A conversation with Warren Bennis on leadership in the midst of downsizing

In an interview, Warren Bennis, of the Leadership Institute at the University of Southern California, argues that the positive effects of empowerment are being undermined by the psychological malaise of restructuring and reengineering. It is impossible for a leader to maintain trust, commitment, and productivity from employees when layoffs are imminent. The source of the problem is that companies have moved away from a broad stakeholder orientation to a narrow shareholder mindset; the pressure to increase shareholder wealth overrides other actions that might be in the best interest of employees, the community, and other stakeholders. Today's value-based leaders must find ways of balancing the needs of the various stakeholder groups, even when those needs are in conflict. Rather than lay off employees, Harman International has created new employee-run vendor companies and sales outlets (insourcing).