The best leaders are usually humble, and that humility comes from a strong sense of self-confidence. Instead of creating destructive fear, a good leader will break down that kind of fear by talking to the troops. I spent a lot of time on the shop floor and never felt that I was wasting my valuable time. When you banter with your employees and use self-depreciating humor, and take the blame for things that go wrong, you're not giving anything up; you're establishing your credibility as a human being and a leader.
Inc.: But you're not arguing against the boss's being a wielder of power. You just think he or she shouldn't wield it in such a way as to create fear.
Lutz: Well, a certain type of fear has to remain. Leaders can't be nice guys; they've got to shoot for respect, not love. They need to instill a fear of consequences for not attaining your mission--the fear of punishment if you goof off or the fear of punishment if you do something dishonest, the fear of a reprimand if you don't complete an assignment on time.
That's an essential fear, a good fear. That's different from the bad fear of doing your best and taking a risk and then having the boss blame you if it doesn't pan out. So when you're walking around, talking to your employees and being self-depreciating, you're not trying to loosen them up to the point of feeling that they don't have to worry about succeeding. When the bantering is over, you have to leave them with the message that they have to do their jobs well. And if they let you down, you don't waste time or mince words in letting them know it. You give it to them straight, and you let them know you expect better. It's what the British call the short, sharp shock. Works with kids, too.
Inc.: How can you tell if you're hitting the right mix of humility and good fear?
Lutz: I used to have the human resources department give anonymous opinion surveys to all the people I worked closely with, asking them things like do I listen well, do I communicate the task and vision in a highly credible way, and so forth. If you're running somewhere around 80% of a perfect score, you're probably doing as good a job as you can. If you're down around 50% or up near 100%, then something's wrong.
One thing lacking in businesses is a way to allow employees to give feedback openly. There's no equivalent to the Marine Corps Gazette, in which officers are encouraged to criticize current Marine Corps decisions and policies. Not only is that a way to find out where you might be screwing up, but it's a great way to identify future leaders. I think I'll start up something like that at my next position.
Inc.: If you had to point to one thing a CEO must get right, what would it be?
Lutz: You can always smell how good a company is by how enthusiastic and motivated the employees are. And that comes from the top. Any company acquires the traits of its leaders, ultimately. It sort of trickles down. If the top guy has an oppressive, vicious leadership style, it will end up being the accepted style down through the whole organization. A leader who is too permissive and tries too hard to be a nice guy and who never pushes anybody will find that the whole organization loses discipline and a sense of urgency over time. Now, how long does it take for an organization to reflect a new leader's personality traits? That depends on how active and energetic that leader is and how hard he or she personally tries to drive the change. It also depends on company size. It can be a question of months in a small company and years in a very large one.
Inc.: Presumably, the process will go at least a little faster for you at Exide because most of the senior-management team has stepped down. That gives you a chance to bring in your own team and start with a clean slate.
Lutz: I don't do that. I never do that. Good leaders are able to get superior performance out of the guys that are there. I learned that in the Marine Corps. You know, I've heard so many people say, "Oh, Chrysler used to do such ugly cars, but now that you've cleaned house and gotten all these new designers, you're turning out great stuff." Guess what? Same designers. I didn't change a single one.
Insecure leaders need to surround themselves with cronies. I want to work with whatever cards I'm dealt. I usually find that the excellence of people in any corporation has a predictable distribution, because everybody hires from the same business and engineering schools. You've got that 15% of outstanding people, the broad lump in the middle, and that 15% you wish you didn't have. What a good leader does is not replace individuals but shift that whole curve in the direction of excellence. In my 12 years at Chrysler I replaced only two people, and in those two cases I probably should have done it sooner, but it took a long time to admit to myself that they were impossible to work with.
Inc.: What's the ideal culture?
Lutz: One that's never satisfied. It's a dangerous feeling to believe you're the best. Better to feel you're constantly striving to be the best. You don't have to be perfect; you just have to be better than the other guys. If your culture is such that it produces fewer screwups than the other guy's culture, then you win.
David H. Freedman is a contributor to Inc.
