Is A Committed Capitalist Really an Enlightened Leader In Disguise?

To many, “capitalist” has a negative connotation: greedy, only thinking of their money and not people. Yet, I have found that bottom line capitalists are in fact often not only enlightened leaders, but extremely generous, to the point of being humanists.

When I started in this field in 1993, I considered myself a humanist. I was guided by the principle that if employees concerns are ignored, it will negatively impact the company. I still think this principle is the foundation of strong leadership, yet I am surprised by how often over the years I have heard myself asking clients, “Why don’t you just fire them?”

Don’t get me wrong—I am all for working towards a positive conclusion when there are performance problems. But sometimes quick dismissal is the best solution. In fact recent research by Leadership IQ shows that 27% of CEO’s get fired for exactly this reason: they are too tolerant of low performers.

I have watched executives go to great lengths to avoid firing people that are clearly either incompetent or just a bad fit for the job. The negative consequences of not firing the person are clear: reduced team results and negative motivational impacts on others. Peers see the incompetent person not being fired, and think “I am busting my hump to get results, and this bozo does nothing and gets the same bonus?” Your team then doubts your leadership abilities and your overall stock in their mind is rapidly reduced.

These are 3 excuses leaders give for being ‘overly generous’ with employees – and none of them hold water. If you are using them, it is time to cut the cord,

1. “I want to just give them one more chance” This means you have waited too long. How many last chances should one person get? We ask leaders in our workshops , “What should you do when someone is not performing up to standard?” One person says send them to a class; another says mentor them; another says reassign them. And so on and so on. “Fire them” is not mentioned for a long time. This is my experience with leaders in general. They will do everything to give the problem employee one last chance, and another, and another. If you’ve already told them the goals, coached them, removed barriers, discussed the performance problem, then guess what? You’ve already given them that last chance. Fire them already!

2. “What will others think?” This is the worst excuse. For example, I received a call seeking advice about how to handle an employee who earned about $100,000 / yr. and was discovered to have made several mistakes that cost the company hundreds of thousands of dollars. When I asked “why don’t you fire him?”, management said they were concerned that people would think they rushed to judgment. Really? They should know you will rush to judgment when incompetence is clear. When I probed, they said they were moving the person to a less demanding job—a dead-end job with no career growth. Letting that person stay shows that management doesn’t value money or the hard work of others, and frankly, is cruel and disrespectful to the offending employee. Man up and make the right decision even if it isn’t easy.

3. “It would be too disruptive” This is also ridiculous. A division leader once hired my business partner Antoine to coach a manager two levels down. After initial interviews with the leader, Antoine said that hiring us wasn’t worth it – The manager wasn’t the right person for this job, they couldn’t do the job with all the coaching in the world. And all the executive could say was, ”It would be too disruptive to let them go.” So he hired us anyway. Three months and much coaching later, the manager quit. They started to see for themselves that they weren’t a good fit. The executive called Antoine with relief and happiness to tell him the manager quit. Yes he was happy, but were the financial and morale costs in the 6 months that this problem existed worth this non-decision? I say no.

The resulting rule is this: “If you are complaining about the same person more than three times to your spouse, you should fire them.” This final rule, simple and blunt, comes from a technology COO , with experience leading organizations both big and small. Sure, it is normal to have issues with people on and off. Performance and relationships ebb and flow. But if you repeatedly bring your work issues home and keep discussing the same problems with your spouse, this indicates, as he puts it, “there is a conflict between the values and behaviors that the firm finds acceptable , and the employee”. The bottom line is that the employee is a problem and must go.

I have come to see that capitalist and humanist are not opposites but synonyms. Focusing on the bottom line makes you act quicker to fire people. And after being fired, many people find new energy and focus in different industries and jobs. The push out gets them to see their true gifts, which they can apply to the business world elsewhere. The whole team’s team’s pride and espirit de corps improves too: they can get back to doing the good job that they want to do without being distracted by the low performer. And your reputation will increase in the eyes of the people around you-they will respect you for doing the right thing.

The bottom line is that if you want high performance, reward it. Successful capitalists build their fortunes and organizations on this principle. But they also know they can’t succeed by being an enabler of sub standard results. When it is time to say goodbye, you need to say it. It is the most profitable and most humane approach to take.

If you want to see if your leadership choices are that of an enlightened leader, answer these 8 questions at www.thepowerofswing.com

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