Leadership 501: Leading Organizations (Level 5)

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Level 4 – Creating Leaders

Organization leaders need specific attributes

A Level 5 Leader combines marketing, personal financial principles, sharp business skills, and every aspect of leadership

A great organizational leader can turn a devastated culture into a productive and engaging environment

  • Only a charismatic, smart, and socially intelligent leader can carry that vision
  • They naturally foster trust to build great relationships and teams

Great visionaries creatively look beyond conventional models and previous experience

  • Operates within boundaries and limitations to build something from the ground up
  • Believes the best things are often simplest

Visionaries focus on large-scale results

  • Looks ahead at obstacles to success and removes them as fast as possible
  • Always wants a little more than the current status
  • Routinely looks at the organization’s financial condition and realistically estimates costs for to the budget

Organizations only succeed with a well-communicated vision

Excellent communication isn’t necessarily great leadership

  • People follow a strong leader, not just great ideas
  • Assess yourself to become someone people want to follow

The message must bring a passion for serving a higher purpose beyond self-interest

  • Procedures and tasks change with culture and situation, but a vision won’t move
  • The purpose must form into something to specifically help someone
  • The more straightforward and focused the message is, the farther and quicker it will travel
  • The vision will carry itself far beyond the individual and into future generations when expressed correctly

Members of the organization should have more than enough training to succeed at working toward the vision

Everyone in the organization must be devoted wholly to the organization’s vision

  • The organization’s principles should require members to adapt or leave
  • Members must feel their input contributes to the collective vision

Ask all of the members what they think, not just the highest-ranking

Keep budget items for new communication channels

  • Choose your communication channels carefully
  • Use visuals to communicate more clearly
  • Promote the organization more effectively with a young social media advisory board

Roll out products and services as an overall experience

  • Advertise the ceremonious occasion with a fanfare
  • Publicly put old and discontinued products to rest like a eulogy of a great idea that ran its course
  • Invalidate and learn from dysfunctional products and services publicly to ensure the situation doesn’t repeat itself

Socially engineer your organization

Set rules that support or discourage certain large-scale behaviors

Most organizations correct their course with two methods

A. Placing many rules to follow precisely to avoid mistakes

  • People usually find ways to honor rules while still doing a terrible job
  • Formalized systems often make potentially devoted members disloyal from a lack of distinguishing other positive qualities (e.g., reprimand for a late delivery without considering the circumstances)

B. Giving incentives to make people want great results

  • People usually find ways to game the system and invalidate the incentive’s purpose
  • Over time, the focus can become distorted into a completely arbitrary set of rules which don’t produce results
  • If you decide not to have incentives, make sure everyone knows precisely why

The only long-term cure for lousy performance is a virtue-based culture

  • Practical wisdom is both the moral skill to learn what the right thing is and the moral will to do it
  • Wise people know particular instances for when and how the rules don’t apply

Not everyone likes working in a great organization

  • They must like others’ expectations that they seek accomplishment
  • They have to adapt to the established culture
  • They need to feel proud to be part of that organization
  • They have to take an interest in changing everything about their work
  • They must value clear, open, and honest communication

Great members of dysfunctional cultures must do one of a few things

  1. Work twice as hard through the necessary bureaucracy to come to the important part of the work
  2. Ignore and break completely arbitrary rules they fully know nobody checks and nobody cares about
  3. Compromise their values and become part of the problem
  4. Leave the system and find a better environment

Many benefits can improve an organization’s culture

Increase focus on results

Give cash rewards proportional to performance

  • Communicate well in advance to avoid surprises
  • Start with merit raises before giving harder-to-calculate incentive bonuses
  • Set extremes in the system to heavily reward high performers
  • Make them feel the team’s effort by tying a portion of the bonus pool to overall profitability
  • Don’t compare employees to review each one fairly

Give a company car or a car program with insurance, maintenance, and repair

Give extra time off for staying on for set periods or attaining specific goals

Celebrate high achievers with a lavish ceremony

Provide nap rooms or lodging to help with massive projects

Negotiate discounts or free productivity and management software they can use for personal purposes

Enable openness to change

Pay them for personal philanthropic time

Provide educational reimbursement or professional development services

Create opportunities for them to learn about a different role through temporary work in it

Establish an on-site gym or give incentives for weight loss

Give alcohol or tobacco recovery programs

Foster feelings of freedom and priority

Give unlimited vacation days or flexible hours

  • For complete independence, don’t track their hours at all

Mandatory holidays off or half-day Fridays

Let them bring pets to the office

Give a few hours or up to 20% of their time to explore their pet projects

Let them be part of an exclusive organization, even after they leave the company

Pay for their commuting costs or let them work from home

Give them paid time off to improve their professional skills

Foster a feeling of safety and community

Provide surviving spouse support and extended parental leave

  • Give family and bereavement leaves

Have a generous retirement plan package

Make an ambitious healthcare plan

  • Make an on-campus health center for minor medical problems
  • Create a wellness program to help with counseling and substance abuse

Allow business travel expenses for personal needs

Give gifts for certain life landmarks like marriage or a new baby

Give them discounted or free insurance

  • Give a defensive driving day for employees with auto insurance

Give free or discounted services

  • Free financial consultations to inspire investing
  • Legal assistance
  • Identity theft protection

Provide childcare

  • Fund an adoption assistance program
  • Furnishing a family room with books and games
  • Provide breastfeeding/pumping materials

Make the workplace feel fun

Give massive discounts or free merchandise for the company’s products

Free food, juice bars or unlimited snacks

Free services like massages

Fun distractions at the workplace like video games, pool tables, fields or courts

Sponsor events like concerts, parties or amusement parks

Partner with affiliates to share discounts across organizations

Every organization grows through a life cycle

The larger the organization grows, the less hands-on and responsive the leader’s role becomes

Changes are always definite and clear in large organizations

  1. The situation is “unfrozen” from its static format by reducing certain requirements
  2. A social movement arises with some confusion and inefficiency as everyone adjusts to a new way of doing things
    • These changes must come from an open system which combines internal feedback and external signals
  3. New standards are “frozen” as everyone agrees to the new changes

Each organization travels through four periods

  1. Formation period – a new organization started, a founding vision without formal definitions
  2. Rapid growth period – organization adds direction and coordination to keep growing and ensuring success
  3. Mature period – growth slows to match the pace of the industry
  4. Declining period – often involves laying off workers and reorganizing
  5. Successful reorganization creates a new Formation period

The Greiner Curve tracks how organizations grow from leadership

NOTE: Each growth rate varies and the crises aren’t always in order

A. Growth through creativity

  • The founders of the organization spend most of their time making products and opening markets
  • Not many staff and mostly informal communication
  • Rewards for long hours and hard work usually come through profits or company stock
  • Growth ends with a leadership crisis and the need for professional management
    • The leader must more effectively organize the organization’s resources

B. Growth through direction

  • Someone new usually brought in to compensate for insufficient leadership
  • More formal communications
  • More budgeting and focus on separating activities like marketing, production or sales
  • Incentive benefits mostly replace stock or profit as a financial reward
  • Growth ends with an autonomy crisis once the products or processes have grown so numerous one person can’t manage or remember all of them
    • The leader must start delegating responsibilities to others

C. Growth through delegation

  • Mid-level managers are freed up to react quickly to new market and product opportunities
  • Top management monitors and manages large-scale issues like mergers and acquisition opportunities
  • Most organizations fail at this stage since the primary manager usually won’t consent to less direct control
  • Growth ends with a control crisis where the separate parts of the organization need a more complex head office
    • For some reason this usually happens at about 150 people
    • The leader and other organization heads must start establishing more clear roles for everyone

D. Growth through coordination and monitoring

  • Previously isolated business units are reorganized into product groups or service practices
  • Investing becomes centrally managed and focuses on ROI (return on investment) more than profits
  • Benefits include organization-wide profit-sharing arrangements aligned with organization goals
  • Growth ends with a red-tape crisis where bureaucracy halts further developments
    • The entire organization must adapt to change

E. Growth through collaboration

  • Introduces a new culture and structure where professional sensibility replaces a fixed hierarchy
  • Teams are tasked to deliver projects and regrouped as needed instead of vast systems that rigidly define financial rewards to unchanging team structures
  • Growth ends with an internal growth crisis where the organization has reached the peak of its cultural capacity
    • The organization can only grow further from partnerships with complementary organizations
    • Everyone must think beyond the scope of the organization’s activities

F. Growth through extra-organizational answers

  • Growth continues through merger, outsourcing, networks, and other solutions with other organizations

An influential organization will cross cultural boundaries

  • The rapid information society we live in ensures large organizations become well-known very quickly
  • Form a vision with its global effect in mind
  • Developed parts of the world often forget the myriad opportunities and risks from the developing world

Many cultural risks will damage an organization on every level

Avoid favoritism towards family members

  • Draft a family employee policy
  • Define their roles and responsibilities very clearly
  • Treat them like every other member of the team
  • Don’t hire your children right out of college
    • Let them work elsewhere in the world for a few years for them to gain much-needed experience

One of the most significant organizational risks is to connecting revenue to financial success

  • Revenue doesn’t consider profitability, inventory management, and cash flow
  • Revenue also doesn’t factor a product’s marketability or the organization’s debts

Bringing together multiple unrelated groups always has risks

Uncertainty will easily cripple morale and inspire fear, so boldly negotiate and discuss

  • Don’t pay too much additional for your hires (5% is fine, but 20-30% loses their value)

Avoid merging perceived equals

  • A merger sounds fortunate but overlooks the two group cultures
  • Look for irreconcilable differences in who has unspoken power in the groups

Make sure all the cultures complement each other

  • Combining a group from related products, technologies or numbers leads to enormous conflicts

Acquisitions are unequal power dynamics and adapting is more challenging

  • Don’t let the concessions and clarifications from the acquired group give them all the power
  • On the other hand, don’t disrespect the acquisition’s talents or work environment

Someday you’ll want to retire, so make an exit plan

Consider stepping aside and retiring or going part-time

  • Don’t wait to spend time with your family

Don’t let boredom force your hand

Hire a replacement with the right qualifications

  • Have specific goals for your successor
  • Don’t make the decision alone
  • Evaluate their personalities as thoroughly as you would with resumes
  • The entire organization will be uneasy, so take time to adjust your protégé into the role

If you’re selling or leaving the company, ease everyone’s fears by taking everything slowly and transparently communicating everything

Next: How To Make A Home