Why Defending Travis Kalanick Is Lame

In the wake of Uber’s slow-motion implosion and Travis Kalanick’s forced resignation as CEO, some supporters have set out to defend one of Silicon Valley’s more beleaguered “bad boys.” Current and former Uber employees showed an outpouring of love and devotion across blogs and social media; company managers urged their underlings to sign a petition for the board to reinstate him; former Yahoo CEO Marissa Mayor spoke up for him at an event in Palo Alto; and reporter Alison Griswold praised Kalanick’s behavior, calling it necessary to creating a multibillion-dollar ride-hailing empire in such a short timeframe and revolutionizing the way people get around.

Digesting these arguments made me realize how far we still have to go in terms of holding men in positions of power responsible for their meanness. So often we focus on their miraculous achievements—whether it’s a profoundly disruptive innovation or a moment of singular leadership through crisis. And shouldn’t we? Men of great power have pushed society forward and led us in new directions. (Women have done the same; they just rarely get the pass for irresponsible or destructive behavior.) We venerate powerful men for their vision and feel dependent on them to initiate progress.

Far too often, however, we willingly look past glaring pitfalls for the sake of keeping the vision alive. The reaction to Kalanick's ouster demonstrates perfectly this phenomenon. Here is my rebuttal to a few members of the TK Fan Club and their justifications for his brand of mean:

Marissa Mayer, former CEO of Yahoo
Justification: Kalanick was ignorant of sexist and toxic company culture due to Uber’s explosive expansion.
Quote: “I think he’s a phenomenal leader… I just don’t think he knew. When your company scales that quickly, it’s hard.”
Analysis: There are a couple of major flaws to the ignorance defense. Firstly, there is near unanimous consent that Kalanick “built the company in his own image.” His own personal philosophy about always winning, codified in Uber’s 14 Values, was a founding principle that shaped the company culture. While Uber’s extralegal tactics shot the hail-riding service into the Silicon Stratosphere, they also trickled down as an ends-justify-the-means ethos. The way that HR ignored Susan Fowler’s sexual harassment complaint in favor of keeping a “high performer” is merely an extension of this single-minded pursuit of the Uber vision.

Secondly, how can a CEO claim ignorance of company culture when aligning culture to values that support sustainable growth is an essential element of the job? In calling TK a “phenomenal leader,” Mayer sweeps much under the rug. Flouting local laws to get cars on the road faster across cities in the US and elsewhere would—in other situations—be called “law breaking.” What about the inappropriate emails sent to employees about drinking and having sex while at company parties? What about violating the right to privacy of a victim of sexual assault? What about the damning blog post by Susan Fowler calling out HR’s incompetence at handling sexual harassment cases, a sentiment seconded by other female ex-employees? You “don’t think he knew,” Ms. Mayer? While Kalanick clearly has significant strengths—and he may not have gotten the company off the ground without them—his weaknesses are just as tangible.

Alison Griswold, Quartz Journalist
Justification: Uber is great precisely due to Kalanick’s brash, authority- defying personality and leadership style.
Quote: “Kalanick’s role in getting Uber into those cities and onto those phones first cannot be understated. Regardless of whether Uber, still a private company, was ever truly worth the $68 billion investors said it was, the company could not have attained that valuation without him.”
Analysis: In her June 22, 2017, article for Quartz, “There Would Be No Uber without Travis Kalanick,” Griswold argues that TK is responsible for Uber’s incredible business success. But she also admits that the very brashness that has given Uber such monumental stature in the ride-hailing revolution is the reason for its mounting troubles. Her argument then rests on a short-sighted definition of success. As I discuss in Mean Men, this short-sighted view is the norm rather than the exception. So willing are the many investors, board members, executives, and the media to see start-ups get big fast, that ignoring predictable, and often dire, consequences of unethical and toxic leadership practices comes at a significant cost to sustainable growth. Since it is just as true to say that TK is responsible for the current state of affairs at Uber, which includes major controversy and law suits, puts the company’s greatness is in serious question, and that too is a reflection on Kalanick’s leadership.

Some Uber Employees
Justification: Kalanick was an inspirational figure who embraced employee ideas and uncompromisingly pursued a brave vision of the future.
Quote: “Uber is fundamentally reshaping people’s transportation habits and how they interact with their cities. This kind of impact would have been unthinkable only a few years ago, but we’ve made it a reality—thanks to your vision. So, thank you. We’ve mis-stepped at times—I’ll be the first to admit that Uber is not perfect. But the positive impact you’ve had on this company, and the world, is truly inspirational.”—Margaret Anne Seger, junior project manager
Analysis: Many employees were incredibly inspired and personally touched by Kalanick’s leadership, as the outpouring on social media after the ousting demonstrates. Clearly, TK had a way of connecting with people that made them want to follow him and invest in him. The employee testimonials almost universally praise this quality, speaking of the former CEO in glowing terms. In fact, a look at the word choice across posts offers some deeper insight. One employee uses the word “disciples” to describe TK’s supporters within Uber; another thanks him for his “guiding light”; several write in a chanting rhythm, beginning every sentence with a thank you; most are “heartbroken” by his departure. Notice the religious tone? Getting a little bit creeped out? It is not uncommon for a leader with mean-man characteristics to also be highly charismatic. Examples abound— from maverick Steve Jobs with his unpredictable temper to instigator Trump and his Make-America-Great-Again rhetoric which captured the hearts of the disenfranchised. Intense charisma—especially that which inspires an unwavering following in a select group of individuals—is a warning sign that we may be in the company of a Mean Man.

Some Uber Managers
Justification: Kalanick’s ousting is the result of the board bowing to an unfairly critical press; it does not represent the wishes of the employees, and should therefore be reversed.
Quote: “Uber is TK and TK is Uber. Without him I don’t see any other leader doing a job as good as him, external or internal.”—Uber manager (quoted in Buzzfeed article)
Analysis: Shortly following Kalanick’s forced resignation a number of Uber managers urged underlings to take action in defense of TK with the aim of pressuring the Board to reinstate the ousted CEO. They encouraged employees to email Board members Arianna Huffington, Garrett Camp and Bill Gurley and register discontent in an anonymous petition. Similar to social media posts of employee support, emails sent by managers to employees have a reverential tone toward TK with an additional desperate edge because they are also a call to action. What’s more problematic is the dynamic of people in a position of power arguing for a mini-rebellion from those in their employ against those who employ them (the Board). This act echoes the accusations of a bullying culture leveled against Uber by former employees, including Susan Fowler, wherein a dysfunctional HR department repeatedly fails to provide checks and balances to unduly exercised authority.

Chew on one BuzzFeed reader’s incisive comment about the managerial emails sent to staff members: “Managers are sending petitions to employees. Doesn't that tell you enough about the culture to run away as fast as you can? ‘Oh no pressure, and no worries that this will affect your next performance review, but would you mind signing this petition?’”

We cannot continue to praise the good without recognizing the ineffective, bad, or worse. Continuing to deify the Kalanicks of the start-up world will not bring us better leaders; it just perpetuates the status quo. I have no problem with power, and the amount of it many CEOs hold. But we have a responsibility to hold powerful men fully accountable for its misuse if we hope to see better leadership in the future.

Political Beliefs and CEO Pay

During the creation of my blog post on the next generation of women leaders, I’d expected the dawning of a new era for women leaders, and with this in mind, I wrote about the obstacles that women leaders face after they’ve made it to the top. But, despite predictions, our nation’s highest glass ceiling was not shattered last November. Of course, that post still applies to women CEOs around the world, even if not to our president-elect. Regardless of personal politics, it is obvious that the race to win the position of America’s CEO illustrated some intriguing differences between what Republicans and Democrats value in their leaders. If we wanted to drastically simplify the aims of each party, we could simply look to their candidates’ books. For instance, the title of Hillary Rodham Clinton’s It Takes a Village says it all: today’s Democrats cherish social justice and equality. Likewise, Donald Trump’s titles The Art of the Deal and How to Get Rich could provide a snapshot of what today’s Republicans prize: individualism and free markets. So while some of us were outraged when Trump’s response to Clinton’s observation that he had rooted for the housing crisis was, “That’s called business,” others of us thought such a stance denoted strong leadership.

According to Abhinav Gupta and Adam J. Wowak’s 2016 article “The Elephant (or Donkey) in the Boardroom: How Board Political Ideology Affects CEO Pay,” this diverging of ethos isn’t confined to the political realm. In fact, the business decisions made by a company’s board are just as tied to ideology. And when it comes to leadership and compensation, research shows that conservatives tend to hold the CEO responsible for a company’s success, and so they pay him or her in a way that reflects that perceived worth (i.e.: more). Liberals, on the other hand, tend to believe that the company’s success comes from a team effort—it takes a village—and the company’s spending, including the CEO’s paycheck, reflects that feeling (i.e.: the CEO is paid less). Perhaps this contributes to the fact that, according to CNBC, “the average pay for an S&P 500 CEO was $12.4 million in 2015, or 335 times the pay of a rank-and-file worker, according to a new report from the AFL-CIO,” a wealth disparity Trump’s proposed tax cuts would buoy if implemented.

This finding leads us to why conservatives might have assumed that Trump was the right man for the job: He’s rich (and he’s not afraid to brag about it. Though just how rich is still unclear). And surely he must be rich because he’s a good CEO (“good” as defined by conservatives), and if he’s a good CEO, he must be worthy of not just the corner office but the Oval Office.

Herein lies the double-edged sword—or the potential for just deserts, depending on where you lie on the political spectrum. Unlike liberal-leaning boards, which hold a CEO responsible but also take into account issues of social welfare and circumstances outside the CEO’s control, conservative board members tend to evaluate the CEO on delivery above all else. And since Trump claims that “[he] alone can fix it,” citizens will be expecting the new CEO to deliver on his promises—to make America strong again, to make America proud again, to make America safe again, to make America great again, and to make all of our wildest dreams come true.

President Hillary and the Next Generation of Leaders

No matter whom you vote for today, I think we can all agree that the next four years will challenge America’s perceptions about our country’s elected “CEO.” Today, November 8, 2016, Hillary Rodham Clinton is predicted to shatter the most fortified and multipaned of glass ceilings in the United States, joining the ranks of such leaders as former Icelandic prime minister Jóhanna Sigurðardóttir, former Thai prime minister Yingluck Shinawatra, and chancellor of Germany Angela Merkel. Of course, this otherwise momentous occasion is in many ways just one step along what promises to be a very long and bumpy road. Clinton has already accomplished an extraordinary amount in her career, all while facing challenges that her male peers did not. As they say, Ginger Rogers did everything that Fred Astaire did “backwards and in high heels.” Likewise, women in leadership roles must run countries and companies while managing the extra work created by gender bias, such as navigating expectations around “niceness” or the seemingly never-ending scrutiny of their physical appearance and personal lives. Samantha Bee’s interview of former secretary of state Madeleine Albright, Norwegian prime minister Erna Solberg, Chilean president Michelle Bachelet, Marshallese president Hilda Heine, and Croatian president Kolinda Grabar-Kitarović reveals a glimpse of just what female world leaders have to deal with beyond leading their nations.

Though the United States is a country rather than a company, there is no reason to believe bias would operate differently as our CEO and commander in chief interacts with Congress, a body whose demographics don’t vary much from the Fortune 500 in terms of female representation. On top of that, research shows that women get blamed more for corporate failures than their male counterparts. A recent article in the Wall Street Journal reports that, according to new analysis out of the Rockefeller Foundation and Global Strategy Group, the media cites the CEO as the reason for a company’s crisis 80 percent of the time when that CEO is a woman versus 31 percent when the CEO is a man. Clinton is all too familiar with the blame game, noting in the first presidential debate, “I have a feeling that, by the end of this evening, I'm going to be blamed for everything that's ever happened.”

What happens in the next four years will undoubtedly influence the course of politics and business culture—and inform the lives of women and girls—across the globe. So, what’s HRC to do when “the toll we’ve paid” to get her there “has been the most graphically sexist election in living memory” according to the New York Times, an election too many of us are quick to put behind us? Well, she could continue to name the issue. She could call out the sexism of her colleagues, as former Australian prime minister Julia Gillard did in her famous 2012 misogyny speech. She could call out sexism in the media, as Yahoo CEO Marissa Mayer did. Of course, any of those things would be on top of just being a damn good president.

That’s why Clinton shouldn’t have to do it alone. We, as her delegates, must stand up against sexism in whatever realm we occupy, whether it’s a war room or a boardroom (or a courtroom or a newsroom or a classroom or a kitchen). This is not just the job of women, or of women CEOs and elected leaders, but of all of us. We can all say enough is enough, as Michelle Obama encouraged us to do in her New Hampshire speech. We can engage in self-reflection to ensure we aren’t piling on, criticizing anything less than perfection for our women as role models or in the way they choose to grapple with certain sexism. And, most importantly, we can keep appointing and electing women to leadership positions until it is normalized, until we as constituents, board members, or frontline workers learn to judge our leaders fairly, based on competency and character, and take the “nasty” out it.

Tenure and the Ticking Clock

As of this moment, just weeks before the November election, Ronald Reagan holds the record as the oldest person to ever hold office. In a debate in 1984, he was asked a question about his age and whether he had enough stamina to keep on running the country. His famous answer: “I am not going to exploit for political purposes my opponent’s youth and inexperience.” Of course, age in and of itself doesn’t matter. Yet it is often used as shorthand in terms of that long-standing debate, argued between generations since time immemorial. Though it can take the form of suits and ties versus long hair and bell-bottoms or texting versus Facebook, the underlying clash remains the same: What is more valuable—the wisdom and accomplishment of the experienced, or the creativity and passion of the neophyte?

Now, please don’t misunderstand me—I’m not here to compare the role of president to the role of CEO. Instead, I’m interested in leadership, specifically what keeps a leader effective, no matter how long in the tooth or wet behind the ears he or she is. The question, which I go into at length on Deloitte’s website, is: When a person becomes a CEO, is it just a matter of time before he or she loses the ability to be effective and to keep the company competitive? Do all CEOs inevitably become obsolete?

In 2008, after John McCain admitted that he did not know how to use a computer—or, mind-boggling in light of the current challenges of the Clinton campaign, feel the need to email—Barack Obama’s campaign made a television ad in which they called the Republican nominee “out of touch.” Now, would his technology illiteracy have made him a bad president? Not necessarily. But what’s striking about these interviews is that McCain showed a strong incuriosity about technology in general. In an interview on CNN, he said, “I read my emails, but I don’t write any. I’m a Neanderthal—I don’t even type. I do have rudimentary capabilities to call up some websites, like the New York Times online, that sort of stuff. No laptop. No PalmPilot. I prefer my schedule on notecards, which I keep in my jacket pocket.”

Obviously, that admission was a mistake for many reasons. The fact that McCain’s wife read his emails aloud to him every night was cute, in a Leave-It-to-Beaver kind of way, but it didn’t do much for his image. Now, fast forward to 2016. According to an article published last week in the Wall Street Journal, CEOs are staying longer in the corner office, many beyond the age of sixty-four. And a recent study found that the benefits of a CEO’s on-the-job experience can be offset over time, especially if the CEO relies on go-to behaviors despite changes in the competitive environment. Plus, the negative effects of CEO tenure multiply over time, as CEOs gain power.1 In short, no matter how old or experienced a CEO is, it is up to him or her to stay in the know.

We live in a world where innovation is arguably more critical than ever before, and where advancements occur at a breakneck speed. To avoid complacency and the loss of competitive edge, a CEO must be purposeful about introspection and committed to ongoing growth. She must question her established approaches and guard against the common urge to resist the new and unfamiliar, and build a management team composed of people who value honesty, diversity, and creativity to help her do that. And, perhaps above all else, she must be curious about the people around her, the current business environment, and the future that is fast on its way.

1 Peter Limbach, Markus Schmid, and Meik Scholz of the University of St. Gallen School of Finance, “All Good Things Come to an End: CEO Life Cycle and Firm Performance,” March 31, 2016, updated from July 3, 2015.

Do Leaders Simply Look for Themselves When Hiring?

In 2016, there are more women and minorities in leadership positions than there have been at any time in the country’s history. This isn’t to say that we don’t have a long way yet to go before achieving anything close to equal representation in the higher reaches of government and the corporate world, but undeniable strides have been made since I began my career as a management consultant and academic decades ago. These days, there are numerous highly visible leaders who are women, people of color, or both, whom one can tick off at a moment’s notice: from Pepsi CEO Indra Nooyi, to Democratic presidential candidate Hillary Clinton, and our current president Barack Obama. And yet in looking back at some of my earliest research on diversity in corporate culture, I’m struck by how much has remained the same in spite of all that has changed. So why has the movement toward the top been so sluggish? There are myriad socioeconomic forces at play that are inarguably worthy of discussion but which I won’t get into here. The cause that I want to get at today is far more subtle than the blatant racism and sexism that we see, sadly, writ large on the national stage in the run-up to the 2016 election. This is a kind of discrimination that many managers fall prey to, despite their very best intentions. Simply put, when people in positions of power (leaders and managers) are choosing their teams, they tend to hire people who remind them of themselves. This can come from obvious similarities (race, religion, educational background) or more subtly, through similar behavior, values, or belief systems).

Those in leadership positions are often extremely protective of any source of acquired power. Therefore, leaders are only inclined to share their power and its privileges with those they trust. And most find it easiest to trust those they feel they best understand, who “fit in,” who are familiar, who are similar. You can see where this is going. The bastions of power are dominated by white men, and the power gets passed on ad infinitum to other white men who remind them of themselves. This tendency, noticed and named back in the 1960s by management theorist Wilbert Moore, is known as “homosocial reproduction,” and it plays a huge part in keeping power secure in the hands of those who have always held it. It is responsible for not only hiring practices but also, perhaps even more crucially, determining whom those in power choose to network with, which has a major impact on who within an organization has access to opportunities for advancement.

In large corporations I often hear the term “fit” used to cloak this unnamed prejudice. Is candidate x a good “fit” for the company dynamic? Will they be a “fit” with clients, with their coworkers? What used to be blatant—managers once made no bones about looking for candidates of a certain race (white) or gender (male) with certain class backgrounds, who attended the same schools or served in the same branch of the armed services as they did—is now far more subtle. There is the unspoken expectation that, even if you are not actually like those in leadership positions, you had better behave like them. Just ask any woman if she ever feared not being taken seriously if she acted too “feminine” in a workplace characterized by masculine men in power.

So how do we combat something so pernicious? Especially as well-meaning managers may be responding to more of an unconscious bias than any malevolent desire to keep women and minorities out of power.

The first step, as with so many things of this nature, is simply recognizing that it exists and persists despite social progress in other areas. Denying that inequalities exist is a surefire way to keep them in place.

Quite aside from diverse hiring practices being the right thing to do ethically, there is now a mountain of evidence to suggest that it’s one of the best things you can do for your organization’s bottom line. Research shows time and again that diverse thinking and healthy conflict are a requirement for effective decision-making. It follows that if you hire only people exactly like you, this is very unlikely to happen. Leaders who rigorously question their own tendencies to look for themselves in those they hire and promote have the best chance of success in the long term.

Five Reasons Humility Is Key to Being a Good CEO

One popular conception of the CEO is of someone ubermasculine, dominant, and aggressive. From Elon Musk to Donald Trump to Harvey Weinstein, c-suites throughout the world are littered with examples, all compounding our notion that to be successful, you have to be domineering and even arrogant. Mountains of new evidence suggest otherwise, however, and it’s becoming more accepted that good leaders have empathy. But what about humility? Although in many ways, this quality is at odds with how we think of leaders, in some new leadership research, I’ve come across compelling data* that suggests the ability to be humble is not only helpful to good leaders, but also essential to a company’s bottom line. Here’s why:

1. They Put Collective Goals Above Their Own

 Humble CEOs are often just as ambitious as their megalomaniacal counterparts, but they seek success for the whole organization and yearn to be a part of something greater than themselves. This is in marked contrast to those CEOs who are driven by accumulation of wealth, personal adulation, and celebrity status. Humble CEOs have an awareness of their smallness in the grand scheme of things. Unlike some of the characters we see making headlines for their flagrant abuse of power, these CEOs don’t consider themselves above moral laws and deeply value their connection with the larger community.

2. They Can Take Feedback, Even When It’s Negative

 Arrogant CEOs resist being questioned, and anyone who does so is likely to get serious blowback; it’s the entire reason whistle-blower laws exist. Humble CEOs, on the other hand, place a high value on continuing to learn and improve, and therefore seek an honest understanding of their own strengths and weaknesses. They understand not only the humanity and limitations of others, but also their own. This makes them both more open to new ideas and feedback from others, and less likely to lose perspective and destroy a company because they can’t accept their own fallibility.

3. They Value Their Team

 Humble CEOs are more likely to trust and empower their top management teams. Rather than surrounding themselves with yes-men and yes-women who would never question them (I’m looking at you, Dov Charney) and centralizing their power, humble CEOs know that an organization’s success doesn’t hinge solely on their brilliance. They’ll hire smart, capable, competitive people and then involve them in big decisions, sharing power and credit. Companies run by humble CEOs are also much less likely to have outsize pay disparity within their management structure, something that can cause bitter internal battles and spell disaster for a company.

4. They Make for Balanced Leaders

 CEOs must have certain qualities to attain a position of power. Drive, ambition, and other characteristics from the List of Ten are all likely to show up in the personality makeup of anyone who has risen to the top of an organization. But mean men from Steve Jobs to Lance Armstrong show us what it looks like when these qualities run amok—verbally and psychologically abusing others, throwing temper tantrums, and manipulating those around them—it’s not pretty. But the right amount of humility in a leader can temper these other qualities and help a leader keep his or her emotions in check, as well as keep them from taking outsize risks. Because the good of their organization—not their personal glory—remains their top priority.

5. They Play Well With Others

 Studies have linked employer humility to employee engagement and team integration: two defining characteristics of a company’s long-term health and success. Humble CEOs set an example that others want to follow and engender more goodwill than their bombastic, ruthless counterparts. Because they appropriately value their team members (and don’t overvalue their own contributions), humble CEOs can facilitate mutual trust and discourage infighting. Because they deeply value the organization and everyone in it, they’re able to create a shared vision so that when the company succeeds, everyone feels they had a hand in it.

 As scholars begin to look more carefully at humble CEOs to see if they really make a positive difference in organizational performance as compared with their blowhard counterparts, the emerging data points to “yes.” Not only have executive teams been shown to be more integrated when the CEO is humble, but early indicators from long-term studies are pointing to a significantly greater inclination for these senior teams to deal with market disruption and innovation more effectively.

As more hard data comparing narcissistic and mean CEOs with their humble counterparts makes its way through the research pipeline, rest assured we’ll be sharing it here.

*“Do Humble CEOs Matter? An Examination of CEO Humility and Firm Outcomes” by Amy Y. Ou, David A. Waldman, and Suzanne J. Peterson from the Journal of Management.  

Why the Best Leaders Trust Their Employees

“By the standards of the rest of the world, we overtrust. So far it has worked very well for us. Some would see it as a weakness.” That reflection comes to us from Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett’s business partner and best friend, who ruminated on the state of corporate life at Berkshire Hathaway’s annual meeting in spring 2014. Buffett and Munger’s firm is run in the exact opposite way many would expect a diverse amalgamation of companies to be run. By all accounts, it is run more like a massive entrepreneurial venture than a lumbering conglomerate. Both men are allergic to distrustful corporate cultures, but how do you use trust to manage the fifth-largest company in the United States, with $162 billion in revenue and 300,000 employees worldwide? How do you operate dozens of diverse businesses without a risk-managing general counsel overseeing them all? Without a finger-wagging centralized human resources department telling every operating unit what to do or not do? In other words, how do you dispense with the control mechanisms that enable Buffett and Munger’s mean man counterparts to feel utterly omnipotent? It could seem at best naïve and at worst negligent to run a large business like this. But in truth, the trust Munger mentioned can be a kind of superpower, one whose potential often remains unlocked or is misused. But Buffett and Munger get it: their management philosophy is based on finding trustworthy managers and giving them an enormous amount of control. Over the years, they’ve shown how this creates more value than if they consolidated the control in the company’s Omaha headquarters and monitored the business’s every move.

At a 2007 meeting, Munger said, “A lot of people think if you just had more process and more compliance—checks and double-checks and so forth—you could create a better result in the world. Well, Berkshire has had practically no process. We had hardly any internal auditing until they forced it on us. We just try to operate in a seamless web of deserved trust and be careful whom we trust.”

The belief that a leader can accomplish more by developing a culture of trust than by implementing multiple layers of control may seem unrealistic in today’s age of complex, fast-growing start-ups. But two researchers from the University of Zurich have shown that the more a firm focuses on controlling and monitoring their employees, the more new problems arise.

Control-heavy leadership not only doesn’t make people behave the way you want them to but also has the paradoxical effect of encouraging them to take advantage of the firm they’re supposed to care about. Researchers Margit Osterloh and Bruno Frey call this phenomenon governance for crooks. Whereas when organizations put a premium on trust, people tend to act in more ethical, civil, and productive ways.

In firms run by mean men, trust is doled out like small crumbs—and vacuumed away just as easily. Their need for control makes building genuine trust impossible. This absence of trust then creates its own self-fulfilling prophecy. When people do not feel trusted, they’re more likely to act in an untrustworthy manner. Intrinsic sources of motivation evaporate, and they become more focused on what they want to get from the organization, rather than what’s right for the team.

Today’s smartest companies put a higher level of trust in their workforce and seek to raise employee engagement at all levels—building in involvement, commitment, passion, enthusiasm, focused effort, and energy to employees’ work experiences.

Engagement has now been widely correlated with higher corporate performance. It embodies what the new generation of talented workers expects, and what most of us probably always wanted. In a 2012 analysis of 263 research studies across 192 companies, Gallup found that companies ranking in the top 25 percent for employee engagement, compared with the bottom 25 percent, had 22 percent higher profitability, 10 percent higher customer ratings, 28 percent less theft, and 48 percent fewer safety incidents.

Trust is an even bigger deal.

Billy Joel’s song “A Matter of Trust” starts off hard and loud. In the second line he sings, “The cold remains of what began with a passionate start.”

A passionate start. I’d be hard-pressed to find a better way to capture how mean men use their manipulative, faux-charismatic charm to create a passionate start with those who don’t know them well. But the passion never lasts; ultimately it becomes revulsion.

Incivility, in any form, ultimately chips away at the bottom line, even if in some cases it bumps up short-term profit and stock price. Authentic leadership—the kind that emphasizes trust and engagement—on the other hand, creates workplaces that have greater loyalty, reduced absenteeism, increased reliability, and higher job performance.

I’ll leave you with a stunning observation from a group of UK researchers: when leaders act with authentic leadership and infuse expectations for pro-social behaviors into their corporate cultures, their employees’ desire for achievement increases (a good thing, since it directly translates to higher motivation for employees), and their need for power—the bad kind—decreases. Something about authentic leadership and pro-social behaviors makes us want to work harder while at the same time reducing our need to control other people.

It all comes down to a matter of trust.

Why Transparency Is Tricky

I’ve posed the question before on this blog: Who is responsible for holding mean men accountable? For exposing their wrongdoing when necessary?

There may be hundreds of reputable news outlets covering business, but they often don’t do as much as they should. It doesn’t help that mean men are, almost by definition, charmers. Combine money with power with connections with influence, and you begin to see why the mainstream media seems to “miss” certain truths that the general public has always sensed. And while the media catches up or reorganizes its priorities, we need greater transparency inside our largest corporations and organizations.

Just a few decades ago, it was unthinkable that subordinates would evaluate a leader. We aren’t talking as far back as Mad Men even—we are talking the era of Friends. The 360-degree evaluation didn’t become popular in US organizations until the 1990s. Now, in Fortune 500 companies and top nonprofit organizations, it’s the norm.

Executive coaching also used to be a rarity, and when it came into full bloom—also in the nineties—it carried as much stigma as seeing a shrink did back in my parents’ day. A CEO that needed a coach was a CEO who couldn’t manage his or her problems. Today, a large percentage of people are turning to executive coaches, and surveys show that having an experienced professional coach in their corner helps good leaders achieve more.

Let me emphasize that last statement: experienced coaches help good CEOs and leaders, not those who are “successful” psychopaths with highly complex narcissistic issues.

I should know: I’ve been in the executive coaching business for two decades, and I’ve worked with young, unpolished entrepreneurs who simply needed a little sanding around the edges, and I’ve also worked with egomaniacal mean men. Only in the rarest of the latter cases did we make significant, sustainable headway.

Tools exist for making any one of us more accountable, but forcing people to use these tools—even if they themselves claim they are up for change—can be challenging. Not many of us can easily open up a part of ourselves and allow others to sit in judgment. Entertaining the idea of change is one thing—being forced to do things differently based on feedback others are giving you can be anathema, particularly to entrepreneurial men who thrive on control.

Most leaders today recognize that if they want to be considered “modern,” they’d better step into the coaching and self-evaluating ball game. That said, how do we advise employees who have information about unethical or illegal behavior in the higher levels on how to proceed without fear? Transparency for transparency’s sake does no good unless each and every employee feels they can offer the truest feedback and criticism. But in organizations led my mean men, it’s a sure route to HR for the exit interview.

It’s clear we need to also address how to better advise CEOs and boards about handling reports of unsavory or illegal misconduct. We’ve seen in the news what happens when powerful people get tossed a damaging report only to then juggle it like a hand grenade—take Dov Charney and the American Apparel case for example. Talk about a story with excessive shrapnel.

So what took everybody so long?

One person—whether he or she is reporting misconduct or is the board member taking note of it—can make a difference. In all my years of coaching CEOs and advising boards, I’ve found it exceedingly rare that any serious concern finally being reported has not already long been on the minds of other employees and executives. All it takes is one person to get up the nerve to act, and the situation, if handled properly, can then move quickly and directly into action against the perpetrator.

Too many boards wrongly assume that the absence of complaints means that all is well. I am often called in on these cases after employees reached their limits and reported to external parties. Boards must invite transparency before it’s too late. They must reach out, ask questions, and encourage dialogue. In the age of the web, sure, powerful founders and CEOs can spin stories and create impressive branding to match their narcissism. But the web is also gaining power as a mouthpiece for employees. Glassdoor is only one of many websites that invites people to anonymously share the pros and cons of where they work and whom they work for. Leaders can snub sites like Glassdoor.com if reviews are horrific and may even go on a witch hunt in search of the employee who posted about the SoB CEO, but that typically leads nowhere. And despite what I said in the opening of this post about media sellouts, more and more online news outlets are making it their business to highlight controversial leaders.

Responsibility for creating a system that encourages constructive self-criticism belongs to those at the top. Responsibility for maintaining the integrity and usefulness of this system lies with every employee at every level. Firms that don’t allow for a transparent culture risk great peril.

Credibility and reputation are lost quickly in the Internet era. No firm is too big to fail. Once the story of Dov Charney’s firing broke, pundits came out of the woodwork, asking: Why didn’t the board do this years ago when they had more than sufficient evidence for cause? But why should a board failing to act surprise us? Charney was no fool when he put the American Apparel board together—he recruited members who had little experience running a major public company and was therefore able to keep them at bay. Board members have traditionally been left in the dark, and mean men are calculating—this does not surprise us.

The message that boards and mean men cannot help but hear right now is this: if you don’t fully embrace a transparent culture, the Internet will eventually out you. Some of your media ties will do the dance with you, but stories leak. Stories about assholes leak faster. The Internet has more muscle than you do, and you will only get away with it—whatever it is—for so long.

As of early June 2015, in response to Charney’s case against them for defamation, American Apparel delivered a restraining order against him, prompting one reporter to refer to him as the bad ex-boyfriend who just isn’t taking the hint and another to ask: “Does anyone know if American Apparel even makes clothes anymore?”

How Civility Breeds Success

Last week, I wrote about why mean is not effective in the workplace. But is the opposite equally true? Is a harmonious, civil workplace beneficial to a company’s bottom line? It would appear that it is. For the past eighteen years, Fortune magazine has run an annual list of the 100 Best Companies to Work For in the United States, the results of which have become a playbook for building trust and employee engagement. The firms that make the list each year show consistently impressive financial outcomes, typically far better than their industry counterparts. Overall, the 100 Best also grow at a faster clip and have significantly lower turnover in side-by-side comparisons with comparable firms.

So what gives? Is it tangible factors like child care, free snacks, a gym, and other benefits offered by places such as Google, Genentech, and Intuit (which all consistently score within the top ten)? Certainly employees appreciate these perks, but the true common denominator is that all of these firms manage—in many cases obsessively—their workplace cultures and demand a high level of civility.

So how do highly effective entrepreneurs shape the culture that enables these firms to become rockets for growth?

Trust and Openness

Spend a week in Ann Arbor, Michigan, and you’ll inevitably find yourself at one of the Zingerman’s businesses. Originally a traditional Jewish deli, Zingerman’s was founded by Paul Saginaw and Ari Weinzweig, who realized early on that growth was dependent on figuring out how to ensure that every employee thrived at work.

Their brand is now known nationally, and what they call their “Community of Businesses” has grown to include imported gourmet foods, a bakery, a creamery, and a second restaurant (Zingerman’s Roadhouse). They’ve also expanded their brand to include a mail-order catalog, coffee, catering, and more. By 2012, the combined revenues were coming in at $45 million.

Wayne Baker, a management professor and chair of the University of Michigan’s management department, has written several case studies about Zingerman’s and its approach to achieving sustainable growth. He found that Zingerman’s shares enormous amounts of critical information with employees; teams within each unit see exactly how their division performs on a weekly basis.

They are also explicit in their intolerance of incivility. Leaders are expected to treat employees with the same high standards of respect that the employees are meant to uphold with customers. Zingerman’s has built an environment where leaders set the tone and serve as role models.

Another key to the company’s success is that each unit has a managing partner who owns part of that business. “They make the push to go for greatness,” Weinzweig says, and they operate as one business with “semiautonomous units.”

Zingerman’s management philosophy has been so successful that they decided to start a management-training company in 1996 called ZingTrain to help spread the word. The program includes such seminars as “Fun, Flavorful Finance: Why Our Dishwashers Know Our Net Operating Profit.”

Emotional Intelligence

Emotional intelligence is essential in the critical moments of a start-up. Research shows that when the status quo needs to be challenged, emotionally intelligent employees speak up more frequently and more effectively. They are also more likely to speak up—while keeping their anger in check—when colleagues are treated unjustly. And their ability to express enthusiasm helps them avoid appearing threatening to leaders when bringing new ideas to the fore. Great leaders value these employees and don’t use their own often formidable emotional intelligence to manipulate others, as mean men like Peter Arnell do.

We can see the benefits of emotional intelligence in action by looking at founders of successful companies who remain in leadership positions. Sergey Brin and Larry Page of Google are prime examples. The two founded Google while still in their twenties and were mature enough to see early on that they needed a seasoned CEO to help lead the company. But they wanted a CEO who would also value and nurture the culture they were creating at Google, a culture that valued people’s individual creativity and was supportive of their personal goals—for example, by allowing engineers to spend twenty percent of their time working on their own projects. Eric Schmidt fit that bill, and together the three men created a culture that highly talented people found empowering and appealing.

Eventually Schmidt stepped aside, and now Page is CEO of Google. I admire Google for growing so quickly while holding firm to its original values. Google’s ability to quickly grow its highly complex product and service offerings on a global scale, with an organizational structure of mind-numbing intricacy, and remain a place where employees feel valued and empowered is incredible. Full disclosure: Google has been a client of mine, though I cannot say that I often walk away with such a high opinion of leaders I’ve worked with as I did with these guys.

Facebook has a similar story. Mark Zuckerberg was very young when he cofounded it and recognized his need for growth in certain areas. He has reportedly worked hard to develop his emotional intelligence, both with executive coaching and help from Facebook’s COO, Sheryl Sandberg, a leader renowned for her combination of smarts and civility.

Zuckerberg’s position at Facebook is secure given his stock holdings and the structure of Facebook’s board. Whether he needs to or not, Zuckerberg values civility and he’s consistently ranked as one of the most well-liked CEOs in Silicon Valley.

Emotional intelligence can be a double-edged sword. It’s vital for any leader to recognize, understand, and manage emotions, but a strong intuition about others can be used toward diabolical goals. So, while companies like American Apparel fight tooth and nail to keep their founder out, the leaders who learn the value of civility may spend their entire careers atop the company they built.