The Six Figure Rule

What to do when a high-performing senior leader creates dysfunction for the CEO, leadership team, or company

There is a particularly frustrating kind of leadership problem: a senior leader who is very good at part of their job – and still makes running the business harder.

Maybe they deliver great results but create constant drama.

Maybe they are technically brilliant but exhausting to manage.

Maybe conflicts seem to follow them from meeting to meeting.

Maybe they are moody, defensive, territorial, disrespectful, or simply require far more emotional maintenance than someone at their level should.

And if you own or run the company, you may have found yourself thinking:

They drive me crazy. But they’re too valuable to lose.

At BetterCulture, business owners and senior leaders bring us versions of this problem regularly. That’s when we point out a simple principle that hits them like a ton of bricks.

We call it The Six Figure Rule.

The Six Figure Rule is a simple standard for senior leaders: the more responsibility, authority, influence, and compensation someone has, the more they should reduce organizational friction rather than create it. Put more simply: “When you are paying someone six figures, they should be making your life better, not worse.”

The specific “six-figure” salary isn’t the point.

The point is that senior leaders are supposed to add value to the system – not become another problem the system has to manage.

When a Senior Leader Becomes a Source of Dysfunction

Senior leaders are hired to carry weight.

They make difficult decisions. Solve complicated problems. Manage important relationships. Lead other leaders. Remove obstacles. Help the organization operate better.

Ideally, they take weight off the owner or CEO.

But sometimes the opposite happens.

A CEO spends an unreasonable amount of time managing an executive’s impact on others.

An owner continually gets pulled into a conflict between two senior leaders who should be capable of resolving it themselves.

A high-performing department head produces excellent numbers but leaves frustration, resentment, and damaged relationships in their wake.

And eventually, the owner ends up feeling:

“Why are we working this hard to manage one of the people who is supposed to be helping us lead the organization?”

That is the heart of The Six Figure Rule.

When you are paying someone six figures, they should be making your life better, not worse.

Challenging the CEO Is Not the Same as Creating Dysfunction

The Six Figure Rule does not mean senior leaders should always agree with the owner or CEO.

Quite the opposite.

Good executives push back.

They challenge assumptions. Raise uncomfortable issues. Deliver bad news. Question decisions. Advocate for their teams. And sometimes tell the CEO something the CEO absolutely does not want to hear.

That is not dysfunction. That is part of the job.

But there is a huge difference between challenging the boss and being a burden to the boss.

Strong senior leaders should solve more problems than they create.

They should reduce drama rather than generate it.

They should carry weight rather than add weight.

They can be demanding without being destructive.

They can disagree without becoming disagreeable.

They can create healthy tension without creating chronic dysfunction.

And they should not create problems that everyone else is continually expected to absorb.

Why Senior-Leader Dysfunction Becomes a Culture Problem

The damage rarely stops with the owner.

Bad behavior at the top rarely stays at the top.

When two executives continually feud, their teams often get pulled into the conflict.

When a senior leader is volatile, people become more careful about bringing them bad news.

When a high performer is allowed to treat people poorly, employees notice the exception being made.

And when bad behavior is repeatedly excused because someone “gets results,” the organization learns a powerful lesson:

Results buy permission.

That is a dangerous lesson to teach.

Gallup research underscores just how much influence leaders have on the experience of the people around them: managers account for about 70% of the variance in team-level employee engagement.

That doesn’t mean every culture problem is caused by a manager. It does reinforce an important point: the behavior of leaders has an outsized effect on the people they lead.

Culture is shaped not only by the behavior an organization encourages, but also by the behavior it is willing to tolerate – especially from people with power.

Eventually, everyone starts paying the tax.

Communication gets harder.

Collaboration suffers.

Good employees become frustrated.

Other leaders spend time managing unnecessary conflict.

And the owner or CEO devotes energy to problems that a strong executive should be helping solve – not creating.

What If the Difficult Executive Is Too Valuable to Lose?

This is usually where the conversation gets difficult.

The problem executive is often valuable. Sometimes extremely valuable.

Maybe they manage the company’s biggest customer.

Maybe they possess technical knowledge nobody else has.

Maybe they generate enormous revenue.

Maybe they built an important part of the operation.

Maybe losing them tomorrow would create a legitimate business problem.

So the owner concludes:

I know they’re difficult. But we can’t afford to lose them.

Sometimes that may even be true.

For now.

The mistake is turning temporary dependence into permanent permission for dysfunctional behavior.

If one executive has become indispensable, the answer is not to give them unlimited behavioral freedom.

The answer is to reduce the dependency.

Cross-train someone.

Document critical knowledge.

Broaden important customer relationships.

Develop another leader.

Build redundancy.

If one person’s value gives them permission to behave however they want indefinitely, that isn’t a people strategy. That’s a hostage situation.

Solve the dependency.

Then solve the behavior.

How to Coach a Senior Leader Who Is Creating Dysfunction

The Six Figure Rule is useful in the other direction, too.

At BetterCulture, we sometimes use this perspective when coaching the senior leader who is creating the problem.

And it can be surprisingly helpful.

The executive may be intensely focused on their own performance – their numbers, their department, their expertise, their priorities – without fully appreciating the effect they have on the larger organization.

The conversation then becomes:

Your job is not simply to perform your function well. Your job is to make the organization better because you are in it.

A senior leader should be adding capacity to the system.

Adding stability.

Improving decision-making.

Strengthening the people around them.

Making their boss more effective.

Making their peers more effective.

Helping the organization perform better.

That can be a very different way for a talented executive to think about their role.

Individual performance matters.

But if your numbers are great while everyone around you becomes less effective because of the way you operate, that is not senior-level success.

Senior leaders are responsible not only for the value they personally produce, but also for the value they add – or subtract – from the system around them.

When Is It Time to Stop Tolerating the Dysfunction?

None of this requires perfection.

Senior leaders will make mistakes.

They will have bad days.

They will occasionally handle conflict poorly.

They may need coaching.

But an occasional problem is different from a persistent pattern.

A senior leader should not continually require excessive conflict management, emotional cleanup, special handling, or accommodation.

The higher someone rises in an organization, the greater the expectation that they can manage themselves, manage important relationships, and make the overall system work better.

For owners, this is often the real value of The Six Figure Rule.

They may have spent months – sometimes years – living with the problem executive (and the consequences of that executive’s behavior).

But they haven’t asked:

“Why are we tolerating this much dysfunction from one of the people who is supposed to be making the organization better?”

That question can bring remarkable clarity.

If a senior leader has received clear feedback, understands what needs to change, has received appropriate coaching and a reasonable opportunity to improve, and the same dysfunctional pattern continues, eventually the choices become fairly simple:

The executive changes the behavior.

Or the organization changes the executive.

Senior leadership should come with higher expectations – not greater tolerance for dysfunction.

So if a member of your leadership team continually consumes an unreasonable amount of emotional energy, conflict management, cleanup, or accommodation, ask yourself two questions:

Is this person making the organization easier to lead – or harder?

Is this person adding value to the system – or forcing the system to compensate for them?

Then remember The Six Figure Rule:

When you are paying someone six figures, they should be making your life better, not worse.

Because leadership is hard enough without building an executive team that makes it harder.