The sixth level in the progression, Compensation (or Consideration in Kind), involves the leader promising and delivering rewards to his supporters in exchange for their loyalty. This method of establishing followers is rampant across both the political spectrum and in organizations of all types.

In theory, a democracy should not end up in the hands of a leader who compensates his/her followers, since that would entail having to compensate over half the populace. But by all appearances in the U.S. at least, Compensation is very effective (especially in raising funds). Which of course, when considering the politics of “special interests,” who is actually doing the leading? The candidate or those who bankrolled the campaign?

We can leave that debate for another day, because Compensation as a tool to establish followers is practiced frequently in business and in all types of organizations. What does the leader-by-Compensation look like in the workplace? For one, this kind of leader typically has a small number of close associates and/or a group of long-standing employees (who may be at any level) who express fierce loyalty to the leader. They will do what the leader says to do and either convince the rest of employees to fall in line or mark the not-so-compliant employees for “surveillance.” Clearly, the loyal employees are performing in such a way because they are being paid to perform in such a way, receive special treatment not afforded other employees, or want to steer clear of the inevitable wrath that such leaders pour out at frequent intervals.

Can such a leader effectively achieve goals? It depends on what goals and what the leader stands to gain by meeting those goals. In nearly every case, this leader has placed self-interest above organizational performance or process success. I can confidently say that because if it weren’t the case, the leader would not be purchasing the loyalty of a select few and would be seeking consensus or cooperation.

In larger organizations, you can often spot this leader type by the nature of his/her staff. For example, the “rock star” new executive comes in, and before long the whole floor is populated by his long-standing colleagues (cronies?), sporting titles that did not previously exist in the organization. When the executive departs (which usually occurs within a few years), the whole staff trickles out as well, to follow the rock star to his/her next gig.

The limit to leading-by-Compensation is tied to the leader’s ability to compensate. When that limit is reached, when there are no more goodies to hand out to followers, the leader must resort to other means to establish enough followers to maintain their position. What happens next in the progression depends much on the goodness of the leader as a person.

Next: the last C, Coercion and Control