Some time ago, I accepted a challenging consulting engagement with a national bank. The chairman and CEO of one of its multibillion subsidiaries abruptly resigned and I was to crisis manage the company as interim CEO until a permanent replacement could be recruited.
Over the course of that assignment, I often interacted with the senior executive to whom the subsidiary reported—the parent bank’s head of commercial lending. Late one evening, as we were reviewing the company’s progress to date and began to discuss the operational and personnel changes I was proposing, the executive interrupted to ask whether I subscribed to the Jack Welch school of management.
“What do you mean?” I asked. “Evaluate everyone and get rid of the bottom 20%,” the executive responded mater-of-factly.
Although my recollection of that particular metric was 10%, not 20%, I didn’t believe in Welch’s cutthroat formula and said so. The executive wasn’t impressed. “Then you’re really not committed to achieving performance excellence, are you?” Certainly not, I thought, given that after eliminating the bottom 20%, those in the 21% to 40% layer would then become the new bottom 20%, subject to termination in the subsequent evaluation cycle, and so forth.
But instead of arguing that point, I chose to ask about the managers who were responsible for hiring and supervising all those failing employees in the first place. After all, it takes a good deal of time and treasure to source, recruit, train and help make productive newly hired personnel. How, then, are those who made all those decisions and failed to remedy their now-obvious errors held to account?
We did not resolve our difference of opinion that night. But our exchange did trigger a memory from early in my career.
I was an inexperienced manager and things were not working out well with my first hire. So, I turned to my supervisor for advice. And because I was fearful and cowardly, I placed all the blame on my subordinate for his poor performance.
I will never forget my supervisor’s response. He raised his arm, pointed a finger at me and said, “Look at my hand,” as he slowly turned it on its side. “Every time you point a finger, there are three pointing right back at you.”
A year or two after my engagement with the bank ended, my son happened to say something that caused me to recall that late-night conversation with the executive. He smiled after hearing the story and went on to describe his own technique for evaluating prospective investments for the funds he manages.
He calls it “the velocity of executive turnover,” and it measures the extent to which the CEO’s direct reports have left the company, voluntarily or otherwise. An excessively high departure rate, he explained, likely indicates that the CEO is impossible to work for, or that he doesn’t know how to hire in the first place. Either way, he concludes, the board of directors is complicit because its members have apparently done nothing to address that dysfunctionality.
Consequently, no investment.
Leaders—whether in commerce, academia or government—who talk about striving for performance excellence or, even, greatness while habitually blaming others for mistakes that can be reasonably attributed to their own negligence or incompetence aren’t leading. Rather, they are misleading those whose trust in them is obviously misplaced.