The Cost of Leading from Fear vs. Leading from Vision

Feb 3rd, 2020 | WP Admin

Patrick Lencioni said it best, “Trust is the foundation of real teamwork. And so the first dysfunction is a failure on the part of team members to understand and open up to one another. And if that sounds touchy-feely, let me explain, because there is nothing soft about it. It is an absolutely critical part of building a team. In fact, it’s probably the most critical. “

There are those managers who lead with fear, using it to bully and manipulate their employees into compliance. Yet even more detrimental is when an organization’s senior management leads from fear.

When this is the case, serious consequences are usually waiting around the corner. It may take time to accumulate into a crisis, but if fear leads the decision-making in an organization, something devastating is very likely on the way.

In working with executives from the Fortune 500 organization to the small-business entrepreneur, I’ve had the opportunity to lift the hood and see the inner workings of management psychology in practice.

What I’ve found along the way is that leading from a base of fear leads an organization into stalled productivity, unmet goals, high turnover, financial ruin and, in some cases, loss of life.

When using fear as the basis for decisions, inevitably three key dysfunctions reveal themselves in the foundational core of an organization’s culture:

Lack of shared vision. A vision is the organization’s compass. If an auto manufacturer’s vision is to profitably create innovative cars that are safe, economical and environmentally balanced, and to do so in a way that serves the communities where they are manufactured, then that’s the compass by which all of the organization’s decisions are guided. However, all too often management fails to make its decisions based on the vision, but rather to avoid its daily fears – such as internal conflict, succession denial, retaliation, and so forth.

Lack of realized potential. Making decisions based on how to avoid fears acts as a toxin to the organization. Over time it stifles innovative ideas, creative thinking and problem-solving, passion, and distracts employees from the organization’s vision. In fact, the Gordon Institute of Business Science estimates fear-based decision-making can cost organizations from 20 to 80 percent of their potential. When potential is stymied, turnover is usually the result. And turnover is costly. Experts across the board estimate turnover can cost from 2 to 5 percent per employee’s salary to replace them.

Lack of full engagement. Employees want to be part of something bigger than themselves. But when employees feel they must manage their management’s fears, they can easily lose sight of that bigger purpose. When this happens, employees disengage – avoiding crucial conversations, suggestions, and collaborative push back. This can be costly beyond financial measures. It can cost lives.

The antidote for fear-based management is not to dismiss risk. If anything, operating by vision gives leeway to better risk management. Comparing every idea to the one crucial question of “how does this help us achieve our vision,” opens the floodgates to new ideas, new opportunities, better and more open communication, frank feedback, and stronger ethics. These are the working principles of consistently strong organizations that demonstrate sustainability across changing markets and business environments.

But when an organization is overshadowed with fear-based decision-making, it sets itself up for exactly what it fears the most. Conversely, leading by vision keeps success as the foremost thought in all decisions and subsequent actions. And as part of that, organizations will make mistakes, but they will learn for them, apply that learning, and come out stronger on the other side. Countless successes throughout history have been realized via failure, and as Benjamin Franklin eloquently articulated: “Do not fear mistakes. You will know failure. Continue to reach out.”