As the CEO of major corporations for over 25 years, I learned a number of valuable lessons about leadership.
Welcome to the series: 5 Leadership Mistakes to Avoid. Over the next 5 weeks, I will address a different mistake each week. I invite you to join in the weekly discussion and share your experiences and lessons learned. No leader succeeds without making many mistakes. But great leaders succeed because of what they learn from their mistakes.
Here are 5 common mistakes that many leaders struggle with and how to avoid or overcome them.
Prioritizing profit over people
In today’s hyper-competitive environment, it’s understandable that companies must focus on hitting their financial targets. CEOs may feel the pressure to be uncompromising on this key metric, for if we don’t, we may lose our jobs. However, the mistake is made when the goal of profit is put before the goal of an engaged workforce. It must be both/and rather than either/or. Profit is not the primary focus. The profits are a result, not the primary goal. Profit is the excellent result of prioritizing value to your customer, excellent treatment of your team, and managing the income statement and balance sheet to produce excellent results. As Jim Collin’s said: “Profit is like Oxygen, it is not the purpose of life, but without it there is no life.”
It needs to be abundantly clear that people are the most valuable asset of your organization. Your employees hold the key to your success, bar none. I have led multiple turn-around situations and purchased companies with poor cultures (and profits) and turned them into exceptional cultures with excellent profits. The data of these turn-arounds is clear: as engagement and satisfaction scores for the employees increase, turnover decreases, performance and work ethic excel, personal responsibility increases, wages for the employees grow and value for the customer accelerates. Then, not surprisingly, profits soar.
Therefore, what is the best way to do this and avoid prioritizing profit over people? There are several things, but here is just a few:
1. Have a clear set of people metrics in place so you know how your team feels. This includes satisfaction and engagement surveys which create data that leads to insights to your culture and where the problem areas exist.
2. Spend just as much time understanding these “people results” as you do analyzing the financial results of your department or organization. So many leaders talk about the importance of their people but spend all their time on either the financial results or talking to the end customer. Both are essential, but not sufficient in creating a great culture.
3. Put your money where your mouth is: promote, hire, and give pay increases to those who not only create value for your customers, but also treat fellow team members well (according to the data from #1).
4. If you are suffering poor results on the people side of your metrics, here are a few things to look out for:
1. Are job roles and metrics of performance clear? Do they have the skills and training to get the job done? By investing in employee’s soft skills and professional development, we not only show employees they are valued, but it also empowers them to become leaders, mentors, and innovators within the organization.
2. Make sure they have the support of a strong leader who will give more positive reinforcements than negative. We need to encourage risk taking and innovation and that only comes with confidence that grows with leadership support. This act also demonstrates caring leadership which is critical to employee engagement.
3. Give your team constant feedback regarding how they are doing AND how they are fitting into the big picture of your team, department, or organization.
Put your team first by supporting them to serve the customer with value. If you do this, profit will take care of itself.