Ed Batista

Very Cheap, Then Very Expensive (On Job Titles)

Despite the fact that people do not acknowledge a preference for hierarchy, such a preference can be inferred from behavioral patterns... The strongest piece of evidence is simply the regularity with which this form of organization is produced... When scholars attempt to find an organization that is not characterized by hierarchy, they cannot... In sum, the production of hierarchy is a central and omnipresent component of organizing.

~Deborah Gruenfeld and Larissa Tiedens [1]

Once you confer the Director or VP title on one person, you are signaling to every person in the company that titles are fair game at your company. Get ready for every person in the company (who deems themselves ready for the title) to campaign for a title in both subtle and unsubtle ways, for almost every accomplishment possible.

~Gokul Rajaram [2]

As psychologists Gruenfeld and Tiedens make clear, the impulse to establish hierarchical distinctions is universal [3], and as I've noted before, they "aren’t justifying or rationalizing hierarchy, and they cite a complex set of both positive and negative effects that result from hierarchical structures in organizational life, but they clearly demonstrate its persistence as an organizing principle." [4]

A theme in my work with founder/CEOs is what I call "the judicious imposition of structure," which includes the need to clarify who's responsible for what and how decisions get made as the organization scales. [5] And an inevitable step in that process is the creation of hierarchical job titles, but as founder and investor Rajaram also makes clear, establishing titles comes at a cost.

Those costs are often hidden at first, so titles may seem cheap--I've even had clients call them "free." But not only are those hidden costs eventually revealed, they also tend to escalate--so supposedly "free" titles ultimately become very expensive. And yet it's neither feasible nor desirable for companies to avoid titles forever. What explains these dynamics, and what can founders do about them?

Why Titles Seem So Cheap

They're not "real."

When a company begins awarding titles, they're aspirational assertions and acts of imagination, existing only within the arbitrary confines of an org chart, which itself may be largely notional. Such titles have no intrinsic validity or independent worth--they're not code or cash--so founders may conclude that it costs little to offer them in exchange for services rendered.

They offset other constraints.

Most early-stage organizations are constrained in a number of predictable ways. If they're earning any revenue at all, they're rarely profitable, so cash compensation shortens their runway and increases the pressure on leadership to raise more capital sooner. They're also risky and unproven ventures that lack an established brand, so founders can find it difficult to convince talented people to join or stay with the company. In this context a title can be used to attract or retain employees who might pursue other forms of compensation or status elsewhere.

Many founders don't care about them.

As LinkedIn co-founder Reid Hoffman has noted, startup founders have much in common with pirates--not the sociopathic criminal types, but the "lovable rogues" who break archaic rules and bypass official channels in order to promote creative problem-solving and drive change. [6] In my experience this attitude is why many founders become founders in the first place, and they dismiss titles as so much corporate bureaucracy that can be safely ignored: If someone wants a particular title, who cares? Let them have it.

Why Titles Become So Expensive

Reality is socially constructed.

When enough people--or the right people--believe a story, it suddenly becomes true. [7] Cash itself--and any other medium of exchange--is nothing but a collective narrative, and when the story changes, so does the value of the asset in question. The same is true of titles, and as a company scales and becomes more substantive, the value of a title within that construct adjusts accordingly.

They become constraints in themselves.

This is the essence of the risks highlighted by Rajaram: "Titles become a motivator... Titles lead to entitlement... The title parade never ends." [8] Titles are useful because they have the ability to influence behavior--they can attract or retain talent, and they clarify responsibilities and decision rights. But if obtaining a given title becomes an employee's superordinate goal, that drive is now the tail that wags the dog.

They're very difficult to take back.

Rajaram calls it "impossible" to "untitle" employees, and although I've seen it happen I would agree that it's very difficult. The most common challenge is the employee who continues to perform at an adequate level and remains an asset to the company but whose growth isn't keeping pace with the organization around them: The capable individual contributor who's unable to manage, or the capable manager who's unable to "manage managers." Even if they're willing to relinquish their title--which is rare--they will likely be perceived as having fallen short, which will hamper their effectiveness.

So What Can Be Done?

The first step for founders is raising your awareness of these dynamics and avoiding unnecessary mistakes. Even though titles seem cheap at first, they will inevitably become expensive, and that inflation should be factored into job design decisions from the start. With that in mind, Rajaram offers two specific proposals:

a. Descriptive titles for individual contributors: Create job titles that precisely articulate what the person actually does. For example, Software Engineer, Firmware Engineer, Business Development Representative, Product Manager, Product Marketing Manager. This forces you to clearly spell out each person’s high level job description concisely as part of the job title, which is an excellent organizational design goal in and of itself.

b. A better label for people managers: Use the term "Lead" (or a similarly generic term) for all people managers. This word replaces "Manager," "Director," "VP" or any other titles. Also make people manager titles as descriptive as possible. For example, Product Management Lead, Firmware Engineering Lead, <ProductName> Engineering Lead, <ProductName> Product Lead, <Geography> Sales Lead. [9]

I support these ideas, and I've seen a number of clients employ them effectively. But my experience also suggests that they're unlikely to work in every organization, and they almost certainly won't work indefinitely. Bear in mind Gruenfeld and Tiedens' conclusion--"the production of hierarchy is a central and omnipresent component of organizing"--and it becomes apparent that in most cases efforts to forestall the establishment of hierarchical titles will eventually fail. So what else can be done?

Learn to level.

While it's difficult to "untitle" an employee who's under-performing relative to their role but remains a valued asset, with foresight and tact it's possible to level them under a new manager while retaining them within the organization. As I've noted before, the factors that contribute to a successful levelling include:

• Data pointing to a performance gap.
• Non-defensiveness on the part of the employee.
• Trust in your good intentions toward them.
• The potential to learn from the incoming manager.
• Clarity on the distinctions between the employee's current and impending roles.
• Graciousness on your part throughout the process. [10]

This is much easier, of course, if you remember that titles eventually become expensive and avoid "over-titling" people from the outset. Failing that, this is why "Senior Directors" and "SVPs" exist.

Pay attention to status.

Sufficient role clarity allows us to answer some questions that are fundamental to organizational life: Who are we to each other? What are our relative positions in this environment? As I've noted before, "One of the most significant ways we establish role clarity in organizations is through formal hierarchies and reporting relationships, which often allow us to answer the questions above." [11]

The dilemma, however, is that "even as these tools create greater role clarity, they set in motion a process that eventually generates role confusion. The key issue is the steady upward pressure experienced within a hierarchy to maintain and increase one's relative status." [12] But titles are just one form of status enjoyed by employees, and there are many others at your disposal: Access to and attention from senior leaders. Participation in decision-making. Early dissemination of information. Public acknowledgment and appreciation.

Your tasks as a founder are to appreciate the essential role that status plays in organizational life [13] and to learn about the specific forms of status that your direct reports care about. You may not be able to give them the title they want--but you may not have to.

Ask better questions.

Simply asking "How can we prevent prevent people from desiring hierarchical titles indefinitely?" is unrealistic in most circumstances and can even be counter-productive. Particularly when hiring for senior leadership roles in later-stage organizations, the ambiguity inherent in a generic term such as "Lead" will turn away any number of talented people who have reached the point in their careers where they're unwilling to settle for anything less than a hierarchical title that meets or exceeds their previous levels. That said, there are a number of critical questions you should be asking:

• Where are we feeling pressure to add or clarify titles? What specific titles are people seeking?
• What are the implications of these titles for the organization today? What might they be in the future?
• If we delay implementing these titles, how might we benefit? Alternatively, what costs might we pay?
• If we implemented these titles now, how might we benefit?
• Knowing that this would be an irreversible decision, what costs will we pay, not just now but thereafter?
• At what point will this cost/benefit calculus change?

Hierarchy isn't autocracy.

Despite our universal preference for hierarchy, it's fallen into disfavor as a result of its abuse by autocratic leaders. We see this on a grand historical scale in the form of dictatorial governments, but it occurs every day in more mundane settings whenever a leader exerts positional power to overcome resistance and satisfy their personal preferences. But the establishment of titles need not be a step in this direction.

A hallmark of a healthy organization is an ability to distinguish between hierarchy and autocracy, and work by professor of management Lindred Greer can help us understand the difference:

In the past 15 years of my research, my collaborators and I have documented the many and nefarious ways in which hierarchy at work can cause tensions, conflict, and inequity. But I was forced to face the evidence that hierarchy can just as well lead to better coordination and collaboration... Based on extensive research and observation, I’ve come to realize that hierarchy is necessary to get work done, and it can be a force for good--better performance, relationships, and well-being at work--if teams are structured well and led by a skillful leader... My research has uncovered four different factors of work hierarchies that can lead to better performance, better relationships, and more cooperation...

1. Build hierarchies based on expertise...

2. Give employees areas of ownership...

3. Create a triangle rather than a ladder. A hierarchy can take the form of a ladder or a triangle: a single line of people with less and less power, or a pyramid where lower levels get wider and wider...

4. Reduce the power distance. Finally, the most effective hierarchies are the ones with a short distance between top and bottom, both objectively and according to people’s perceptions. [14]

Rather than seeking to forego titles as a means of avoiding autocracy, how might you incorporate these guidelines into the establishment of an organizational structure that's both more hierarchical and more effective?

Footnotes

[1] Organizational Preferences and Their Consequences (Deborah Gruenfeld and Larissa Tiedens, Chapter 33 in the Handbook of Social Psychology, 2010)

[2] Titles: The One Thing CEOs Should Delay as Long as Possible (Gokul Rajaram, Medium, 2017)

[3] Critics of hierarchy may point to the alternative offered by "holacracy," coined in 2007 by consultant Brian Robertson and implemented most notably at shoe retailer Zappos, as well to other egalitarian approaches to management dating back to the 1970s and '80s. But as executive coach Harrison Monarth has noted, research suggests that the absence of job titles in no way eliminates the process of determining hierarchical status in organizational life:

Humans subconsciously rely on visible cues like attractive features or extroverted personalities to assign status in a group that has no labels to indicate otherwise. In a company devoid of bosses, these perceptions of status will take hold to establish a pecking order. (A Company Without Job Titles Will Still Have Hierarchies, Harvard Business Review, 2014)

And in recent years even Zappos has begun to return to a more hierarchical approach, as observed by journalist Aimee Groth. (Zappos has quietly backed away from holacracy, Quartz at Work, 2020)

[4] Leadership as Performing Art

[5] The Judicious Imposition of Structure

[6] Uber Needs to Transition from "Pirate" to "Navy" (Reid Hoffman, LinkedIn, 2017)

[7] For more on this idea, see The Social Construction of Reality: A Treatise in the Sociology of Knowledge (Peter Berger and Thomas Luckmann, 1967).

[8] Rajaram, 2017.

[9] Ibid.

[10] The Fine Art of Levelling

[11] Role Clarity and Role Confusion

[12] Ibid.

[13] For more on the importance of status, see the following:

• Social: Why Our Brains Are Wired to Connect, pages 33-34 (Matthew Lieberman, 2013)

• The Myths of Happiness: What Should Make You Happy, but Doesn't, What Shouldn't Make You Happy, but Does, pages 131-132 (Sonja Lyubomirsky, 2014)

• Status Anxiety, pages vii-ix (Alain de Botton, 2004)

• A Company Without Job Titles Will Still Have Hierarchies (Harrison Monarth, Harvard Business Review, 2014)

[14] Four Keys to a Healthy Workplace Hiearchy (Lindred Greer, Greater Good Science Center, 2020). For more on Greer's insights on hierarchy, see Why Teams Still Need Leaders, an interview with Frieda Klotz (MIT Sloan Management Review, 2019).

Photo by UK Parliament.

The Problem with Fighting Fires

The problem isn't that you're too busy.

You are too busy, but that's not the problem.

If you view being busy as the problem, there is no solution.

You will always be too busy, and that will never change.

As Andy Grove once noted: "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."

The problem is that you're acting like a firefighter instead of a fire marshal. You're constantly rushing from one fire to the next, never slowing down to install smoke detectors.

The problem is that a few fires are truly dangerous, but most can be safely ignored, and you're not taking the time to tell the difference.

The problem is that firefighting is thrilling and addictive and makes you feel needed--and installing smoke detectors is boring.

The problem is that you're really good at fighting fires.

The line by Andy Grove is from High Output Management, page 47 (1983).

For Further Reading

What Do Great Leaders Do?

The Most Productive People Know Who to Ignore

Playing with Matches (On Feeling Needed as a Leader)

Importance vs. Urgency

Photo by USAG Humphreys.

Mind the Gap (On Leading Senior Executives)

A theme in my practice is the CEO who's leading senior executives for the first time. This often occurs with a founder whose company has grown dramatically or has recently raised a significant round of funding. While some of their early-stage leaders will make the leap, others will need to be levelled in order to bring in senior executives whose talents and capabilities will better support sustained growth and successful operations at scale. [1]

In many cases these executives know more about their function than the CEO, they have more experience than the CEO, and they may well be better at their jobs than the CEO. It's not uncommon for these CEOs to ask themselves, "How do I add value here?" 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.

So if you're a CEO in this position, how should you think about leading senior executives? How do you add value here? In my experience there are three areas where CEOs inadvertently create gaps--and there are steps you can take to minimize them or prevent them from developing in the first place. (And although in this essay I focus on CEOs and their executive team, many of the issues I address are relevant to any senior leader and their direct reports.)

1. Accountability

Senior executives require a great deal of autonomy, and this may entail a shift in perspective as CEO, particularly if you're used to working with direct reports who are less experienced, more deferential, and more dependent on you for tactical direction. The great management thinker Peter Drucker coined the term "knowledge worker" [2], and later discussed what they require from leaders:

Knowledge workers are not subordinates; they are "associates." For, once beyond the apprentice stage, knowledge workers must know more about their job than their boss does--or else they are no good at all. In fact, that they know more about their job than anybody else in the organization is part of the definition of knowledge workers... To be sure, these associates are "subordinates" in that they depend on the "boss" when it comes to being hired or fired, promoted, appraised and so on. But in his or her own job the superior can perform only if these so-called subordinates take responsibility for educating him or her... Increasingly "employees" have to be managed as "partners"--and it is the definition of a partnership that all partners are equal. It is also the definition of a partnership that partners cannot be ordered. They have to be persuaded. [3]

Most of your employees are already knowledge workers, of course, but Drucker's definition clarifies just what senior executives will expect from you as CEO: Acknowledgment of their expertise. A sense of partnership. Persuasion, not orders. And yet note that it's easy to create a gap when putting these ideas into practice in your working relationships with with executives.

When Drucker began formulating these concepts in the mid-20th century, he and other innovative thinkers like Douglas McGregor [4] were exploring alternatives to the authoritarian, command-and-control style of management that prevailed at the time. McGregor's "Theory Y"--which "emphasizes the average person’s intrinsic interest in his [sic] work, his desire to be self-directing and to seek responsibility, and his capacity to be creative in solving business problems"--stood in stark contrast to the then-dominant "Theory X," which "assumes that people dislike work and must be coerced, controlled, and directed toward organizational goals." [5]

And although the "Theory X" approach persists in some industries and certain parts of the world, in environments like my clients' organizations--and very likely in yours--the pendulum has swung far in the opposite direction. Today organizations that employ knowledge workers have absorbed the ideas of Drucker and McGregor to such a great extent that they're taken for granted.

This sea change in management philosophy has generally been for the better, but there have also been some undesirable side-effects. One is the extreme pressure many contemporary leaders feel to avoid being accused of "micromanagement"--a concern that can be heightened with senior executives, who've been hired on the basis of their expertise and expect to have substantial authority in their function.

As a consequence, some CEOs go to such lengths to avoid "micromanaging" senior executives that they essentially provide no management at all. This isn't how these CEOs would describe their actions. Their stated intent is to pursue the guidance prescribed by Drucker and McGregor--they want to "give people room" and "stay out of the weeds." But in effect they're merely hoping that an executive will succeed entirely on their own initiative. Occasionally this works--but when it doesn't, the process of replacing an under-performing leader can be costly and painful. [6]

The key is recognizing that as CEO you must afford senior executives sufficient latitude to make use of their expertise, while also ensuring that they're held accountable for achieving agreed-upon objectives so that you can assess their performance. What helps in this process?

• Clarity: The addition of a senior executive to your leadership team may affect everyone's responsibilities (including yours), so ensure that there's sufficient role clarity, not only when crafting their job description, but also on an ongoing basis. It's also necessary to clarify how decisions will be made in this new configuration before the inevitable power struggles become rancorous.
• Feedback: Don't wait for performance reviews--make feedback normal. Given that senior executives are likely to have worked with experienced CEOs in prior roles, be sure to solicit feedback as well as provide it. The setting for these conversations should be consistent one-on-ones--get them on the calendar, don't cancel them, and let your executives set the agenda. While you may need to improve your ability to deliver critical feedback, if expectations aren't met merely expressing disappointment can be a useful starting point.
• Empathy: As I've written before, "One of the reasons many leaders believe they can either hold people accountable or empathize with them is a misunderstanding of what is meant by 'accountability.' We often assume it entails a combative stance in an antagonistic interaction, with the goal of enforcing compliance--but that's not holding someone accountable, that's bullying them." The goal is to create a high-accountability, high-empathy culture in which "a shared sense of mission, strong feelings of ownership and responsibility, and relationships built on mutual trust and respect contribute to superior organizational results."

2. Motivation

Senior executives with a sustained record of success bring a host of assets with them. They know how to do the job, they understand the industry, and they have a network of former employees who will be inclined to follow them into their new role. This makes them appealing candidates for an organization that's striving to improve performance at scale, but it also affords them a wide range of options and increases their opportunity cost.

As a consequence, they often have particular needs that must be met, not only to induce them to accept an offer, but also to ensure their continued motivation--and to fend off demotivation. The work of psychologist Frederick Herzberg on motivation is relevant here. Herzberg's thesis is that job satisfaction and dissatisfaction aren't endpoints on a single spectrum, but are two distinct scales. His research suggests that certain aspects of a job (called "intrinsic motivators") have greater potential to generate satisfaction, while other aspects (called "hygiene factors" or "extrinsic motivators") are more likely to generate dissatisfaction if they're perceived as inadequate or problematic:

The factors involved in producing job satisfaction (and motivation) are separate and distinct from the factors that lead to job dissatisfaction... These two feelings are not opposites of each other. The opposite of job satisfaction is not job dissatisfaction but, rather, no job satisfaction; and similarly, the opposite of job dissatisfaction is not job satisfaction, but no job dissatisfaction...

Two different needs of human beings are involved here. One set of needs can be thought of as stemming from humankind's animal nature--the built-in drive to avoid pain from the environment, plus all the learned drives that become conditioned to the basic biological needs. For example, hunger, a basic biological drive, makes it necessary to earn money, and then money becomes a specific drive. The other set of needs relates to that unique human characteristic, the ability to achieve and, through achievement, to experience psychological growth...

The growth or motivator factors that are intrinsic to the job are: achievement, recognition for achievement, the work itself, responsibility, and growth or advancement. The dissatisfaction-avoidance or hygiene factors that are extrinsic to the job include: company policy and administration, supervision, interpersonal relationships, working conditions, salary, status, and security. [7]

These findings offer some useful guidance to help you understand and influence your executives' motivation. Where do gaps typically emerge and what can you do to help close them?

• Intrinsic motivators: CEOs create a gap here by imagining that senior executives are immune to the appeal of these factors. Everyone's needs differ--see below--but even highly experienced leaders can derive substantial satisfaction from a sense of achievement, recognition for those achievements, and opportunities for growth and advancement. It takes some creative thinking to design these factors into a more senior role, but a strategic People leader can help--and some well-timed celebrations can go a long way.
• Extrinsic motivators: Senior executives command hefty compensation packages, but it's a mistake to assume that someone will remain satisfied with their comp, no matter how far you may have initially stretched to accommodate their requirements. Again, individual needs will differ, but the psychological process of hedonic adaptation means that we inevitably take improvements for granted--this is why salary and status are "hygiene factors" in Herzberg's framework. Even the most substantial increases eventually lose their ability to motivate, and the resulting gap between reality and expectations can be a major source of dissatisfaction. To be clear, I'm not suggesting that you simply defer to executives' wishes to keep them happy--that quickly becomes unsustainable. So be prepared to negotiate with them not only upon extending an offer, but also at regular intervals thereafter.
• Individual variation: It's essential to have clarity on what each of your executives values most and the extent to which their needs are being met today. There are many reasons why a CEO shouldn't have too many direct reports, but this is among the most important. If you're managing too many executives, it's easy to lose touch with what motivates them as individuals and their respective levels of fulfillment and satisfaction. You may have to close that gap by shrinking or formalizing your executive team.

3. Team Dynamics

The arrival of senior executives has a powerful effect on the leadership team as a whole. In most cases a new executive is replacing an early-stage leader who's no longer a member of the team, and even if the transition was made with the prior leader's assent the reconstituted team will need time to gel. (This may take even longer if the prior leader was terminated or unwillingly levelled.) In this process, senior executives can be disruptive presences, both for better and for worse. They can role model higher standards of professionalism, offer new approaches to problem-solving, and inspire colleagues to improve their own performance.

But this heightened sense of competition can also have a shadow side. Senior executives may be the first to hold VP or C-level titles, which can raise expectations for title advancement among other members of the team--some merited, others not. Although compensation details are held in confidence in most organizations, it's common for some of this information to leak or to be inferred, potentially causing resentment among longer-tenured leaders who earn less than the newer executives. Senior executives are usually driven people with high expectations for their peers' performance, which can cause impatience and friction if their colleagues aren't operating at the same level. And early-stage leaders who feel anxious about their ability to keep pace with the organization's growth may not feel inspired but threatened, resulting in turf wars and conflicts over scope.

In parallel with these developments there's usually an evolution in the team's culture--again, for better and at times for worse. Some early-stage leadership teams include members who compensate for a lack of experience or limited capabilities with a deep devotion to the mission and a commitment to company values--and when their contributions no longer make up for their deficits, these leaders are often the first to be replaced by senior executives. The resulting group is comprised of higher-performing individuals, but the members may feel less connected and function less like a team.

And many early-stage teams are "ethical pirates," in LinkedIn co-founder Reid Hoffman's term. [8] Without acting immorally, they eagerly break rules and ignore established procedures in order to get the job done--this yields innovation, but may not scale (and if it does scale, it can create incentives for unethical behavior.) Senior executives are often hired because they bring with them a set of established procedures that will presumably be more effective at scale. But this can trigger a culture clash between early-stage leaders who view senior executives as stifling bureaucrats, while the latter view the former as undisciplined amateurs.

To return to the question above that I've heard many CEOs ask as they're assembling a team of senior executives--"How do I add value here?"--this is the context in which you can add a tremendous amount of value by addressing the gaps that can all too readily emerge on your leadership team:

• Evolving norms: The arrival of senior executives is both the result and the cause of larger changes in the organization, and this will be reflected in new team norms--the informal practices that members feel obligated to follow, deriving from shared beliefs about productive behavior. In the absence of a process that identifies desirable norms, makes them explicit, and reinforces them consistently, groups often experience a gap between their stated intentions and their actual behavior, because rules aren't norms. More specifically, note the importance of norms related to emotional awareness and regulation, which affect a team's sense of trust, identity and efficacy.
• Cultural integration: Team norms are just one manifestation of organizational culture, and senior executives usually bring with them a set of cultural practices that early-stage leaders will perceive as different or even alien. This may be one of the reasons that a senior executive was hired in the first place, but even in that case it's essential to close the gap between cultures through a process of integration. New executives must conform to the old culture just enough to gain credibility as change agents. Returning to Hoffman's management metaphor, "startup pirates" must be induced to "join the navy."
• Functional rivalries: At times senior executives have the ability to put the interests of the entire organization ahead of their personal preferences. But even the most collaborative will on occasion prioritize the needs of their direct reports and their function, and they may view other functions as rivals, if not antagonists. A degree of cross-functional rivalry is healthy, but when the gap between functions grows too wide it's counter-productive and wasteful. The key is fostering a collective identity that transcends individual functions and encompasses the entire organization.

Footnotes

[1] The Fine Art of Levelling

[2] The Effective Executive (Peter Drucker, 1967)

[3] "Management's New Paradigms" (1998) in Management Challenges for the 21st Century, pages 17-22 (Peter Drucker, 2001)

[4] For more on Douglas McGregor, see Leadership and Motivation: The Essays of Douglas McGregor (1966)

[5] Beyond Theory Y (John Morse and Jay Lorsch, Harvard Business Review, 1970)

[6] For more on managing terminations:

• On Firing a Senior Team Member
• Merciful Exits (On Under-Performing Executives)

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

[8] Uber Needs to Transition from "Pirate" to "Navy" (Reid Hoffman, LinkedIn, 2017)

For Further Reading

1. Accountability

• Role Clarity and Role Confusion
• Leadership, Decision-Making and Emotion Management
• Power Stuggles Among Nice People
• Make Feedback Normal. Not a Performance Review.
• The Judicious Imposition of Structure (Part 2: Meeting Hygiene & One-on-Ones)
• How to Deliver Critical Feedback
• Leadership Word of the Day: DISAPPOINTMENT
• Accountability and Empathy (Are Not Mutually Exclusive)

2. Motivation

• The Truly Strategic People Leader
• CEOs and Celebrations
• Stop Trying to Be "Good Enough" by "Getting Better"
• Negotiating with Your Own Side
• The Judicious Imposition of Structure (Part 1: The Executive Team)

3. Team Dynamics

• Rules Aren't Norms (On Better Meeting Hygiene)
• Group Dynamics: Norms and Emotion
• Conform to the Culture Just Enough
• Pirates in the Navy
• Startup Leadership: A Greater Us

Photo by Ged Carroll.

Andy Grove on the Right Kind of Fear

While I firmly believe in the value of psychological safety as a factor that contributes to high performance, I've also observed an unhelpful tendency in recent years to prioritize that quality above all else. [1] Anything that leads someone to feel distress is viewed as "unsafe" and thus unacceptable. But former Intel CEO Andy Grove believed that a particular kind of fear can actually play a productive role in organizational life--the fear of losing:

The quality guru W. Edwards Deming advocated stamping out fear in corporations. I have trouble with the simplemindedness of this dictum. The most important role of managers is to create an environment in which people are passionately dedicated to winning in the marketplace. Fear plays a major role in creating and maintaining such passion. Fear of competition, fear of bankruptcy, fear of being wrong and fear of losing can all be powerful motivators.

How do we cultivate fear of losing in our employees? We can only do that if we feel it ourselves. If we fear that someday, any day, some development somewhere in our environment will change the rules of the game, our associates will sense and share that dread. They will be on the lookout...

Simply put, fear can be the opposite of complacency. Complacency often afflicts precisely those who have been most successful. It is often found in companies that have honed the sort of skills that are perfect for their environment. But when their environment changes, these companies may be the slowest to respond properly. A good dose of fear of losing may help sharpen their survival instincts. [2]

However, this doesn't mean that all fear is productive. Grove made a sharp distinction between the healthy fear that dispels complacency and a very different kind of fear that is toxic to an organization's effectiveness--the fear of speaking up:

If you are a middle manager you face an additional fear: the fear that when you bring bad tidings you will be punished, the fear that your management will not want to hear the bad news from the periphery. Fear that might keep you from voicing your real thoughts is poison. Almost nothing could be more detrimental to the well-being of a company.

If you are a senior manager, keep in mind that the key role of Cassandras is to call your attention to strategic inflection points, and under no circumstances should you ever "shoot the messenger," nor should you allow any manager who works for your do to so.

I can't stress this issue strongly enough. It takes many years of consistent conduct to eliminate fear of punishment as an inhibitor of strategic discussion. It takes only one incident to introduce it. News of this incident will spread through the organization like wildfire and shut everyone up.

Once an environment of fear takes over, it will lead to paralysis throughout the organization and cut off the flow of bad news from the periphery. [3]

The figure of Cassandra provides a fitting analogy. A priestess in Greek mythology, she was the younger sister of Hector, the great warrior of Troy. The god Apollo gave Cassandra the ability to see the future, but after she rejected his advances he put a curse on her so that her true prophecies would always be disbelieved. When the Greeks left a massive wooden horse at the gates of Troy as a supposed peace offering, Cassandra warned her compatriots to destroy it, but they ignored her as they conducted a victory feast: "We stationed the monster fraught with doom on the hallowed heights of Troy. Even now Cassandra revealed the future, opening lips the gods had ruled no Trojan would believe." [4]

Cassandra tried to attack the horse with axe and fire, but she was stopped so that the feast wouldn't be disrupted. [5] That evening, of course, Greeks concealed in the horse slipped out and opened the city gates to their countrymen, leading to Troy's destruction. A healthy fear of losing and respect for a truth-teller certainly would have sharpened the Trojans' survival instincts. Their complacency and their resistance to bad news sealed their fate.

Note that Grove's position on fear is entirely consistent with that of Harvard Business School professor Amy Edmondson, whose research makes a compelling case for the competitive advantages to be derived from psychological safety. [6] They both emphasize the role that safety plays in encouraging people to speak up. As Grove noted, "Constructively debating tough issues and getting somewhere is only possible when people can speak their minds without fear of punishment." [7] Edmondson made the very same point nearly two decades later in a 2018 interview:

What makes a workplace psychologically safe or not?

Individuals feel they can speak up, express their concerns, and be heard. This is not to say that people are "nice." A psychologically safe workplace is one where people are not full of fear, and not trying to cover their tracks to avoid being embarrassed or punished.

What I am advocating is candor. Being open. And sometimes that might mean being direct to a fault, knowing that you have a right and a responsibility to ask hard questions about the work: "Is this the right decision? Are we collecting the right data? Do we know the impact this might have on others?" [8]

So if you're a senior leader seeking to help your organization perform at the highest possible level, how can you inspire "the right kind of fear" while avoiding "the wrong kind"? There's no simple solution or quick fix, but there are steps you can take over time:

1. Reward (and Model) Candor

A foundational leadership principle is that when you see behavior you want more of, acknowledge it and express appreciation for it. To minimize the fear of speaking up, whenever anyone shares information that might be viewed as "bad tidings," recognize that it may have felt risky for them to do so, and thank them. [9] The lower their position in the hierarchy, the greater the risk, which your appreciation should take into account.

This doesn't mean that you should have infinite patience for someone who's always negative. Relentless pessimism isn't the same thing as candor. But neither is unremitting optimism, and some leaders tend to reward people who only bring good news--which means they won't hear bad news until it's too late to do anything about it.

A related principle is modeling the behavior you want others to adopt. Here this entails being candid with critical feedback, even--and perhaps especially--when you're concerned about how the other person will respond. This gets easier when you provide feedback on a consistent basis, rather than waiting for review cycles [10] and when you learn how to deliver critical feedback that the other person might experience as motivational rather than demoralizing or threatening. [11]

2. Foster (and Model) Accountability

A healthy fear of losing is only possible when losing comes with consequences. In this context it's vitally important to create incentives to be open about mistakes and setbacks in order to learn from them. [12] Ray Dalio, founder of hedge fund Bridgewater Associates, attributes much of the firm's success to a rigorous commitment to accountability:

Having a process that ensures problems are brought to the surface, and their root causes diagnosed, assures that continual improvements occur. For that reason I insisted that an issue log be adopted throughout Bridgewater. My rule was simple: If something went badly, you had to put it in the log, characterize its severity, and make clear who was responsible for it. If a mistake happened and you logged it, you would be OK. If you didn't log it, you would be in deep trouble. [13]

This doesn't mean that you should have infinite tolerance for ineptitude and underperformance. While accountability starts with candid feedback, in some circumstances it becomes necessary to remove someone from their role. But while it's essential to avoid creating an environment in which people are constantly anxious about losing their job, having coached many leaders though this difficult process I know that when a termination is handled well it can have a galvanizing effect on the organization while also being in the best interests of the person being fired. [14]

Here it's critical that you hold yourself to the same standard. When a leader screws up, the rest of the organization often colludes in the process of quietly ignoring it in order to shield the leader from embarrassment. [15] This not only prevents the leader from learning, but also gives everyone else a convenient excuse to do the same. If, instead, you admit and publicly acknowledge your mistakes, you invite others to follow your example. [16]

3. Promote a Team Identity

Despite the potential benefit of a healthy fear of losing, it's all too easy for efforts to foster accountability to trigger an excess of fear, resulting in finger-pointing and blame, as Stanford professor Jeff Pfeffer has noted:

The downside of the emphasis on individual accountability is illustrated by Jody Hoffer Gittell's research on Southwest and American Airlines during the mid-1990s. American Airlines then-CEO, Robert Crandall, insisted that delays come to his attention and that the delays get assigned to individual and departments, so they would be accountable for their results and, moreover, would compete with one another to avoid creating problems...

The result of this approach was to create a culture of fear and infighting as people and units tried to pin the blame on others. Little learning occurred and on-time performance continued to lag. At Southwest Airlines, the view was that delays were everyone's problem and when they occurred, people needed to work together to learn as much as possible...

Gittell's research showed that the Southwest system produced more learning and more teamwork, resulting in better system performance, than the American Airlines approach with its emphasis on assigning individual or departmental accountability and blame. [17]

The key is ensuring that people identify with the organization as a whole and believe that they succeed or fail together. This is more difficult in certain environments, of course--if people don't truly work interdependently then a sense of team spirit may never be sufficient to overcome the incentive to escape scrutiny and avoid blame. [18] Even when people do work interdependently, they may identify more strongly with their close colleagues than with the organization, a situation described by George Halvorson, the former CEO of Kaiser Permanente:

Humans are social creatures; we fall readily into group loyalties. We instinctively divide the world into "us" and "them" and treat others very differently according to which category they’re in... Many workplaces default to a version of kinship based on function. A group’s shared identity reflects a common characteristic of its members—everyone’s an engineer, or everyone’s a radiologist. Doing similar work under the same conditions is enough to make an "us." [19]

A degree of sub-group identity is by no means a bad thing, and at times cross-functional rivalries spur fruitful competition. But they should always be subsumed within a larger organizational identity--a "greater us" [20]--which you as the leader must personally embody. [21]

4. Regulate Your Emotions

Finally, in all of these efforts it's essential to regulate your emotions, which is one of the most common--and most challenging--themes in my practice. To be clear, note that regulate does not mean suppress. We can suppress emotions for short periods of time, but not for long, and in some circumstances the effort actually heightens the feeling we're seeking to minimize. [22] But the goal isn't to pretend you're not having any feelings at all--it's to express your feelings in such a way they help you achieve your goals, rather than serve as obstacles.

The work of emotion regulation is never easy, but it's particularly difficult when dealing with fear, perhaps the most primal and powerful emotion. [23] A hallmark of ineffective leaders is their inability to grasp the difference between "the right kind of fear" and all other kinds. Such leaders generate fear indiscriminately and imagine that they're cultivating a healthy fear of losing, but fail to recognize the negative impact on those around them: self-censorship, excessive caution, risk-aversion. Ultimately the organization pays a price as talented people leave or choose to remain under duress (and then only as long as financial incentives are sufficient to be motivating.)

The alternative is to be deliberate, thoughtful and intentional in leveraging the power of emotions, both positive and negative, when taking any of the steps noted above: acknowledging bad news, providing feedback, learning from failure, holding others accountable, holding yourself accountable, creating a sense of camaraderie.

In addition, let's recognize that even the fear of losing is counter-productive when taken to extremes, and sometimes that affects a leader internally. I've worked with many leaders who felt overwhelmed by the prospect of failure or even just the sense that they were falling short of expectations (their own or those of others) or falling "behind" in some type of competition (real or imagined). The purpose of emotion regulation isn't merely to assuage other peoples' fears, but also one's own.

Cultivating the capacity for emotion regulation is the work of a lifetime, and you'll probably never feel that you've "mastered" it, if only because it's necessary for our survival that emotions not be subject to willful control. [24] But my work with leaders makes it clear that you can improve your ability to inspire a healthy fear of losing without inadvertently triggering a poisonous fear of speaking up:

• The Tyranny of Feelings
• Force Isn't Power
• Leadership Word of the Day: DISAPPOINTED
• Talking About Feelings
• How Leaders Create Safety (and Danger)
• Attitude and Behavior
• The Value of a Good Fight
• On Speaking Up and Shutting Up
• Leadership as a Performing Art
• How to Fight a Fire (Self-Coaching in a Crisis)

Footnotes

[1] Safety Is a Resource, Not a Destination

[2] Only the Paranoid Survive: How to Exploit the Crisis Points That Challenge Every Company, pages 117-118 (Andy Grove, 1999)

[3] Ibid, pages 118-119.

[4] The Aeneid, page 83 (Homer, translated by Robert Fagles, 2008)

[5] The Fall of Troy, Book XII (Quintus Smyrnaeus, translated by A.S. Way, 1913)

[6] For more on Amy Edmondson's work on psychological safety, see the following:

• How Fearless Organizations Succeed (strategy+business, 2018; excerpted from Edmondson's book below)
• The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation and Growth (2018)
• Building a psychologically safe workplace [11:26 video] (TEDxHGSE, 2014)

[7] Grove, page 117.

[8] Make Your Employees Feel Psychologically Safe (Martha Lagace interviewing Amy Edmondson, Harvard Business School Working Knowledge, 2018)

[9] Risk Management (The Importance of Speaking Up)

[10] Make Feedback Normal. Not a Performance Review.

[11] How to Deliver Critical Feedback

[12] The Ruling Out of Possibilities (On Failure)

[13] Principles: Life and Work, page 62 (Ray Dalio, 2017)

[14] Merciful Exits (On Under-Performing Executives)

[15] Overcoming Organizational Defense: Facilitating Organizational Learning, page 25 (Chris Argyris, 1990)

[16] I know from personal experience that publicly acknowledging my mistakes in a leadership role is simultaneously mortifying, liberating, and profoundly useful to those around me:

• Lessons in Falling Down
• Committing a Microaggression While Teaching a Class on Microaggressions
• How Am I Doing? aka T-Group Feedback

[17] Changing Mental Models: HR's Most Important Task (Jeffrey Pfeffer, Chapter 19 in The Future of Human Resource Management, Mike Losey, Dave Ulrich and Sue Meisinger, editors, 2005)

[18] What Kind of Team Are We?

[19] Getting to "Us" (George Halvorson, Harvard Business Review, 2014)

[20] Startup Leadership: A Greater Us

[21] Leader as Avatar

[22] For more on the impact of suppressing emotions:

• Emotion regulation: Affective, cognitive and social consequences (James Gross, Psychophysiology, 2002)
• Consequences of Repression of Emotion: Physical Health, Mental Health and General Well Being (Jainish Patel and Prittesh Patel, International Journal of Psychotherapy Practice and Research, 2019)

[23] The Emotional Brain: The Mysterious Underpinnings of Emotional Life (Joseph LeDoux, 1998)

[24] White Bears and Other Unwanted Thoughts: Suppression, Obsession, and the Psychology of Mental Control, page 123 (Daniel Wegner, 2nd edition, 1994)

Photo by Giuseppe Milo.