Leaders do not always act rational. Or they act rational in a way that seems irrational to others. Especially in situations of crisis personal interests change quickly, and often the good of the organisation is scarified for personal protection or gain.
I knew directors at Chemviron Carbon who, in the face of an approaching crisis, hired extra staff only because they knew that soon they will be asked to reduce overheads and make redundancies, and by making those redundant they just hired they got away with not touching those who had been there before, effectively cementing their status quo and ending up with exactly the same number of people they had before. This is irresponsible, despicable gambling with human chess figures.
I knew of directors at 4711 who, in the face of an approaching crisis, had to make suggestions about cost savings and instead of making real contributions, though about ideas that would sound great on the surface but could never been implemented. Their motivation was protect their fifhdoms and not end up with smaller budgets, less staff and reduced importancte.
I knew of directors at Chemviron Carbon who deliberately hired the second best person for a job because the best one was “too ambitious” and was perceived a threat to those less qualified but yet above him in hierarchy. If you deliberately hire the second best and deprive your company of the best resources because of personal interest, that’s criminal.
All these behaviour patterns seem totally irrational to an outsider who doesn’t see the underlying motivation of the leader (who, in this examples, hasn’t deserved that title). It is therefore vital for any controlling organ such as a non-executive board or a CEO to understand what drives their leaders, especially in a crisis, and to to take them out of control temporarily and replace them with a neutral, external crisis manager who has no personal interests and no political agenda and acts for the best of the organisation without regard for personal gain or loss.
The problem is, many organisations still feel bullet-proofed, even if they are already bleeding to death. Human nature promotes denial. Military analysts had long predicted a possible Japanese attack on Pearl Harbour, but America fell victim to complacency and megalomania and denied such a possibility. Over night, the opinion of many so called “experts” changed dramatically.
Similarly sad was the shock the US suffered on 9/11. America felt bulletproof because of its superior military power, but simply did not see that that an envelop with Andrax or a few suicide bombers could make their airplane-carriers and nuclear missiles redundant. Over night, perception changed.
Just because something is too horrible to even imagine does not mean it will not happen.
Many commercial organisations are in a similar situation: They are highly vulnerable and perhaps disaster is already knocking at their door, yet they still think they are bulletproof. Why? Because the worst case scenario is so terrible that they simply deny the possibility that it might happen. They are blind and think that history can be projected into the future: “It has worked all the time in the past, so it will too work in the future”. But as every stock investor has learned, past performance is no guarantee for future performance. Personal power is not stronger than life’s reality.
How to change that and make managers see the risks? By changing views and perspectives. If you can’t see around the corner, change your position. Step a few yards aside and all of a sudden you can see what’s around the corner. For an organisation, this means to bring in external views, new ways of looking at things, adding external experience that does not exist in the current structure.
But this leads to the next problem: Why change a system that benefits yourself and do something that seems to disadvantage you? This is were we need a paradigm shift. As long as leaders are rewarded with bonuses based on 12 weeks results, all they will ever do is thinking in 12 weeks horizons. They give a damn investing in new technologies that saves 20% of the corporation’s cost over the next 10 years but will reduce the cash flow position next quarter. They give a damn about hiring extra staff to deal with high growth if this means that profits take a short term dip because hiring means recruitment and training costs.
Only if leaders start being rewarded for long-term performance and when leaders are rotated and taken out of a job after a number of years regardless of their performance, their motivation to protect and cement their status quo will become superfluous and attitudes will change.
At this moment, most leaders treat their organisation like a tradesman bending and forming a work piece until it fits him, while what we need is a culture where leaders treat their organisations like gardeners, creating an environment where organic growth and development can take place, fertilising and enabling that organism that’s called a company.
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