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Is a Bad Boss Good for the Bottom Line?

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Earlier today, I was interviewed by Stuart Varney on Fox Business News, about a column Leigh Buchanan wrote that listed seven signs that your employees hate you. (The column appears in the January issue of Inc.; to read it, click here.) After dutifully running through a few of the signs on Leigh's list, Varney shifted the conversation and basically said, Does any of this matter? He went on to argue that it's perfectly fine--and often smart--for a boss to instill fear and hatred in his or her employees. Fear is a great way to ensure that a group of workers meets a key business goal, particularly in an environment such as this one, where the economy appears to be on the down swing.

I like a good debate, and I was happy to take on Varney. I said that I thought, having reported on entrepreneurial businesses for more than a decade, that fear was at best a useful short term motivator. It can work to get a group of employees--especially relatively young workers--to work intensely on a project, and to produce extraordinary results.

In the long term, however, if you are trying to build a sustainable company, I believe that you have to motivate people around a postive goal. This is not to say that a boss needs to pal around with his or her employees, or that a boss has to walk on egg shells. A boss can be blunt and direct in criticizing performance, but instilling fear is another matter entirely. In an economy with relatively low unemployment (even when you factor in today's dismal Labor report), if workers feel on edge every morning when they head to work, you can be pretty sure that you'll face high turnover. And the costs of a fluid workforce (both direct and indirect) can be crippling.

Besides which, who wants to be a tyrant? I jokingly referred to Varney's imagined boss as practicing "the Stalinist model of management." It takes a lot of effort to be a jerk 24-7 (although, for some, it seems to be effortless actually), and that's effort that could be expended instead in the pursuit of some other, worthier objective.

At least that's my take. But I should note that Stuart Varney understands the small-business market better than most TV journalists I've met, and I take his views seriously.

So what do you think? Can you build a great business even if your employees are afraid of you or even hate you? Or is it wiser both economically and otherwise to wield the stick rather than the carrot?

Last updated: Jan 4, 2008




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