I admit up front that my argument in this post may seem somewhat circuitous. So if you don’t want to read on, here is my conclusion from articles I sight herein: the best companies attract the best (e.g., most skilled, highly educated, and nicest) workers. Civil, polite and nice people are more likely to make more effective leaders. If skilled people are such a business advantage (and the best companies know they are), and if you can’t immediately attract the best and the brightest leaders, invest in and develop the talent you have – help them get better.
Recent research is uncovering that much of the income inequality that is happening in our current economy is due to “a gap in wages between companies, not within them.” And, “more productive, higher paying companies are hiring better workers.” (Corporate Inequality is the Defining Fact of Business Today, HBR, May 2015).
In the article Nicholas Bloom, a professor at Stanford’s business school, comments, “Back in the 1980s, college graduates and low-skilled people would be in every firm. Today, much like our neighborhoods, companies seem to be more segregated by education and skill.” Dr. Bloom goes on to say that this seems to be happening for soft skills as well, “Nice, fun, polite people are sorting into some firms,” and jerks (I can’t use the word he uses) are “sorting into others.”
From a macro-economic, and “health of our society” standpoint, this research is very worrisome. The data confirms yet another advantage of a more privileged background: better and higher paying jobs in the best companies. Thankfully, other research on the impact of what I consider to be “healthier”, more skillful leadership traits and the neuroplasticity of our brain confirms that we can change and learn new behaviors throughout our lives. Regardless of where we start, the family we come from, or where we went to school, we can get better. We can even learn to be nicer.
Studies by Christine Porath, Alexandra Gerbasi and Sebatian Schorch at the Grenoble École de Management, have shown that, “behavior involving politeness and regard for others in the workplace pays off.” At a biotechnology company, a study confirmed “those seen as civil were twice as likely to be viewed as leaders.” (“No Time to Be Nice at Work”, New York Times, June 19, 2015).
Morgan W. McCall Jr., and Michael Lombardo and others found from their research while at the Center for Creative Leadership, that the “no. 1 characteristic associated with an executive’s failure is an insensitive, abrasive or bullying style.” (“Is Your Boss Mean?” The New York Times, June 21, 2015)
So if successful companies hire more skillful and nicer employees, they must see a return on their investment. Higher skilled employees, and this includes healthier, more polite and caring leaders clearly have a big impact on the success of your enterprise. If you can’t immediately attract or afford to hire the “best” leaders and employees, develop the ones you have. And this will most likely need to include teaching them some kind of mindfulness, “self-care practices” (mean people are often mean to themselves as well as others), empathy and kindness.
And if you are a leader who loses control, gets angry or mistreats others, and are not always driving your own emotional bus, get help. You will probably make more money.
For over seven years I worked with some private equity (PE) owned organizations. To say it was an education is an understatement. Like most of the best learning-on-the-job, I made some mistakes, especially early on. However, I am grateful for the experience it gave me. In retrospect, it feels like I received another Master’s degree because the way they think and look at businesses was often different than my earlier learning.
Most people understand that PE invests in companies because they believe that they can create more value than the current operations and business structure are able to achieve. The company I worked with didn’t buy distressed companies. For the most part, they bought good companies where they believed there was unrealized value to be found through some combination of growth, operational excellence initiatives and other efficiencies. They invested in companies and often in the leadership and people strategies and systems – which is how they found me.
Here is what they taught me:
For the record I am aware that some people think of PE as unethical or evil. I knew that when I signed on. As I had no experience I wanted to make my own call. Did they do some things that I thought were short-sighted? Yes, I believe they did. But that is really wired into their goals. With a 3-5-year window for some kind of event (e.g., sale, spin, etc.), they aren’t in it for the long hall. Sometimes they chose people to lead their acquisitions that I think were better suited for other roles (and that is putting it very nicely). In the end, why I continued to do the work is that they did some things exceptionally well. Under their ownership, performance improved. Leaders and teams were challenged to learn new skills and grow (sometimes for the first time) and they sharpened their financial and operational chops. People got a chance to get better. I believe I helped with that and for everything I learned, I hope I was able to contribute something back.
The most important thing they taught me was that every business model and structure has strengths and weaknesses. I have come to think of businesses as “evil” when they allow an abusive or uncaring manager to stay in place, when they allow unethical behavior or mismanagement that has the potential to drive the business into the ground. Having worked in over 12 industries for the last 17 years, with both private and public companies, I can say with confidence that these types of leaders can be found in every type of business. In the end, what separates most good businesses from bad is whether or not they are led by smart, ethical people who care about their employees and demonstrate that through their actions and words. Thankfully, I find these leaders everywhere.
Welcome to Moira's blog. I write a bi-monthly post about the work of building better people strategies, systems, teams and leaders.