The cost of neglecting relational leadership
Navigate difficult times with a dedication to a team's well-being
There is no denying that companies must make difficult choices to be competitive, but a more balanced strategy that considers both employee welfare and economic viability is desperately needed.
The renowned French tyre company Michelin recently announced the closing of two factories in Germany. This move has caused considerable concern in the business community and is expected to affect over 1 500 jobs. The decision to prioritise bottom-line considerations over the development of strong employee relationships and responsible relational leadership is a concerning trend that currently dominates corporate decision-making.
The reasons given by Michelin for the closures reflect a harsh economic reality: rising energy costs, inflation and quickly rising interest rates within the eurozone have been plaguing Germany's manufacturing sector, aggravated by the conflict in Ukraine and decreased Russian gas supplies. Although these considerations pose a significant barrier, the fundamental problem here is not one of economics. It highlights a more serious failing in relational leadership, which emphasises the value of leaders and their teams developing solid, mutually beneficial connections.
From my experience as a leadership coach and author, I know that relational leadership entails not only leading during good times but also navigating through difficult times with a dedication to the team's well-being. Although economically justified, Michelin's action begs the question of how committed the company is to its workers. There is a perceived lack of relational leadership at the corporation, as evidenced by the IGBCE union's allegation that it is trying to "maximise profit" at the expense of "highly committed and highly qualified employees." This method reduces workers to insignificant figures on a balance sheet and ignores the human element of business.
Human-centred, accountable and ethical decisions
The decision made by Michelin has implications that go beyond its short-term financial effects. More than 1 500 jobs will be lost. This is more than just a figure – it is a major disruption in the lives of many families and communities. This action would demoralise the workforce, which would lower productivity and employee engagement generally – not only in Germany but possibly throughout Michelin's international operations as well.
There is no denying that companies must make difficult choices to be competitive, but a more balanced strategy that considers both employee welfare and economic viability is desperately needed. Businesses with a long history and a large global presence, such as Michelin, can offer an example by incorporating relational leadership and accountable agility into their decision-making, demonstrating that it is possible to manoeuvre through economic difficulties without sacrificing their dedication to their employees.
Michelin's decision to close its German operations draws attention to the necessity of a leadership strategy that strikes a balance between business needs and a sincere dedication to worker welfare. Relational leadership could offer a road map to managing an increasingly complicated and erratic global market to make decisions that are not only morally and practically sound but also human-centred, accountable and ethical.
The reasons given by Michelin for the closures reflect a harsh economic reality: rising energy costs, inflation and quickly rising interest rates within the eurozone have been plaguing Germany's manufacturing sector, aggravated by the conflict in Ukraine and decreased Russian gas supplies. Although these considerations pose a significant barrier, the fundamental problem here is not one of economics. It highlights a more serious failing in relational leadership, which emphasises the value of leaders and their teams developing solid, mutually beneficial connections.
From my experience as a leadership coach and author, I know that relational leadership entails not only leading during good times but also navigating through difficult times with a dedication to the team's well-being. Although economically justified, Michelin's action begs the question of how committed the company is to its workers. There is a perceived lack of relational leadership at the corporation, as evidenced by the IGBCE union's allegation that it is trying to "maximise profit" at the expense of "highly committed and highly qualified employees." This method reduces workers to insignificant figures on a balance sheet and ignores the human element of business.
Human-centred, accountable and ethical decisions
The decision made by Michelin has implications that go beyond its short-term financial effects. More than 1 500 jobs will be lost. This is more than just a figure – it is a major disruption in the lives of many families and communities. This action would demoralise the workforce, which would lower productivity and employee engagement generally – not only in Germany but possibly throughout Michelin's international operations as well.
There is no denying that companies must make difficult choices to be competitive, but a more balanced strategy that considers both employee welfare and economic viability is desperately needed. Businesses with a long history and a large global presence, such as Michelin, can offer an example by incorporating relational leadership and accountable agility into their decision-making, demonstrating that it is possible to manoeuvre through economic difficulties without sacrificing their dedication to their employees.
Michelin's decision to close its German operations draws attention to the necessity of a leadership strategy that strikes a balance between business needs and a sincere dedication to worker welfare. Relational leadership could offer a road map to managing an increasingly complicated and erratic global market to make decisions that are not only morally and practically sound but also human-centred, accountable and ethical.
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