Ed Batista

A Reading List for Leaders in a Crisis

1. Responding to the Crisis

How Leaders Overcome Adversity

Engage others in shared meaning. Find your distinct and compelling voice. Put your integrity and values into practice. Grasp the context of the crisis. Tap into your hardiness.

From Peacetime to Wartime

Determination. Persistence. Calm. We need these qualities in our wartime leaders because they must act decisively and with conviction, mobilizing those around them to work together under conditions of great uncertainty while avoiding panic.

When Leaders Break Glass

The leader who never breaks glass runs the risk of missing out on narrow windows of opportunity and being overtaken by fast-moving threats. Sensing when to break glass and learning how to do so with the right amount of force are essential leadership skills.

Compasses and Weathervanes (30 Questions for Leaders)

The question isn't "What kind of leader should I be?" but rather "What kind of leadership is called for at this moment--and am I capable of summoning it?"

2. Supporting Others

Talking with Colleagues About Suffering

A theme in my practice is the leader who's aware or senses that a colleague is suffering and would like to offer support but is unsure how to broach the topic. If you're in this situation, here are some suggestions.

Viktor Frankl on the Meaning of Suffering

Frankl is not denying the grief and rage that spring from suffering and tragedy. He's not "making the best of things." He's not blithely suggesting that "everything happens for a reason." He is encouraging us to acknowledge our grief and rage, and also to see our suffering as an experience in which it is possible to find meaning.

Mourning Ends, Grief Need Not

There's a difference between mourning and grief. Mourning ends, because we have to return to the world, but grief need not, and we can return to our grieving to honor our feeling and our memories of the person we lost at any time.

3. Managing Yourself

How to Fight a Fire (Self-Coaching in a Crisis)

Some situations truly test a leader’s ability to self-coach, to manage themselves effectively while also guiding others. Here are four factors that have helped clients who’ve had to surmount a crisis.

Taking the Leap (Dealing with Risk and Uncertainty)

Rather than minimizing risk and avoiding uncertainty, we’re better served by more effectively managing the emotions that these qualities trigger. To be clear, managing emotions doesn’t mean suppressing them. Efforts to ignore our feelings or pretend that they don’t exist aren’t sustainable over time (and may even exacerbate the very emotions that are causing us difficulty).

The Importance of Slowing Down

The impulse to hurry should often be interpreted as a signal to slow down.

4. On Coping

Pockets of Agency

Even--and especially--as we feel a loss of control in the world at large, we can strive to create "pockets of agency," smaller settings within our lives in which we can "cause or control the movement."

Aggression, Panic, Paralysis, Denial

Some people are moving assertively to win competitions or bolster their status. Some people are overwhelmed by fear. Some people are unable to take necessary action. Some people are acting as though everything will be "back to normal" soon.

Tumbling Down Maslow's Hierarchy

Why does this matter? Because many people aren't moving up the ladder, they're moving down.

The Legitimacy of Loss

People are failing to grieve their losses. In some cases this may simply be a form of denial, but in many others I suspect that people believe that their losses are somehow illegitimate because they are lesser, and that grieving their losses would be unseemly or inappropriate when so many have suffered far worse.

5. Learning from a Crisis

Some Crises Build Character. Others Reveal It.

Something bad happened, and there was a crisis. There are still many risks, and the situation could yet turn worse, but at the moment, catastrophe has been averted. If approached correctly, this can be a fruitful learning experience for you and the people around you. It may seem too early to learn from the crisis, but don't wait too long.

Double-Loop Learning

Double-loop learning occurs when we expand the analytical frame to explicitly identify and then challenge any underlying assumptions that support our stated goals, values and strategies.

6. Other Resources I Recommend

Ten Things To Keep In Mind During A Crisis (Anamaria Nino-Murcia, 2022)

Trauma Stewardship: An Everyday Guide to Caring for Self While Caring for Others (Laura van Dernoot Lipsky with Connie Burk, 2009)

Waking the Tiger: Healing Trauma (Peter Levine with Ann Frederick, 1997)

In An Unspoken Voice: How the Body Releases Trauma and Restores Goodness (Peter Levine, 2010)

 

Photo by AppleDave.

When Leaders Break Glass

We've seen it countless times on fire alarms and panic buttons: Break glass in case of emergency. (The example above is from a San Francisco BART station.) It's a fitting figure of speech for a theme in my practice: When a client feels that their company's established processes are too slow or that employees are addressing a situation with insufficient urgency, they "break glass" and intervene to bypass those processes, generate the requisite urgency, and ensure that the issue is resolved now.

The leader who never breaks glass runs the risk of missing out on narrow windows of opportunity and being overtaken by fast-moving threats. Sensing when to break glass and learning how to do so with the right amount of force are essential leadership skills. But the leader who breaks glass incessantly at the first sign of delay causes other problems.

Such knee-jerk reactivity can affect the company's culture and infrastructure. As I've noted before, "[Leaders] generally have a bias for action, and when they’re faced with a system that seems to be slowing things down, they simply ignore it. This can be a great strength--but it can also be a crucial weakness, particularly when a leader’s reflexive disregard for systems prevents their healthy evolution in the organization at large." [1]

It can also affect employees' sense of responsibility and motivation: "When a leader repeatedly continues to intervene...as an organization grows...people are taught that this is the leader’s job, not theirs, and they fail to develop their own crisis-management and problem-solving abilities... Ultimately even the most intrepid employees can feel demotivated when the leader is always there to 'rescue' them." [2]

So if you're a leader facing this dilemma, what can you do? How do you know when to break glass and when to let a scenario play out? There's no single solution, but there are some practices that can help you find the right balance.

Know Your Tendencies

Most leaders I've worked with tend toward one end of the spectrum or the other. Founders and other early-stage leaders often break glass without a moment's hesitation. Many new ventures are essentially ongoing exercises in glass-breaking, and that attracts a certain personality type.

There are also many leaders who resist breaking glass or find it very difficult. Their training, formative experiences and past successes have taught them to build and rely upon orderly systems. This approach lends itself well to any number of enterprises--often large-scale or highly regulated--which also attract a certain personality type.

The challenge is that companies are dynamic entities, and leaders must be able to adapt their style to suit changing circumstances. As I've written before, "the fluidity and ambiguity that foster creative problem-solving in an early stage startup will feel like chaotic dysfunction at a later point in the company’s development." [3] And the smooth-running corporate machine will run itself right into a ditch if leadership is unable to interrupt established procedures and change course when necessary.

Knowing your tendencies is insufficient on its own, but in the absence of that self-awareness you'll likely stay in your comfort zone, do what's familiar,  and miss opportunities to adapt.

Regulate Your Emotions

Despite the popular conception of emotion as an impediment to rational thought, decades of neuroscience research has made it clear that it's a vital input to the reasoning process. [4] Even so, as the eminent neuroscientist Antonio Damasio has written, and as we all know from personal experience, "uncontrolled or misdirected emotion can be a major source of irrational behavior [and] seemingly normal reason can be disturbed by subtle biases rooted in emotion." [5]

The most relevant emotion in this context is anxiety. It's typically some form of anxiety that either drives a leader to break glass too often or prevents them from doing so when it would be useful. I'm not suggesting that you should discount or ignore your anxiety. Emotion's primary function is to alert us to potential opportunities and threats, and if we lacked the capacity for anxiety we would be in grave danger. [6]

But emotions are data, and like all data they're comprised of both signal and noise. Emotion regulation isn't suppression--that's just pretending that you're not feeling what you're feeling. In contrast, regulation involves assessing what you're feeling and putting it in perspective in order to discern the meaningful signal in the midst of all the distracting noise. In this context, this requires you to sense, comprehend, articulate and express your anxiety in ways that enable you to make a deliberate decision about whether--and how--to break glass. [7]

Learn From Every Situation

Becoming more effective at breaking glass--and knowing when not to--isn't just a matter of advance preparation. It also entails looking back at each situation in order to learn from it. You observed a potentially troubling delay, and you either intervened and disrupted established processes, or you refrained from taking action and let things play out. What happened?

You have to assess not only the benefits of your choice, but also the costs, and here it's important to take others' perspective into account. A theme in my practice is the leader who breaks glass repeatedly and achieves the desired result in a given situation, but over time their employees become demotivated or disaffected. I'm not suggesting that you should feel obligated to tread lightly and avoid giving offense. That will cause you to hesitate at moments when you should act decisively. But there are inevitably costs to breaking glass, and they're not always obvious.

Key factors in this process are a degree of rigor in your analysis, feedback from other stakeholders, and an ongoing effort to hone your intuition. Rigor isn't rigidity, and it may be sufficient to simply ensure that you have regular time for reflection in your calendar. [8] To provide a little more structure, consider keeping a decision journal to track your results. [9]

Soliciting feedback from stakeholders doesn't mean that they get to determine whether your choice was the right one. But in the absence of input from others, you're left with your own perceptions of success or failure, and we reliably deceive ourselves under certain circumstances. [10]

Any given decision to break glass or not will be an intuitive one, made on the basis of imperfect information and dependent on subtle cues, both internal and environmental. If the choice is obvious, it will usually be made by someone more junior than you who's closer to the problem. Intuition isn't some mystical quality--it's merely pattern recognition occurring on the margins of consciousness, as noted by economist and psychologist Herbert Simon:

The situation has provided a cue; this cue has given the expert access to information stored in memory, and the information provides the answer. Intuition is nothing more and nothing less than recognition. [11]

Your task is to ensure that the accuracy of your intuitive judgments improve over time, resulting in fewer false positives--when you broke glass and the costs outweighed the benefits--as well as fewer false negatives--when you failed to break glass but should have.

 

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Footnotes

[1] How to Scale: Do Less, Lead More

[2] Ibid.

[3] Ibid.

[4] Antonio Damasio on Emotion and Reason

[5] Descartes' Error: Emotion, Reason and the Human Brain, page 52 (Antonio Damasio, 1994)

[6] "It is clear that emotion should not be very susceptible to willful control. If we could turn off all our emotions, feel no pain, never laugh, not be gripped by fear or despair, stop being excited, and so on, we could easily end up dead... The priority of emotions over will is important for our survival because it allows our plans to be interrupted by the immediate pressures of reality." (White Bears and Other Unwanted Thoughts: Suppression, Obsession, and the Psychology of Mental Control, page 123, Daniel Wegner, 2nd edition, 1994)

[7] The Tyranny of Feelings

[8] How to Think (More on Open Space and Deep Work)

[9] Shane Parrish of Farnam Street offers a useful set of decision-making resources:

• Decision Journal (Shane Parrish)
• Creating a Decision Journal (Shane Parrish)
• The Ultimate Guide to Making Smart Decisions (Shane Parrish)
• Mental Models: The Best Way to Make Intelligent Decisions (Shane Parrish)

[10] When Heuristics Go Bad (On Cognitive Biases)

[11] What is an "Explanation" of Behavior? (Herbert Simon, Psychological Science, 1992)

 

Photo by Nancy McClure.

Everyone's the Hero in the Movie of Their Life

Much of my work as a coach involves helping clients deal with "people problems." The CEO with an overbearing investor who's full of unhelpful advice. The investor with an egotistical CEO who never listens. The CEO with a defensive executive who calls any oversight "micromanagement." The executive with a distrustful CEO who can't give up control.

In any situation like this it's important to bear in mind that everyone's the hero in the movie of their life. This is true for my clients, and it's true for the people who are causing their problems. It's true for me, and I'm willing to bet that it's true for you. It's true for almost every single person we encounter.

When we're frustrated with someone and unhappy with their behavior, or when we feel thwarted by someone and view them as an obstacle, it's remarkably easy to characterize them as a villain. We imagine that they're intentionally working at cross-purposes to us, and that their primary aim is to prevent us from achieving ours. They're not trying to build anything--they just want to tear us down. There may be some truth to such perceptions, but they rarely encompass the full truth.

Sociopaths exist, but the lifetime prevalence of antisocial personality disorder is estimated at 1 to 4 percent, and most of those people are in prison. [1] It's extraordinarily unlikely that we'll ever interact with an actual villain in day-to-day business life. I've been a coach since 2006, and I've conducted over 8,500 coaching sessions [2], and in all that time only a single client had an antagonist whose behavior was sufficiently irrational and destructive to raise the possibility of sociopathy.

It's true that there are countless zero-sum scenarios in life where there will be few winners and many losers, and the resulting pressure causes people to act selfishly and aggressively. But when we find ourselves in such a contest, it's useful to remember that our rivals and and competitors aren't villains, at least not in their own minds. From their perspective they're the heroes, fighting the good fight, and we may be their villainous adversaries.

So what's happening here, why does it matter, and what can we do about it? Humans are reliably subject to an illusion described by theologian Eric Springsted, drawing upon the work of philosopher Simone Weil: "The illusion is that it appears to us as if we were at the center of the world. We thus appear as terrifically important, and what else is of value can be ranked by its proximity to us." [3]

And as I've written before, "We can readily grasp why evolution has selected for the center of the world illusion--viewing ourselves from this perspective, we typically put our subjective needs and desires above those of others, making our own biological success more likely." [4] It's a short step from there to villainizing others while valorizing ourselves, and thus we are all the heroes in the movie of our life.

This mental model confers some benefits in a competitive environment, but it also carries a number of costs. When we view others' intentions as malevolent and their behavior as hostile, we protect ourselves against potential villains, but we also make it less likely that a mutually beneficial outcome will be achieved. We turn every contest into a zero-sum scenario, often needlessly. We forego the possibility of collegial relationships, even with rivals. And we keep ourselves in a perpetual state of hyper-vigilance and distrust, undermining our own quality of life.

To be clear, I'm not suggesting that we naively assume good intentions or leave ourselves vulnerable to bad actors. My former Stanford colleague Jeff Pfeffer describes a student of his who did just that and came to regret it:

"Why did you do that?" I inquire. "Because," she responds, "I have been taught to build relationships of authenticity and trust at work." When I ask how her efforts went, she comments that of course they didn’t work at all, because her peer was not interested in "repairing a relationship" or behaving with trust and authenticity; he was interested in taking over her team for his own advantage--a not uncommon situation. [5]

But there's a world of difference between allowing ourselves to be taken advantage of and viewing all competitors and rivals as villains. We can protect our interests and work toward our goals in a competitive environment while viewing other parties realistically and dispassionately. Some of them will turn out to be untrustworthy, overly aggressive, even predatory, and we'll need to respond appropriately. But almost all of them will believe that they're the hero, and it will serve us well to bear this in mind.

We craft stories to explain others' behavior, and there's always some missing data left out of our narratives. Further, we take action on the basis of theories and beliefs which rest upon our interpretations of a selective data set, and at each stage of this "ladder of inference" errors may creep into our thinking. Slowing down to consider what data we might be missing or misinterpreting allows us to take a broader view of the situation and act with deliberation, not reflexively. None of this precludes the possibility that we may find ourselves in a hostile conflict. As I've written before,

Sometimes fights have a way of finding us, and sometimes angry people show up uninvited and refuse to leave, and sometimes the circumstances simply dictate a zero-sum struggle. And if we're unable to de-escalate the conflict, unable to find a win-win solution, and unable to turn adversaries into allies, then a successful outcome may depend on our ability to step into the conflict and make effective use of our anger. [6]

 

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Footnotes

[1] Despite the rarity of antisocial personality disorder among the general population, it's estimated that 60 percent of male prisoners have this condition. For more on this topic, see the following:

• Epidemiology, Comorbidity, and Behavioral Genetics of Antisocial Personality Disorder and Psychopathy (Kimberly Werner, Lauren Few and Kathleen K. Bucholz, Psychatric Annals, 2015)
• The epidemiology of antisocial personality disorder (Paul Moran, Social Psychiatry and Psychiatric Epidemiology, 1999)

[2] I hit 8.500 coaching sessions on October 11 of this year, and I wrote this in May: 8,000 Coaching Sessions

[3] "Will and Order: The Moral Self in Augustine's De Libero Arbitrio," page 92 (Eric Springsted, Augustinian Studies, Volume 29, Issue 2, 1998). This essay is also available as a chapter in Springsted's The Act of Faith: Christian Faith and the Moral Self (2015).

[4] We're Not the Center of the World (But We Think We Are)

[5] Leadership BS: Fixing Workplaces and Careers One Truth at a Time, pages 42-43 (Jeff Pfeffer, 2015)

[6] The Value of a Good Fight

For Further Reading

The Importance of Missing Data

Racing Up the Ladder of Inference

The Importance of Slowing Down

 

Photo by Brecht Bug.

Guidelines for Better Virtual Events

We've optimized our space and equipment for virtual work.

We're on time, ready to go, in the right frame of mind. This may entail leaving a prior event early to take a break and avoid going back-to-back.

We keep our cameras on and ensure that we're well-lit. Facial expressions convey meaningful data that's important to share.

We keep our microphone on and don't mute ourselves. Laughter, murmurs, sighs, gasps and other sounds are also meaningful data worth sharing.

We wear headphones or ensure that we're in a private space where the conversation won't be overheard by others.

We turn off all other applications and notifications to ensure that we're not interrupted and our attention remains focused on the conversation.

We don't multi-task. Our phones are out of sight for the duration of the conversation.

We don't use chat or text to hold sidebar conversations with other participants. With the exception of breakout rooms, all communication is equally available to all participants.

We strive to find the balance between leaving space for others to complete a thought, and interrupting to express ourselves in the moment.

 

Thanks to Lisa Stefanac for her insights derived from teaching Interpersonal Dynamics virtually at the University of Chicago Booth School of Business.

Photo by David Fulmer.

The Antidote to "Manager Mode" is Actual Management

This is not the solution.

Management as a concept seems to have fallen into disrepute. In a recent essay Paul Graham described "manager mode" as the unpalatable alternative to "founder mode." But what is Graham really criticizing? He recounts a talk given by Airbnb CEO Brian Chesky:

The theme of Brian's talk was that the conventional wisdom about how to run larger companies is mistaken. As Airbnb grew, well-meaning people advised him that he had to run the company in a certain way for it to scale. Their advice could be optimistically summarized as "hire good people and give them room to do their jobs." He followed this advice and the results were disastrous...

The way managers are taught to run companies seems to be like modular design in the sense that you treat subtrees of the org chart as black boxes. You tell your direct reports what to do, and it's up to them to figure out how. But you don't get involved in the details of what they do. That would be micromanaging them, which is bad.

Hire good people and give them room to do their jobs. Sounds great when it's described that way, doesn't it? Except in practice, judging from the report of founder after founder, what this often turns out to mean is: hire professional fakers and let them drive the company into the ground. [1]

So Graham isn't criticizing actual management. He's criticizing the absence of management, which is an issue I've observed in my practice for years and wrote about in 2022:

It's possible for a less-experienced CEO to get in the way of their senior leaders--but more typically I see the opposite problem. The CEO gives their executives a great deal of space, only to find several months or quarters later that they backed off too far, and some important objectives were neglected and fell into the gap. [2]

Why does this happen? Why do otherwise capable CEOs fail to provide sufficient oversight to senior leaders? And why is Graham's critique of "manager mode" resonating with so many people? In large part because the historic critique of management practices--a decades-old phenomenon, not a recent one--has been so badly misunderstood and so poorly implemented that many leaders are now so fearful of being called a "micromanager" that they fail to provide sufficient management at all.

The concept of "micromanagement" is associated with the work of MIT professor Douglas McGregor, a mid-20th century pioneer in the application of behavioral science to the challenges of organizational life. [3] McGregor offered a compelling critique of the conventional approach to management, which he dubbed "Theory X." He noted that Theory X manifests in both a "hard" version that extracts employee compliance through coercion and threats, and a "soft" version that renders employees pliable by catering to their desires for comfort and security.

While we associate "hard Theory X" with the early industrial era, and it remains common in certain sectors and parts of the world, today we encounter "soft Theory X" almost everywhere in the information economy. But both hard and soft Theory X are rooted in a shared view of human nature: that people are "indolent...lack ambition, dislike responsibility [and] prefer to be led" and therefore must be "persuaded, rewarded, punished [and] controlled" in order to give best effort in pursuit of organizational goals. [4]

McGregor's alternative, Theory Y, takes as its starting point an entirely different set of assumptions about people and their capabilities:

People are not by nature passive or resistant to organizational needs. They have become so as a result of experience in organizations.

The motivation, the potential for development, the capacity for assuming responsibility, the readiness to direct behavior toward organizational goals are all present in people. Management does not put them there. It is a responsibility of management to make it possible for people to recognize and develop these human characteristics for themselves.

The essential task of management is to arrange organizational conditions and methods of operation so that people can achieve their own goals best by directing their own efforts toward organizational objectives.

This is a process primarily of creating opportunities, releasing potential, removing obstacles, encouraging growth, providing guidance. It is what Peter Drucker has called "management by objectives" in contrast to "management by control."

And I hasten to add that it does not involve the abdication of management, the absence of leadership, the lowering of standards, or the other characteristics usually associated with the "soft" approach under Theory X. [5, my emphasis]

It should be obvious that putting these Theory Y principles into practice isn't easy. Finding ways to confront and overcome this difficulty is one of the central themes in my work with clients and in my writing on this site. But compounding the problem is that McGregor's complex and nuanced ideas have been dumbed down to mean "Hire good people and give them room to do their jobs," which often results in "the abdication of management [and] the absence of leadership"--precisely the outcomes that McGregor sought to avoid.

There's a noteworthy and relevant parallel here with the work of Amy Edmondson, whose research has highlighted the importance of psychological safety in organizational life. Sadly, this concept has been misinterpreted to mean, "No one's feelings can get hurt," when it really means "No one should be punished for speaking up and sharing bad news." What has resulted are organizational cultures in which leaders are fearful of being direct and walk on eggshells to avoid giving offense, which are actually psychologically unsafe environments. [6]

So what can we do? First, let's rehabilitate the concept of management. While excessive direction and control on the part of leadership is unlikely to yield the best results from highly-skilled knowledge workers, those workers still need to be managed. They need leaders who are actively involved in the process of determining 1) who will do what by when, 2) to a certain standard of quality, 3) with regular check-ins to assess progress, 4) and the ability to intervene and change course when necessary. That's not "micromanagement"--that's just management.

And yet let's not over-correct in the process. Graham doesn't offer much detail in his definition of "founder mode," other than endorsing engagement with a wide range of employees beyond the leader's direct reports. But he does offer a warning, in his final footnote:

I also have another less optimistic prediction: as soon as the concept of founder mode becomes established, people will start misusing it. Founders who are unable to delegate even things they should will use founder mode as the excuse. [7]

At certain stages in a company's life, the leader must be intensely involved in the most minute details of every aspect of its operations. Some issues will remain under the leader's close scrutiny indefinitely, while others will come and go depending on the context, and the cultivation of the ability to know the difference is an essential leadership skill.

But just as McGregor and Edmondson's ideas have been misunderstood and misconstrued, I fear that Graham's concept of "founder mode" will be misinterpreted as both an excuse and an obligation for leaders to operate this way well beyond the point of diminishing returns, contributing not to excellence, but to under-performance and personal overwhelm. I want to free leaders from the fear of being called a "micromanager" when they're simply providing the necessary elements of management. But I also want leadership to be a sustainable calling, not a ticket to burnout. [8]

 

This is a companion piece to the following:

• "Work Hard or Work Smart?" Is the Wrong Question (2017)
• Accountability and Empathy (Are Not Mutually Exclusive) (2019)
• The Judicious Imposition of Structure (2021)
• Hard Problems in Soft Cultures (2022)

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Footnotes

[1] Founder Mode (Paul Graham, 2024)

[2] Mind the Gap (On Leading Senior Executives)

[3] In The Micromanagement Disease: Symptoms, Diagnosis, and Cure (Public Personnel Management, 2010), Richard White makes a connection between McGregor's work on Theory X and the subsequent emergence of the term "micromanagement." White cites the Oxford English Dictionary's attribution of the first usage of "micromanagement" to a 1975 article in The Economist, but I haven't been able to verify this.

[4] "The Human Side of Enterprise," page 6 (Douglas McGregor, Leadership and Motivation, 1966). This essay is McGregor's best-known and most influential work--it originated as a speech on the Fifth Anniversary of the School of Industrial Management at MIT (later known as the Sloan School) in 1957, and was published in the American Management Association's Management Review in November of that year. It subsequently formed the basis of his 1960 book The Human Side of Enterprise. My citations here are from a posthumous collection of McGregor's work issued by MIT two years after his death to commemorate his contributions.

[5] Ibid, pages 15-16.

[6] Safety Is a Resource, Not a Destination

[7] Graham, 2024.

[8] For more on leadership and sustained excellence:

• Happy Workaholics Need Boundaries, Not Balance
• Open Space, Deep Work and Self-Care
• Investments, Not Indulgences

 

Photo via TomEatonSA.

Why Your Bonus Plan Isn't Working

A major theme in my practice is executive compensation. Like all other professionals, my clients are seeking to obtain a fair return in exchange for their services, and they're also leaders who must offer competitive compensation to attract and retain top talent. In some conversations, we'll focus on a client's own financial requirements, and in others we'll address the needs of one or more employees, or the company's overall approach to compensation

I don't provide comparable datasets or detailed guidelines for compensation plans, although I can refer my clients to people who do. [1] Instead, when working with clients on their individual compensation I'm generally helping them think about their overarching goals as well as their immediate negotiation strategy. [2] And when working with clients on employee compensation, my role is to help them consider the organizational implications of any particular choices they might make.

In the latter case, we often wrestle with the issue of bonuses. Economic sociologist Viviana Zelizer describes the various forms bonuses can take:

Advance inducements to make some major commitments (e.g. enlistment in the army), after-the-fact lump-sum rewards (e.g. veteran's bonuses, retirement bonuses), discretionary rewards by employers (e.g. Christmas bonuses), payments tied to extraordinary individual achievements (e.g. overfulfilling sales quotas, landing a big account, inventions that become company property), payments tied to collective performance (e.g. shares of company profits, group productivity rewards), and more. [3]

Typically my clients hope to use a bonus to motivate and reward behavior that will lead to "extraordinary individual achievement" or yield improved "collective performance," although for a bonus to achieve these goals a set of conditions must be met. And a problem I often see in my practice is a bonus that's offered in the absence of one or more of these conditions, which renders it far less effective as a motivator and yields frustration on the part of employees, management, or both. Why does this happen, and if you're a leader in this situation, what can you do about it?

A Lack of Clarity or Control

The desired behavior must be sufficiently distinct from ordinary activity, and employees must have a degree of control over the intended outcome. The desired behavior need not be novel or innovative--it may simply entail "do more of what's already working." It's also not necessarily the case that management must provide explicit guidelines or instructions--that's rarely feasible with highly-skilled knowledge workers. But employees must grasp that something different is being asked of them, even if it's up to them to determine how to proceed.

Should employees accept that challenge, they must also feel a sense of agency in the process. There has to be a connection between their expenditure of effort and the achievement of the goal. This doesn't mean that employees need to have total control over the outcome or that exogenous factors can't ever get in the way. But the more control they enjoy, the more effective the bonus as a source of motivation. And below a certain level of control, any bonus plan will likely be viewed as unfair and demotivating.

The Wrong Risk Profile

Employees must be comfortable with the concept of variable compensation, and optimally they prefer this to a fixed salary. Everyone's comfort level with risk varies, and this risk profile can play a significant role in our career choices. People with a relatively high tolerance for risk gravitate toward fields that offer variable payouts, largely because they're attracted by the potential upside, but in some cases because they find the uncertainty itself stimulating. They're gamblers, in a sense, and they like to bet on themselves.

This risk profile is common among the entrepreneurs and investors who comprise the majority of my clients, but it can be found in most market-facing fields, particularly sales. (And most of my clients must sell in one way or another, from closing deals to raising funds.) But many people are uncomfortable with risk, and their caution may be heightened when it comes to financial matters. They're less interested in upside potential and more intent on downside protection.

A bonus is of interest to this latter group to the extent that it's merely additive on top of already sufficient compensation--so it may not really serve leadership's goals at all. This isn't to say that bonuses never work outside of sales or similar roles. But the overall organizational culture must foster an appetite for risk, even in conventionally risk-averse functions.

Hedonic Adaptation and Loss Aversion

The bonus must be viewed as a quid pro quo for the desired behavior, not an expected function of employment. But a challenge is that we readily adapt to improved conditions and soon come to take them for granted, a process known as "hedonic adaptation." [4] Even if the above conditions are satisfied, when a bonus is paid out repeatedly it may well come to be expected by employees.

It can help to maintain a clear delineation between base and variable compensation, although even then it's likely that at least some employees will come to view the bonus as a given. When that occurs, the absence of a bonus in the future will cause even greater unhappiness, the result of "loss aversion," our propensity to weight perceived losses more heavily than equal gains. [5]

There isn't really a "solution" to these states, which are deeply rooted in human psychology. But it's important to be aware that they generate continuous upward pressure on ambitious employees' financial expectations, and leaders who fail to prepare for this eventuality are engaged in magical thinking. [6]

On Currencies

Even as I work with clients to help them optimize their compensation plans, I believe it's essential to bear in mind the work of the great 20th century psychologist Frederick Herzberg, who provided a sharp critique of conventional approaches to motivating employees, which he referred to as "kicks in the ass" or KITA. These kicks aren't only negative, in the form of criticism or threats--they can also be positive, in the form of desirable rewards:

Let us consider motivation. If I say to you, "Do this for me or the company, and in return I will give you a reward, an incentive, more status, a promotion, all the quid pro quos that exist in the industrial organization," am I motivating you? The overwhelming opinion I receive from management people is, "Yes, this is motivation." I have a year-old schnauzer. When it was a small puppy and I wanted it to move, I kicked it in the rear and it moved. Now that I have finished its obedience training, I hold up a dog biscuit when I want the schnauzer to move. In this instance, who is motivated--I or the dog? The dog wants the biscuit, but it is I who want it to move. Again, I am the one who is motivated, and the dog is the one who moves. In this instance all I did was apply KITA frontally; I exerted a pull instead of a push. When industry wishes to use such positive KITAs, it has available an incredible number and variety of dog biscuits (jelly beans for humans) to wave in front of employees to get them to jump. [7]

As I've written before,

Herzberg is exaggerating for comic effect here--I don't think he ever kicked his dog. But his larger point holds: rewards like dog biscuits and jelly beans may result in movement, but that's not the same thing as motivation. This doesn't mean rewards are irrelevant as incentives, but a key in deploying them effectively is understanding that there are two different types of motivation, intrinsic (deriving from the work itself) and extrinsic (deriving from by-products of the work or aspects of the environment in which work occurs). [8]

Bonuses and other forms of compensation are extrinsic motivators, which Herzberg called "hygiene factors." His research indicates that inadequate compensation causes tremendous job dissatisfaction, but above a certain amount (which varies for everyone), additional compensation doesn't yield greater satisfaction. I'm not suggesting that bonuses never work--that's obviously not the case. But should you find that your bonus plan is failing to deliver the desired results even in the presence of the conditions described above, it may be worth considering what other "currencies" your employees value that you may be failing to provide. [9]

 

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Footnotes

[1] For more detailed guidance, I recommend these experts on executive compensation:

• Jody Thelander, J. Thelander Consulting and LinkedIn
• Lanelle Santimauro, Compensation Consultant
• Rob James, Pearl Meyer and LinkedIn

[2] Culture, Compensation and Negotiation

[3] A Humbler Bonus (Viviana Zelizer, The Huffington Post, 2009)

[4] For more on hedonic adaptation:

• The Myths of Happiness: What Should Make You Happy, but Doesn't, What Shouldn't Make You Happy, but Does (Sonja Lyubomirsky, 2014): "Human beings have the remarkable capacity to grow habituated or inured to most life changes... What is particularly fascinating about this phenomenon, however, is that it is most pronounced with respect to positive experiences. Indeed, it turns out that we are prone to take for granted pretty much everything positive that happens to us." [pages 18-19]

• The Laws of Emotion, pages 353-354 (Nico Frijda, American Psychologist, 1988): "One must, I think, posit a law of hedonic asymmetry, the law of asymmetrical adaptation to pleasure or pain: Pleasure is always contingent upon change and disappears with continuous satisfaction. Pain may persist under persisting adverse conditions."

• We Won't Be Happy WHEN. We Could Be Happy NOW.

• Pain, Suffering and Hedonic Adaptation

• Stop Trying to Be "Good Enough" by "Getting Better"

[5] For more on loss aversion:

• Thinking, Fast and Slow, Chapter 26: "Prospect Theory" (Daniel Kahneman, 2011)
• Loss aversion (Behavioral Economics)
• Questions about the validity of loss aversion have emerged in the course of social psychology's replication crisis. For example, see Kahneman and Tversky’s "debatable" loss aversion assumption (Jason Collins, 2019). While acknowledging this controversy, I still find the concept a reasonable explanation for otherwise curious behavior.

[6] The Traps We Set for Ourselves

[7] One More Time: How Do You Motivate Employees? (Frederick Herzberg, Harvard Business Review, originally published 1968, republished 2003)

[8] Currencies (On Motivating Different People)

[9] Ibid.

 

Photo by pictures-of-money.

The Ambiguous Role of Executive Chair

According to Spencer Stuart, the outgoing CEO becomes the Board's Executive Chair in over 40 percent of S&P 500 CEO transitions, and I've worked with several clients who followed this path. [1] In these cases everyone agreed in principle that the company would benefit from the continuity afforded by having the former CEO take on this special role, but what this meant in practice was often highly ambiguous.

A degree of ambiguity is inevitable. Any standardized "job description" for such a specialized role will fail to meet a given company's unique needs. (This is also often true for Chief Operating Officers, another role that varies widely from one organization to another. [2]) But too much ambiguity makes it difficult for the parties involved to understand what it will take for this new arrangement to work.

This can pose a particular challenge for the Executive Chair and the incoming CEO. The Chair may have played a large role in recruiting and selecting their successor, and if so it's likely that both parties said the right things about their future working relationship and were reluctant to jeopardize the deal by asking too many inconvenient questions. As a result sometimes very little is spelled out with any specificity before the Chair and CEO must begin working together, which can easily lead to misunderstandings.

I don't believe there are best practices that an Executive Chair must follow in order to succeed, but here are a set of questions that a new Chair and an incoming CEO can explore to arrive at a shared definition of success:

The Executive Chair and the CEO

• What expectations do you both have for this relationship?
• How clearly have those expectations been articulated?
• How often will you communicate, and on what issues?
• What decisions does the Chair expect to be consulted on?
• How does the CEO (really) feel about this?
• What decisions does the CEO expect to make autonomously?
• How does the Chair (really) feel about this?
• What will happen when you disagree?
• How will any disagreements be resolved?
• What role will the Chair play in assessing the CEO's performance?
• If necessary, how open are you to working jointly with a coach?

The Executive Chair and the Board

• What role will the Chair play during Board meetings?
• Will they facilitate or have any other special responsibilities?
• How does the CEO (really) feel about this?
• What role will the Chair play in between meetings?
• Will they hold one-on-ones with other Directors?
• If so, is this an option or an obligation?
• And how does the CEO (really) feel about this?

The Executive Chair and the Business

• What ongoing responsibilities (if any) will the Chair have?
• How much autonomy will they have to conduct these duties?
• How accessible will the Chair be to other parties, such as investors, analysts, or the media?
• What role will they play in those settings?
• To what extent will they be empowered to speak for the company?
• And how does the CEO (really) feel about this?

 

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Footnotes

[1] 2023 CEO Transitions (Spencer Stuart, 2024)

[2] The Mythical COO

 

Photo by Kyle Taylor.

My Appearance with Ryan Hawk on the Learning Leader

On May 1st I conducted the 8,000th coaching session of my career, and my post on lessons learned came to the attention of Ryan Hawk, who's been hosting the Learning Leader podcast for over 9 years. Ryan invited me to join him for Episode 592, and we discussed topics ranging from coaching and leadership to the elements of effective feedback.

• YouTube
• Learning Leader (streaming audio and list of key points)
• Apple Podcasts
• Spotify

Recorded June 6, 2024. Published July 21, 2024.

Your Toughest Critic & Biggest Fan (CEO Self-Assessment)

A theme in my work with CEOs is the necessity of seeing yourself clearly and cultivating the capacity to rigorously assess your weaknesses and your strengths. You have to be both your toughest critic and your biggest fan. This is good advice for executives at any level, but it's particularly important for CEOs because the nature of the role makes it difficult to get candid feedback from people in a position to offer relevant and trustworthy guidance. [1]

The people who have your best interests at heart and who you trust to be candid, such as family and friends, may not be in a position to offer a meaningful critique of your performance. The people who are in such a position, such as Board members, investors and senior employees, may not be candid, or they may have obligations that at some point diverge from your personal interests. And the mentors you relied upon to fill this gap earlier in your career may no longer be available to you. So what can you do?

1. Clarify How You Add Value

You're undoubtedly busy with a great deal to do. And yet in my experience CEOs add the most value and have the greatest impact on the business by leading, not simply by doing. Seeking to add value by merely doing more may actually be counterproductive in your efforts to lead at scale. [2] The goal here is to ensure that any self-assessment is focused on your most meaningful activities.

It's no longer the case (if it ever was) that you can assess your impact by the number of hours you put in or how many items you've crossed off your to-do list. As Andy Grove once wrote, "My day always ends when I am tired and ready to go home, not when I'm done... A manager's work is never done. There is always more to be done, more that should be done, always more than can be done." [3]

Instead, if you're like most of my clients, at any given moment you have a relatively small number of responsibilities that are both important and urgent--perhaps three to five. [4] It's tempting to add to that list, but rigor matters here--if too many things are important and urgent, than nothing really is. If you succeed at these key tasks but others slip, you've still succeeded. And if you fail at these key tasks, then success elsewhere won't matter.

2. Make Reflection a Practice

Early in their careers many people imagine they'll finally have a more spacious work life when they obtain a more senior role and have greater control over their calendars. They often fail to realize that the more senior the role, the more people want your time and attention. You likely face some version of this challenge, and it can feel difficult or even irresponsible to dedicate time to yourself. But reflection is like a good night's sleep or regular physical activity--it's not an indulgence, but an investment in your capacity to add value. [5]

It's also not the type of activity that fits neatly into brief segments of free time between other activities. While there's no single best approach, I do recommend making reflection a regularly occurring item on your calendar. Every individual's needs differ, and you will have to experiment to find the routine that's most productive for you. Consider the length of time and the setting that are most conducive to meaningful reflection, as well as the frequency with which you can reliably block off and protect such activities on your calendar. [6]

I know CEOs who do their best thinking on solo retreats over a long weekend, although that may only be feasible several times a year. I've also known a CEO who did his best thinking at the driving range, and he made that a weekly routine. The idea isn't that reflection must occur on a rigid schedule, but like all important-but-not-urgent activities, it won't happen with any consistency if you don't make it a practice.

3. Find the Signal in the Noise

As noted above, it can be challenging to obtain useful feedback as a CEO, but I'm not suggesting that you should ignore others' feedback or fail to solicit it. And yet feedback from others isn't necessarily "the truth" about your performance. As I've written before, "feedback always says as much about the giver as the recipient. It's filtered through their reality-distortion fields, reflecting their personal values and priorities." [7]  Many organizations try to correct for that distortion via a 360 assessment, and if that's available to you I recommend taking advantage of it. At the same time such processes can be time-consuming, occur only at periodic intervals, and are subject to some predictable biases of their own. [8]

There's also feedback available to you in the form of organizational results, which likely matter much more than anything else. But here, too, is plenty of noise in the form of what psychologists call the "fundamental attribution error"--we routinely assign leaders more credit for success (and more blame for failure) than they deserve. [9] Further, the feedback loops for a CEO are extremely long, as Jeff Bezos has noted: "When somebody congratulates Amazon on a good quarter, I say 'Thank you,' but what I'm thinking to myself is, 'Those quarterly results were fully baked about three years ago.'" [10]

Ultimately, all of the feedback you might obtain, including but not limited to direct input from others, 360 reports, and organizational results--are forms of data, which is comprised of signal and noise. It's your job to determine which is which.

4. Tolerate the Dissonance

Self-assessment isn't merely an intellectual task--it's also an emotional one. This is true for all executives, but, again, it's particularly true for CEOs because of the obligation to be your toughest critic and your biggest fan. If you're like my clients, there are any number of parties who are watching to see if you stumble, and when you do they'll be quick to find fault. If you shrink from a candid assessment of your weaknesses and missteps, your critics won't hesitate to do so, and you may find yourself unpleasantly surprised by how they leverage that information.

But senior leadership also entails maintaining a high degree of confidence in your capabilities and an optimistic view of what you and others can achieve. As I've written before, "There's a positive correlation between optimism and effective leadership, in part because the optimistic leader has a contagious effect on others, attracting talent and resources and making success more likely." [11] And as you've no doubt experienced as a CEO, there are moments when you can't look to anyone else for encouragement, because everyone is looking at you.

Putting this into practice and acting as your toughest critic and your biggest fan is likely to evoke what psychologists call "cognitive dissonance," a form of stress deriving from the difficulty of holding in mind seemingly incompatible realities. Most people have a low tolerance for such dissonance, to the extent that they may dramatically alter their beliefs and behavior in order to reduce the stress. But as a CEO you can't afford to do that. I've previously discussed how to better manage the dissonance that inevitably accompanies this job, and my guidance is consistent with what we know about emotion regulation more generally: Expect it. Get comfortable with it. And talk about it with people you trust. [12]

 

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Footnotes

[1] Two Sides of Trust

[2] How to Scale: Do Less, Lead More

[3] High Output Management, page 47 (Andy Grove, 1983)

[4] Importance vs. Urgency

[5] Investments, Not Indulgences

[6] How to Think (More on Open Space and Deep Work)

[7] Feedback Is Not a Gift

[8] Your 360 Report Is Ready

[9] I first learned about the fundamental attribution error as an MBA student from Roberto Fernandez, who described it as "ascribing causality to personal characteristics when causality actually lies with the situation." The original research was done by Stanford psychologist Lee Ross: The Intuitive Psychologist and His Shortcomings: Distortions in the Attribution Process (Advances in Experimental Social Psychology, 1977).

[10] Jeff Bezos interviewed by Michael Beckerman (Internet Association Gala, 2017). The passage above begins at the 7:07 mark in this video.

[11] This line is from The Ruling Out of Possibilities (On Failure). For more on the research on leadership and optimism, see Dispositional Affect and Leadership Effectiveness: A Comparison of Self-Esteem, Optimism, and Efficacy (Martin Chemers, Carl Watson, and Stephen May, Personality and Social Psychology Bulletin, 2000), and Impact of Leadership Style and Emotion on Subordinate Performance (Janet McColl-Kennedy and Ronald Anderson, The Leadership Quarterly, 2002).

[12] The Cognitive Dissonance of the CEO. For more on emotion regulation, see The Tyranny of Feelings.

 

Photo by Slim via Pixahive.

Snark, Not Sarcasm (On Leader Communication)

An occasional theme in my work with leaders on communication is the verbal or written comment that was intended by the leader to be witty but instead falls flat, creates distance, or even leaves people feeling offended or hurt. One reason for this gap between intent and impact [1] is that the leader was perceived as going beyond what we might call snark and crossing a line into sarcasm.

Many definitions use these terms almost interchangeably, but we can distinguish between them to illustrate a subtle yet important point when you're communicating as a leader. Both snark and sarcasm are forms of irony that involve delivering a message employing language that usually means the opposite. This creates a moment of dissonance as people figure out what you really mean.

With snark that dissonance resolves in a moment of shared humor. The seeming incongruity of your message poses a riddle, and you're inviting others to join you and get in on the joke by solving it. But sarcasm is sharper, and it cuts deeper. There is no shared resolution, or if there is it comes at someone else's expense. The incongruity of the message is evident, and others are not invited to get in on the joke--they are the joke.

This is a subjective distinction that's contingent on the context, among other factors. A comment that evokes knowing laughter in one setting will yield stony silence in another. This is a function of the culture and its norms, a topic I've addressed before by comparing organizational life to three common settings:

Many of the situations we encounter in contemporary professional life take one of three cultural forms: A classroom, a church, or a cocktail party... So some meetings are like a classroom, others are like church, and still others are like a cocktail party. And some companies are like a classroom, others are like church, and still others are like a cocktail party... The problem, however, is that schools, places of worship, and celebratory gatherings identify themselves very clearly through obvious signifiers. We know where we are, we readily grasp the norms, and we act accordingly. But meetings and companies are much harder to interpret... So the signs and signals are opaque and confusing, and it's easy to misread them. [2]

Many cocktail parties run on snark, and it's welcome in some classrooms, but it's rarely tolerated in church. So a first step is to assess the setting, although our ability to "read the room" can vary widely. Neuroscientist Richard Davidson calls this "context-sensitivity," and people who score low on this dimension "are oblivious to the implicit rules that govern social interactions" and fail to appreciate that "a behavior that would be perfectly acceptable in one context [is] offensive in another." [3] But this capability is by no means fixed, and if you find yourself repeatedly misjudging the setting, Davidson recommends meditation and other approaches to mindfulness to heighten context-sensitivity. [4]

Another key factor is your relationship with the other parties, which is particularly salient for leaders, given what social psychologist Adam Galinsky calls the "power amplification effect." A leader's comments often have a greater impact than the leader intended, and ambiguous comments by a leader--such as ironic humor--tend to be interpreted negatively by others. [5] Here it's important to assess the extent to which others perceive you as a distant or intimidating authority figure. Note that you may not be the best judge of that perception, so it can be useful to solicit feedback, even--and especially--if you have any concerns about what you might hear. [6]

Also, note that while sarcasm tends to be cutting and cold, snark can be warm, even inviting. It's still ironic, but it can be delivered with a knowing twinkle in the eye that encourages others to join you in the fun, a point made (in a snarky way) by author Robert Dimmick: "If sarcasm is the ability to insult idiots without them realizing it, snark is the ability to insult others who will realize it and will A) appreciate the effort made and/or B) respond in kind." [7]

The timely use of humor is an essential leadership tool, particularly in helping people maintain hope and optimism in the face of adversity. In such circumstances ironic humor can be risky, as people under stress are less effective at processing nuanced information, and alternatives may be safer. [8] But rather than banishing irony from your repertoire, I think it's far preferable to learn to use it skillfully, as you would any sharp implement.

 

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Footnotes

[1] Intent vs. Impact (When Communication Goes Awry)

[2] Classrooms, Churches, Cocktail Parties (On Norms)

[3] The Emotional Life of Your Brain: How Its Unique Patterns Affect the Way You Think, Feel and Live--and How You Can Change Them (Richard Davidson and Sharon Begley). Davidson's "Dimensions of Emotional Style" model includes an assessment that can be completed to approximate the results he sees in the lab.

[4] Ibid, Chapter 11, which includes a number of tips for adjusting your "emotional style" to enable you to better achieve your goals, largely focused on meditation. Also see Don't Just Do Something, Sit There! (Mindfulness for Busy People).

[5] When You're in Charge, Your Whisper May Feel Like a Shout (Adam Galinsky, The New York Times, 2015). Discussed further in The Blue Problem (Power and Communication).

[6] For more on soliciting feedback, see the following:

• Make Getting Feedback Less Stressful
• Why Some Feedback Hurts (and What To Do About It)
• The Problem with Anonymous Feedback

[7] Snark vs. Sarcasm (Robert Dimmick, The Etiquetteer, 2018)

[8] Joe Montana & John Candy (Leadership & Group Mood)

 

Photo by Rich Bowen.