This blog post continues our series about how some “classic business rules” can be corrupted in practice by poor leadership.
What if your boss says “I will leave you alone to run your own show, but the rule around here is that you NEVER miss your number.”?
That’s autonomy with a big caveat attached. How was “the number” determined? Was it the result of a thoughtful goal-setting conversation with your boss? Or was it just handed to you by fiat because somebody a few layers above said, “Everybody’s department must grow operating income by 10 per cent over last year, period!”?
No analysis of what’s happening to customer demand, what’s happening to market entry by competitors, what’s happening in the larger macro economy that may affect your sales or costs.
If your leader is not joining you in a thoughtful discussion of what “the number” should be, he or she isn’t leading and is only dictating. And your operation could be put in peril as a result. If the implication is “hit your number or die,” then what kinds of irrational things might you do to a short run target and save your job?
- Start buying cheaper materials which reduce product quality?
- Cut back on staffing in customer care centers?
- Cut back on overtime, even though the season is busy?
- Lay off some people?
- Delay the launch of a new product into the next year because you know the first few months of a product launch are dilutive to earnings and will hurt your number?
- Or, at the other extreme, hold back on sales effort because you don’t want to exceed your target by too big a margin and cause NEXT year’s number to be based on your success? You want a great bonus, but not at the expense of next year’s bonus, right?
The point here is that an unthinking devotion to “the number” can produce distortions and non-optimal results and hardly reflects good leadership. Worse, this kind of dictation only serves to weaken or even break trust with the leader’s key followers. Winning and keeping trust is mandatory for long term success of a leader. Followers will be slow to forgive the kind of manipulation described here.
Coming up soon: What about the rule that says “Set stretch objectives for your people”?