As a leader, how you act—and how people react to how you act—matters. For proof, look no further than the public reaction to AIG executives whining about restrictions on their bonuses.
In boss land, how you behave and how things look is more important than almost anything else. It’s called the rule of optics.
Here’s a story of two companies, one mindful of the rule of optics, another not so much.
Back in the day, Walmart and Kmart were two retailers in fierce competition. Kmart was once powerful enough to entice Martha Stewart to lend her name to a line of home goods products.
Kmart must have spent millions designing and installing the new Martha Stewart home goods departments. But walking through one of the sections, one was likely to see boxes all over the floor, some empty, some full.
All that thought, money and planning went out the window, because a couple of minimum-wage workers just didn’t care much.
Meanwhile, you could walk into any Walmart and the shelves were well stocked, the store was clean and you could find someone to help you.
Walmart had figured out the rule of optics: The lowest-paid employees are vital to the company’s success.
So, at the time,made employees feel like they were important by giving them stock options and money back if they cut down on theft.
Kmart didn’t, and they’ve been on the ropes for years since.
— Adapted from “You Can’t Fire Everyone,” Hank Gilman.