Nearly every aspect of our lives can be thought of as a balancing act. Compromise and cooperation are the hallmarks of good citizenship, but leaders face increasingly complex balancing acts as they climb the organizational ladder.
The most crucial point of balance is the potential conflict that exists between a company’s corporate profit motive and its people resources. Focus too much on profit, and the company’s people are likely to suffer. Too much focus on people, and profit will become challenged. Mathematically, it’s clear that if pay and benefits become unsustainable in a business model, economic viability will be difficult to maintain. But is the people side of the equation all about pay and benefits? The answer is no.
The company’s most valuable asset
There’s a different lens we can look at the profit-people balancing act through to help turn it from “either/or” to “also/and.” That lens is to view people resources as the company’s most valuable asset.
Once leaders adopt this mindset, teams and individuals become the engine to growth and profitability. Investments in building trust and accountability through clarity and communication become natural drivers of a healthy organization. According to McKinsey, companies that exhibit high organizational health scores outperform their peers significantly in total return to shareholders, return on invested capital and earnings.
Hence, while pay and benefits play a key role in retaining top talent, true organizational health gains come from strong, inclusive management practices that are applied consistently through time.
The drivers of organizational health
It may sound simplistic, but we can boil organizational health down to two interrelated concepts — trust and accountability. Let’s take a quick look at how to foster these two key ingredients of healthy companies.
Trust is established by creating clarity throughout the organization and continually reinforcing that clarity through multiple modalities — over and over and over again. Think about trust as a ladder and remind yourself as a leader that your teams hang on nearly every word you say.
If the purpose of the organization is not clear, or goals continually shift and/or are not congruent across teams and functional areas, your people will not know what to do or what to believe. They’ll continuously be looking over their shoulders for the next shoe to drop or the next edict to be issued that takes them in a new direction. Paralysis and indecision will become the norm.
An offhand remark can send teams spinning. Playing favorites is equally damaging. After a few steps up the ladder, a flippant comment or ill-conceived plan can send everyone sliding right back down to the first rung of the trust ladder. When change is necessary, it must be communicated with transparency and supported by its connection to the company’s purpose or north star. Obfuscation and hiding true motivations will damage leadership’s reputation in the eyes of team members — in some cases, irretrievably.
Accountability is the support mechanism to establishing and maintaining organizational trust. This is where goal-setting and goal cascades are critically important.
On an annual basis (in some cases semi-annually), leadership should meet to reconfirm the company’s mission/purpose, establish the one thing that’s most important over the upcoming planning period (the company’s north star), and build clear and achievable goals to support that north star. Functional team leaders then build their team’s goals in support of corporate-level goals, and so on.
A key element of effective goal-setting is to play at least one round of “catchball.” Catchball consists of “tossing” goal sets back and forth between teams for review, commentary and adjustment. This will serve to ensure that the corporate story hangs together and goals are congruent up, down and across the organization.
Once goals are set and implementation commences, visual management tools that clearly show metrics, progress, wins, challenges and blockers should be developed for all to see. Knowing that a team’s warts are as visible as their successes will help keep all parties accountable for deliverables, encourage timely handoffs between teams and minimize blame for failures.
When clarity and transparency are embraced and teams know what their counterparts in other divisions/functional areas are responsible for, it’s much easier to row in the same direction.
When profit and people are viewed as being at odds with one another, striking the appropriate balance between them can be extremely difficult, if not impossible. Once leaders recognize that people are the company’s most valuable asset and that organizational health is more than a simple pay-and-benefits calculation, sustainable economic performance will follow.
To be blunt, the creation of a healthy organization is not about “throwing money at the problem,” but more about empowerment, inclusion, listening, clarity and treating people with dignity and respect.
Andrew Temte, CFA, is president and global head of corporate learning at Kaplan North America. A thought leader on issues related to workforce reskilling and upskilling, he is the author of “Balancing Act: Teach Coach Mentor Inspire.” His 30-plus-year career includes teaching and executive leadership roles in both professional education and higher education institutions. An accomplished musician and leader of the rock band The Remainders, he is active in numerous fundraising events and committees in the La Crosse, Wis., area.