A week ago I read a blog post by Joel Peterson and ever since have been pre-occupied with the notion of ‘what it means to be an exceptional leader in today’s business environment’. Joel is the Chairman of JetBlue Airways and a Con- sulting Professor to the Stanford Business School. He wrote that satisfaction or meaning as a corporate leader comes from the “ability to look back with pride and to look forward with peace, knowing that those we’ve worked with and cared for are better off for having known us”. [1]

Balance human potential with operational efficiencies

After reading Joel’s piece, I thought to myself “Whatever happened to the thoughtful way of building and running a business?” I believe business today is run too much like a machine with an all-out effort towards efficiency. Ross Perot had it right when he said “Inventories can be managed, but people must be led.” Companies need to take a more contemplative, engaging and balanced approach on how they operate. The approach I’m referring to acknowledges that the enterprise is primarily a human institution (i.e. picture a company location without people and there is nothing, silence, no activity; people make the company what it is). As such, strategies that provide the greatest return are ones that value people and appreciate what engaged and committed people can accomplish.

Study-after-study demonstrates the significant advantage a company achieves by creating a collaborative culture along with “esprit de corps” amongst its members [2]. There have been numerous articles in publications such as Harvard Business Review, Gallup Management Journal, etc., reporting significant loss of human potential in business today due to unenlightened policies and operating methodologies [3]. Ideas to leverage the enormous potential of engaged employees are mostly shrugged off. They are considered by many to be an of enigmatic aspect of how organizations operate with no easy or direct way to affect or improve. As a result, money, time and energy are spent addressing lower ROI problems where the solutions are more straight-forward and easily measured. As an example, the same company that just shrugged off the 50%+ loss that it may be experiencing due to a disengaged workforce will jump right on fixing a mechanical malfunction where there is a 10% loss of efficiency.

Companies with engaged employees show a 600% higher return on assets

As a recent Harvard Business Report publication stated, there is a direct link between collaborative, committed employees and “profitability, customer satisfaction, and turnover” [4]. In addition, Industry Week recently reported that “Companies with high levels of engagement show a return on assets six times higher than companies with low engagement levels” [5]. That’s 600%!!

A Lesson from Starbucks
Enough statistics? Okay, here’s a vivid example from Malcolm Gladwell‘s recent book, Five Critical Business Lessons: [7]

Starbucks CEO Howard Schultz was in a tough situation during the recession. His company’s stock price was plummeting and shareholders called for a cut to the company’s $250 million in employee healthcare benefits. But with a mission statement to “inspire and nurture the human spirit” of the customer, how could Shultz justify not doing the same for his employees? How could he expect his baristas and store managers to put people over profits, if he couldn’t do the same? Schultz had to decide between his short-term economic interests and his long-held beliefs. He kept the benefits.

Result: Since January 2008, Starbucks’ stock has increased over 250% demonstrating that you can still do well financially while standing for what you believe in.

Engaged employees boost performance by up to 240%

Need more to persuade you? The October issue of the Gallup Management Journal contained the following points about engagement in the article, “What Your Company Can Learn From the Best” [6]:

  • Only 30% of America’s workers are engaged in their jobs
  • Workplaces with higher engagement levels are more likely to experience growth in part because engaged employees are, on average, more productive, less likely to be absent, and less likely to leave their organizations.
  • When organizations successfully engage their customers and their employees, they experience a 240% boost in performance-related business outcomes compared with an organization with neither engaged employees nor engaged customers.

“Control is not leadership; management is not leadership; leadership is leadership. If you seek to lead, invest at least 50% of your time in leading yourself —your own purpose, ethics, principles, motivation, conduct. Invest at least over you and 15% leading your peers.” – Dee Hock, Founder and CEO Emeritus Visa

6 Skills Leaders Must Know

So what can a leader do? I found the “6 Skills Leaders Must Know” [8] on leading a winning team (told by the Captain of an America’s Cup Sailing Team) to illustrate the human side of a thoughtful approach to building & running a business.

  1. Be Decisive and Consistent: “Stay calm, think clearly, and trust your judgment” Be decisive & be clear on expectations. Be consistent, hold people to the same standards and share information to all involved
  2. Evolve Every Day: Review mission, values and goals. Circling back to core understandings can give the team the framework to integrate dissenting views. Engage people in assessing performance and brainstorm new approaches
  3. Forge Strength in Adversity: Analyze missteps and develop options to avoid a repeat. Own your mistakes including giving an effective apology. Rekindle rapport by engaging others in creating a plan to prevent future mistakes.
  4. Lean on Your Team: Collaboration is crucial to corporate success. Open your mind / appreciate differing views by:
    1) Consider yourself equal to the other person
    2) Ask “How would I react in their situation, with their point of view?”
  5. Blaze a Trail: Lead with grace. 3 phrases to cultivate rapport:
    1) ”What if…” reduces ego and helps brainstorming;
    2) “I need your help…” passes power to others;
    3) “Would it be helpful if…” helps someone stuck see a new path.
  6. Breed Confidence: Set an emotional tone. A leader’s positive outlook will be mimicked by his team. Acknowledging small triumphs and voicing appreciation for hard work helps create a positive and winning environment.

 

The Best!

Dave Fleck

References

1 The Work-Life Strategies that Really Matter, LinkedIn Blog Post
2 How Employee Engagement Drives Growth, Gallup Mgmt Journal
3 i.e. inspired human spirit and the power of mission, commitment, enthusiasm, collaboration
4 HBR Ignite Employee Engagement
5 The Case for an Open Communication Culture, Industry Week
6 What Your Company Can Learn From the Best, Gallup Mgmt Journal
7 LinkedIn Post “The 5 Traits of Wildly Successful People” by Alex Banayan
8 Six Skills Leaders Must Know by By A. Heffernan, in Men’s Health