IBM is doing this wrong. The Marine Corps has done this right and it has done it wrong in its past too. How can we learn from this?
This direct quote seems relevant here
“How much more am I worth to IBM than that guy down at the bottom of the pay scale? Twice as much? Sure. Ten times as much? Maybe. Twenty times as much? Probably not.”…Thomas J Watson Jr. in Father Son and Co
and he was balking only at 20X Not the 300X Ginni was being paid compared to the average IBMer, not the bottom paid. Putting IBM at the literal top of the list of CEO to average worker pay. I havent seen them re-do this for 2020, but they will. Are we confident we will no longer be at the top of this list? Should we even be anywhere on it when we’re only making 92% of our revenue targets at the exec level and having cyclical layoffs? Pointing to “the market” as the reason we have high exec comp ignores
1) we’re at the top of the market in comp comparison (setting the WRONG example) and
2) our competitors are growing powerfully while we do not (NOT delivering victory) and
3) our competition isnt laying off size-able groups of workers, halting salary cycle for 12 months and not funding growth driven profit programs for employees (only top execs) to “control costs” while simultaneously buying back shares juicing exec compensation and awarding big payouts for partial attainment of executive goals as reported in shareholder documents. (Not taking care of our people OR requiring our executives to share the suffering)
How can we justify even 5X let alone TJ Watson Jrs point of 20X to say nothing of the market topping 300X weve had?
How could it be done right?
Many people think of the military as an organization in which rank and structure and deference mean significant inequality. There are elements of truth in this, but there is a countervailing force that demands, that requires, that forces a level of equality that nothing else will. Combat. It is critical that a leader delivers victory to those they lead, or drinks more deeply of the defeat than anyone on the team, or they won’t be the leader for long.
Nothing forms bonds among a team quite so strongly as shared suffering. What does this mean in the modern business context? If there are pay-cuts, the highest paid people should get them first. If there are layoffs, the executive organization cannot possibly be paid bonuses, stock incentives, or boost their compensation with stock buybacks. If additional hours are required the most senior people need to be putting them in first. If there are perk or benefits cut, the most senior people in the organization take them first. It means shared suffering, it means setting the example.
To set the example is the bedrock of all leadership, it is cast into sharp relief in the military by the hot fires of combat. A unit which encounters combat with a leader that doesn’t set the example will rapidly result in defeat, a change of leadership, disintegration of the team or all of these.
This principle can be applied to modern business, albeit with less urgency and intensity because people are risking only their time and livelihoods, not their very lives. What a leader must do is:
- Example: Set the example – behave as they expect others under their leadership to behave
- Mission: Out line the mission, deliver victory: The who, what where, when and critically the WHY of the mission. Leaders must deliver victory, or share equally or greater in defeat.
- People: Take care of your people. If you can’t deliver victory, if you experience defeat, drink more deeply of it than anyone else.
Example. Set it. The rest of all leadership flows from this single truth. You don’t get extra permission, you have extra requirements. A leader must never ask someone they lead to do something they would not be willing to do themselves. This does not mean that they need to do everything they ask of those they lead – but it does help if they can jump in from time to time and get their hands dirty to demonstrate they can. You cannot effectively lead from a cushy chair in an air conditioned tent, from a white stallion miles behind lines in a fancy suit, or from an executive suite. You have to get out to the front, to lead from the point of friction, and to share in the pain of the people at the bleeding edge that are delivering on the mission you outlined.
Mission. Outline it and deliver victory. You need to sketch the “Why.” You cant really delegate this. You can accept input, you can solicit feedback, you can holistically empower members on the the team to draft their contributions, but in the end, it is the leader who commits themselves and the team they lead to the purpose of the organization. Set an aspirational, world changing purpose. Describe a compelling vision of what the world will look like when you have achieved your mission. Describe the effects you will have on the battlespace, the population, and friendly forces – or the market, the consumers or users of your products or services and your competition. (The military calls this the “end state” portion of. Commanders’ intent.) Then set intermediate goals, describing why, what, when, where, and who will accomplish them and critically tie them always back to the higher level why eventually anchoring to the purpose of your entire organization. You can delegate authority but not responsibility. It is your charge to win victory. And victory is the best morale booster. Even when people have been driving hard and sacrificing sleep, health, or even the lives of their comrades, if the mission is worthy of it, and victories are achieved, it can be sustained.
People. Take Care of them. If you cant deliver victory, you must make clear you are bearing the cost as much as your team is. People are not resources to be expended. People are human beings that possess time and attention and talents that you can ask them to allocate to spend on your missions. This principle might shock some people – in the military, where we ask people to risk their very lives how can we talk about not expending people? How can we hold in tension the need to take care of people while knowing we may ask of them that they lay down their very lives for our cause?
Because that is the only way it can be done.
Rank alone is never enough to put people into a life threatening situation. A sergeant might be able to order a private to scrub a toilet, but charging a machine gun nest requires something much more. Sometimes fear can be a sufficient motivator to overcome fear of death or injury. In some militaries a private sufficiently afraid of a sergeant may charge a machine gun nest knowing the alternative is being shot by his own side. Some measure of this could be used in combination with fear of shame. That private might fear judgement by his peers for giving into his fear, for not charging the machine gun. Neither of these fear based motivators can last long, and it don’t lead to many victories. Truly effective militaries know that the only way to overcome fear is love. Love for one another and the team, love for the mission and the purpose.
So practically for business leaders in the modern environment – what am I saying? I’m saying you, as a leader must deliver victory or take a greater share of the suffering than any member of your team. Simon Sinek observed that in the Marine Corps we have a culture in which Leaders Eat Last – and he titled his second book after the practice. This is a symbolic, but also practical demonstration of the Corps’ culture for sharing in the suffering of your team. If there isn’t enough food, the leader thereby experiences the most of it.
Dan Price made headlines first for setting a minimum salary at his company Gravity Payments at $70,000. He did this by cutting his own compensation. The results have been powerful in the effectiveness of his company. In the Pandemic he and his executive team followed this framework – they shared in the suffering and cut their own pay first, then others who volunteered for it, to protect others that would otherwise have been laid off.
Conversely some organizations accepted massive bailouts, while laying people off and compensating their executives at absurd levels as though nothing were wrong. Hopefully regulators will step in to stop these unethical and immoral decisions in the future, so we can have harsh capitalism with companies and allow them to die if they’ve made bad mistakes, and protect people. But even if it doesn’t, the most talented people in an organization will notice. They will seek companies where leaders share in their hardship. Where they set the example, they outline the mission and deliver victory, where they take care of the team or bear the brunt of the suffering.
Which do you want to be?