Management by Fear is Bad for Business

By Lou Solomon

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Management by Fear is Bad for BusinessIn the fear-based workplace, short-term numbers are king, and when the numbers are off, leaders in management positions respond by applying pressure. They give pushy pep rallies and bear down on budgets.

Like a chain reaction throughout the company, pressure rolls downhill.

When Pressure Rolls Downhill: A Case Study

This actually works at first. People want to meet expectations and keep their jobs. But people who are dodging disappointment from management will not exceed expectations or become the superstars they were meant to be.

Years ago, I had the opportunity to coach a well-known CEO. We’ll call her Susan and she had national recognition for her achievements. She was fiercely ambitious and masterful at politics and publicity.

But her employees had learned to be afraid of her disappointment when the numbers were off. Her decisions made clear her priority of financials over people. Members of her leadership team became yes-men-and-women. Susan longed to gain the real engagement of her people or advance the organization into the future, but it never happened.

Happy Employees = Happy Customers at Costco

Just how do you capture the optimal performance from people who will exceed expectations and take your organization into the future?

Costco Co-founder Jim Sinegal and current CEO Craig Jelinek appeal to employees in a respectful and encouraging way—and it has paid off for everyone. Jelinek and Sinegal have staked the long-term success of Costco on a culture of happy employees and customers. They contend that if employees are happy, they will be more productive, and together with happy customers, they will reward shareholders.

According to, the benefits cited by Costco employees include:

  • Frequent breaks
  • Flexible schedules
  • Opportunities for career development
  • Higher pay and
  • A low-stress job environment

Costco outperforms Wal-Mart and Target in culture and employee satisfaction. And, Costco is outperforming its competitors when it comes to the top line and the bottom line. 

Management Needs to Acknowledge Employees

Leaders can lower the element of stress in the workplace with sincere acknowledgment. Employees need to be “seen” for their unique, specific contributions beyond the numbers.

The basic “atta-boy” doesn’t satisfy people who put their heart and soul into their work. Creative, multifaceted adults need specificity—and when you give it to them they know you’re really paying attention. So, instead of saying something generic, say something specific like, “I appreciate the way you pull in people from other departments to reach your team goals—you’re a connector.”

No time? From the elevator to the parking lot, daily encounters represent opportunities to express appreciation for an employee’s efforts. Public recognition at a staff meeting, or a thoughtful “thank you” note from the boss are also meaningful compensation for great work.

Management Needs to Put People First

One of the most over-used and under-demonstrated claims by leaders when giving a keynote is “Our people come first.”

The only way a leader earns the right to make that claim is to occasionally make a stand and put people before the numbers. Examples include:

  • Fighting for something on behalf of the employees
  • Walking away from rude prospects who verbally abuse employees
  • Protecting off-site meetings even when the numbers are off, and
  • Creating a workplace environment of acknowledgment and appreciation

Take a page from the leaders at Costco, who are proving that when you treat employees with respect and encouragement, they will reward shareholders.

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