Luckily or not, as the youngest of four, my older brother took over my father’s bakery. A small business with ten employees serving hotels, restaurants, and residents of Fuschl am See, a beautiful little tourist village in Austria. I admire my brother’s relentless focus on quality: he’d never compromise quality for quantity. You can feel the pride in his work, a common feature of craftsmen in the region. They stand with their name for their products, focus on long-term success, and are an active part of the community. Employees are part of the family and often stay for a lifetime.
After 25 years in leadership roles in the tech industry, I’m convinced that modern companies can learn important lessons from the way those small business owners run their shops: a “back to basics” program.
A Gallup employee engagement survey [i] released in April 2022 found that only 32% of U.S. employees are engaged with their jobs with two out of three employees are just waiting for the next opportunity. A McKinsey & Co report [ii] from Feb 2021 highlights that more than half (57%) categorize their team climate as neutral or negative.
These low employee engagement numbers must alarm company leaders. Talent becomes increasingly scarce, employee turnover accelerates, and attractive jobs need to offer mobility, flexibility, and self-fulfillment. Companies with low employee engagement will lose out in the fight for the best talent.
Working with business leaders at dozens of B2B technology companies, I’ve seen a pattern emerge: a religious belief in performance indicators and black-and-white thinking. All is fine if the numbers are “green” and nothing is good when the numbers are “red”. A focus on outcomes and ignoring the quality of process is typical along with sacrificing long-term development for short-term goal attainment. Moreover, key indicators are often ill-defined, not clearly understood, and tweaked to show better-than-actual performance.
Indicators offer a simplified version of reality: you achieve or miss. Leaders, with all the difficulties of managing people and business, find relieve in simple answers and reduced complexity. But managing goals should never be confused with good leadership.
“Quantitative leadership” doesn’t inspire: it doesn’t create culture or develop relationships. Who needs leaders whose raison d’être is to collect and report numbers?
“Quantitative leadership” reduces employee relationships to commercial transactions. It favors short-term compliance over long-term development, and produces actionism when contemplation would be a better option.
The message “management by objectives” sends to employees is inherently transactional. You deliver on the objective, and we pay you a bonus (or whatever “carrot” is used). But without a value-system, knowing what the leader and the company stand for, and the internal attachment of the employee to the organization, the relationship between the employee and the company is purely commercial. Denis Rousseau [iii] introduced the psychological contract, which maps out the dynamic relationship between employee and employer, including beliefs, expectations, ambitions, and obligations. Under the conditions of “quantitative leadership”, this psychological contract shrinks to nothing more than a commercial agreement. Employees don’t develop loyalty, frustration-tolerance, and value alignment, and they will leave for any better offer.
Quantitative Leadership also tends to prioritize short-term over long-term success. Even though companies that focus on the long-term produce 81% higher economic profit [iv] than the average, nearly 60% of CEO’siv say they are too intent on quick results. Short-termism is the dominant behavior in number-obsessed leadership cultures.
Research shows that overconfidence deteriorates leadership performance – a reason why male leaders often make worse decisions than female leaders [v]. Indicators often support such a wrong sense of certainty, and therefore promote action where consideration and reflection would be a better choice.
Numbers represent symptoms, but leaders need also to cure causes.
Do you find yourself guilty of worshiping numbers?
I invite you to reflect with me on what it takes to be a good leader, what it takes to build a psychological safe workplace, and how to establish long-lasting productive relationships with your staff, peers, and superiors.
“Handwerkskunst” means the “art of craftmanship”. Emphasis is on the high standards that craftsmen traditionally meet in their work. Leadership is Handwerkskunst. Communicating targets, collecting results, and reporting to management has little to do with good leadership.
But what constitutes good leadership?
Daniel Goleman, the author of "Emotional Intelligence [vi], researched 38,000+ leaders and their organizations. He found that leadership styles that rely heavily on empathy tended to create a more positive company climate, which is a precursor of positive company results. “Coaching” and “Affiliative” leadership styles produce the best results across all business contexts.
Similarly, McKinsey recently published a study [ii] , showing that consultative and supportive leadership styles impact psychological safety most positively - a strong indicator of adaptive and innovative performance.
The essence of good leadership is empathy, providing psychological safety, and fostering employee growth.
Developing empathy is not straightforward: it requires self-awareness. Do you know your “red buttons”? The values you stand for? The leadership style you deploy in normal business dealings? Which style do you regress to when times are tough?
Self-awareness lays the foundation for empathy, allowing you to get rid of illusions about yourself – both positive and negative. To discover your true self, as part of the process, you’ll discover your values and principles. Dare to share them openly and you’ll discover a new quality of human connection with your team.
As a business leader, you can positively impact the lives of others. You can live and lead by your values. You’ll find never-ending opportunities for personal growth. I invite you to embark on this journey.
Leadership is Handwerkskunst.
[i] Gallup (2022). The 2022 Guide to Employee Engagement. https://www.gallup.com/workplace/388685/2022-employee-engagement-guide.aspx
[ii] McKinsey Survey (2011). Psychological safety and the critical role of leadership development. https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/psychological-safety-and-the-critical-role-of-leadership-development
[iii] Shore, L. M., & Tetrick, L. E. (1994). The psychological contract as an explanatory framework in the employment relationship. In C. L. Cooper & D. M. Rousseau (Eds.), Trends in organizational behavior, Vol. 1, pp. 91–109). John Wiley & Sons.
[iv] McKinsey Global Institute (2017). MEASURING THE ECONOMIC IMPACT OF SHORT-TERMISM. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/long%20term%20capitalism/where%20companies%20with%20a%20long%20term%20view%20outperform%20their%20peers/measuring-the-economic-impact-of-short-termism.pdf
[v] Chamorro-Premuzic, T. (2019). Why do so many incompetent men become leaders?. Harvard Business Review Press.
[vi] Goleman, D. (2007). Emotional Intelligence (10th ed.). Bantam Books.
