I once observed a weekly sales meeting at a large company. The sales manager was waving wildly in front of a whiteboard. On it were the monthly targets and sales results by salesperson. He talked at a fast pace, praising the people at the top, ignoring or tormenting the people towards the bottom. He was ”rallying his troops”. This is not an unusual sight in a sales team. Salespeople are often motivated by results and the tough leadership that goes with it.
Leadership has been topical in Finland the last few weeks with Nokia Chairman Risto Siilasmaa speaking out about some of the behaviors he observed at Nokia on the part of his predecessor Jorma Ollila. Shouting, public humiliation, covering up problems, not admitting to mistakes. This behavior led to a culture of fear, partly responsible for the eventual downfall of the giant in the mobile phone market .
Business is generally a “hard” world. Professor and strategy guru Gary Hamel highlighted at last week’s Nordic Business Forum that even the language we use to describe business is hard: “winning”, “losing”, “going to war”, “competing”, “crushing”, etc. And leadership tactics of fear are pervasive: we use competition, comparison, rankings, shaming, impulsive behavior and hero-stories to apply pressure to employees in the hopes of greater results.
Fear isn’t conductive to high performance
There’s only one problem: Leadership behavior that awakens fear is not always good for human performance. That’s a simple fact based on our human biology and psychology. When you get a provocation from your boss, e.g. to improve your numbers to avoid budget cuts, or to push a project forward no matter what, it’s processed in your brain like a life-or-death situation. The amygdala, a part of the brain critical for memory, emotions, and decision making, goes haywire. It puts your body and mind into fight-or-flight mode. This response drives you towards productivity because you want to survive and avoid punishment, but it also shuts down your ability for analytical reasoning. In other words, working in a state of fear means we’re robbed of the strategic thinking we so desperately need to produce excellent work. 
In short, fear makes us productive for a while, but reduces the quality of our work.
Furthermore, leadership of fear often lives in a culture of competition. Leaders assume that competition makes everyone perform better. Interestingly, research doesn’t agree. The psychology of competition is fascinating – when we’re competing we have two types of goals: performance-approach goals that focus on positive outcomes (“I want to outperform others”) and performance-avoidance goals focusing on the negatives (“I don’t want to do worse than others”) . Research has shown that the former positively predicts performance, whereas the latter has a negative link to performance . Since competition triggers both, a meta-analysis has shown that these effects largely cancel each other out and the net effect is close to zero .
More concretely, many companies have concluded that systems ranking or rating employees against each other tend to destroy performance. Why? Because they increase emotional pressure, reducing motivation. As a result, companies like Microsoft are openly moving away from performance review systems that foster unhealthy competition. 
Psychological safety underpins high performance
So what does human high performance need instead? As usual, Google has the answer. In a massive two-year study on team effectiveness, Google researched 180+ teams, assessing 250+ team attributes. The by far most important factor of an effective team was psychological safety – the belief that you can be vulnerable in front of others, take risks, and not be punished for mistakes. Psychological safety is feeling that “I am seen, and I am heard”. The Google study concluded:
“Individuals on teams with higher psychological safety are less likely to leave Google, they’re more likely to harness the power of diverse ideas, they bring in more revenue, and they’re rated as effective twice as often by executives.” 
Paul Santagata, Head of Industry at Google continues: “In Google’s fast-paced, highly demanding environment, our success hinges on the ability to take risks and be vulnerable in front of peers.” 
There’s another reason leadership of fear isn’t worth pursuing. There’s a saying:
“People join organizations but leave managers”.
We join a company because we’re passionate about the industry, brand or mission. But we often end up leaving because poor leadership had us disillusioned. That’s also what happened at the sales team I described in the beginning. Their sales people were performing well. That is – those who stayed. They had a hard time holding on to a certain type of salesperson, one they desperately needed to sell their new service-based solutions. Hence, they would continue to perform well in the short-term, but were risking their long-term success.
To be clear, there are no bad leaders. There’s only bad leadership behavior. And all leaders occasionally fall into the trap of poor leadership behavior. Why? Because the hard leadership tactics are easy. It’s easier to be dominating than collaborative. It’s easier to compare numbers than to compare potential. It’s easier to demand obedience than to inspire engagement. It’s easier to scare than to truly care.
So despite the accessibility of fear as a management tool, the future of effective, people driven leadership is likely to spring from compassion, not fear. To inspire high performance, we need to raise vulnerability above knowing-it-all, and to encourage curiosity for the root cause instead of blame for the fault.
Great leaders allow you to fail. But they don’t allow you to be a failure.
 How Nokia Embraced the Emotional Side of Strategy by Timo O. Vuori and Quy Nguyen Huy, Harvard Business Review, May 23, 2018 https://hbr.org/2018/05/how-nokia-embraced-the-emotional-side-of-strategy
 Understanding the stress response by Harvard Health, May 1st, 2018; https://www.health.harvard.edu/staying-healthy/understanding-the-stress-response
 Elliot, A. J., & Harackiewicz, J. M. (1996). Approach and avoidance achievement goals and intrinsic motivation: A mediational analysis. Journal of Personality and Social Psychology, 70(3), 461-475
 Elliot, A. J., & Church, M. A. (1997). A hierarchical model of approach and avoidance achievement motivation. Journal of Personality and Social Psychology, 72(1), 218-232
 Murayama, K., & Elliot, A. J. (2012). The competition–performance relation: A meta-analytic review and test of the opposing processes model of competition and performance. Psychological bulletin, 138(6), 1035.
 “How Company Culture Shapes Employee Motivation” by Lindsay McGregor and Neel Doshi, Harvard Business Review, Nov 25, 2015 https://hbr.org/2015/11/how-company-culture-shapes-employee-motivation
 Google re:Work, “The five keys to a successful Google team,” Google, 17 Nov 2015. [Online]. Available: https://rework.withgoogle.com/blog/five-keys-to-a-successful-google-team/
 L. Delizonna, “High-Performing Teams Need Psychological Safety. Here’s How to Create It,” Harvard Business Review, 24 Aug 2017. [Online]. Available: https://hbr.org/2017/08/high-performing-teams-need-psychological-safety-heres-how-to-create-it