Here are some tips to pull it off in your organization:
Identify your managers.
This is easy: your managers are the people you put into management positions. You should already know this.
Identify your leaders.
This is actually quite hard. The difference between a manager and a leader might seem subtle, but couldn’t be greater: employees are assigned their manager, but they choose their leader. Figuring out who an employee actually looks up to is tricky because if it isn’t their manager, the mere acknowledgement of that fact forever changes the relationship between them and their manager — for the worse. Accordingly, the best way to do this is through very careful observation and casual conversation: body language is a key signal, so a pay attention.
Identify the gap between your management and leadership structure.
As immortalized by Alfred Sloan, “Good management rests on a reconciliation of centralization and decentralization.” Management is centralized, while leadership is decentralized. A great organization has the narrowest possible gap between the two: the organic, informal power structure that emerges naturally through working relationships should coincide as close as possible to the formal, top-down assignment of authority and responsibility. Or more succinctly: people should respect their managers, and if they don’t, bad things happen.
Fire the bosses.
A “boss” is someone who has been granted formal authority, but hasn’t earned the respect of their subordinates. Bosses aren’t leaders because employees wouldn’t choose to follow them if given an alternative: their authority comes from above, not below. Once you’ve identified the bosses, immediately begin laying the groundwork to fire them. First, however, you need to groom someone to step into their place. Toward that end…
Promote your leaders.
A “leader” is someone who has outsized influence beyond their formal role. It’s the person who their peers wish were in control, but isn’t because you haven’t noticed them yet. Notice them, engage them, and figure out how to encourage them to take on the authority that they deserve but haven’t made a point to ask for (which is why you didn’t know). It’s likely they haven’t asked because they are good team players (and thus don’t want to undermine their “boss”), and don’t crave authority — in fact, they’ll likely resist it. Leaders don’t ask to lead, they just do: they don’t seek out power, which is what makes them ideally suited to have it. Figure out how to craft a role that grants them broad authority over those tasks they are comfortable and willing to do (and that their peers will support), but that doesn’t force them to take on other responsibilities they might not be comfortable or willing to handle. Flexibility here is the key.
Be decisive.
Nobody benefits by you putting off the inevitable. The longer you wait, the greater chance your leader will take one of the job offers they are unquestionably receiving, leaving you with no way to replace the boss. Not only that, the longer you wait, the more likely the boss will take one of the job offers they are likely also getting, which undermines the authority of the leader you want to promote — it disempowers the promotion by making it seem reactionary, even if you had already planned to do it. The moment you make your decision, buck up and do it.
Be honest.
This isn’t about subterfuge — it’s about dealing with reality as it is, rather than how you’d like it to be. Nobody wants to be just a boss: they want to be a leader. They want the respect of the team, and if they haven’t earned it, they likely want and need your help to either get it, or change their role. If it gets to the point where you need to make a firing decision, always remember that it’s your fault, not theirs: you picked them, you put them in a role they weren’t suited for, and it’s your responsibility to make that right. That might mean another chance, career training, or a generous severance package. But at the very least, it deserves an honest explanation of the way you see it, such that they can learn from the experience. They might walk away thinking your an idiot. (In fact, they probably will.) But better that than them forever thinking of you as a liar.
It’s not fun, but firing is a major part of hiring. It’s better for you, better for your employees, and — in all honesty — better for them. Everybody I’ve ever fired has subsequently found a position that was better suited to them, and so long as you’re only hiring great people to start with, they will find that job very, very quickly.
David Barrett is Founder and CEO of Expensify (“Expense reports that don’t suck!”) and a frequent contributor on CNBC, Bloomberg TV, and Fox Business News. Expensify is always hiring awesome people, and would love to hear from you.
