Great Leaders, Veiled Vanity and Forgiveness

Today’s definition of a great leader has evolved.  Power, prestige, position have displaced others as pre-eminent qualities of a great leader.  I recently read a terrific post on Harvard Business Review that reminded me of one such displaced trait that some might even perceive as quaint.

The ability and willingness to forgive others has not only slipped in stature, some may now even believe it to be indicative of weakness.  However, revenge (as the opposite of forgiveness) isn’t proper strategy or leadership, but rather thinly veiled vanity as the following story about General Ulysses Grant illustrates.

In the historic Civil War battle for Fort Donelson, General Grant had asked for Navy support and ordered them in.  In their haste they got too close and were beaten severely.  Two had their steering knocked out by the fort’s cannons and began to drift down river.  Grant and his army were in a precarious position.  His 20,000 men surrounding the fort were equal in numbers to the defending confederates in and around the fort.  It is an axiom of war that the attacker nearly always needs an advantage of at least three to one to be certain of victory against a well-entrenched army.  Grant was an aggressive general who generated his own luck by pressing the enemy hard enough that they made mistakes.  As he continued his attack the defenders grew nervous and tried to escape by knocking a hole in Grant’s lines and escaping with their army.  As they made an attempt to do so, they made a fatal error when they delayed to gather supplies and ammunition. As the pressure slackened, Grant said, “the one who attacks first now will be victorious.”  He won the battle and secured the fort. It is a very rare event for an entire army to be captured.  General Washington had accomplished it at Yorktown.  Grant’s senior leaders were excited at the prospect of having the enemy regiments paraded in front of the victors, with bands playing and the opposing general ceremoniously handing over his sword.  When one of them asked General Grant when the ceremony would be held he responded, “There will be nothing of the kind, the surrender is now a fact.  We have the fort, the men, the guns.  Why should we go through vain forms and mortify and injure the spirit of brave men, who after all are our own countrymen and brothers?”

Great leaders, like Ulysses Grant, understand that forgiveness for mistakes, for perceived slights, even for war or debt, promotes a healing process and growth in individuals, teams, companies and nations.  This can seem counterintuitive when we’ve been programmed to believe in rewarding good behavior and providing negative consequences for improper behavior.  However, timely forgiveness can create indefatigable loyalty and strong team dynamics.

This certainly proved true for Grant and Lincoln as they famously moved toward rebuilding by forgiving, rather than demanding reparations or “vain forms.”

Seeking payback through humiliation or other means, regardless of attempts to veil it, seldom creates positive momentum.  As Mahatma Gandhi powerfully suggested, “An eye for an eye only ends up making the whole world blind.”

 David Chase has experience in small to medium private companies and large public companies as a senior operational and financial leader.  With 14 years in finance, a CFO of multiple entities and divisional EVP experience, Dave has a breadth of experience.  Dave has led or been instrumental in raising multiple rounds of equity and debt in excess of $450 million.

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Are Your Sales or Incentive Comp Plans Working?

We recently helped a client evaluate their sales compensation plan (it was not working well) and in the process we recommended and they agreed that they start over and create one from scratch.

It was an interesting process and reminded me of some key principles around compensation in general and sales comp in particular that I learned a long time ago, they are:

  1. Any compensation plan must be simple to understand, measure and track (this is the 30 second rule: if you cannot explain it completely in 30 seconds, it is probably too complex).
  2. Results must be easily and regularly reported so that the employee knows whether or not he/she is winning or losing at all times. I prefer that the sales person / employee be able to track and monitor her/his own results with the finance team available to support and verify.
  3. The plan must be consistent over time (i.e., you cannot change the goal line).
  4. The plan must clearly be in line with and support the business’ overall strategic goals. I can’t tell you how many times I’ve seen compensation plans that actually provided perverse incentive to the employee!

With respect to sales and incentive compensation, in my experience the more you can leverage compensation to results, the better off you’ll be in the long term. As the CEO, that means allowing your sales employees to earn more from their profitable sales results than they can from their salary. If their efforts provide profitable growth for the Company, do you really mind that they make more money than some of the company’s executives? Absolutely not! Rather you should be delighted – and so will they be.

The problem with salary-heavy compensation, of course, is that it decreases motivation and makes it virtually impossible for a small company to scale. Commission or bonus-focused compensation plans, however, provide tremendous upside for growth and allow CEOs to truly leverage their people. I’m not talking about a unitary system here that’s only good for the company – those plans will never work. Bonus-heavy compensation is ultimately better for everyone, providing ample opportunity for each member within the sales team hierarchy (and the company itself) to make more.

If your incentive compensation plan is not providing the incentive for your key sales team members to excel, it may be time to re-think and re-design a plan the better aligns everyone’s interests.

Good Luck!

Author: Kent Thomas @advancedCFO