Here’s our Dilemma:  recent management studies claim from hard data that being a nicer (collaborative, giving) boss produces far greater net results for an organization than being tougher.  However, another study indicates that being “agreeable” (friendly/compassionate from the Big 5 personality traits) is tied with lower income, more so for men than women.

So being nice pays off for the company but not for the you (the leader).

At this time, the typical advice from experts is:  “Be nice but not always nice” (selectively straddle), or “Be nice but not too nice” (moderation).

This is a case of Absent-Minded Analysis.  The results are reasonably supported, but the advice is not. 

Consider:

• If you have an agreeable personality, developing tough behaviors goes against your grain.  Personalities are predominantly immutable by adulthood.
• If you should succeed in tougher behaviors, the other party might not know how genuine you are.
• If you should succeed in tougher behaviors in front of someone who has consistently seen your warm behaviors, the gain from being tough ephemerally might be small compared to the losses.  For example, if a usually kind teacher gets harsh one day, the students might be too fearful for several days, creating a net loss.

Taketa’s Tertiary Solution

Instead of “fixing the person,” why not fix the pay?

• If nice guys & gals generate better long-term results, then they should generate better operating net present value or profits.
• This suggests that they should benefit more than stock-based compensation (restricted stock, options, etc.) more than their tougher counterparts.
• In addition, if nice guys & gals sustain a great team consistently, then they should remain with the company long enough to satisfy the vesting requirements.

The study regarding pay disparity might be from the lens of negotiated pay upon hiring or promotion.  Tougher people do negotiate higher pay upon hiring, but nicer people tend to recapture their losses when asking for pay raises, when their superior results justify the increase.  This observation has historically held with gender pay gaps in which women underbid at hiring and ask for pay raises later when results are obvious.

Granting nice leaders more pay raise opportunities helps motivate the right behaviors.  Of course, stock-based compensation is an implicit pay raise if the company overall is growing.

Of course, nice leaders behave this way for reasons besides money.  Famous consultant Alan Weiss writes in The Consulting Bible that real wealth is discretionary time.  Nice leaders gain immensely by transforming 8 routine hours a day to 8 more pleasant hours a day.  How much would a vacation cost to achieve that same gain?

Action Plan

If 360-degree feedback indicates that you are dealing with a nice leader, by all means, offer a higher proportion of stock-based compensation if the leader is sheepish about asking for higher pay compared to tougher counterparts.  The return to the company is fabulous, and it costs you no upfront cash.  If stock based compensation is not possible, make a conscious decision to allow for more pay raise opportunities, including at the end of successful projects.