Today's Stakeholder Revolt: Leadership's Do-or-Die

Today's Stakeholder Revolt: Leadership's Do-or-Die | LinkedIn

What if we were wrong…maybe we pushed too far. President Obama after the election of Donald Trump

What is going on with leadership? Trust in corporate CEOs fell to a modern-day low – down 12 points in 2017, the largest drop ever according to Edelman. Seventy percent of U.S. employees self-report they are disengaged at work. Deloitte found that in 53 regions around the world, without exception, the gap between what employees need and organizations’ ability to develop leaders responsive to those needs – widened. Corporate stock buybacks a transaction primarily benefiting shareholders – not workers – are projected to rise 51 percent this year.

The approval of Congressional leadership hovers at around 15 percent. Approval for our recent Presidents has become extremely one-sided. President Obama averaged about 13 percent approval from Republicans and now President Trump averages around 8 percent from Democrats. Today, highly partisan leadership is mostly rewarded and bipartisan leadership is mostly punished.

Think of parents as the key leadership resource for families. Single-parent households are the reality for 50 percent of kids born to mothers under 30 today, up over 700% since the 1960s – resulting in five times the poverty rate for those kids. On-site leaders are now cut to half for about half the kids. The proportion of children living in “grandfamilies” (with grandparents) has doubled since 1970. Separating children from parents has consequences – whether at home or at the border.

Religious leadership has spent an inordinate amount of time in the last decade dealing with divided denominations, congregations leaving, and clergy abusing children.

If leadership were a stock, it would be trading at an all-time low; if it were a baseball team, it would be in last place. Blackrock CEO Larry Fink warns about “leadership losing their license.” Why are leaders these days held in such disregard and even contempt?

I believe leadership got us into this dismal state and it will take leadership to get us out. As a former CEO and now an executive coach to public-company CEOs and non-profit leaders, it is my experience that a sizable portion of leadership is situational – defined by the unique demands facing each organization. Once Pearl Harbor was attacked on December 7, 1941, our country did not require a leader to unite this country for war. The surprise attack did that.

While leaders of that day had their challenges, the purpose behind their cause, the unity of their stakeholders, and the trust in their leaders were all high. The question today is what kind of leadership does our current situation demand?

Three Key Shifts That Alienate Stakeholders

I believe three big shifts are undermining stakeholder relationships with leaders.

1. Preferential Stakeholders: Haves and Have-nots

Absent an impending Pearl Harbor-esque threat, leaders today face less unified, more transient and less committed stakeholders. This fracture is compounded by a self-serving style of leading that is preferential to certain groups thus damaging overall group cohesion.

For years the top role-model for business leadership was Jack Welch, storied CEO at GE, whose mantra was “shareholder value” – treat the shareholder as King. This message became gospel in most business schools and corporations. Predictably other stakeholders – customers, employees, community – often sacrificed for the King, came to distrust business leadership and shareholders. Disaffected stakeholders – such as disengaged workers who give 57% less effort – eventually cost all stakeholders including shareholders. Last week GE was dropped from the Dow Jones industrial average. Jack Welch now calls “shareholder value the dumbest idea in the world” recognizing it is a crucial result but its source is productive stakeholder relationships.

President George W. Bush’s chief political strategist Karl Rove became a legend for playing to the base – often divisively. Get your tribe to out-vote their tribe – incite your tribe rather than appealing to unity across tribes. Sure enough it worked. And Obama and Trump won with a similar formula. Unfortunately, what got those leaders elected made governing the whole country very difficult.

At home, the rise of births to father-absent kids, a doubling divorce rate over the past five decades and a declining birth rate reflect a society collectively preferring parenthood (and children) less. Many millennials report delaying marrying to avoid the pain of divorce they experienced from their parents. Even for college-age kids, preferences continue: today the wealthiest top 1 percent get as many seats at Harvard as the bottom two-thirds of the population.

Special treatment of preferred stakeholders creates backlash and eventually disengaged, angry “un-preferred” stakeholders.

2. Kinder, Gentler Leadership Style – Not

The standard for acceptable leadership behavior keeps rising. The cost of toxic organizational cultures and leadership abuses – think Uber, Wells Fargo, Weinstein, Ailes, Catholic Church hierarchy – has grown less bearable. This cost alongside the influx of millennials into the workforce has resulted in demands for a leadership style that is more participative, collaborative, flexible, engaging, innovative, purposeful and nice. Similarly with parenting, many millennials avoid spanking and curt “no’s” with their kids, seeking a more relational leadership approach.

Unfortunately, many leaders have either not gotten the memo, rejected the new wisdom or are struggling with this new, “enlightened” way.

3. Short-term vs. Sustainable Results

In an age of instant gratification, quarterly earnings reports, and smart phones that provide access to stock prices or anything else in seconds – we expect results and we expect them now. In the world of millennial romance anthropologist Helen Fisher calls today’s short-termism “fast sex, slow love.” Swipe left, swipe right. Stakeholder impatience – home, work, politics or faith – favors short-term transactions, often counter to trusting, productive, sustainable relationships.

So, what is going on with leadership? Stakeholder expectations for fairer, nicer and lasting have changed – especially among millennials – but leader performance has not. Leaders’ inability to respond has created a growing “leadership disappointment” gap – the situation in “situational leadership” has shifted. Stakeholders are revolting against much of current-day leadership and some verge on becoming un-leadable.

Relational Leadership: Do-or-Die

Bob Woodward of Watergate-fame and author of eight books on Presidents defines the challenge facing a President: “To figure out what the next stage of ‘good’ is for a majority of the people.” In other words, not just one party or several interest groups. I believe today’s defining situation is disaffected stakeholders. The implication: the next stage of ‘good’ will require a special brand of leadership – Relational Leadership – intent on growing stakeholder relationships capable of producing that ‘good.’ Here are three keys for today’s Relational Leader:

1. Manage and grow the whole stakeholder pie – not just your slice (or side). There are two kinds of leaders: one prefers/pits one stakeholder group against others – shareholders over employees, partisan supporters over citizens, even parents over kids. It is called divide and conquer and it produces opposition. Short-term the preferred groups may benefit but longer-term the “out” group resists, rises up and erases the preferreds’ benefits. Obama articulately, coolly and unilaterally imposed his preferred executive orders. Trump inarticulately, hotly and unilaterally erased them. The pendulum swings madly to the extremes. The center is hollowed out, the whole is fractured and shrunk. Nothing sticks.

Relational leaders, by contrast, focus on connecting rather than dividing. They ask: Are my relationships big enough to get the job done? They make building productive, strategic relationships their highest priority – because they are going for sustainability. Remember Jim Collins advice: “get the right players on the bus” – Relational Leaders focus on all the stakeholders including adversaries. They manage the tension of competing needs and demands to move the enterprise forward. Former CEO Tom Monahan calls it “constructive dissatisfaction” – because if you consistently cave to just one group, like shareholders, it repels other stakeholders ultimately becoming destructive for the whole. The key is optimizing constructive support and even dissatisfaction, not destroying enemies. True leaders advance the restoration of wholeness.

2. Kinder, gentler is not enough – intentionally build diverse stakeholder relationships. Leadership style matters but Relational Leadership is more than just being “nice.” “Nice” repels less but it doesn’t build relationships. President Obama and Trump’s leadership styles are very different yet 50 percent of voters said the country was more divided after Obama’s presidency and 55 percent now say the same thing about Trump. Each failed to build strategic stakeholder relationships – especially enlisting the opposition – big enough to get the job done. While supporters eventually grow tired, opposition grows into energized enemies.

Relational leadership proactively seeks counsel and involvement from very diverse sources to avoid becoming bubble-dwellers. As Andy Stanley has said, “People who do not listen find themselves surrounded by people who have nothing to say.” Steve Jobs, not exactly Mr. Nice, said his most-proud accomplishment was not the iPad or the iPhone, rather it was building a team that could build those great products. Today, being a jerk can get you fired like never before, but just being gracious is not enough – accountability for high standards is also required. Relational leadership is about this impossibly demanding mission of proactively partnering-up grace – that builds loyalty and commitment – with accountability – that compels living-up-to high standards – into a productive dance.

3. Build trust through long-term purposeful vision, active short-term progress, sustainable results. Demands for short-term results is often the default for the absence of a trusted, purpose-filled vision. Amazon CEO Jeff Bezos consistently resisted shareholder pressure for short-term profits, giving priority to a vision of longer-term growth and marketplace transformation. One-night stands substitute poorly for purpose and sustainable vision.

Relational leadership is intent on using purpose and vision as glue to manage the tension of impatient and highly diverse stakeholders. It seeks trust at three levels: Intention – do you trust my intention? Action – do you trust committed-actions will back-up my intention? Outcome – do you trust the actions will deliver results? Once someone loses trust of your intention, you are done. Action ultimately affirms intentions; results, however require competent action. Relational leaders transparently report progress on intention, actions and results that builds trust and sustains productive relationships.

We are all leaders. In leading and selecting leaders – as parent, boss, worker, voter, neighbor, volunteer, church member – relational leadership will be crucial for the next stage of ‘good.’

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