Effective Leadership: Is “Fairness” a Good Value?

I just finishing reading a book that a friend recommended, “Principles” by Ray Dalio, a wildly successful hedge fund guy who also has some interesting thoughts on leadership. 

One of the things that he articulates that I agree with is the challenge of “fairness”, particularly when it intersects with generosity. For example, if you provide lunch for your headquarters staff on Fridays, does that mean that you should give a stipend to all of those whom you allow to work from home so that they can get a free lunch on Fridays too?

You might laugh, but I’ve seen issues like this come up hundreds of times in my career as an executive and again in the companies I now work with.

So is fairness a good value to espouse in a highly functioning organization? Occasionally but not frequently from my perspective.

My opinion is that the parking lot and the lunch room are good places for fair practices. If you can’t eat the same chicken sandwich as everyone else or walk a little further in the parking lot when you come in late, your people will take notice and you’ll lose respect.  I also believe that you should eliminate disparate impact where you can for legal and moral reasons.  

However, fairness only goes so far when your objective is to create a highly functioning organization. 

Meritocracy should trump socialism when it comes to pay and responsibilities. When weak performers are rewarded in the same fashion as the strong performers, you will disenfranchise your stars and attract more weak people. 

I am a big fan of inclusive management and collaboration, but not everyone needs to have a say in every matter. If you are uncomfortable reserving the most important decisions for the senior team or making unpopular decisions that you know are correct for the long-term benefit of the organization, you’re not fit to sit in the hot seat. If political correctness rules your decisions, you are not CEO material. 

If you need to cut your budget and believe that you must be fair by asking each department to cut an equal amount to be “fair” vs. eliminating low performing and non-strategic pieces of your business, you need to stiffen your resolve. 

If you believe that it is not fair that as CEO you are held accountable for the results of your organization even though you cannot control all the pieces, you’re misguided. Investors and boards are concerned with results much more than fairness.

Give all the kids at the next birthday party the same size piece of cake, but don’t let fairness turn your company into a dysfunctional playground. 

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Recent Comments

  • Patrick McKenna

    Todd, Excellent points, as always. Thank you.

    reply
    • Todd Ordal

      Thank you, Patrick!

      reply

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