Profits are the lifeblood of a successful business. None of the people who have shared their thoughts with me have anything against healthy profits. What they are against is a primary focus on profit. Viktor Frankl postulated that success and happiness cannot be pursued—they must ensue as unintended side effects of one’s personal dedication to a course greater than oneself. In like fashion, profits are the inevitable by-product of a business successfully run in accordance with a mission and purpose as described earlier.

Compensate Fairly
Hardly any discussion of leadership even broaches this topic, but it is hugely important. Leaders of the future will not seek monstrous compensation. In fact they will turn down offers of excessive remuneration and go out of their way to ensure that their emoluments are not disproportionate relative to others and the average at the company.

There are pragmatic reasons for this. The chief’s compensation—monetary as well as in the form of perquisites—is closely scrutinized. Any perception of excess immediately signals that this is a person prone to self-serving. None of his or her dictums to husband company resources or control costs carries any real weight, and many employees psychically distance themselves from such a leader. A leader certainly cannot generate a loyal following with that baggage.

There are also ethical reasons. In a complex modern organization, it is by no means clear who really adds value and how much. Outsized compensation for the person on top simply reflects where power has been amassed, and is a misuse of that power. This is seldom spoken of but is always recognized, and the resentment it generates chips away at the very fiber of an organization.

The following comments from one of my students are highly instructive. They are also representative of the thoughts of many: Say a company is in trouble. The board decides that they need a “strong leader.” To get him they offer a huge signing bonus,a large block of stock or options and other compensation that is frequently hidden. The implicit assumption is that money is the major factor that makes the job worth considering. And this has a chilling effect on everyone else in the entire company. Everyone starts thinking in terms of what they, too, can extract from the company.

It never occurs to the board members that the message they are sending is deeply flawed and dangerous. That maybe it is incumbent on them to find a person who thinks that rescuing a corporation with a storied past is a privilege. That there are people who would consider saving thousands of jobs and careers a reward in itself. They never find such persons because they never look for them.

They never look for them because they think that money is the only way to motivate someone. When they put someone like that at the top, the person immediately hires a whole bunch of others exactly like him. Carried to an extreme, this is what brings people like Al Dunlap to the top job of major corporations.

Our system is broken. Leaders who cannot induce a deep and inherent respect by virtue of being who they are cannot easily direct their followers. They then have to resort to “fear and greed” mechanisms to ensure behavioral compliance. Sometimes such mechanisms work, sometimes they don’t. But their presence does explain why so many of our largest companies have highly toxic environments.