Paul Wolfowitz was enjoying his enviable tenure as President of the World Bank one moment, only to find himself fighting for his prestigious job and reputation as a fearless anti-corruption advocate in the next. His was a losing battle, and he was forced to resign over his handling of a pay package for his girlfriend, who was also a bank employee.
The bank’s board concluded that Wolfowitz violated staff rules by arranging a raise of US$50,000, and a transfer to a United States State Department job with a tax free salary of US$193,000, which was even more than Secretary of State Condoleezza Rice’s salary.
His career demise is the publicised version of what happens in countless companies and organisations when favouritism – the practice of awarding positions and dispensing preferential treatment based on friendship or family ties – reigns. As Wolfowitz’s example showed, this unethical practice can swiftly end a brilliant corporate career in ignominy. The effects, however, transcend the individual and are often far reaching for the company at large.
Promoting individuals based on relationship ties and not on qualification and merit creates two powerful negative consequences. It engenders resentment and distrust in more qualified and deserving staff, as well as their supporters. In addition, it exposes the promoted person to responsibilities that they are not capable of fulfilling competently. In either case, the company’s profit margin, reputation and growth potential are all compromised.
According to leadership expert John Maxwell, trust is the foundation of leadership effectiveness. In his bestselling book, “The 21 Irrefutable Laws of Leadership”, he states that people won’t trust a leader who has slips in character. Quoting PepsiCo chairman and CEO Craig Weatherup, he asserts:
“People will tolerate honest mistakes, but if you violate their trust you will find it very difficult to ever regain their confidence. That is one reason you need to treat trust as your most precious asset. You may fool your boss, but you can never fool your colleagues or subordinates.”
The issue is not merely academic qualification, however, but meritocracy, consistency, and transparency. Employees possess an innate equity monitor that will immediately detect impartiality. Someone can be qualified academically, but not deserving of being promoted, based on other factors of seniority, attitude, or relevant competency, for example. What favouritism communicates is a lack of respect for process and fair play. Deepak Seth, in his work “The Seven R’s of Self-Esteem”, notes: “Respect is the first rung on the organisational ladder of self-esteem and high performance. For people to be their best and give their best, they need to experience being treated with respect… demonstrated by tangible action.”
Showing favouritism – giving promotions and other benefits to friends and family – in the long run, is a recipe for organisational ineffectiveness and personal failure, both for leaders who give the favours and the hapless souls who naively accept them.