In the hundreds of books about leadership that have been written, many different definitions of leadership and paths to achieving it are presented. The only thing they agree on is the importance of leadership to achieving objectives, but few ever mention the ways that poor leadership impacts organizations. Understanding what makes a good leader isn't just essential for those who want to optimize performance, it's also essential for avoiding workplace problems that can affect productivity, morale, and profit.
Bob Woolverton, who is a retired police captain with 34 years of experience in the Bothell Police Department, as well as a graduate of the FBI Training Academy, explained the concept of "conceptual leadership" and how it is a far more powerful tool for motivation than interpersonal abilities. Bob also discussed how companies can assess the quality of leadership their employees are receiving, and the importance of a compelling vision statement.
Bob started by telling a story of meeting a group of women in a restaurant who were all celebrating the fact that they had left their common place of employment on the same day. They left the company because of a horrible boss and a lack of leadership. Bob estimated that six long-term employees quitting an average-size business could have cost as much as $1 million in lost training, overtime to cover lost efficiency, and lowered morale from any negativity which likely preceded their exit.
In 2017, a large study of employers determined that the average US company loses 26.3 percent of its workforce to voluntary turnover each year. Replacing a lost employee costs one half to 2.5 times the employee's salary. In the case of a police officer, Bob explained that the replacement cost was closer to 2.5 times the lost officer's salary, to pay for overtime while the replacement is found, interviewing, testing, and vetting applicants, and months of academy training to end up with a new officer with no on-the-job experience.
Bob calculated that a company with 100 employees with an average salary of $50,000 would lose $660,000 - $2.6 million every year due to voluntary turnover. This illustrates the cost of poor leadership is very real, but most companies are not doing anything to address it.
One simple test that a company can perform to assess the quality of leadership in the organization is to survey as many of its managers as possible, asking them to describe the top five priorities of the organization. If the results of the survey are consistent, with managers providing a large number of matching answers, then the organization is communicating its objectives successfully. An agreement of two-thirds or more of the answers provided indicates a company with good communication. Bob revealed that only 27% of companies that perform this test achieve a consistency of two-thirds in their managers' understanding of the organization's objectives. This means that 73% of companies are doing a poor job of communicating their goals and purpose.
If the management does not understand the company objectives, then it is unlikely that the employees understand them. This is where poor leadership can take its toll on productivity and morale. This is why it is essential for companies to provide direction by providing a reason for the company's existence, which is the first step towards employees finding their purpose in it.
If most people are asked why a particular company exists, the ubiquitous answer will be, "To make money." While there is truth in this statement, it is not a good statement to create enthusiasm or loyalty in customers or employees. Profit should be seen as a by-product of successfully fulfilling a deeper mission of service to the customer, or even the world.
The mission statement is simply a public declaration of why the organization exists. It should state what the organization strives to do in its daily operations. Bob provided the example of Charity Water's mission statement:
Charity Water is a non-profit organization bringing clean
and safe drinking water to people in developing countries
This is a simple explanation of what Charity Water does, and customers or employees will know if they want to be a part of that mission.
A vision statement, on the other hand, is a declaration of what the organization aspires to achieve in the future, or what it hopes the future will hold for society, the earth, technology, or individual humans. Charity Water's vision statement focuses on the hope for humanity which drives its daily activities:
We believe we can end the water crisis in our lifetime by ensuring that every
person on the planet has access to life's most basic needâ€"clean drinking water
This vision statement is bold, ambitious, and invites everyone to join them by using inclusive words like "we" and "our". This is the part of an organization's identity that can resonate deeply with potential customers and employees, inspiring them to innovate, collaborate, and exceed expectations on its behalf.
A great vision can create enthusiasm, but leadership is what transforms visions into reality. However, the prevailing understanding of leadership focuses on the leader-follower relationship, which will always result in failure. Leaders who focus on personal dynamics will not drive a company towards achieving its vision. Leaders must instead focus on finding the strategies for achieving their vision by engaging everyone in the process. The best solutions to problems will almost always come from the people who are the closest to them, so leaders will need to be open to strategic input from employees at all levels.
The real job of a leader is driving the organization towards its vision, while adjusting continuously for change, which will happen with greater frequency than the original strategies anticipated. Priorities may change, and the leader needs to be able to clearly define those changes, and establish responsibilities and accountability for every employee and every objective. When employees know what their contribution to the organization is, it creates intrinsic motivation, and reduces the rate of voluntary and involuntary turnover. Being "nimble" with strategic planning while staying true to the fundamental vision is what can make a company a vibrant and fulfilling place to work.
Leadership is not about being likable, nice, or even supportive. While these are great personal traits for a leader to have, they are not what drives productivity, innovation, efficiency, or even employee satisfaction. Many of the most revered leaders in the business world are not known for being wonderful people, but they were able to attract some of the most talented people in their fields to work with them. Neither Bill Gates nor Steve Jobs are famous for likability. Their ability to transform vision into reality inspired thousands of employees to devote their careers and energies into designing, engineering, and envisioning cutting-edge technologies for Microsoft and Apple, and inspired millions of customers to provide their ardent support.
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