Unemployment Diary: Leading from the Middle

Long ago, Baden-Powell suggested that, on a hike, the patrol leader should “lead” from the middle. Here he will be in contact with all his Scouts. Here he will know exactly what is going on ahead and in the rear. Here he can have the new Scout close to him, giving him a chance to know the boy, giving the new Scout a chance to know his patrol leader.

Boy Scouts of America, The Official Patrol Leader Handbook

March 16, 2009

The recent uproar over retention bonuses and executive compensation at AIG and other financial firms implicated in the economic catastrophe has given us an opportunity to talk about how people are paid for their work; if all we do is sharpen our pitchforks and light our torches while descending on the enclaves of power, though, we’ll have wasted this conversation. Though outrage is certainly cathartic, and justified, it’s not sufficient to make serious change.

We have in the United States the steepest slope in pay scales in the industrial world. The AFL-CIO has an interesting tool that lets you see the compensation of publicly-traded corporations’ CEOs in stark terms: we can see, for example, that AIG’s last president, Martin Sullivan, made about as much in 2008 as 8 Nobel laureates, 34 U.S. presidents, 472 average workers, or 1,024 minimum-wage workers. My former CEO certainly isn’t in the same stratospheric range as Mr. Sullivan was, but he does make enough to cover my former salary 31 times over.

There’s a similar pattern elsewhere in the developed countries, though there are often caps placed on executive pay. We have a sharply hierarchical distribution of wages, implying that the work of the person at the top is worth many times the work of the person at the bottom, and that the corporation depends on the CEO’s specialized talents for its survival. It’s an unexamined assumption that we would do well to consider.

Stever Robbins gives a succinct job description for the CEO position: the CEO sets strategy and vision, establishes the corporation’s culture, fosters teamwork, and sets priorities through fiscal allocation. These are obviously important jobs, but are they 472 (or 31 or 703) times more valuable than the work done by the people who implement the vision? Should the CEO really be the highest paid person in the corporation?

Recently, a few executives have opted for the “$1 a year” compensation package; I find this insulting. It’s an obvious stunt: the paycheck is a tiny part of the executive’s total compensation, and it’s unlikely that I’d bump into a $1/year CEO at Saver’s, or share coupon tips with him in the checkout lane at Rainbow. There’s far more public relations than true leadership in this sort of trick.

I’d like to see a CEO with real vision and leadership try something that my old Boy Scout Patrol Leader Handbook suggested: lead from the middle.

When I was a Boy Scout, I did my stint as a Patrol Leader. It was my job to set the strategy, culture, teamwork, and priorities of a group of four to ten Scouts, though our resources amounted to a few tents, an axe and saw, a box of cookware, and a cooler of food. A successful patrol leader doesn’t rush out ahead of the patrol and blaze new trails; he delegates that to the Scout with a knack for pathfinding. And he doesn’t set up a nice Springbar tent on top of a hill while the rest of the patrol struggles with moldy green canvas; he uses the same tent as the rest of the team, and if he’s smart he puts it right in the middle so he’s available to advise and lead whenever his input is required. In the middle, he knows what’s going on, and he can lead his patrol on a successful outing.

How interesting it would be to see a corporate leader model a Scout. Gone would be the corner office upstairs with a cherry desk suite; instead, the patrol leader CEO would have a cubicle (maybe with high walls, even a door) on the same floor as his employees. He could hear the buzz of the office, participate in the water cooler chatter, and know first hand if his vision is working instead of having the news filtered through his minions. He could set an example of teamwork by using the same spartan conference rooms as the regular workers when he needs to call a meeting; if he truly requires an updated conference table with leather chairs, then he can share the improved amenities with the accounting or web development team when they have their meetings. When he delegates work, he can actually see it done, and when employees have questions, they can ask him directly rather than through one of those seldom-monitored suggestion boxes.

And for pay, rather than making a mockery of the “common touch” on a dollar a year, he could accept compensation that’s the average wage of the team that he’s leading. By taking a salary somewhere between the lowliest help desk drone and the most esoteric of financial wizards, his fortunes would be truly tied to the corporation’s. If he wants a pay increase, or better benefits, then he would have to extend the same to everyone; and if he decides that pay and benefit cuts are the path to economic prosperity, then his own salary is trimmed in proportion to everyone else’s. A leader need not be a king.

Of course, CEOs are clever people–you don’t climb the slippery pole unless you’ve got no compunctions about stepping on some hands and heads and hearts to get to the top–so our current crop of corner office holders would find many ways to subvert this subversive idea. They could simply outsource all of the low wage workers, or create a special management corporation made up of just the top echelon of employees; they could opt for an office-less office, encourage everyone to telecommute, and work from their mansion or penthouse to avoid the hoi polloi; they could devise some alternative forms of compensation (there are so many ways to spell “bonus”) to keep themselves in the regal manner to which they’ve become accustomed. Leading from the middle would require a completely different kind of person–an actual leader, who recognizes that his skills in vision and team building don’t set him apart and above, but actually require him to be within and among–than what we install into power today.

Which is a shame, because leadership is what we’re lacking most, and most desperately need.