Episode #223: Quiet Quitting and Elon Musk
Q&A with Marty & Em
There’s a lot going on in the world of work right now. The Covid pandemic was a huge catalyst for a major shift in how people see their careers and, more importantly, their lives.
Since then, we’ve come through the Great Resignation, moved onto Quiet Quitting, and now we’re seeing mass layoffs. And the net result of all this? The latest figures in the US show a steep decline in productivity.
And then, there’s Elon Musk—always unpredictable, eccentric, and entertaining—but I don’t think he’s ever been accused of being a leadership role model.
In this Q&A episode, Em and I drill down to the heart of the matter, and offer some practical perspectives that you’ll find invaluable when trying to navigate these issues with your own people.
Quiet Quitting and Elon Musk
EPISODE #223 TRANSCRIPT
There's a lot going on in the world of work right now. The Covid pandemic was clearly a catalyst for a major shift in how people all over the world view their careers - and more importantly, their lives. We've come through the Great Resignation, moved on to Quiet Quitting, and now we're seeing mass layoffs - and according to the latest figures in the US, the net result of all of this is a steep decline in productivity.
And then there's Elon Musk - always unpredictable, eccentric, and entertaining. But I don't think he's ever been accused of being a leadership role model.
As you might imagine, we get an endless barrage of questions from our listeners on these issues, so in this article, I wanted to cover a few trending topics. I start by looking at the recent decline in productivity, I dive deep into Quiet Quitting, and I share my thoughts on Elon Musk's leadership style.
PRODUCTIVITY IS DECLINING
Productivity is a measure of the hourly output per worker across the whole economy. In the second quarter of 2022, productivity in the US plunged. It was the largest year-on-year decline since they started keeping records, and this is on the back of a sharp decline in Q1 as well.
Hours worked increased slightly, so people aren't working any less hours. The unit cost of labor continues to increase even more rapidly though - by over 10 percent last quarter. So wages are going up, people are producing less, and they seem to be working harder. These numbers are problematic and the trends seem set to remain for quite a while.
Why are we seeing such a steep decline in productivity? Well, the causes and effects can be pretty complex here, but I think we’re now starting to see the scoreboard on the remote working issue. There's still fierce debate on whether productivity's increased or declined.
People who prefer to work from home swear that they're much more productive now - and if that's truly the case, then that productivity isn't being captured. Perhaps the proliferation of extra Zoom meetings that leaders hold to try and keep tabs on everything are sucking up any actual productivity gains that may have been realized.
But as much as we debate the root cause, the outcomes are entirely predictable. Long-term productivity declines result in a shrinking economy: quality of life goes down, opportunities dry up, and innovation flees offshore to other economies… and when that happens, everyone just blames the government. If it wasn't so serious, it'd be fairly comical.
IS QUIET QUITTING HERE TO STAY?
The recently-coined phenomenon of Quiet Quitting can be especially tricky. The definition of this is quite different, depending on who you ask. It can range from simply using up all your sick leave, through to not doing any extra work when you don’t feel as though there’s enough recognition for it.
But however you define it, Quiet Quitting is an unfortunate phrase. At least it shows how quickly these things can take root in the media. There's been a bunch of variations on this theme, but I think people have been emboldened by the fact that they've been working from home, and they realize that they now have a huge amount of latitude in terms of how much effort they put in, and what results they achieve.
It's not necessarily their fault either - there are leaders who can't lead for results, but only by looking at the activity - for example, the time someone spends at their desk. They may not have been able to set appropriate targets or standards for their people, and everything defaults to the lowest common denominator, so you end up relying on the choice of the individual as to how much effort and commitment they put in.
And the way many companies have treated their people during this time, it’s no wonder that a huge chunk of the workforce is pretty weird and pissed off about how they've been treated since the pandemic hit. I don’t think this is a new phenomenon, though. Since the Industrial Revolution, workers have exercised their power the only way they could: by punishing an employer who treats them poorly with a lack of effort.
They withhold their commitment, their productivity, and their discretionary effort, only doing the bare minimum. Now, in the most obvious sense, this manifests as strike action. But the more passive-aggressive version of this is to just do as little as you can get away with to try to achieve that sense of balancing the scales. And if leaders can't see this and deal with it, well, whose fault is that?
Quiet Quitting is just really a modern take on what's been going on since the dawn of time. So, the question is, is this just a passing phase? Will this disappear once the employment market cools and jobs are harder to find?
Well, I don't know… I think it's most likely that things will go back to relative normality. And by this I mean that employees are going to revert to using less obvious methods to express their displeasure. What I mean by this is that people will need to be careful how they play that game. But I don't know that it's going to change a lot about productivity, employment, or people's lack of satisfaction with the current state of their careers.
I've spoken before on the No Bullsh!t Leadership podcast about the psychological contract, a concept first developed about 60 years ago by Chris Argyris, who was a Harvard Business School professor. The psychological contract is the unwritten understanding between an employer and an employee, and I think this has changed a huge amount over the last decade or so, in particular.
If you think back to the 1960s when Argyris formulated it, the psychological contract would've been a very different understanding. The employee's thoughts may well have been:
“I'll come to work for you every day. I'll give you a fair day's work for a fair day's pay. If I'm loyal to the organization, the organization will be loyal to me in return. I'll do what I'm told and I'll give my best efforts. And in return, I expect to be treated with a level of dignity and respect.”
It seems there was a sort of mutual understanding that employers and employees would look after each other's interests.
It's very different now. If we think about what might sit on the employee’s side of the psychological contract today, it would probably include things like:
Schedule flexibility
Meaning
Balance; and
Much higher expectations around pay.
They’re most likely thinking:
“Well, I don't expect unwavering loyalty from my employer. It's obvious those days are gone. But instead, I expect that my employer's going to provide a place where I can earn a good living while having plenty of room for the other things in my life.
“I want balance. I want my boss to be sensitive to my situation and to cater to my preferences. I want to be able to work from where I choose, in the manner I choose.
“And I expect a level playing field, and that I won't be penalized in my career because of the personal choices I make in the other areas of my life. If I don't feel as though the balance is right… Hey, Quiet Quitting! If my employer doesn't understand my expectations and doesn't satisfy them, I have many ways of exercising my own dissatisfaction.”
The balance of this modern psychological contract will no doubt shift slightly as the job market softens.
But, not everyone thinks like that. There are still people in the workforce who are ambitious and career-oriented, who are going to continue to seek a high level of success and reward, and they will have a completely different psychological contract. They'll be the ones who receive the opportunities that open up, and they open it up themselves through their hard work, risk-taking, and dedication. I'm probably not in the mainstream with this, but I think that's entirely appropriate.
The goal should be to create equality of opportunity, not equality of outcomes. And if someone chooses to put in more effort, more energy, more commitment into anything they do, they'll earn the success that comes from that effort. If someone makes a choice to do less and focus on other areas of their life, well that's fine–in many ways it's probably even more sensible–but they can't expect the same career outcomes.
As leaders, we sometimes forget that it's not our job to provide the environment for everyone to live out their best lives. We have a job to do in delivering value for our organization, and that's why we get paid - so we can't get too carried away with pandering to the demands of our people. It's not good for the team, and ultimately it's not even good for the individual.
Learn more about this common misconception with Ep. #8: Are Happy Workers Productive Workers?
When it comes to dissatisfaction, I sort of get the impression that our thinking on what our lives and work should be has evolved over time. It now seems to be almost a cliché that people have to pursue their life's purpose from a very young age. I didn't discover my true purpose until my mid-forties. And I didn't actually start to realize that purpose until the ripe old age of 56, when I started Your CEO Mentor with my daughter and business partner, Em.
But, here's the important thing to remember: everything I did before that moment in time was simply preparing me for what was to come. If I hadn't done those things and lived that experience, I wouldn't have been able to do what I'm doing now. Some of the most impactful lessons in No Bullsh!t Leadership didn't even occur to me until I was in my fifties!
For me, the concept that you'll be able to discover your life's purpose and then pursue it at the ripe old age of 22 is mildly ridiculous. Now, that’s not to say it can't happen - it's just that it's extraordinarily unlikely, and I think this breeds a lot of dissatisfaction in younger people. They think to themselves - and I've heard this many times - “Why am I wasting my time? This job is taking me nowhere.” It makes it even harder to get a psychological contract that both an employer and an employee are going to be satisfied with.
Explore the role that purpose plays in your career, and what else might matter with Ep. #201: Finding Your Purpose.
ELON MUSK: VISIONARY LEADER, OR GOING TOO FAR?
While we’re talking about turmoil in the workforce, Elon Musk is never far away from the headlines, especially since he took over the reins of Twitter in October. His well-storied approach to the employees at Twitter begs the question, “Is he just demanding results that are necessary to improve the company, or is he out of line in what he’s demanding?”
Of course, I preface all of this by stating that my only sources of information are what’s in the public domain, to the extent that we think those sources are reliable: there are endless media reports, but of course, we also have Musk’s own tweets.
I'm a massive fan of setting high standards for performance, and for leaders being the catalyst to drive and enforce those standards throughout the organization. It has to become embedded in the culture. It's really the only way to run a company if you want to be successful in the longer term. But, from what I've read about Elon Musk's approach, it’s chaotic and destructive.
Don't get me wrong, I don't think it's necessarily a bad thing to tell your employees that you have high expectations for the standard of work they produce, and the extent of commitment to the job that you are looking for. This can act as a filter for anyone who might be thinking of joining the company–or for those who are trying to decide whether or not to stay. But telling people that you expect the job to be their life with total commitment… Well, it's just not going to suit everyone, and there has to be some major incentive for that type of dedication.
Musk is, by reputation, a serious workaholic - but he gets to make that choice because he owns the company. It’s his capital at risk, and he gets to take the profits when things go well.
But what's in it for the workers who don't have skin in the game? Why on earth would they dedicate their lives to making Elon richer? Unless they have some interest in Twitter’s success, they think, “That’s not why I come to work.”
Large companies handle this with long-term incentive schemes to give executives share allocations over time, so they actually do get that level of buy-in. But these rarely extend to rank-and-file employees. Musk seems to be demanding this dedication from every individual - even in the most junior roles - which is interesting.
Having said that, you can bet your life that there will be thousands of people lining up for the opportunity to work for Elon Musk. Despite his eccentric and brash approach, he's still the richest person on the planet, and he's done pretty well with both SpaceX and Tesla. And, as we know, not all great visionaries are great leaders.
But the concept of telling people that you demand total dedication from them when it comes to their careers isn't really new - like I said, it's a pretty good filter. Ivan Glasenberg - the former CEO of Commodities Trader, Glencore, was once quoted as saying, “Don't come to work for Glencore if you want work/life balance. If you work here, we expect total commitment to your career. In return, we'll make you very rich.” He was very clear on his expectations - and the more clarity you can give people about what you’re about, then the better off you’re going to be.
In Musk's case, he has been pretty clear, but he's gone about this by sending a letter to all existing employees, basically giving them the ultimatum: “Commit to rebuilding Twitter by dedicating your lives to the cause, or I'll expect your resignation by five o'clock tomorrow.”
And, this comes on the back of terminating half the company's workforce in early November. He removed a bunch of contractors and sacked a few key people who had the temerity to disagree with his approach, which I thought was interesting. The lack of healthy debate and robust challenge is a pretty bad sign.
A couple of years ago, I examined this problem on the podcast, through the example of Theranos, the biotech startup that eventually collapsed. Elizabeth Holmes, the founder of Theranos, was recently sentenced to 11 years in prison as a result of the fraud - so three cheers for that. That verdict was certainly a win for our confidence in the global system of commerce.
My observation from that example is that intolerance for challenge is one of the unhealthiest cultural markers that you can experience. It pushes dissent underground, and sets up a culture of fear and retribution - which is definitely not what you want in a company. And Musk sent a very clear signal to the people who are left at Twitter, “It's my way or it's the highway.”
On top of that, whenever a leader does something in a way that appears to be reactionary, precipitous or reflexive, people lose faith in the whole system, not just in that decision. Every single person who's at Twitter is now going to be sleeping with one eye open. There's no two ways about it, it breeds distrust and fear. And most of these people are going to be hedging their bets because they don't know what's happening next - they’ll be exploring the job market just in case. Their focus certainly won't be on rebuilding Twitter version 2.0.
There's also the problem with how he communicated - managing by tweet or press release isn't very helpful. We know that sensitive communication that affects people's livelihoods should be a little more considered and compassionate. I always think of the case of the CEO at better.com who sacked 900 people via Zoom earlier this year - it’s just the best example of how not to communicate with people when something affects their lives.
Even if Musk has a good plan to rebuild a Twitter workforce and eventually the product itself, it's a really poor way to go about it because he's missed a couple of really important leadership principles:
1. Employee turnover
When you take an undifferentiated approach, as he seems to have done - the old broadside to every employee - you don't get the opportunity to shape the type of turnover you get. As we know, there are two types of turnover: desirable and undesirable. There are some people that you’d be really happy to see leave the company - that’s desirable turnover. But you'll have a whole bunch of people who choose to leave that you really needed, and would've really preferred to have them stay - and that type of turnover is undesirable.
That's my big issue with things like voluntary redundancy programs: good people leave because it's really lucrative, and they know they can get another job next Monday - but your poor performers stay because, even though they might be offered the opportunity to cash in, they know they can't easily get a job elsewhere.
Sure, it reduces the headcount and the labor cost, but it also massively weakens the gene pool that you have in your workforce. The result of all of this is that you have less people, of a lower average quality, to try to produce the same results. It’s certainly not the way to build for a profitable future. No doubt Musk would have benefited from being a little bit more surgical, finding out who the best people were, and which roles were key to the company. That's talent management 101.
2. Communication
Even in a company with a relatively flat structure, when you have thousands of employees there are layers of leaders who should be providing these insights and delivering these messages - and it seems as though this step's been missed altogether. When decisions are made at the wrong level - in this case too high up - they're often too far removed from the action to be good decisions. As we know from the No Bullsh!t Leadership decision-making framework, decisions should be made as close as possible to the core expertise required to make them.
So, you've got a lack of rational planning, blanket mandates, unwillingness to tap into the knowledge and expertise of the existing Twitter talent, and a clear demonstration of lack of care for the individual. What could possibly go wrong?
But he's still Elon Musk, and you’d never bet against a guy like that. Despite this chaotic and brutal start to his tenure as the “Chief Twit”, as he calls himself, he's still likely to move this thing forward, and in all likelihood, Twitter's still going to attract and retain some really good people.
But it could have been handled so differently… He could have got way better outcomes by being just a little more considered, and a little more surgical in the way he went about it. As it stands now with the current Twitter talent, sure some people are going to stay for the money; some will stay because they're not very good - and they're afraid to step out even into a very forgiving job market; some are going to stay because they're just risk averse by nature; some will stay because they believe in the mission of Twitter, and many more are going to come because they just want the chance to work with Elon.
It’s important to understand the emerging trends in the workforce, and to think about how you can lead more effectively to minimize disruption. As long as people are focused on these types of issues, they can’t be focused on delivering results. The recent workforce backlash has only come as a result of the leadership vacuum that’s enabled these issues to flourish.
There will always be flamboyant characters like Elon Musk, but for those of you who have a more stable environment to lead in, make sure you pay attention to your people’s needs–without pandering to their superficial whims! If you can focus them on the task at hand–your company’s purpose, strategy, and business imperatives–you’ll be much more likely to minimize the turmoil.
If you've got anything that you'd like us to cover on the No Bullsh!t Leadership Podcast, shoot us an email hello@yourceomentor.com and we'll add your question to the list.
RESOURCES AND RELATED TOPICS:
Ep. #8: Are Happy Worker’s Productive Workers? - Listen Here
Ep. #31: Don’t Shoot the Messenger - Listen Here
Ep. #36: If Money Doesn’t Motivate, What Does? - Listen Here
Ep. #87: Decision-Making Frameworks - Listen Here
Ep. #118: Working to Live - Listen Here
Ep. #198: Layoffs Are Back - Listen Here
Ep. #201: Finding Your Purpose - Listen Here
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Buy the NO BULLSH!T LEADERSHIP BOOK - Here
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