As I developed as a CEO, I found two key techniques to be extremely useful in minimizing politics.
1. Hire people with the right kind of ambition—The surest way to turn your company into the political equivalent of the US Senate is to hire people with the wrong kind of ambition. As defined by Andy Grove, the right kind of ambition is ambition for the company’s success with the executive’s own success only coming as a by-product of the company’s victory. The wrong kind of ambition is ambition for the executive’s personal success regardless of the company’s outcome.
2. Build strict processes for potentially political issues and do not deviate—Certain activities attract political behavior. These activities include:
• Performance evaluation and compensation
• Organizational design and territory
Let’s examine each case and how you might build and execute a process that insulates the company from bad behavior and politically motivated outcomes.
Performance and compensation—Often companies defer putting performance management and compensation processes in place. This doesn’t mean that they don’t evaluate employees or give pay raises; it just means they do so in an ad hoc manner that’s highly vulnerable to political machinations. By conducting well-structured, regular performance and compensation reviews, you will ensure that pay and stock increases are as fair as possible. This is especially important for executive compensation as doing so will also serve to minimize politics. In the example above, the CEO should have had an airtight performance and compensation policy and simply told the executive that his compensation would be evaluated with everyone else’s. Ideally, the executive compensation process should involve the board of directors. This will a) help ensure good governance and b) make exceptions even more difficult.
Organizational design and territory—If you manage ambitious people, from time to time, they will want to expand their scope of responsibility. In the example above, the CFO wanted to become the COO. In other situations, the head of marketing might want to run sales and marketing or the head of engineering may want to run engineering and product management. When someone raises an issue like this with you, you must be very careful about what you say, because everything that you say can be turned into political cannon fodder. Generally, it’s best to say nothing at all. At most, you might ask “why?”, but if you do so be sure not to react to the reasons. If you indicate what you are thinking, that information will leak, rumors will spread and you plant the seeds for all kinds of unproductive discussions. You should evaluate your organizational design on a regular basis and gather the information that you need to decide without tipping people to what you plan to do. Once you decide, you should immediately execute the re-org: don’t leave time for leaks and lobbying.
Promotions—Every time your company gives someone a promotion, everyone else at that person’s level evaluates the promotion and judges whether merit or political favors yielded the promotion. If the latter, then the other employees generally react in one of three ways:
1. They sulk and feel undervalued
2. They outwardly disagree, campaign against the person, and undermine them in their new position
3. They attempt to copy the political behavior that generated the unwarranted promotion
Clearly, you don’t want any of these behaviors in your company. Therefore, you must have a formal, visible, defensible promotion process that governs every employee promotion. Often this process must be different for people on your own staff (the general process may involve various managers who are familiar with the employee’s work, the executive process should include the board of directors). The purpose of the process is twofold. First, it will give the organization confidence that the company at least attempted to base the promotion on merit and second, the result of the process will be the information necessary for your team to explain the promotion decisions that you made.
Be careful with “he said, she said”—Once your organization grows to a significant size, members of your team will, from time to time, complain about each other. Sometimes this criticism will be extremely aggressive. Be very careful about how you listen and the message that it sends. Simply by hearing them out without defending the employee in question, you will send the message that you agree. If people in the company think that you agree that one of your executives is less than stellar, that information will spread quickly and without qualification. As a result, people will stop listening to the executive in question and they will soon become ineffective.
Excerpted with permission from The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers by Ben Horowitz.