You Don’t Know What Leadership Is

what is leadership?

You don’t know what leadership is.

It is a bold statement for me to make. One to which your response is probably an emphatic, “Yes I do.” Maybe even with an exclamation point.

However, when I respond by asking, “what is it?”, almost everyone struggles to articulate what leadership is. I contend that if you can’t articulate it, you don’t know what it is.

Some of you will argue that you can articulate what leadership is. You may even eloquently define it for me in simple or complex terms with a big “I got you grin”.

You may think you know what leadership is. However, how you define leadership is not how others define it. In fact, regardless of your definition, I bet I can find tens of thousands of people who will dispute it and tell you why you are wrong (and the response of, “yes, but I am right,” only works for my wife).

Is There One Definition Of Leadership?

There have been many brilliant minds over the years that have pontificated, defined, researched, and written about leadership. Some from an academic background like Stogdil and Mann from the mid 1900’s and some with practical backgrounds like Greenleaf and Patton.

These approaches often create dichotomies when defining leadership. One is that leaders are either born or made, though most of the recent research supports the idea that leaders can, in fact, be made. Another dichotomy is that the approaches tend to either focus on the leader or on the leader’s relationship with his/her followers. However, regardless of the focus, none of them have come up with, or agreed upon a satisfactory definition of leadership.

In the article “An Integrative Definition of Leadership”, Winston and Patterson reviewed over 160 articles and books on leadership and narrowed it down to 90 variables. Their “short” definition was over a page long and people still dispute it.

One of the problems we face in defining leadership is that the concept seems simple. And at one point in our history it was fairly simple: There was a person who was a leader by birthright or some sort of trait and people followed them because they were the leader.

Even today in certain environments leadership seems fairly simple. Take for example an enlisted soldier. Most people think of soldiers as they were in WWII. The soldier was trained to follow orders. Those of superior rank knew more and were better equipped to make decision. The enlisted men were followers, were given orders, and expected to follow them without question. Most people think this is how the military operates today, and to some extent it does. If you are a Corporal in firefight and the Sergeant tells you to move your ass, you do. However, with the dynamic environment soldiers face on today’s battlefield, even the Army is changing how it trains its soldiers.

The Army now wants soldiers to think and make decisions on the battlefield to a much greater degree than they did even 20 years ago. Now these followers are contributing to solutions. Leadership, even in the military, has been changing.

So, when I say, “you don’t know what leadership is,” I do not do so lightly. None of us really know what leadership is.

Rethinking the Source of Leadership

Leadership is an evolving concept that has become much more confusing than it used to be. I think the problem is based on the methods we use to try to define it. Since leadership is continuously evolving, so must our way of trying to understand it.

Instead of trying to define leadership, we should examine how we know when leadership occurs. Most of us, though we can’t truly define leadership, know when it occurs. And if we can figure out when leadership occurs, we get closer to understanding it.

So, how do we know when leadership occurs? I have only read one author who takes this approach to understanding leadership (though it is entirely possible that others have and I have not read their work). In the book, The Deep Blue Sea: Rethinking the Source of Leadership, Wilfred Drath from the Center for Creative Leadership approaches leadership not as something that exists on its own, but rather something that exists because we decide it exists. When you define leadership in your own way you are deciding it exists, while others who disagree with your definition might decide it does not.

Leadership does not exist independently of our perceptions. It exists exclusively because of our perceptions.

So, if leadership exists only in our perceptions, how do we know when it occurs?

Essentially, we can create what Drath calls knowledge principles, which are ideas or rules that are taken for granted to be true. These are shared creations of the people interacting together, rather than just one person’s perceptions. We use these to determine if leadership exists.

Since these knowledge principles are taken for granted to be true, Leadership’s existence becomes about what is meaningful to people as leadership. Because these knowledge principles are meaningful as leadership to people, they can say with certainty that leadership is happening for their group.

Leadership is what the group comes to understand it to be. There is no debate like there is when we try to define leadership. The group knows leadership is happening and becomes objective and not subjective.

So, from your group’s perspective, how do you know when leadership is happening?

The Myth of Fearless Leadership: How to Lead When You’re Afraid

myth of fearless leadership

The fearless leader fallacy harkens back to the “great man” theory of leadership, which portrayed effective leaders as those who charge fearlessly into the melee to save the day. They were “born to lead” and “looked fear in the face without blinking an eye.”

Maybe this resonates with some folks out there but, for me, it never quite sat right. I served overseas in combat as an officer in the military. I’ve started and grown a company that now employs more people than I could have ever imagined. By all measures I am a successful leader but I am far from fearless. In fact, every time I begin to think I have a clue about what I’m doing, something comes along that frankly, scares the living daylights out me.

I’m willing to bet that I’m not alone. I don’t believe that successful leaders and entrepreneurs are fearless. I believe that the most successful leaders and entrepreneurs among us are just as fearful as the rest of us. What sets these men and women apart is what they do in the face of fear.

Fear Doesn’t Have to Be Your Enemy

myth-fearless-leadershipTo me, being fearless means pushing forward with reckless abandon no matter what the risks. Evolution has seen to it that we as human beings have held onto the emotion of fear for good reason. Fear serves us well. It kept our ancient ancestors from putting themselves in dangerous situations, thus, keeping them alive long enough to reproduce.

Unfortunately, many of the things we fear today are no longer physical threats. Fear of what we perceive to be threats, whether it’s the fear of the unknown or the fear of failure, can be so overwhelming that it paralyzes us.

But fear is not necessarily a bad thing. It means that you’re pushing the envelope and doing things that take you out of your comfort zone. It means that you care enough about the livelihood of your organization that perceived threats to your sustainability cause an emotional reaction.

Dr. Joey A. Collins, Assistant Professor of Industrial-Organizational Psychology at Seattle Pacific University, adds that, “Effective leaders demonstrate a high degree of self-awareness and are mindful of their feelings.  It is not that they don’t feel fear – they do. They are just more aware of their fear and better able to process the threat that is signaling it.”

Fear is not necessarily your enemy. The difference is what you do when confronted by these fears. Here are 4 ways to begin to face your fears as a leader in your organization:

Know that you’re not alone.

It may not be easy to admit that you’re afraid as a leader, but I’ll be the first to step up beside you and tell you that you’re not alone. Leading is an enormous responsibility. You have to make sure you make payroll, keep your customers happy, inspire your team and read and adapt to changes in the market on a daily basis. As an entrepreneur you know all too well that if you don’t stay on top of everything going on, someone out there will seize the opportunity to eat your lunch. That’s enough to make even the most stalwart of us blink from time to time.

Ask yourself honestly, what’s the worst that can happen?

At this point in my career I have come to the conclusion that I am absolutely unemployable. As an entrepreneur for ten years, there is zero percent chance that I’ll ever be able to work for someone else again. Entrepreneurs have no safety net. No backup plan. But when I stop and think about the worst possible scenario, I’m able to manage the fear that generates from these thoughts.

If your worst business nightmare came true, what would happen? Acknowledging this can help you push through the fears that come up when you’re faced with critical decisions.

Acknowledge that failing doesn’t make you a failure.

As a leader and an entrepreneur, it can feel like the world is resting on your shoulders. And with so much riding on your decisions, failing is a tough pill to swallow. But, the truth is that everyone fails at one point or another.

Ask any successful entrepreneur how many times they’ve failed and you’ll probably get a good laugh out of them. It’s not about failing, it’s about what you do as a result of that failure that determines your future.

Don’t be afraid to ask for help.

One of the greatest ways I’ve found to face my fears is by relying on a strong support network. At the end of the day, responsibility for your decisions falls squarely on your shoulders, but that doesn’t mean that there aren’t people in your life who you can depend on for guidance and insight.

Asking for help may not come naturally, but by showing some vulnerability and acknowledging that you need help, you’ll open yourself up to many opportunities that may otherwise never be available.

Understand what’s driving your fear and turn it into an advantage.

If you can develop your ability to harness your fear and move through it you set yourself on a path that few ever follow.

Tim Smith, President of Patriot Commercial Cleaning out of Saint Louis, MO is an Army combat veteran who has grown his business despite facing numerous challenges that would have stymied most people. “You have to try to meet that fear head on,” says Smith, “but it’s easier said than done. I’ve found that it does get easier with practice, though. The fears still exist but you can deal with them better because you’ve faced them before.”

Be aware that your reaction to threats will be noticed and modeled by your team.

“Leaders are better able to choose how to express their fear to others,” added Dr. Collins. Let’s face it. If you run around with your hair on fire when threatened, it doesn’t give your team a warm and fuzzy feeling. Effective leaders are able to gauge their responses and react most appropriately.

Maybe this is the root of the fearless leader fallacy. As leaders effectively manage their fear in front of others, the assumption becomes that they, in fact, are fearless.

It’s all about managing the dynamic tension that exists with your fear. On one side, you must be confident enough in your abilities and your value that you can go to market and win. On the other side, you must continue to push your limits so that you never quite feel comfortable.

Being able to manage this tension in the day-to-day is difficult. There are days where you may lean more heavily on one side than the other, and that’s okay. The trouble begins when you let yourself swing too far to one side or the other for too long and begin to operate only from that single perspective.

It is your choice as a leader and entrepreneur to determine how you will react in the face of fear. Respect that fear is a natural emotion, baked into our DNA, but don’t let it stop you. Your reaction to that fear is what will separate you from the pack.

This article originally appeared on Forbes.

What Every Founder Needs To Know About Scaling Startup Culture

scaling startup culture

For startups that want to stick around, growth and sustainability are the goals. But growing like Facebook or Twitter is far more difficult in reality. According to the Small Business Administration, only about half of all new businesses even survive to reach their fifth birthday. Only one-third of those make it to the 10-year mark.

Scaling a startup is no small feat. It takes clarity of vision, a feasible business model and a team who’s up to the challenge of operating in an extremely fast paced environment where dynamics change continuously. It also takes guts on the part of the founders and initial team members. These types of people risk a lot by taking a chance on a new startup. The nebulous nature of these situations can be too much for many people to bear.

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Preserving What Make You Great In Times Of Rapid Growth

what makes you great in rapid growth

We’ve all heard stories of meteoric growth from companies like Shake Shack, Uber and Slack. And while many of these stories serve as inspiration for entrepreneurs and leaders at all levels, the reality of navigating a company through rapid growth never plays out as smoothly as these stories would have you believe.

Anyone who’s ever been a part of a rapidly growing organization can tell you that it presents many unique challenges not found in other organizational contexts. These challenges can test the mettle of team members and put mounting pressures on a system that is evolving quickly to try to keep pace with the ever-changing situation.

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What Does A Leadership Coach Really Do?

executive leadership coach

Guest Article Written By Kelly Meerbott

When your board of directors suggests you bring in a leadership coach to improve on some facet of the organization, How do you react?

If you’re like most CEOs, it might be, “Coach? Why do I need a coach? What’s wrong with me?”

Well, I’m here to tell you two things:

  1. There’s nothing wrong with you. We all need feedback because that’s how we progress.
  2. Coaches, especially leadership coaches, are brought in to help launch you to the next level; to develop high potential into high performance, and high performers into superior leaders. They are there to hold you accountable to the best version of yourself; not to fix what’s broken.

Here’s what you need to know about coaching.

Coaching: A Mindset Shift

Coaching has often been portrayed as a punitive or corrective tool to be used when circumstances have turned negative. However, in progressive companies coaching is considered to be a positive, proven method for helping executives explore their current goals and ambitions and achieve new or higher objectives.

When partnered with open and willing participants, the power of executive coaching is to:

  • accentuate your skills and abilities already in existence
  • boost performance with a more positive outlook and mindset
  • help identify and deal with issues, concerns, and challenges before they become unmanageable problems – on a personal and organizational level

The coaching and mentoring process is about shifting mindsets to see the possibilities, creating a plan, and taking consistent action to realize success once objectives are identified. The best practice approach is to observe and analyze the organization from a holistic point of view. Together, we look for positive, feasible, practical, and attainable improvements.

Even Coaches Need Coaches

After an unexpected layoff in 2009 I made the best decision of my life and professional career in hiring a business coach. The experience taught me firsthand about the transformative power of coaching and professional mentoring. With a great coach I was able to spin the negative events I was projecting onto myself as something happening for me, not to me. This mindset shift in myself–from victim to owner–was most powerful distinction I learned from my coach.

Steve Chandler, success coach & best-selling author of more than 29 books, noted, “Owners have an awareness of their own freedom of choice and they love to make and keep agreements. They own their spirit and energy and have a sense of personal responsibility and self-control. Victims are victims of circumstance who navigate their days based on their shifting feelings.”

The distinction between “owner” and “victim” shifted my primal level instinct from blaming others and things around me, to taking responsibility for my choices, helping to launch me to my next level in business and life.

Good coaches will do that. They change perceptions you have of yourself. In turn, those new perceptions change how you view the world around you. Simply put: “Change your thoughts; change your life (Wayne Dyer).”

You, Loud and Clear

One of my favorite examples from my work is when I was engaged to work with a COO in a medical organization. She had 49 direct staff reports responsible for operations, medical personnel supporting doctors during procedures. The COO’s department was responsible for 80% of the company’s $20M annual revenue. The business unit had become a revolving door (attrition at 59%). Morale was terrible. The culture of the department had evolved into a morass of negativity.

During our first coaching session, the COO sat across from me with her arms crossed in a closed off stance. I asked her, “What would you like to achieve during our work together?”

COO: I’d like to get to the bottom of why so many people are quitting. I’m doing everything I can. I don’t understand it. I reach out to them often, yet I get the sense that they’re afraid of me.

Kelly: Well you do appear to be quite angry.

COO: Really? I try not to be. (begins to cry) I’m going through a very tough divorce. My spouse is a violent alcoholic.

Kelly: Did you know, the more we try to hide our emotions, the more they show?

COO: (Calming down) I can see that.

(At this point, I sit in silence allowing the COO’s emotions to flow and giving emotional space. When they are ready, I ask a question.)

Kelly: When was the last time you had one-on-one conversations with your staff?

COO: It has been so busy that it’s been about 18 months.

Kelly: And aren’t your employees bonuses and salary increases based on quarterly evaluations?

COO: Yes.

Kelly: So what could you do to achieve the outcome you want?

COO: Start scheduling evaluations?

Kelly: That’s one option. Are you open to some coaching around this?

COO: Yes.

Kelly: How do you think it would affect your team if you had one-on-one conversations with them without an agenda? Allow them to come in ask one question and then listen.

COO: No agenda?

Kelly: No agenda.

COO: I could try it. What’s the one question?

Kelly: How are you?

COO: I think my staff would be surprised and shocked.

Kelly: Good. That’s what I was hoping for.

Together, we implemented a first round of meetings. It took two weeks to complete them, but morale demonstrably improved. The COO and I co-created a plan of action to complete all the employee evaluations in 90 days, which were completed in six weeks. By the end of the second quarter, attrition dropped to 17%, and by the end of the year the team brought in $5M more in annual revenue than budgeted.

The point? Although they seem to use similar techniques, coaches are not therapists, psychiatrists, and/or consultants. Executive coaches are creative partners that hold the mentee and associates accountable to be the best versions of themselves. The result? An evolution; a mindset shift: from good to great!

kelly meerbott - leadership coachKelly A. Meerbott  is  a  respected  thought  leader,  speaker  and  Leadership  Coach  to  C-suite  executives. In her  work  with  the C-Suite & senior  leaders,  Kelly  creates  personal  strategies  and  action  plans  to  help  implement  long-term,  positive,  behavior  change  for  themselves,  their  people  &  their  organizations. Find her on LinkedIn, Twitter, and her website.

3 Things to Know Before Eliminating Performance Evaluations

performance evaluations

The HR scene has been up in arms recently as several large firms; including Deloitte, Accenture and GE have made the decision to eliminate their traditional performance evaluation processes. But before you go storming the gates of your CEO’s office with torches and pitchforks demanding that your organization follow in their footsteps, you may want to step back and consider a few things.

The biggest media splash around the topic came from Accenture, who will be eliminating their annual performance review and ranking process this September. According to the announcement and the subsequent press coverage, they cited empirical research that suggests a lack of clear value, an overwhelming amount of time and energy that’s expended supporting the process each year, and the plain and simple realization that their annual performance review process was failing to drive the performance they are looking for as an organization.

But, Accenture did not say that they are getting rid of the process altogether.  Accenture’s CEO Pierre Nanterme told the Washington Post in a recent interview that, “We’re going to get rid of probably 90 percent of what we did in the past”.

Rather than being a once-a-year process where people are force-ranked, the general sentiment seems to be moving away from structure and administrative burden to more frequent, real-time periodic feedback to let employees know where they stand on an ongoing basis.

And this, like GE’s new real-time performance development process, allows employees and their managers to clarify expectations, provide feedback, and set goals on an ongoing basis throughout the year.

Consider This Before Eliminating Performance Evaluations

I recently spoke with Philip Hendrickson, Chief Talent Strategist at Qwalify, about some of the more important considerations around employee evaluations. Collectively, we came up with the following three critical considerations every leader must know before eliminating performance evaluations in their organization:

1. Consider the importance of feedback. Your employees need feedback. They do. Performance evaluation processes are vital for a company. Done well, they reward certain behaviors and acknowledge business success. They also provide developmental guidance, ensuring that people feel they are growing and learning in their role.

Good programs make employees feel valued and retained. There is no better way to build a positive company culture than on a foundation of transparency and respectful acknowledgment of performance.

2. Know what will replace your current process. If your annual performance evaluation is tied to compensation and incentives, how will you make those decisions if you completely do away with your current process?

Professionals at all levels are used to a process that recognizes quality performance that rewards consistent behaviors. Whether you use formal performance evaluations or not, leaders must ensure that there is something else in place before eliminating their company’s current processes for rewards and recognition.

3. Make sure the new way is an improvement. Most companies view the annual performance process with cynicism. But most of the issues with typical performance processes are with the final ranking that individuals receive, not the evaluation itself. People feel that however hard they strived and pushed themselves during the year, they were still ranked as “meeting expectations.” It takes the wind out of them.

A lack of transparency is another cause of cynicism with many performance evaluations. It creates a feeling that there is some mysterious back room where the real decisions are made and some criteria not related to real performance that tips in favor of some people and not others.

Poor reviews, without clear communication of the process, literally chase employees out the door. Be very cautious how yours is structured and delivered.

How We Manage Performance

Our small firm currently has an annual performance evaluation process and we’ll probably stick with it.  Since our employees work with numerous supervisors on several project teams each year, it’s nice for folks to have a chance to get formal feedback from the Partners and Managing Directors at the end of the year. It’s not a very labor-intensive process and it ensures that people are getting feedback from everyone with whom they interact throughout the year.

That said, because people work on many different project teams over the course of a given year, we rely more heavily on the more frequent, specific feedback employees receive at the conclusion of each project. This feedback is delivered individually with the project lead as well as in a group during the after-action review process. Team members work together to identify the things that went well and those that didn’t go so well, in order to continually refine our processes.

Is There A Better Way?

While it may seem that there isn’t a single person walking the face of the earth who looks forward to annual performance evaluations, it doesn’t mean that performance feedback is not desired. Feedback is essential for driving behavior and success.

The talent marketplace has shifted and more employees have begun looking for other opportunities. When someone doesn’t feel their skills and experience are valued by their employer and they feel that they are not getting the level of feedback on their performance that they need to grow, they are much more likely to take a call from a recruiter.

So before you do away with your evaluation process for good, consider the needs of both your organization and your people. Be intentional about how you evolve your systems and processes to provide a winning formula for providing feedback on a more consistent basis.

This article originally appeared on Forbes.com

4 Leadership Lessons From History’s Most Successful Coaches

leadership lessons from successful coaches

Not only do sports imitate life, but sports also imitate business. CEOs and managers at all levels can learn a trick or two from the most distinguished sports coaches in history, incorporating both the technical and management sides of being a successful leader.

Here are four timeless coaching philosophies that can be adopted by today’s leaders to get the most out of their employees.

“Success is peace of mind which is a direct result of self-satisfaction in knowing you did your best to become the best you are capable of becoming” – John Wooden

John Wooden was a basketball coach who won ten NCAA national championships at UCLA during the 1960s-1970s. He was named national Coach of the Year six times and was inducted into the Basketball Hall of Fame both as a player and a coach.

Rather than using the usual metric of wins and loses, Wooden looked for a better way to define success for his team. His personal definition of success thus became encouraging his players to do the best that they were capable of. As long as his players pushed themselves to do their best, the score became the byproduct of all their hard work and training.

Great leaders train their employees well, giving them every tool they need to succeed in their jobs. There are always forces outside a person’s control that may lead to a disappointing outcome. However, as long as that person does the best that he or she is capable of, the foundation to create eventual success is firmly in place.

“Competing at the highest level is not about winning. It’s about preparation, courage, understanding and nurturing your people and heart. Winning is the result.” – Joe Torre

Both a former player and manager, Joe Torre’s most successful run was as the coach of the New York Yankees from 1996-2007. Under his leadership, the Yankees won the World Series four times. Torre was inducted into the Baseball Hall of Fame in 2014.

Torre’s keys to leadership success were knowing each of his players as individuals and taking the time to listen to each of them. He talked individually with his players to clarify expectations, build confidence, answer questions, and offer support. He also treated them with honesty and encouraged their trust. It was understood that if players didn’t trust Torre, or any manager, they would never listen to him and wouldn’t strive to live up to his expectations.

Every player was told that there would come a time in the season when he would be put in a significant situation to help the team realize its goals. Torre made all his players feel valued; a part of something bigger than themselves.

A great leader knows each of his or her employees’ strengths and takes the time to get to know each of them on an individual level. This builds a relationship of trust and transparency, which can lead to improved levels of productivity, organizational citizenship behaviors, and workplace well-being. No one employee is responsible for the success of a team. Each worker will need to step up to the plate during a critical moment in time to bring home a win.

“It isn’t about the words you say. It’s about the energetic message you send.” – Pete Carroll

Pete Carroll is the current head coach of the Seattle Seahawks, and is one of only three football coaches to have won both a Super Bowl and a college football National Championship.

Influenced both by John Wooden’s principal of carrying a strong, clear message and the Grateful Dead’s desire to do something that no one else could do, Carroll realized that his coaching philosophy was going to have to be strong and clear so that each of his players knew what was expected of them. He emphasizes focus, clarity, and belief in oneself as the elements that allow someone to play freely. Carroll plans surprises and pranks to lighten his team’s mood, and he rewards players for their hard work. Juxtaposed to this, he also has strictly prescribed routines that cover what players eat, what vocabulary they use, and the themes of daily practices.

Great leaders have clearly articulated expectations and goals so employees know what is expected of them. This clarity allows employees to work towards an idea with the greatest level of dogged commitment and efficiency. As important as the precision of the goal is, it is equally vital to not let it become monotonous to obtain. Rewards and levity should be interjected into the workplace to improve morale and encourage continued hard work.

“The strength of the team is each individual member… the strength of each member is the team.” – Phil Jackson

Phil Jackson was a basketball coach who won six NBA championships with the Chicago Bulls and five championships with the Los Angeles Lakers. He was inducted into the Basketball Hall of Fame in 2007.

Jackson used a holistic approach to coaching that was influenced by Eastern philosophy and mindfulness, leading to his nickname of “Zen Master”. His strengths were in his ability to create a strong team culture by developing leadership, empowerment, communication, trust, and motivation. Jackson’s use of the triangle offense demonstrated his thoughts about how a team should work together, with no one person being put above the others. Additionally, Jackson believed in being authentic and true to who you are, letting what was important to him drive practices infused with a positive spirit.

Great leaders are only as strong as the team they lead, so creating a healthy and empowered team culture leads to positive outcomes. Every member is equally valued and the ability to work together is an important quality for each individual to possess. It’s easy to let activities become mundane, so having a positive attitude and spontaneous spirit can help end the routine of a day. Above all else, leaders should lead authentically, showing their employees who they truly are and what they value.

Each of these coaches was irrefutably successfuland each used a different coaching philosophy to get to there. But, within each of these unique styles, there is one key message from sports to business: leading based on what you believe in and valuing how your team can work together to succeed will lead to a prosperous and healthy workplace culture.

Build A Culture of Trust: Sharing Financials With Your Team

sharing financials with your team

The open sharing of company financials can still be a touchy subject for many leaders. For years, it was generally accepted that a company should have closed books. No one questioned a company’s success if they were able to please investors, and employees certainly did not need to have access to closed door financial forecasting and investor reports.

Today, we are beginning to think about these things differently. With companies like Buffer leading the way to total financial transparency, it’s becoming clear that corporate success is measured differently today than it was 10 years ago. Organizations are not only expected to please their investors, but their other stakeholders as well.

Things like transparency, openness, and active engagement are not only highly valued, but expected. We now question the motives behind the levels of secrecy that were once widely accepted as the way it’s always been done.

Still, many privately held companies today do not, and have no intention of, sharing their financials or other closely held information in any form with their staff.

My question to the leaders of these organizations is: why?

Three Arguments Against Financial Transparency (and why they’re wrong)

Over the years, I’ve heard many leaders try and explain why they are not opening up their books to their employees. Here are a few:

“Our People Wouldn’t Understand.”

This may be true, at least at first.  Many employees out there (and some business leaders too!) are not adept at understanding simple company performance metrics, mostly because they’ve never been afforded the opportunity to see them and learn.  Sharing financial information gives your employees the opportunity to develop their business acumen.

By learning how to read and interpret financial information related to the company, they will develop their professional repertoire while developing a deeper understanding and appreciation of how their day-to-day actions impact the bigger picture. By cascading financial discussions throughout the organization, you give your people the information they need to take ownership in activities such as budgeting and expenditure control.

Mark Emerson, our General Manager at gothamCulture, has experienced the benefits firsthand. “I have had a number of colleagues throughout the years thank me for teaching them how to make sense of a P&L, balance sheet and cash flow statement. These skills actually carry over for them into all aspects of their work, from projects to product launches.”

“I have also seen that it makes conversations about difficult company decisions easier. Without a financial presentation to show a significant change in revenues, for example, and how the company decision helps adapt to those changes across the organization, employees may find it difficult to embrace those kinds of actions.”

“Our People Wouldn’t Care.”

Let me ask you this: Do your employees care how much they’re getting paid?  Do your employees care whether or not they’ll have a job in six months? Showing them how every dollar is allocated helps employees understand the real context in which the organization is operating and how they can individually contribute to the organization’s success.

Without knowing how much money the company is making and how it’s being managed, the only thing they know is how much they are making in relation to your last big sale, or the last public revenue announcement. In this context, it’s easy for your employees to feel undervalued.

The best way to combat this is to make your financial information openly available to them.

“Sharing Information Means We Lose Power.”

While it may seem counterintuitive at first, sharing financial information openly and honestly with your employees actually helps you gain power. An open and honest dialogue around financials creates increased transparency and helps build trust.

Rather than viewing this sharing of information as losing power, I’ve found that employees who understand the financial performance of their companies tend to begin to take much more ownership of their day-to-day behaviors and decisions.  Rather than losing power, these organizations become more powerful.

The fact is, your employees will likely find out about the information anyway. Whether through gossip, social media, or through sites like Glassdoor, who recently found that 98% of job seekers say it’s important to work for a company that embraces transparency. You may as well openly share it with them first, before they hear it secondhand.

Building A Culture Of Trust

Whether your organization shares financial information with all staff or not, and to what level of detail you share information, is your decision. Know, however, that what you do sends clear messages to the people in your company about what you think of them.

If your end goal is increased engagement, better customer service, and higher performance, you have to start by empowering your people with the information and tools they need to succeed. If you want your employees to trust you, show them that you can be trusted. And when it comes to financials, the messages you send by hiding information are likely not doing you any favors.

Change Begins Where Strategy, Culture And Leadership Connect

culture and leadership change

Many organizations know when they are in need of change. Things that once worked don’t seem work any longer across the organization. Small issues in one area or function or department now seem systemic. Behaviors and attitudes about work, and with work, are changing. Austerity, ambiguity and productivity issues may be permeating.

Organizations recognize when there is a need for change, even if they don’t fully understand what needs changing or where to start in order to address these issues. Often, leaders address performance or engagement opportunities at the surface level, when in reality these may be indicators of a much deeper problem that can only be identified by addressing the organization’s strategy, culture and leadership.

In these cases, leaders must address all of these facets of the organization rather than focusing on a single issue. And while there is no universal resolution for every organization, I’ve found that addressing these performance issues effectively always begins with the following 3 steps.

Step 1: Acknowledge the Problem

So you know you need change. Check.

Then, as any good leader would do, you immediately jump to what you believe should be step 2:  solve the problem. You start attempting to change everything all at once. But, while you’re testing new changes, overwhelming your staff with new roles and responsibilities and asking a litany of perhaps unplanned, random, unconnected and overlapping questions, you may be watching your ‘systemic’ issues persist or even get worse.

You ask yourself, “Where do I go from here?”

Where you go is really a question of where you start. It’s important to realize that step 2 is not to solve the problem, because you haven’t yet addressed the cause of the problem. Step 2 is about truly assessing the problems, the situation and the current reality of what is going on in your organization.

Step 2: Assessment

Before you can begin to find effective solutions, you must first accurately and reliably assess the problem you’re trying to solve. Assessment of key variables, regardless of where you company is in size or maturity, is key. This is often a difficult concept for us ardent, type-a leaders who want to see results and see them now.

Patience, we will get you there. But first, let’s assess the situation correctly and thoroughly before we spend resources on solutions that may not be the root-cause of your issues.

There are a few consistent key areas of assessment any organization should start from when embarking on a journey of organizational change. Taking the time to accurately assess the reality of your organization’s issues will help you better identify the root cause and allow you to understand how to best prioritize your approach to the change at hand.

The key assessment areas fall within four key areas: 

The first two assessment areas help you understand the reality of your ROI (return on investment) or value:

  • Mission (direction, purpose and blueprint) “Do we know where we are going as an organization?”
  • Consistency (systems, structure & processes) “Do our systems create leverage?”

The second two assessment areas help you understand innovation and customer satisfaction:

  • Adaptability (pattern, trends, market) “Are we listening to the market / our customers?”
  • Involvement (commitment, ownership, responsibility) “Are our people aligned and engaged?”

Once the assessment in these four areas is completed, you now have an understanding of your current operating environment. Now you can begin to prioritize the problems you’ve uncovered, and how you need to address them.

Step 3: Solution Strategies

The most critical solution strategies you put in place will likely require some level of initial action in one or more of the areas of strategy, leadership, and/or culture change. These three areas encompass the triad of successful organizational change attributes.

As I mentioned before, you cannot try to solve everything all at once without overwhelming your team. In order to prioritize these three change navigation attributes, then, you want to choose one of these three as your area of focus:

  • A Strategy focus starts the change journey by first understanding your direction, purpose and blueprint and how these impact organizational success.
  • A Leadership focus starts the change journey by first understanding who you are as leaders in your organization. Consider how you show up collectively as a team and individually as an executive and how this impacts organizational success.
  • A Culture focus starts by first understanding the underlying organizational behaviors, values and assumptions that exist and how these impacts organizational success.

You should start with at least one of these change navigation attributes, but wherever you start, you will realistically tap into all three at some point on your journey to high performance and organizational improvement.

Strategy, culture and leadership all go hand in hand. Your organization will only find sustainable success at the intersection of all three.

Two Ways To Ensure Your Corporate Culture And Values Align

corporate culture and values

When you think of your company’s values, what comes to mind?

Do they serve as a compass for your organization? A manifesto? Do they hold any weight at all?

In the organizational development field, and particularly in my work in organizational culture, the importance of a solid set of values in your company cannot be overstated. Unfortunately, many leaders today still struggle to create meaningful values in their organizations despite their best efforts.

Rather than actionable corporate values statements that encompass the overall strategy and culture of an organization, leaders often lean on single, powerful words or phrases. Examples of this might be “Innovation, Community, and Service.”

They look good. They sound good. But they are all but meaningless without the behaviors to back them up.

Ideally, value statements explicitly define how people will behave with each other and customers in your organization. When values statements succeed, the daily behaviors of your people will embody the core values you set forth. When they fall flat, as Patrick M. Lencioni wrote in the Harvard Business Review, “Empty values statements create cynical and dispirited employees, alienate customers, and undermine managerial credibility.”

When your culture and values don’t align, your employees, customers and profitability may suffer.

So, how do you create values statements that will help align your employees and organizational culture in order to drive performance?

Creating More Meaningful Values Statements

I recently read a fascinating article by my colleague Levi Nieminen, Director of Research and Development at Denison Consulting. In it, he outlines two exercises business leaders can do to pressure test their organizational values and ensure they aren’t “bland, toothless, or just plain dishonest.”

Here is what he offers:

1. Avoid the “Feel-Goods.” This is based on the idea that values cannot be battle-tested by success. Rather, companies should think about their values in relation to difficult situations they’ve faced.

“Recall the three most challenging situations your organization [or team, etc.] has faced in the last few years and what the organization did in response to these situations. Now answer the following question: Do the values help to make sense of what was done and why?”

If the honest answer is no, it may be time to reexamine what’s really valued in your organization. By trying to develop a set of values that can be used as a framework to guide decision-making, leaders can help their teams understand why decisions are being made.

2. Look at the “Illogical” Side. Many organizations today are moving away from values-based decision-making in favor of big data and analytics. But, in the absence of hard data we have to fall back on something to serve as our guide for action.

When data isn’t present, or we don’t have all the facts, we have no choice but the fall back on our values.

“Recall the last three times when your organization [or team] made a decision ‘shooting from the hip,’ that is, when you didn’t have the intel that you wanted. In each case, describe the decision that was made and how the decision was reached. Now answer the following question: Do the values help you to explain or justify what was decided and why?”

There is a lot of value in quantitative data analysis and the information it provides, but data is becoming increasing more accessible to people as time goes on. Meaning, you and all your competitors will likely have access to identical data to inform your decisions.

When that playing field of available information is level, the “illogical,” human-side of your decisions will ultimately be what sets you apart from the competition.

Values With Teeth

Values are meant to be more than a poster on the wall.

In order to create values statements that succeed, you must start thinking critically about how they will inform your culture and the decisions that are made on a daily basis. Consider how the policies you have in place will help support them, and ensure your leadership team is both communicating and exemplifying your values to your team.

Don’t expect employees to rally around a set of hollow values when those ideas aren’t practiced and upheld by the leaders in your organization. Your organization will be better for considering these exercises, and determining whether or not your values really have any teeth.

This article originally appeared on Forbes