Share the Pain
If others are being asked to make sacrifices including taking pay cuts or facing layoffs, leaders should be willing to cut their own salaries. The ideas of leading by example and being a role model for others, common in the literature on leadership, both suggest that leaders ought to do what they want others to do. This includes telling the truth and modeling the behaviors they want, but it must also include being willing to make the same sacrifices they want of others. In the military, front line officers don't order their men into battle while they sit behind the lines--the officers often lead their troops into battle and put themselves in harm's way.
There is enormous cynicism in organizations that has arisen because in too many cases, it is, "Do as I say, not as I do." Leaders don't take responsibility for problems and decisions, don't acknowledge mistakes, don't admit what they don't know--and therefore fail to learn--and ask for sacrifices from others that they are unwilling to do themselves. One of the reasons that Japanese companies, including the automobile manufacturers, have been so successful is that they do share sacrifices broadly. This behavior encourages employees to identify with the organization, reduces an "us versus them" mentality, and signals the seriousness of the situation.
When Stanford University recently announced a salary freeze and layoffs, the announcement was accompanied by the message that senior administrators, including the president and provost, were voluntarily cutting their salaries. Organizations are interdependent teams. It is impossible to build a team when people face vastly different fates. Instead, research shows that common fate and a set of shared experiences is the best way to build a cohesive unit--and precisely that is required to meet the competitive challenge many companies now face.
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