Managing Leadership^®

It is with them as with the hussars and light infantry of some armies; no plunder, no pay.

Adam Smith made this remark in “The Wealth of Nations.” Interestingly, he was talking about how the motive of self-interest expressed itself in the actions of the clergy – in particular, the Catholic clergy in Europe, and how they came to draw their revenue from the people both as an institution and as individuals acting within its ambit. A class of people whose education, professionalism, and avowed devotion to our welfare exploited our faith in them and in their possession of these worthy characteristics to express rather more base ones in order to serve their own interests. Their interests didn’t align altogether uniformly with those of their flocks.

Why do we continue to think, then, that those of more secular origins will behave any differently? Managers – especially so-called “c-level” managers – are held in esteem for their education and professionalism, more often than not with justification. But they are also generally assumed to have our welfare in mind when they take the helm of our organizations, and we trust them implicitly in this regard as we trust our clergy. They have a special calling to which only a chosen few are drawn, and we surrender the keys to them, time after time, in complete confidence.

Unfortunately, this confidence often proves to be misplaced. Certainly, a comparison of them to the hussars and light infantry of the age Adam Smith refers to may seem out of place; after all, our senior managers today are quite well paid. But, as this article from the WSJ suggests, they nevertheless do not always seem above simply insisting on – or taking – more when it suits them and when they can get away with it. The article describes efforts to keep them from getting away with it – and resistance to those efforts.

Managers and owners do not always share interests in an organization’s direction and management. Generally, the group that most assiduously looks after its own specific interests will realize them, typically at the expense of the other group. Moreover, when one of these groups essentially surrenders its oversight of its own interests to another group with competing interests, it is not difficult to predict which group will produce the hussars, and which the fleece.

The continued professionalization of the field of management will remain retarded until we abandon the culturally adolescent tendency to attribute special attributes to managers that preclude the need for oversight. A Spanish folk saying has it that good fences make good neighbors. When boards learn to bound their managers within good policy structures, then we will be able to build healthy relationships within the organizational world that integrate groups of varying interests into a productive whole.