Are You A Horrible Boss? (And If So, How To Reform)

Robert Steven Kaplan, Harvard Business School professor and former vice chairman of Goldman Sachs, shares the tale of a truly awful boss--and how he transformed himself and his company for the better.

angry bossThe managing partner of a hedge fund had built an excellent firm over several years. He had taken the time at the inception of the firm to write down a detailed set of business principles, which were on the wall of every office, frequently reprinted in company documents, and posted prominently on the corporate Web sites. He even had these principles--which emphasized concepts such as the importance of teamwork, innovation, looking out for each other, and long-term thinking in investment decisions--printed on little laminated cards so that people could carry them in their pockets. Whenever the subject came up in conversation, he said emphatically that he wanted to build a learning environment, in which young people were coached and mentored and could learn from their mistakes. 

This was also a key part of his recruiting pitch to every potential new hire: if this is the kind of culture you want, then you should come work with us. In my later talks with this leader and his employees, it became clear that he had adhered to these principles consistently during the first few years of the firm’s existence. Once the fund passed several billion dollars under management, the firm was obliged to get bigger, and quickly, in order to accommodate the growth. During a rough patch in the market in late 2007, the firm’s performance began to deteriorate versus the Standard & Poor’s 500--the primary benchmark against which they were judged by investors.

This was far from a unique scenario. If you follow the investment community, you know that every firm goes through periods of underperformance. The disturbing thing about this period, though, was that key employees began to quit the firm, for various stated and unstated reasons. As these people left, the firm’s overall performance continued to deteriorate, and seemingly avoidable analytical mistakes became more and more common.

More concerned about the performance of his team than the firm’s overall flagging economic performance, he called and asked whether I could come over to his office and speak with him. I listened for a few hours as he described his philosophy of the business. He spoke in a heartfelt way about the principles described above: teamwork, innovation, long-term thinking, and so on. It was inspirational--to such an extent that by the time he was finished, I was almost ready to sign up and work there myself. What a great place to learn and grow professionally!

Then the story took a less positive turn. He went on to describe the recent departures, the performance deterioration, and--worst of all, in his eyes--a series of avoidable mistakes in analyzing companies and stocks. As he spoke, I observed his irritation increasing--the volume and pitch of his voice rose until he was nearly shouting: “Why the hell is this happening?” He strode around his office, gesticulating as he yelled, “Why doesn’t the team get it? Am I the only one who cares about our values? I feel like I’m alone, here. I’ve got the weight of the world on my shoulders. How did we get into this fix?” I heard him out, not responding to his rhetorical questions (or his anger). Finally, I asked him whether I could meet with a handful of his key leaders one-on-one. He agreed to this, and I subsequently met with five of his senior leaders individually.

In each of these sessions, I heard story after story about how the firm’s leader conducted himself on a daily basis. It was eye-opening.

For example:

• They told stories of the daily 8:30 a.m. investment staff meeting. In these meetings, the leader often directly criticized and browbeat individual staff members. If a stock went down, he was especially critical, wanting an explanation of why this had happened—even though everyone in the room knew that there might not actually be a cogent or clear answer to this question. (The stock market is not always driven by logic; sometimes, stocks simply go down for reasons that cannot be easily determined or explained.) If you were an investment staff member at this firm and you picked a stock that declined, you knew, for sure, that you were going to get “beat up” in front of your colleagues—even though the firm’s leader had actively participated in, and agreed with, the decision to invest in that stock.

• I also heard about the unpredictable mood swings of the leader. “You never know from day to day,” one person told me, “which person you’re going to encounter: the happy one or the miserable one.” It got worse. He was described as alternating between temper tantrums on one day and saccharine, over-the-top compliments the next. People walked on eggshells, not knowing what to expect. His mood might be driven by the fund’s performance--or by something that happened at home before he came to work, or some other factor. Who could predict? How could you know?

• Another theme came through loud and clear: despite the firm’s avowed emphasis on coaching, the leader really no longer had enough time to coach his staff of professionals. He was spread too thin, dealing with outside investors, administrative matters, investment decisions, asset allocation and portfolio construction, and so on. As one senior professional told me, “We’ve gotten so big, and he’s out with investors so much more. To us, he’s really become unapproachable, because he’s so busy with other stuff.”

What I was hearing was that the leader had failed fundamentally to delegate specific types of decisions to others. As a result, essentially all administrative, investor relations, investment, and trading decisions had to be approved by him. This created an enormous bottleneck and undermined the leadership development as well as teamwork potential of the group. It also created a strange, almost surreal atmosphere when he publicly dressed down his colleagues for bad decisions: doesn’t he remember that he made that decision himself ? Many of the senior leaders I interviewed were actively thinking about leaving because--as I heard many times, in so many words--“the fun has gone out of the job.” I also heard a steady refrain that I found particularly troubling: “Please don’t repeat these comments to him! Even if you don’t tell him who made them, he’ll know, and I’ll be in the doghouse for the rest of my time with the firm.”

Needless to say, I assured them I would do everything in my power to disguise all comments and conceal the identities of the individuals who made them. On that basis, they all gave me permission to relay their observations to the leader. Again, though, I was struck by the degree of reluctance and anxiety they were demonstrating as I obtained their permission to draw on their comments in my report to their boss. It wasn’t just an awkward situation; it was a dysfunctional one.

I also was struck by how directly, and completely, these stories contradicted the goals and aspirations that the leader had articulated regarding the type of organization he wanted to build and sustain. Yes, he communicated them forcefully, and often. The problem, though, was that they no longer jibed with his daily behavior.

In my meetings with the managing partner, I first gave him the general flavor of what I had heard. Then I recommended that he hire an outside coach who would formally interview a very broad range of company employees—perhaps two dozen or more. (This, I figured, would prevent any one person from being identified and singled out for “punishment”; it would also make the findings harder to ignore, since they would be derived from a broader base.) I recommended a coach in whose work I had a lot of confidence, and recommended that she be brought on board as soon as possible. The leader agreed.

Two months passed, and I was called in to meet with the managing partner and discuss the results reported by the coach. He got right to the point. “How could they say those things?” he asked defensively. By this time, he and I had a pretty good relationship, and I felt free to be blunt with him. I explained that the problem wasn’t with the people who had been interviewed; the problem was with him. He was failing to acknowledge, or even realize, that his actions carried far more weight than his words.

It didn’t matter how many walls or Web sites he covered with those words; all too often, his behavior pointed in exactly the opposite direction. We talked through the kinds of actions he took in a typical day, and why. Together, drawing on the coach’s report and my earlier observations, we critiqued the worst of these actions and discussed the chilling impact they had on the people of the firm. More or less in real time, he saw that as a result of the gulf between what he espoused and what he actually did, he appeared to be a hypocrite.

This wasn’t a comfortable conclusion to reach, and I give him credit for getting there. I give him even more credit for his efforts over the following months, as he slowly learned to change many of his more confusing and offensive behaviors. It was a painful period for him. He needed to spend time trying to better understand his own motivations and behaviors—including his assumptions about human nature—and come to grips with why he behaved the way he did. A lot of it, he told me at one point, had to do with his life story, his relationships with his parents, the lessons (good and bad) that he had learned from his early-career bosses, his overall temperament, and the way he dealt with stress. Again, it was a tough, even searing, process for him, but he learned to think before he acted, and to weigh his actions as heavily as his words. He also learned that he needed to delegate much more extensively, to make sure that critical firm priorities were being pursued even when he was too busy to address them himself.

In terms of concrete steps, he learned to develop several junior coaches who were willing and able to help him understand the impact of his behavior. With those coaches, and also with friends and family members, he focused on enhancing his self-awareness: seeing himself as others saw him. He also designated key lieutenants to whom he delegated various critical tasks that were essential to achieving the vision of the firm. Over the next few months, the company’s atmosphere and culture gradually improved, becoming more in line with the leader’s aspirations. Although the markets remained difficult, the firm began performing dramatically better in comparison with its competitors. In the surest sign that things were getting better--and the word was getting out--several former employees who had jumped ship in the bad days agreed to return because of stories from their former colleagues about the change in behavior of the CEO.

Reprinted by permission of Harvard Business Review Press. Excerpted from What to Ask the Person in the Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential. Copyright 2011 Robert Steven Kaplan. All rights reserved.

[Image via Flickr user Tyler Oxendine]

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3 Comments

  • Candice Jones

    Great that he learned his lesson with the help of coaching. An interesting book that helps bosses see themselves … has suggestions for both employees and employers … is Tame Your Terrible Office Tyrant (Wiley & Sons) by Lynn Taylor. All horrible bosses or those who know of horrible bosses should give it a read.

  • David Kaiser, PhD

    Great story. It sounds like the boss was a good-hearted and well-meaning person who let the stress get to him, and simply wasn't aware how he was coming across to his team. It must have been hard for him to come to this realization. Kudos to him for taking a hard look at himself. Kudos to you for stepping up and telling him what he needed to hear.

    David Kaiser, PhD
    Sacred Productivity Coach to C-Level Leaders
    www.DarkMatterConsulting.com

  • William Clarke

    The idea of writing down a set of principles to govern your business is an excellent suggestion. in my opinion this would help many business today and improve employer and employee relationship.