The Great Resignation
My eldest son was a philosophy major. When he first communicated that he wanted to major in philosophy, I asked why philosophy, and why not something like marketing or finance, he replied with the disdain a male teen who’s smarter than his father has, “those are pre-professional degrees. They teach you what to think, philosophy teaches you how to think.”
This was later validated by Alan Lafley (I like how you spell your name Alan), a two time CEO of Procter and Gamble who wrote an Op-Ed in the Huffington Post. Laffey stated that he prefers liberal arts majors over marketing majors, because liberal arts majors understand how to think through problems, marketing majors are taught how marketing has been done in the past.
In Carnegie Mellon Professor Randy Pausch, last lecture, he says a liberal arts degree doesn’t teach you how to think, but rather helps you decide what you want to think about.
I share all this because we are currently dealing with the great resignation and some are trying to figure out what’s happening and why so they can figure out what to do about it. I too have been thinking about this and want to share my thoughts.
In 1983, I graduated with a finance degree from American University. In my finance classes, they taught us that the primary objective of a business is to maximize shareholder value. This theory began in 1970, when in an essay for the New York Times, Milton Freidman revealed the Friedman Doctrine, which states that the sole responsibility of a corporation is to its shareholders.
So what did executives do? They started following Friedman’s Doctrine. They put profits ahead of all else. I wonder: did any of the leaders think about it independent of the Doctrine or did they all just follow it blindly?
Real wages, which is defined as spending power, has barely budged for most US workers in over 40 years. I find it both interesting and suspicious that the real wages have stagnated in 10 years after Friedman’s Doctrine was first presented. Could it be that the profit companies were seeking came on the backs of their employees?
About six years ago, I was hired by an $8B chemical company to assess their innovation culture. They were looking to double their revenue in the next 10 years and believed that innovation would drive growth. During my interviews, several chemical engineers said, “I don’t care about doubling revenue. I didn’t become a chemical engineer to double revenue. If, however, you told me we were going to work on the next big breakthrough in plastics, I’m in.”
The executives were put off by the idea that their employees didn’t care about doubling revenue, however, it started to make sense to them once they learned what their employees did care about and, more importantly, why. I have previously blogged about Axiology, also known as Value Theory. This theory suggests that people are more important than things, which are more important than systems. Clearly, having the people who can innovate is more important than the sales results, however I’m concerned that too many executives don’t see it that way.
How then did we get to the great resignation? My theory is the convergence of several behaviors from the “C” suite. First, leaders put profits before people. As A result, most US workers' real earnings have been stagnant for forty years. Second, too many leaders pay lip service to the company's purpose, which, as a result, doesn't serve as a north star to guide employees action. So employees are left chasing profit for shareholders which is unfulling. Third, leaders too often don’t trust their employees. This really showed up during COVID as plenty of leaders couldn’t wait to get their employees back to the office, in spite of data which suggested that employees were more productive and, due to lack of commuting, were probably enjoying a higher quality of life.
Why wouldn’t people resign en masse? The system does not serve them.
Around the same time Friedman was rolling out his Doctrine, Robert Greenleaf, a former ATT employee who had spent 40 years researching management, development, and education published an essay called “The Servant as Leader.” What Robert Greenleaf believed is the power-centered authoritarian leadership style so prominent in U.S. institutions was not working.
All of what I’ve described points to leadership breakdowns.
Not all companies are run this way. My observation is that founders aren’t driven by maximizing shareholder value but by the purpose they had for their companies. And it’s the passion of purpose with which they lead their companies that ultimately drives the growth and profit of the company.
Southwest is in my opinion a shining example of this. Herb Kelleher, Southwest’s founder's philosophy about profits was, “I’ll take care of my employees and my employees will take care of our customers and our customers will take care of our bottom line.” That philosophy combined with their innovation and contrarian philosophy about air travel made Southwest the most financially successful airlines for decades, in an industry which is really difficult to be profitable in.
It’s only when “professional managers” are brought in that things really start to change, and many times for, not for good. Why? The focus moves away from purpose and towards profits.
So how did we get to the great resignation? Well for me, it is a function of leaders who put profits ahead of people and purpose for too long and people, as a result of the pandemic, are waking up to the idea that life is too short to be a tool for businesses that don’t operate from a meaningful purpose and don’t share the wealth of success.
The solution is simple and challenging and will take years to rectify. First, leaders need to be accountable and take ownership for how we ended up here. Own it. Next, leaders need to lead from an organizational purpose that is bigger than themselves. Then leaders need to truly value and prioritize people, like sports teams value their players, which includes trusting your employees and when you do, I think you’ll find that profits will emerge as an outcome, not an objective.
As the Universal Law states: “As ye sow, so shall ye reap.”