Lesson No. 1

Mercenary Managers – Where Do Their Loyalties Lie?

by Julius Lengert

After the decline of the feudal system with its warlords and liegemen, there arose a new type of soldier — the mercenary. Most liegemen were knights, able to bear arms, men of honor, of aristocratic birth and culture, possessing certain moral qualities, of unblemished reputation, and tied to their lord by oath and mutual loyalty.

These entry qualifications were not expected of the mercenary. Anybody with warfighting skills could become a mercenary. They fought for third-parties only for money without any personal or moral loyalty. A long-term commitment was not part of the deal. The mercenary only wanted a limited-term commission, rapid success and maximum personal profit.

Nowadays mercenary types also exist outside the military in other parts of society, for example in professional sport. So-called soccer clubs are commercial businesses that pay huge sums to sports mercenaries in order to achieve sporting success. There is no question of personal loyalty, engagement, moral scruples or human considerations on either side: the purpose is, primarily, personal enrichment.

Until not so long ago, commercial enterprises on the whole, but especially those with a corporate culture of mutual solidarity, respect for others, and certain moral principles, were run by managements with few signs of a mercenary mentality. But now this mercenary attitude is also found in business management.

As a rule, such mercenaries are outsiders, with no previous connection to the company. They embody the type of manager we may refer to as managerist. Often recruited from the ranks of management consultants, they are unfamiliar with the company philosophy — in fact, they do not wish to be familiar with any such thing — as they were not socialized to respect such non-monetary values. Managerists may be in-house careerists, who once accepted the company philosophy, but at some point came to inwardly reject it. These managerists are unable, or unwilling, to behave in accordance with such a corporate culture. They ignore corporate ethics and pursue their own self-interest, and take little account of personal relationships, moral obligations, unwritten rules or customary behavior.

The ancient Greeks called those without mastery of the Greek language or culture — barbarians. Greeks understood they could not expect certain ways of thinking and behavior from these barbarians, who had not been raised and instilled with Greek culture. They were uncultivated and uncivilized.
The same applies to today’s corporate barbarians: the dynamic restructurers, the experts of turnaround and troubleshooting — upon whom, strangely enough, supervisory boards often pin their hopes and aspirations.

Even more surprizing is the disappointment of these supervisors when these hired outsiders (like mercenaries in a foreign country who leave behind a wasteland and decimated population) after a brief intervention leave behind a frustrated, demotivated and unsettled workforce, and customers whose trust has been lost. When this effect surfaces the proclaimed saviors are quickly released, to pursue other challenges. However, they did not plan to stay long: managerists are short-termist and do not plan for the medium-term or continuity; the persistent application necessary to build and support a long-term and sustainable business is not part of their job description. And by now they have a bulging bank account and their financial security is assured . As well as a golden handshake they have strengthened their reputation as a ruthless manager, which helps them to quickly gain a new appointment.

Does it matter where this mercenary type of manager comes from and what drives them? After all, there have always been people, ruthless and unethical, without real commitment to organizations, with no consideration for co-workers, whose purpose is to simply grab as much money for themselves and as fast as they can.

The more interesting question is — what type of company is it that hires these managerists as highly paid top managers, and why?

The answer is: these managerists are hired by companies whose results are unsatisfactory, at least as far as the supervisors, shareholders and banks see it. They hire managerists in the desperate hope that radical change and disruptive action will somehow rapidly grow the business and its market capitalization (share price). And why they choose outsiders is also easy to explain: external mercenaries will implement measures that the most hardened and ambitious home-grown executive would shrink from. In-house executives will have internalized the corporate culture, perhaps passed down from one generation to the next, so they would not take certain measures. They are not easily converted to corporate barbarianism.

One relevant question remains: Do top decision-makers in these companies, those who hire mercenaries as 'corporate restructurers', really not know what they are doing? Do they not know what long-term damage they cause to their companies? Whoever undermines corporate culture this way also destroys the trust of employees and customers. If you lose the trust of employees, you lose their loyality, weaken their capabilities, and their desire to do their best. Whoever weakens the capability of employees, also worsens work performance, long-term commercial success, and financial yields. Do they hire these mercenaries because they are careless and thoughtless or, more likely, just too impatient for higher profits?

In conclusion: mercenaries can win you a battle, but lose you the war — because they do not have a long-term perspective, as is embodied in holistic corporate culture. We should not forget our Greek lesson: the natural enemy of culture is — the barbarian.