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Is Tough-Ass Leadership Better Than Servant Leadership?

January 23, 2011

Updated December 8, 2011

As a Western society we’ve been enraptured with leadership for decades. The past 20 years have witnessed a tidal wave of books on leadership and management, with most of them having short shelf lives and, in reality, providing gimmicky messages based on flimsy or non-existent research.

One segment of the literature has conveyed the core message that those in charge of organizations should follow a servant-oriented approach to leadership. Adapted from Robert K. Greenleaf’s work, servant leaders exist to serve their followers as they work to advance their organizations towards shared visions. In short, a servant leader has the natural feeling to serve to lead others, in contrast to wanting to lead based on authority and power.

However, in a period of escalating global competitiveness, characterized in part by a race to the bottom when it comes to wage rates and working conditions, some would argue that being a nice boss and being inclusive by practicing a servant leadership philosophy is a recipe for disaster, where the take-no-prisoners approach by hungry emerging economies is the new reality.

Welcome guys like cut-throat Oracle founder and CEO Larry Ellis and retired General Electric CEO Jack Welcome. Did I say “welcome?” Well, let’s take a look at a selection of CEOs who could be deemed mean jerks versus servant leadership corporate managers, and what their results were for the companies they lead.

First up, Larry Ellis. Never one for mincing his words or chewing out a subordinate, Ellis recently attracted attention by lambasting Hewlett-Packard (a company with which he had previous good relations) when it fired high-performer CEO Mark Hurd for what turned out to be false claims of sexual harassment. Ellis, who seemed to take exquisite glee in criticizing HP’s management, subsequently hired Hurd (the subsequent legal issues have apparently been worked out).

In her 2003 unauthorized biography of Larry Ellis “Why Everyone Else Must Fail,” Karen Southwick (who died from cancer in 2004) stated that he was a “…modern-day Genghis Khan” because of his ruthless business approach, which includes his intolerance for anyone who gets in his way.”

This is the CEO who is said to show up for meetings when he feels like it, discards senior rising stars and exudes narcissism like no rival. Yet Ellis ranked as the sixth richest person in the world with a net worth of around $28 billion.

However, 61 year-old Ellis produces results, despite his alleged poor listening skills, top-down management style and lack of empathy. For one thing, he’s known for hiring very talented people who deliver. Oracle has annual revenues of $27 billion US and acquired some 65 technology companies since 2005. After hiring Mark Hurd, Oracle’s shares rose 5% while HP’s dropped 1%. Not too shabby.

Would Oracle be better off financially if Ellis had been practicing servant leadership?

In the November 6, 2010, issue of The Economist, an article on Oracle noted the “growing anger among customers of Oracle” over increasing maintenance fees for its software programs. While Ellis’ outburst against HP regarding Mark Hurd had “entertainment value” and “may impress Wall Street,” according to The Economist, in the end it probably won’t boost Oracle’s sales.

For a glimpse of Ellis in action, check out this talk he gave on cloud computing in 2009, in which he takes others to task and provides his own perspective on what it represents. Note his cutting humor during parts of his talk:

A second tough-ass CEO was “Neutron” Jack Welch, head of General Electric between 1981 and 2001. Now 75, Welch has been viewed as the catalyst who relentlessly drove GE to streamline its operations by shutting down factories, running lean inventories, de-layering management and laying off employees. His focus for GE was being number one or two in any market in which it competed. Those managers who didn’t perform didn’t last long under Welch. In fact, he conducted an annual firing of the bottom 10% of underperforming managers.

And it worked – depending on to whom you speak. Welch was a hero to many in the corporate world, yet he still has many detractors who argue that the lifeblood of any organization is its employees, managers and staff. Nuking managers on an annual basis is not the way to lead an organization, according to Welch’s opponents.
Since retiring from GE, Welch has done a number of media interviews, from which he has had to backpeddle a few times. For example, in a March 12, 2009 interview with The Financial Times he stated: “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy…your main constituencies are your employees, your customers and your products.”

That comment got a reaction from other CEOs: would Welch have made the same comment when he was in charge of GE? This issue of shareholder value and who are the primary constituents of a corporation continues to be battled out in the business literature.

Watch this interview of Jack Welch with Charlie Rose shortly before his retirement from GE, in which he shares his views on corporate leadership and community service:

One can argue endlessly whether Larry Ellis, Jack Welch and others have taken the correct route in leading their respective companies. In fact, some might say that the role of a corporate CEO is not to engage employees in a collective singsong of Kumbaya, but rather to demolish the competition and ensure that the company remains at the forefront. You’re either on the bus or under it, as the popular expression goes.

In fact, let’s look at the issue from an even more global level. China. This country’s dramatically impressive growth rates and steady climb up the value chain in manufacturing is based on results-based management with little margin for error. The on-the-bus analogy is very apt here.

I personally don’t validate the process of brow-beating subordinate managers and staff, preferring the approach of aligning and enrolling people to work towards a shared vision and common purpose. But then some would accuse me of being a softie. The results of GE under Welch and Oracle under Ellis are indeed impressive.

As a contrast to the CEO as emperor, let’s look at some other company leaders who have lead successful enterprises using very different people-oriented approaches.

Max Depree, retired CEO and respected leadership author provides a compelling case for a servant-oriented approach to leadership. DePree, who’s written such concise books as Leadership is an Art and Leadership Jazz bases his writings on his real life experiences in running a highly successful company.

His father, D.J. DePree, founded office furniture manufacturer Herman Miller in 1923, purchasing the Michigan Star Company with his father-in-law Herman Miller. Max and his brother, Hugh, began to co-manage in the early 1960s. In the mid 1980s Max took over as CEO, holding that position until 1990. He subsequently launched a career as a highly successful author on leadership. The Max DePree Center for Leadership” continues to promote his beliefs and practices.

From the mid 1970s to the mid 1980s Herman Miller was rated as 7th globally in return on investment. However, of particular significance was Max’s emphasis on integrating his beliefs into the company’s culture. The Scanlon Plan, a program that encouraged and rewarded employee participation, was one major outcome.

Herman Miller continues its focus on employee engagement, product quality and customer service through its commitment to operational excellence, which encompasses production systems, employee ownership, innovation and economic value-added. Herman Miller has been ranked as one of Fortune magazine’s most admired companies for the past consecutive 18 years.

Take a look at this cute Herman Miller video on their disappearing popular comfy chairs from London office buildings:

Let’s look at a second CEO who has been part of an amazing story in the competitive and volatile airline industry. Southwest Airlines began operations in March 1967, serving just three cities in Texas. During its 43 year history, the airline has grown to be the world’s largest low-cost carrier, earning repeated accolades along the way for its focus on customer service and its humane treatment of its employees.

The current CEO is Gary C. Kelly, who took on the new role on July 15, 2008. However, Kelly began his career with Southwest in 1986 as comptroller, subsequently working his way up to CEO. It’s not a usual part of a CEO’s job description to dress up in a silly costume for Halloween, but Kelly has a way to inspire fun in the workplace. This is the CEO who makes a point of sitting beside customers and employees on flights to listen to their concerns and flying experiences.

This short video shows Gary Kelly explaining Southwest’s thinking behind improving productivity for business travellers.

Southwest Airlines has faced the same challenges as other airlines over the years, especially with the onset of the Great Recession two years ago. However, Kelly has resisted layoffs and instead engaged employees on ways to address challenges.

Here are a few metrics that underscore the success of Southwest Airlines. First, it has achieved 37 consecutive years of profitability, ranked #1 in customer satisfaction in 2009 by the U.S. Department of Transportation, and named by Fortune magazine as one of the world’s most respected companies 13 years in a row. Kelly, himself, has been the recipient of numerous leadership awards, including leading one of America’s top workplaces.

To reach this level of success in what has been described as a dysfunctional industry is extraordinary. It was not done easily, yet Southwest’s formula for success is not a trade secret; it’s about treating employees as human beings and keeping them engaged and aligned towards the corporation’s core purpose.

Southwest Airlines has gained noteworthy attention over the years by the humor its flight crews use as a way to lighten the tension the flying public often has and to make the experience more human. Here are but just two examples that illustrate this humor. It’s useful to note that some other airlines, including Canadian ones, have tried to replicate this humor, but not as successfully as Southwest. Why? Because employees have to be happy in their work to be funny.

From a Southwest flight attendant who intervened when passengers were taking too long to get seated: “People, people we’re not picking out furniture here, find a seat and get in it!”

During a pre-takeoff safety explanation on the intercom from a flight attendant: “There may be 50 ways to leave your lover, but there are only four ways out of this airplane.”

Better yet, check out this CNN piece on one of Southwest’s flight attendants. This is obviously a guy who loves his job and engaging passengers. Hard to do this is if you’re a miserable employee.

For an example of another servant leader who has lead a highly successful manufacturing company, read my post on Ray Anderson, seen as perhaps the greenest CEO on the planet.

So what’s the verdict, folks? There are success stories on both sides of the CEO-as-tough-ass versus servant leader issue.

Here’s one additional information piece for you to reflect upon. It’s an interesting post by business prof Bret Simmons Is A Narcissistic CEO Good For Your Organization? Simmons refers to one study which found that narcissistic CEOS had a tendency to make “bold, risky action.” However, their results varied widely.

For companies like Southwest Airlines and Herman Miller, they have stood the test of time and continue to remain profitable. It will be interesting to watch how Oracle proceeds into a rapidly changing world of technology. General Electric already has had its ups and downs and faces some big challenges.

In the end it’s our personal decision where we wish to work. Yes, even in a tough labor market there are times when some soul-searching is needed.

From your own perspective and experiences, where would you prefer to work when it comes to how executive leadership is practiced? Take a moment and share a comment.

The workplace is an incubator for the human spirit.
(the late Anita Roddick, Founder of the Body Shop)

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5 Comments leave one →
  1. January 27, 2011 1:12 pm

    I suppose it depends on how we define “better”.

    It probably is better if the goal is short term returns and immediate results.

    However, if the goal is sustained performance over a long time frame, then I am convinced that the servant leader is far more likely to produce a framework that will result in an appropriate culture for ongoing success.

    One of the big ones that you didn’t mention, whois getting a lot of well-deserved press right now, is Steve Jobs. In my opinion, much of Apple’s success can be attributed to a cult of personality built around the aura of Mr. Jobs – one of history’s great asshole bosses. The intersection of his force of personality and Jonny Ive’s design has result in some wonderful technological trinkets.

    But let’s not forget, stock price is supposed to be a reflection of the value of future profits for a given firm. And Apple’s stock immediately dropped 5% on the announcement of his recent leave of absence.

    • January 27, 2011 1:23 pm

      Thanks Geoff. Yesterday morning I was reading this week’s BusinesWeek while eating breakfast. And it struck me: I should have included Jobs in this post. From what I’ve read, he’s exceedingly demanding of his people. But look at what he’s produced. Yet he’s private and not flamboyant like Ellis or Welch. With his recent medical leave and unknown return date, it will be interesting to see how Apple performs, both from an innovation perspective and in the value of its stock. Of note, the BW article stated that Apple was on autopilot for the next two years. I think that’s a rather simplistic view of the short-term future. A lot can happen in the space of two years.

  2. January 25, 2011 8:38 pm

    I appreciated the juxtaposition of leadership styles while demonstrating that organizations can perform with either–the question being, at what cost? Max De Pree said “Only leaders can stand up to the organization and hold it to its goals and to its required performance.” (Leadership Jazz, p.23). I think he models that an approach that appreciates the potential in every person and produces results is possible.

    I often wonder if this cost could be counted that a manager early in her career might adjust before hubris set in. My response to your post here:

    -Joanna, Max De Pree Center for Leadership

    • January 25, 2011 9:29 pm

      Thanks Joanna for sharing a comment. I believe the cost is measured over the long-term (decades) and not in the quarter-to-quarter mentality adopted by most corporations. It’s why companies that are more inclusive and participative with a focus on why they exist will undoutedly perform better in a global economy.


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