Are you a leader or a manager?
What’s the difference between leaders and managers?
Ask Jim Smith, who took a company public, helped another to a successful IPO by cutting $35 million in costs, and was voted as one of the top 101 employee engagement influencers in 2017 along the likes of Richard Branson, Jeff Weiner and Mark Zuckerberg.
Jim’s consulting firm was invited by a major US utility to bid for a cost reduction project after a year-long internal initiative had failed to produce the earnings improvement the CEO needed.
“We were up against the four largest consulting firms in the US and were the last ones to present. They must have liked our proposal, because I got called back from the airport, and we made the deal that night,” Jim says.
The company was in a tough situation: because of the WARN Act, which requires US companies to provide 60-day advance notice of mass layoffs, they had already announced that they would have to lay off 3,000 employees, meaning more than 1 in 10 people would lose their jobs.
Jim’s proposal was brilliant in its focus and simplicity: a 10-week project in which employees would be asked a single question by the CEO. Fees would be contingent on the results.
But at first, the expected cost cutting suggestions from employees trickled in slowly, with only 800 ideas received in three weeks. The one recurring theme in the comments was about the fleet of private jets the company’s executives were using.
“We took these comments to the CEO and pointed out that asking employees for ideas to cut costs while all the officers are flying around in private jets is unlikely to send the right message,” Jim recalls.
The CEO agreed, and promptly announced to the company that the jets would be sold. Within a week of the announcement, Jim’s team received almost 4,000 employee suggestions.
“Employees don’t care about what you say; they care about what you do,” says Jim.
“If you want an engaged workforce, listen to employees, and act on their suggestions – the next day. Go for the sacred cows: do something completely different than employees expected, get that bully fired, kill that policy that everyone hates. If there is a good idea that can make your company better, why would you wait?”
Armed with thousands of employee suggestions, Jim and his team ended up delivering a $300 million cost reduction and saving 1,800 jobs.
Their process worked because it suspended the inertia, silos and politics that often take root in hierarchies with multiple layers of management.
Employees weren’t simply asked for their input; Jim and his team actively advocated for their ideas. If a manager failed to act on a good idea immediately, Jim’s team would escalate it; if needed, all the way up to the CEO.
After all, when hearing a team member grumble at the water cooler about the CEO’s private jet, what manager would take that up with the CEO?
Managers are typically paid to operate within the confines of existing systems and are rewarded for efficiently maintaining the status quo.
Leaders, by contrast, are paid to upend those systems when that’s what the situation calls for – sometimes even to upend the very systems that they had created or of which they are beneficiaries.
Leadership is not focused on “occupying the spaces where power is exercised, but rather on starting long-run historical processes,” Pope Francis said in one of his first public interviews.
Leaders are people who transform organizations, societies, the world. The Abraham Lincolns, the Mahatma Gandhis, the Martin Luther Kings, the Nelson Mandelas.
They are also, like all of us, fallible, prone to errors of judgement and blind spots. That’s why the best of them also create processes to get honest feedback from those they lead. As the great kings in folk tales, they wander among their people in disguise to find out how things really are going – or hire a consultant like Jim.
And when they hear a team member grumble about their private jet, they promptly proceed to sell it.
Or better yet, like Dutch Prime Minister Mark Rutte, when they’re called into a meeting by the King, they cycle over and park their bike outside the palace.