase any of our Business Life audio book titles, please visit amazon.com’s new feature called “Author Central” to view:
Baack, D. (2012). Organizational behavior. San Diego: Bridgepoint Education, Inc.
Endearment, F. o. (2006, March 29). Home depot CEO Bob Nardelli’s militaristic management style out of date. Retrieved from Firms of Endearment: http://firmsofendearment.typepad.com/srm/2006/03/home_depot_ceo_.html
Ferracone, R. (2010). Fair pay fair play (1st ed.). San Francisco, CA: Jossey-Bass Publishing.
Hall, F. L. (2008). Executive compensation best practices (1st ed.). Hoboken, NJ: John Wiley & Sons, Inc., Publishing.
Multiple. (2007, January 14). Out at home depot. Retrieved November 28, 2012, from Business Week: http://www.businessweek.com/stories/2007-01-14/out-at-home-depot
Wishing everyone an enjoyable Veteran’s Day Holiday!
(Original Post May 2015)
On Monday we posted a blog that examined various leadership styles and discussed whether being liked is more important than achieving end results. Today we continue this analysis by identifying different kinds of leadership styles. When I conducted research for my ebook, Ethics in the Real World (2013) I discovered that the ability to distinguish and administer information from perceptions, stimuli, and emotional cues defines a person’s emotional intelligence (EQ). The EQ of a person plays a key role in the development of an individual’s ethical perceptions in both their personal and business relationships, particularly for those with constant social interaction.
A person’s cognitive ability, or beliefs and perceptions about any given situation, for instance, can influence the way they judge, react to, and respond to their environment (Berry, 2013). I also learned that a person’s EQ plays an important role in how individuals discern satisfaction in their lives and create career experiences based on their own values in addition to what that person perceives is acceptable or unacceptable behavioral choices.
According to Jeffrey Glanz (2002), many studies have been conducted to determine the best style of leadership, and the majority of researchers concluded that the most effective leadership style is one that exhibits varying degrees of the following virtues: (a) courage, (b) impartiality, (c) empathy, (d) judgment, (e) enthusiasm, (f) humility, and (g) imagination (Glanz, 2002). In other words, these are the components that are at the core in the development and cultivation of successful leadership styles.
On Friday we will conclude our blog posts on effective leadership styles as a conclusion to our Veteran’s Day Holiday tribute. Until then … enjoy your holiday!
“Man is made by his belief. As he believes, so he is.” ― Johann Wolfgang von Goethe
Berry, M. A. (2013). Ethics in the Real World. USA: Kindle Direct Publishing.
Glanz, J. (2002). Finding your leadership style. Alexandria, VA, USA: Association for Supervision and Curriculam Development (ASCD).
This week, as proud citizens of the United States, we will once again take the time to celebrate and reflect on the many services provided by our veterans as we honor all the great she-roes and heroes that have served this beautiful country. In honor of these heroic leaders, we decided to re-post our favorite blogs on the topic of leadership for the Veterans Day Holiday this week. In the meantime, we will continue the discussion we began on strategies for effective decision making next week.
Until then … we hope you enjoy this week’s blogs!
(Original post, December 2012)
The nature of today’s business world produces constant change. Strong leadership expertise is required to handle potential problems with intelligence, diplomacy, and efficiency. Every leader exhibits talent in a different way and no one way of leading is better than another. In fact, everyone can lead to a certain degree but not all leaders are effective (Glanz, 2002). Generally, visionary leaders that demonstrate a charismatic style tend to experience higher levels of success. This class of strong leader copes with change, delivers guidance, and institutes direction by communicating a vision that generates enthusiasm. These transformational leaders propagate trust, encourage development leadership skills in others, exhibit self-sacrifice and serve as moral representatives. They focus on objectives that transcend their own immediate needs (Baack, 2012). In addition, they increase levels of fulfillment and performance in their organization by formulating and communicating a vision while building a bond with their staff. They are able to combine personal capability, group skills, managerial aptitudes and motivational proficiency with individual humility and professional determination.
Many studies have been conducted to determine the best style of leadership. Most conclude that effective leaders exhibit varying degrees of the following virtues: (a) courage, (b) impartiality, (c) empathy, (d) judgment, (e) enthusiasm, (f) humility, and (g) imagination (Glanz, 2002). The best leaders continue to re-examine outdated business paradigms to maintain smooth operations, high production rates, while diligently working to keep morale up. In his book, Leadership Aikido, John O’Neil (1999) introduced six concepts inspired by the martial arts tradition that stresses victory without harm. The six master practices he outlines that enable leaders to assess and develop their potential are:
He believes through the elements of aikido, leaders are able to identify and overcome five inner enemies that impede progress: (a) failure to grow emotionally; (b) failure to make creative decisions; (c) failure to empathize; (d) failure to manage ego; and (e) failure to overcome alienation and boredom (O’Neil, 1999). This perspective embraces personal power and energy as vital traits to effective leadership.
The bottom line is, individuals are not required to be well liked to become effective leaders. What is important, however, in an effective leader is their ability to garner high levels of trust and respect. The truth is, leaders are not always in a position to produce satisfaction in the workplace because not all policies and regulations enforced are popular. It is imperative, nonetheless, that leaders are accepted and command respect in their leadership role. To sum up, if a leader is not acknowledged or venerated on some level, it will be difficult to achieve objective goals and high levels of success in their position.
“What each of us believes in is up to us, but life is impossible without believing in something.” ― Kentetsu Takamori
For more information on Media Magic, our digital publications, or to purchase any of our accelerated learning Business Life titles, please visit:
Glanz, J. (2002). Finding your leadership style. Alexandria, VA: Association for Supervision and Curriculum Development (ASCD).
This week our posts are focused on the concept that the decision-making process is a skill. Once we accept this premise we can understand better, that this skill, like any other we focus on, can and usually will improve. For instance, as one gains more experience making decisions, one becomes more familiar with the tools and structures that are needed for effective decision-making. Plus, the most perceptive decision makers have discovered that the ability to develop better decision making skills, also helps improve self-confidence.
On Wednesday, our discussion left off with the six essential steps in the decision-making process. Today we take a closer look at each of those steps:
1. Establishing a Positive Decision-Making Environment
When a group of people gather for a specific reason, at times the discussion tends to lose focus because of each individual’s different experience of it. This occurs when the decision-making environment hasn’t been established. In order to establish a decision-making environment it is essential that everyone involved comprehend what the issue is before preparing to come to any conclusions. This would include an agreement on the objective, keeping focus that the issue at hand is being evaluated honestly, and complying on the process to move the decision forward.
Another clear component that must be addressed are the key interpersonal considerations at the onset. For example, have all the stakeholders been included? Do the individuals involved in the decision-making process engage in respectful communication to one another? Are the participants engaging in active listening? Are they able to keep an open mind and encourage the flow of an honest discussion? After all, if only the strongest opinions are heard, or worse, the group is being controlled by a gatekeeper, there is a risk that not all the best solutions will be considered or available to reach a goal that has a fair outcome for all involved.
2. Generating Positive Solutions
Another essential component of developing an effective decision-making process is the ability to generate as many good alternative solutions as sensibly possible. If the first solution is decided on and implemented quickly for the sake of simplicity, then there’s a good chance that even greater alternatives may be overlooked.
3. Evaluating Alternatives
This stage is more often than not the most time-consuming part of the decision-making process. The negative aspect of exploring alternatives can sometimes result in a decision never be made. Therefore, in order to make this step efficient, the decision-makers must be clear about the factors they want to include in the analysis process.
To make the best decision possible, the smartest leaders consider the following three key factors as essential components in the consideration process:
Making a decision can be both stressful as well as exciting. To help leaders deal with their emotions as objectively as possible, it is recommended they use a structured approach in the decision-making process. This requires looking at what is most important in making a good decision. Leaders that take the time to think ahead and determine exactly what will make the decision “right” can significantly improve their results and decision accuracy.
5. Checking the Decision
The most successful leaders remember that some components about the decision-making process are not objective. For example, some believe that in addition, their decision has to make sense on an intuitive instinctive level as well. So far the decision-making process has been based on the perspectives and experiences of the leaders involved. It is at this time the decision-makers must also evaluate whether the decision has validity and make sense. Furthermore, if the decision being contemplated is a significant one, then it’s also worth auditing to make sure that assumptions are correct and that the logical structure used to make that decision is sound.
6. Communicating and Implementing
The final stage in the decision-making process includes communicating the decision and developing a system to implement it. There are leaders who choose to force their decision on others by demanding acceptance. This is a, “because I said so approach” which can result in negative outcomes. Alternatively, leaders are in a better place to gain acceptance by offering an explanation as to how and why their decision was reached. For most decisions – particularly those that need participants to agree before implementation – the most effective strategy is to explain the decision-making process. In other words, leaders that include a plan which discloses how the decision was arrived at and offer steps to effectively implement that plan, are more likely to achieve successful outcomes. This is because people typically respond positively to a clear plan – one that reveals what to expect and what is required.
Well, that’s a wrap for this week’s posts! We will continue this discussion next week by taking a closer look at the importance of decision-making and being assertive with them in the workplace. Until then … have a great weekend everyone, and keep working on improving your organizational management skills!
“Believe in yourself! Have faith in your abilities! Without a humble but reasonable confidence in your own powers you cannot be successful or happy.” – Norman Vincent Peale
For more information on Media Magic, our digital publications, or to purchase any of our accelerated learning Business Life titles, please visit:
Welcome back to our discussion this week on the decision-making process. Today our post contains a survey that was designed to help assess how effective our decision-making skills are by identifying some of our strengths and weaknesses. Let’s dive in, shall we?
Grab a note pad and for each statement, choose the number that best describes your decision-making process. Please answer the questions authentically (rather than how you think they should be answered), and don’t be concerned about whether the answer seems to score a “right or wrong” answer. Try to remember, there are no right or wrong answers. Once you’ve answered the questions honestly, add them up to reveal the total score:
____ Evaluate the risks associated with each alternative before making a decision.
____After I make a decision, it’s final – because I know my processes strong.
____I tried to determine the real issue before starting the decision-making process.
____I rely on my own experience to find potential solutions to a problem.
____I tend to have a strong “gut instinct” about problems, and I rely on it in decision-making.
____I’m sometimes surprised by the actual consequences of my decisions.
____I use a well-defined process to structure my decisions.
____I think that involving many stakeholders to generate solutions can make the process more complicated than it needs to be.
____If I have doubts in my decision; I go back and recheck my assumptions and my process.
____I take the time needed to choose the best decision-making tool for each specific decision.
____I consider a variety of potential solutions before I make my decision.
____Before I communicate my decision, I create an implementation plan.
____In a group decision-making process, I tend to support my friend’s proposals and tried to find ways to make them work.
____When communicating my decision, I include my rationale and justification.
____Some of the options I’ve chosen have been more difficult to implement than I expected.
____I prefer to make decisions on my own, and then let other people know what I’ve decided.
____I determine the factors most important to the decision, and then use those factors to evaluate my choices.
____I emphasize how confident I am in my decision as a way to gain support for my plans.
____ Total Points
What the Test Scores Reveal:
Those with scores of 18 to 42: are individuals whose decision-making process hasn’t fully matured. They have difficulty being objective enough and rely too much on luck, instinct, or timing to make sound decisions. These people can improve their decision-making skills by focusing more on the process that leads to the decision, rather than on the decision itself. What they will gain by doing so is creating a solid process they can use to face any decision with confidence.
Those with scores of 43 to 66: are individuals whose decision-making process is okay. These people have a good understanding of the basics, but now need to improve the process and become more proactive. It is recommended they concentrate on looking at the many different options available, then developing a plan to help them discover and identify any risks with consequences that can act as obstructions to their goals. The better their analysis, the better their decision will be in the long-term. It is also recommended they focus specifically on the areas that reveal their weakest points, to help them implement more effective systems that will work across a wide variety of situations.
Those with scores of 67 to 90: are individuals with an excellent approach to their decision-making process. These people know how to set up the process that will generate a variety of potential solutions. There they analyze their options carefully and make the best decisions possible based on what they know. As they gain more experience, they use that information to evaluate their decisions, and continue to build their skills. However, these individuals are also asked to be mindful of the areas where they didn’t score higher points to evaluate how they can use this information to help improve their process.
That’s it for today. Next time we’ll take a closer look at the following six themes that were used to develop today’s survey:
Then we will examine the data to reveal how successful leaders utilize these basic components to help structure and improve their decision-making systems to achieve positive outcomes.
Until then … Keep improving your organizational management skills!
“Life has many ways of testing a person’s will, either by having nothing happen at all or by having everything happen all at once.” – Paulo Coelho
Happy Halloween and Nevada Day to everyone celebrating! We’ll be back next week with new posts! Until then … stay organized!
Halloween is an opportunity to be really creative. – Judy Gold