This question originally appeared on Quora: What do you do if morale is sinking and people are fleeing your company?
Here's what I'd do, as one who's written at length on open allocation. (See:) By the way, I'm writing under the assumption that I've been brought in to fix an existing company. This strategy requires the ability to assess talent, which makes it unlikely that the CEO is going to cause a talent bleed. He might be cleaning up after his predecessor, though ... that's the role I've put myself in.
First, I'd identify the "must-do" tasks and handle those separately (and leave the people doing them alone, while giving them what they asked for). We can't have business level disruptions unless they can't be avoided. Aside from day-to-day, we-have-to-do-this jobs, stopping the talent bleed is a top priority. The unnecessary work would be postponed for a while.
I'd call an all-hands where I explain that I'm looking to make large changes in the organization, and that I want the company to be driven more from the bottom. Assuming it's a tech company, I'd say that I'm committed to becoming engineer-driven (and mean it!).
I'd figure out who the most talented people are, ask them what they want to do with their careers, and generally let them do it, as they would in an open-allocation setting. This means that I'd be giving preference to the people who aren't asking to control others. Over time, I'd have more of these 1-on-1′s and generally encourage people to direct their own work. Managers would get "promoted" into either (a) a role with 10% more pay but zero oversight or ability to fuck things up, or (b) a role overseeing and protecting this transition to an open-allocation organization. The toxic managers would get (a) as prelude to a severance ... because when there's a talent bleed, you can't afford the morale hit of cold-firing. The promotion-to-irrelevance also has the nice side of effect of being, in I-haven't-figured-this-guy-out cases, reversible. Firing someone is not. And this is a company in turmoil, so it's going to be hard as hell to see immediately who needs to be fired. Over time, I would fire people who (a) insist on power over others or (b) are threats to the new culture.
I'd make Culture of Excellence a formally and publicly stated goal, but I'd also work overtime to make sure that that's what actually emerges. I'd explain (in an all-hands) that I know what's going on and detail how I want to fix it. I'd listen to people and give a lot of weight to suggestions to the people who want to excel over those coming from people who just want to get by, or those who want to control others.
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