How to Lead by Example as a Manager: The ZEISS Salary Rule
In 1896, ZEISS capped its leaders' pay at 10x an average worker's salary. How to lead by example as a manager — the rule behind a company that lasted 180 years.
Leading by example means the rules that apply to your team apply to you first — not after. In 1896, ZEISS founder Ernst Abbe capped his own leaders' pay at 10 times an average worker's salary, a rule that still holds today. It's also why 65% of Indian firms now invest in soft-skill and culture training.
TL;DR- In 1896, ZEISS founder Ernst Abbe capped his own leaders' salaries at 10x the average worker's pay — and gave up ownership of the company entirely.
- The rule applied to every senior official, including the board — no exceptions for people at the top.
- ZEISS also introduced an 8-hour workday in 1900, decades ahead of most companies.
- When leaders exempt themselves from their own rules, teams stop trusting the rules — and the leader.
- 65% of Indian firms now invest in culture and soft-skill training to build exactly this kind of trust.
What did ZEISS's founder actually do in 1896?
ZEISS was already a respected optics company in Germany when its founder died in 1888, leaving the business to a professor who'd worked alongside him, Ernst Abbe. Any other owner would have taken control and kept the profits. Abbe did the opposite — he handed the entire company to a foundation in 1891, ending his own ownership outright. Then in 1896 he wrote a rule into the company's charter that no senior official, including the board, could ever earn more than ten times what long-serving workers made. That rule still holds today.
What is a self-imposed salary ceiling?
This is what's called a self-imposed salary ceiling — a limit leaders place on themselves, not just on the people below them. It wasn't a suggestion or a value on a wall; it was written into ZEISS's foundation statute, alongside a minimum wage that could never be cut, profit sharing, and paid leave. In 1900, ZEISS became one of the first German companies to introduce the eight-hour working day, decades before most of the industrial world got there.
| ZEISS Foundation Statute (1896) | Typical Company Today |
|---|---|
| Salary cap: no senior leader earns more than 10x an average worker | No cap; leadership pay set independently of worker pay |
| Minimum wage that could never be reduced | Wages reviewed and can be cut in downturns |
| Profit sharing with all employees | Bonuses often limited to leadership and sales roles |
| Elected workers' committee with a real voice | Feedback channels exist but rarely bind decisions |
| Eight-hour workday introduced in 1900 | Still debated in some industries today |
| Rule applied to the board, no exceptions | Leadership often exempt from its own policies |
Why do rules only work when leaders follow them too?
I've watched this exact pattern play out in Indian offices for years: rules for the shop floor, none for the corner office. Late-coming gets flagged for junior staff and ignored for managers. Dress codes apply downward, not upward. Every time that happens, a company quietly teaches its best people that the rules aren't real — they're just for keeping the workforce in line. I've written before about how to build trust with your team as a leader, and this is where most of that trust actually gets lost.
How does a double standard destroy trust in a team?
A double standard doesn't just annoy people — it changes how they work. Once a team notices that leadership plays by different rules, they stop reporting problems honestly, stop giving real feedback, and start doing the minimum required instead of their best work. Trust doesn't erode in one dramatic moment; it drains out through a hundred small exceptions leaders make for themselves that they'd never allow for anyone else.
How can you lead by example as a manager?
Leading by example starts with a simple question: is there any rule in your office that applies to your team but not to you? Attendance, expense limits, dress code, even how you speak in a heated meeting — if the answer is yes, that's the first place to fix. This is exactly the ground-level work I do in my leadership training programs — helping managers spot the double standards they don't even realise they're running.
What did ZEISS gain from this rule 180 years later?
Nearly 130 years later, the Carl Zeiss Foundation is still the sole shareholder of Carl Zeiss AG and SCHOTT AG, and it's barred by its own statute from ever selling those shares. A company that gave its founder's ownership away, and capped its leaders' pay by rule, has outlasted thousands of companies built the conventional way. That's not a coincidence — a team that trusts its leaders to follow their own rules works differently than one that doesn't.
How do you build self-imposed rules for your own leadership?
You don't need a 122-paragraph foundation statute to start. Pick one rule in your office that quietly doesn't apply to you, and apply it to yourself first — publicly, so your team sees it happen. Do that consistently, and you won't need to ask people to trust you. They'll have already watched you earn it.
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Avinash Chate TEDx Speaker · Founder, The Future Corporate · 11+ yrs experience Avinash has trained Indian Army, BRO, RBI, BARC, JSW Steel and 1000+ corporate leaders across India. His work focuses on leadership development, communication skills, and behavioural training rooted in Indian values and modern business needs. |
Frequently Asked Questions
What is a self-imposed salary ceiling?
A self-imposed salary ceiling is a rule leaders place on their own pay, not just on employees' pay. ZEISS's 1896 statute capped every senior official, including the board, at 10 times the average long-serving worker's salary — a limit the company still honours today.
Why did ZEISS's founder give up ownership of the company?
In 1891, Ernst Abbe transferred the entire company to the Carl Zeiss Foundation instead of keeping it for himself. He believed a company built to last needed rules that bound its owners as tightly as its workers, and giving up personal ownership was the clearest way to prove it.
How do double standards hurt trust in a team?
When a team sees leaders exempt themselves from rules everyone else must follow, they stop trusting that the rules — or the leaders — are genuine. That shows up as guarded communication, less honest feedback, and people doing only what's required instead of their best work.
How can I start leading by example in my own team?
Pick one rule in your workplace that quietly doesn't apply to you — attendance, expenses, dress code — and apply it to yourself first, visibly. Consistency in small, visible rules is what actually builds trust, more than any values statement ever will.
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