What is the Cost of Leadership?
By Kevin Dwyer
Thursday, 14th February 2013
This is a true story, the names have been omitted to protect the downright stupid; the story concerns local members of a global company with over 250,000 employees and over $US 160 billion in revenues.

The marketing division and their superiors had misread the market they sold into badly. Revenues were falling as fast as market share. Costs needed cutting. Product design was told to cut costs. Marketing was told to cut costs. Sales were told to cut costs.

However, it was not all bad news. The company still had strong cash flow, a good brand and access to first rate technical, HR and marketing skills.

The company had been losing people steadily over the past few years. However, it was hardly a flood.

It was in this environment that one day an employee, a marketing planner, found that his calculator no longer worked. It wasn't a matter of flat batteries but something more terminal.

It was now that he found out that to buy a calculator was not as simple as it might seem. He had to fill out a request form first and forward it to his manager. He noted that the form had an array of three rather senior signatures to collect. It did seem strange, I would argue ridiculous, that he had to collect the three very senior signatures for an item that cost $4.95.

Nonetheless, said paperwork was filled out and forwarded to his boss.

Fast forward a week. No calculator.

Fast forward another week. No calculator.

By the third week of using the calculator function within excel or his mobile phone the intrepid employee thought he might enquire about the calculator.

He found the hold up was with his boss.

Having been to a meeting recently where the wagons were circled and the team enthused to "work together" to get through the market problems, he felt galvanised to chase up his simple request which he knew would make him more productive in his planning role.

He noted on the desk of his boss an old calculator, I mean the old huge ones, which had a cracked case. He thought no more of it until his boss announced he would not be getting a new calculator and the old relic on the desk was his.

Notwithstanding the feelings of "You have got to be kidding!" he returned to his desk. He was surprised though to find that the calculator did not work.

He was mortified, however, to find that when he went back to his boss to pass on the news about the calculator not actually functioning he was given a lecture. The topic of the lecture was about how the team must pull together and simply could not afford extravagances.

At the time of writing the individual is contemplating leaving the organisation.

Why does he want to leave? Because he did not get a calculator? No, because the pattern of decisions made about the wrong things at the company was crystallised by the calculator episode.

Decisions whether a $4.95 calculator can be purchased or not, rather than why a senior vice president should spend hours of his time involved in such a process was normal.

Decisions to forward sell product to distributors and dealers to increase the reported sales numbers, instead of investigating what was causing the slump in sales was normal.

Decisions to cut costs evenly across the board instead of understanding which cost areas could be cut and have minimal impact on employee and customer satisfaction was normal.

According to Drucker, "Management is doing things right; leadership is doing the right things."

The price of the difference between leadership and management in this case was $4.95. The difference in cost was employee morale and retention.

We welcome your comments.
Contact Kevin by email at
kevin.dwyer@changefactory.com.au or via phone on +61 (0)408 508 490

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