What can business owners learn from the last German emperor Kaiser Wilhelm II that can help them recover from the coronavirus shutdown? Quite a bit — when it comes to what not to do.
With the world in the midst of the coronavirus pandemic, many comparisons are being made to the influenza pandemic that swept across the world in 1918. Wilhelm is widely considered to be a major instigator of World War I, which created the conditions that contributed to that pandemic. Much of the problem can be traced to Wilhelm’s poor leadership abilities. Although Wilhelm thought he was brilliant, he was a terrible leader who “viewed other people in instrumental terms, was a compulsive liar, and seemed to have a limited understanding of cause and effect.” His leadership led to the destruction of his country, and nearly an entire continent.
Much like the influenza pandemic of Wilhelm’s day, the coronavirus shutdown is putting millions of businesses at risk. Indeed, a survey from Main Street America revealed 80% of small businesses have closed temporarily and two-thirds are at risk of closing permanently if the shutdown lasts for five months.
However, it is not as if everything was fine in the business world before it was hit with the coronavirus. When the shutdown eventually ends, businesses cannot simply expect to survive by doing things the way they did before. Before the shutdown, many managers gave no thought whatsoever to the need for effective leadership. For them, taking the time to learn about sound management techniques had all the appeal of a hot dog machine at a truck stop. Thus, the leadership style defaulted to a Wilhelm-like one, in which subordinates were ordered about and were expected to obey without independent thought.
According to Forbes, “a full 50% of employees who leave companies cite their manager as the reason.” As noted in Fortune, poor management causes employees to leave “(b)ecause at the end of the day, it’s constant abuse or fear of abuse.” This is enormously costly to the organization. For example, a study by JD Match concluded that attorney turnover costs the legal industry approximately $9.1 billion annually for the turnover in just the 400 largest U.S. firms.
Not only is poor management costly because of the employees who leave, it is costly because of its impact on employees who stay. Indeed, this style of leadership leads to decreased productivity and increased mistakes. As noted by Liz Wiseman in her groundbreaking book “Multipliers,” research shows that poor leaders get two times less productivity out of their subordinates than good leaders do.
Experiments cited by professor Richard H. Thaler have shown that treating employees well will be reciprocated with higher effort and lower turnover. Wiseman has explained that, to the contrary, a leader who focuses on his or her intelligence and desire to be the smartest person in the room kills the ideas and drains the energy out of everyone else. This leads to the phenomenon in which subordinates will “quit and stay,” where they go through the motions on the outside but have given up on the inside.
Another aspect of good leadership is fairness. To be fair does not require a leader to be a pushover and jeopardize the goal, but it also does not require a manager to resist all concessions. Indeed, there can be dire consequences to a leader who refuses to be reasonable. Thaler has stated that there is clear evidence that when people are treated in a way that they believe is unfair, “they can get angry enough to punish the other party, even at some cost to themselves.” This unlikableness based on unfairness can spread to others besides just the person being treated unfairly. Research cited by Nobel Prize winner Daniel Kahneman has shown that even strangers who observe unfair behavior will attempt to punish the person who is being unfair.
Internationally known psychologist Daniel Goleman has stated that subordinates must receive feedback from leaders so they can keep their efforts on track, but criticism that contains disgust, sarcasm, contempt or personal attacks is not effective. In fact, Goleman cites research that has shown that angry criticism leads to evading responsibility or stonewalling — avoiding all contact with the leader who blew up in anger. Additional research has shown that “inept criticism was ahead of mistrust, personality struggles and disputes over power and pay as a reason for conflict on the job.”
Ultimately, business owners must realize that when the coronavirus shutdown ends, recovery won’t come automatically by simply doing what they did before. Survival will be tenuous, whether they serve Irish nachos or sell Post Malone T-shirts. They simply cannot afford the financial losses that come from the employee turnover and disengagement that is the result of poor management practices.
The Civil War Gen. Thomas Francis Meagher once stated that “great interests demand great safeguards.” It is clearly in the interest of managers who want to help businesses recover from the coronavirus shutdown to follow sound leadership practices. If they don’t, they risk having the same thing said of them that the general staff of the German Army said about Kaiser Wilhelm II: that he “couldn’t lead three soldiers over a gutter.”
Blake R. Hills has been a trial attorney in Utah for close to 20 years. He has had numerous assignments as a supervisor during that time.