“A chief executive officer who has ‘friendships’ within the company, has ‘social relations’ with colleagues or discusses anything with them except the job cannot remain impartial—or at least, which is equally damaging, he will not appear as such. Loneliness, distance, and formality may be contrary to his temperament—they have always been contrary to mine—but they are his duty.”
—Peter F. Drucker
Here Peter Drucker is referring to the behavior of Alfred Sloan, the president and CEO of General Motors from 1923 until 1937, CEO and chairman until 1946, and chairman until 1956.
Sloan believed the only important variables regarding a person and that person’s fitness for a position were performance and character. He believed that close personal relationships with colleagues would bias his judgment of their performance and character.
A man of great personal kindness, Sloan did not trust himself to mingle social and business relationships. One might characterize his relationships at work as austere and those outside of work as generous to a fault.
In Drucker’s case study on Sloan, he asks students to compare Sloan’s style with that of Franklin Roosevelt and Abraham Lincoln. FDR and Lincoln both emphasized performance in subordinates, but both enjoyed deep friendships with at least a few top executives.
Roosevelt, for instance, formed a close personal relationship with Harry Hopkins, one of his closest advisors and the architect of much New Deal legislation. Hopkins was a loyal and able servant of FDR, and he was one of his closest personal friends. Lincoln was magnanimous to those who served under him, but he was particularly close to his Secretary of State, William Seward. He deeply respected Seward, a competitor for the 1860 Republican nomination. Within a short period of time, they formed a close personal relationship. Yet Lincoln was very objective about Seward’s work, and Seward gave Lincoln very detached advice, including strong dissent on various policy matters.
Despite these examples, Drucker is identifying a problem faced by many executives who cannot be objective about the performance of those with whom they form close personal ties. The result is often either great loneliness experienced by those at the top or the appearance of favoritism that spreads discontent throughout the organization.
With the flattening of organizations and the widespread use of self-managed teams, this problem not only remains, but it has become more pronounced because of the need for close working relationships among team members. In the end, relationships between leaders and followers must rest on candor, even though they may have to be friendlier than during Sloan’s generation.