The two kinds of people in the world—and why it matters for leadership
One provocative assertion I often make when teaching is that there are two kinds of people in the world: those who have hearts and those who don't. Students and executives usually chuckle awkwardly at this statement, wondering where I am going. I then share that many leaders look at changing technology and changing markets and realize that a lot of jobs in their companies will inevitably be eliminated within the next few years, and it's not hard to predict which jobs will go away. The question is how the executives react to this realization.
Leaders who 'have hearts' experience empathy for those currently in jobs that will be disappearing, seeing individual faces and hearing individual names in their minds. Such leaders think of the men and women in their organizations as flesh- and-blood humans. They worry about employees losing jobs that feed their children, keep roofs over their heads, and provide health insurance, not to mention (hopefully) supplying a sense of satisfaction and meaning.
Other leaders see the job elimination through a cooler lens, less concerned for those affected. They embrace 'creative destruction' as a fundamental aspect of how capitalistic systems work. Austrian economist Joseph Schumpeter wrote about the inevitability that new technologies and advancements will destroy what came before.
For instance, there used to be great demand for skilled telegraph operators and folks who could add columns of numbers quickly with just a pencil—until more cost-effective technologies devalued those skills. Leaders with this perspective focus not on the hardships of the unemployed but on the numerous new jobs created by the same forces of change. They believe employees simply must adapt or be left behind, and there's no point in getting upset about it—everyone owns their individual career. They see the latest disruptions as just the continuation of the human experience, going all the way back to our hunter- gatherer ancestors. Still others may only care about job cuts for the sake of cost reduction, never mind the 'creative' part of the destruction.
For the purposes of Systems Leadership, it doesn't matter which type of person you are in my (admittedly reductive) shorthand. You need to invest in your people whether you have a heart or not, for at least three major reasons.
1. It's cheaper and easier to retrain than replace
Studies show that it often costs less to reskill a current employee than to recruit, hire, and train a new one. According to the Society for Human Resource Management, finding and training a new employee can cost as much as six to nine months of their salary. For instance, if a worker earns $60,000, the company could end up spending an additional $30,000 to $45,000 to replace them. The Center for American Progress estimates the costs can be even higher, depending on the role. This means reskilling an existing employee is not just the right thing to do, but often the more cost-effective strategy.
2. Investing in people boosts morale and discretionary effort
When a company invests in retraining its employees, it sends a powerful message. Imagine the morale boost when employees learn that their company values them enough to send them for specialized training in AI. Now contrast that with hearing that the company is posting external job openings for AI specialists, and layoffs are on the horizon to fund the new hires. The impact on employee enthusiasm and engagement is profound. Continuing education and upskilling are crucial for fostering loyalty, enthusiasm, and a productive workplace culture.
3. Institutional knowledge is an invaluable asset
Many leaders prioritize fresh ideas, new talent, and innovation. But systems leaders understand the unique value of institutional knowledge—the insights and perspectives that only come from experience. While hard data often drives decisions, there's immense value in recognizing the importance of those who have navigated the complex challenges of the past. Their insights can be the key to solving future problems.
Whether they 'have hearts' or not, leaders must see employees as a resource to be invested in to advance the needs of the company. Systems Leaders take advantage of cost-saving opportunities without treating their people like replaceable cogs in a machine. At the same time, however, they believe fully in holding people accountable to high standards. They would say it's a false choice to frame strong management and compassionate management— hard heads and soft hearts— as opposites. Great leaders aspire to both.
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