The Real Reason Leaders Win: Return on Character

Cash or Character?

Not too long ago, I was asked to give a talk about organizational culture and why it matters. Before I walked up to the podium, one of the attendees cornered me. He wanted me to know his strongly-held position. In an emphatic tone, he nearly shouted:

“Skip, cash matters, not culture, not character, not creativity! Cash is the only thing you can spend.”

How fortunate that my slides started with financials so I could demonstrate the power of culture change. But, what I wish I had was the book that crossed my desk a few weeks ago:  Return on Character: The Real Reasons Leaders and Their Companies Win.  In the most comprehensive study of its kind, Fred Kiel reveals the research that proves that good character wins. We discussed his findings at length and I know many organizational leaders will want to study the results.

 

“Character is the tree. Reputation is its shadow.” -Lincoln

 

 

Studying CEO’s

Tell us just briefly about your study and its methodology. Where did you get the idea, how many CEO’s were involved, etc.?

ROC CoverIn 2005 I and my co-author, Doug Lennick, published a book entitled Moral Intelligence in which we claimed that highly principled leaders obtained better long-term business results than leaders who were not so principled.  The book has done very well, but shortly after it was published we received some pushback. One person said, “Fred, I know you like all of this soft stuff.  But let me give you a little lesson in economics.  The business model is what creates value.  If a business is profitable and makes a lot of money, all that culture stuff will come along with it.  And if it doesn’t, that’s not a big deal as long as management stays legal.  What you talk about is just icing on the cake.  It’s nice but not necessary.  And, besides you don’t have any hard data to back up your claim.”

This really got to me.  He was right about me not having any data to back up our claim that character matters – and that became the call to action for our study.

Over the next seven years we signed up 121 CEOs and their senior teams to participate.  Eighty-four completed the study, so we have complete data sets on these 84 CEOs, their senior teams, and their organizations.  Over 8,500 randomly selected employees completed our surveys about these CEOs and their teams.  We have nearly one million separate data points in our research base.  This is the largest study of this kind to date.

 

4 Universal Character Habits

How do you define character in the Return on Character (ROC) matrix?

We scoured the cultural anthropology research and discovered that humans all over the world share many common practices and beliefs.  Parents all over the world teach their children to tell the truth, keep promises, own up to mistakes, forgive others, and to care for people – at least in their tribe.  We added to this understanding the recent findings from the neurosciences and genetics to come up with our definition of character as it applies to leaders.

The ROC Matrix shows the four universal principles and the character habits that are aligned with these principles.

 

Copyright Fred Kiel; Used by Permission Copyright Fred Kiel; Used by Permission

Lincoln said, “Character is the tree.  Reputation is its shadow.”  Likewise, the habits we all have for how we treat other people is our character reputation.  That’s what we measured in our research – a leader’s reputation for how he or she treats people.

 

Probing the Leader’s Childhood

In several places in the book, you delve into the CEO’s childhood and upbringing.  Why?  What did you find?  Why is the CEO’s life story so important?

If you took the resumes and employment histories of high character CEOs and compared them to low character CEOs, you’d be hard pressed to see much difference. Both groups are competitive, driven to succeed, rational, high energy, and often wicked smart – they know how to command a room and nail an interview.

Where we started to see significant differences was when we surveyed their employees and asked about their behaviors around the 4 universal character habits – integrity, responsibility, forgiveness and compassion. So that begs the question – how did each group come by their different postures around these habits? Where did they get their beliefs about how the world worked and how to succeed in that world?

Turns out the clues are in their childhoods and upbringing.

12 Rules for Managing Your Employees As Real People

 

Think your people are your greatest asset?

Do you survey your employees but ask the wrong questions?

Is corporate engagement one of your goals?

 

Widgets, FTE’s and Assets

What I think I love most about Rodd Wagner’s new book WIDGETS: The 12 New Rules for Managing Your Employees As If They’re Real People is his clear, unambiguous writing that calls it like he sees it. He upends common practices and wisdom, throwing out what you know and replacing it with what just makes sense. Our conversation is likely to change your position on a few subjects and have you rethink your practices. It did for me.

Why did you call the book “Widgets”?

If you spend enough time at enough companies, the bad terms used to refer to people start to accumulate. “Human capital.” “Full-time equivalents” or “FTEs.” “Headcount.” “Aprons” at a home improvement store. “Blue shirts” at Best Buy. I could barely contain my shock when leaders for one temporary staffing firm referred to the people they place as “inventory.” And the department responsible for people? In most companies, it’s called “Human Resources.” At one company, a mass layoff is called a “resource action.”

These are euphemisms, and euphemisms are most dangerous when used to refer to people, because they make it easier to disregard that we are talking about someone’s son or daughter, brother or sister, and they deserve the respect and dignity of being referred to as people. I used the title “Widgets” to take a hard whack at these bad habits and all the dehumanizing practices that flow from that perspective.

 

“Your people are not your greatest asset. They’re not yours, and they’re not assets.” –Rodd Wagner

 

Lather. Rinse. Repeat.

What is wrong with many employee engagement efforts today?

Employee engagement is in a rut. It’s become hackneyed. It’s routinized.

Commission a survey. Beg people to participate. Get the results back. Distribute scorecards. Train some trainers; unleash them on the company. Cajole the CEO into using the word “engagement” in his next speech. Ask managers to do some team sessions, which maybe half will do before tucking the forms in a desk drawer. Leave the way managers are selected, coached, supported, and held accountable untouched. Let the executives feel good that they checked the employee engagement box. Go quiet for 9 or 10 months until it’s time to start the Sisyphean cycle all over again. Lather. Rinse. Repeat.

JacketBut the most pernicious problem with engagement initiatives today is the way some consultancies and companies talk about the people who are neglected and, when the survey comes around, tell the truth. So-called “disengaged” employees are vilified, their motivations and character questioned. They’re said to be “more or less out to damage their company” or trying to undo what the more “engaged” accomplish. Our research contradicts these assertions that those who are most frustrated are some kind of “cancer” inside the organization.

Of course, recognizing that they will be suspect if they give low marks to their company, many employees have realized it’s career suicide to tell the truth. So they don’t. Who would under those circumstances? “Just mark five to survive,” one admin advised her colleagues. In many places, it’s now difficult if not impossible to even get a true measure of engagement. That’s the mark of a fundamentally flawed and broken system.

 

If an employee does not give high marks on a survey, look first at the manager, not the employee.

 

Inside the Head

Getting inside their heads is your first rule. It’s individual; it’s unique; it takes up significant time. And yet, it’s the most important of all. Would you share why this rule is the first?

I’ve been fielding and analyzing employee surveys and other data from more than a decade-and-a-half. Every time I plot the numbers on a new study, the first thing that strikes me is the massive range in individual responses. You simply cannot predict how a person will feel about his or her job based on generation, age, gender, race, tenure, industry, company, or any of the other group statistics that are used so often to stereotype employees.

Engagement is an individual phenomenon. Everything – how much money people want, what they consider a cool place to work, how they like to be recognized, what they envision for their future – is unique to that person. Therefore, applying all of the other New Rules depends on first understanding that one person and responding to his or her personality and ambitions. This is the reason that every good piece of research on employee engagement finds that a person’s direct supervisor is one of the key players. That manager is in a unique position to know the employee well and match him or her with the resources and opportunities inside the company.

 

“When recognition is common, employees develop resilience against adversity.” –Rodd Wagner

 

Best Friends at Work

Having a best friend at work appears in most surveys, and we repeatedly hear that it is critically important. You argue otherwise. Help us understand.

First, asking about friendships – particularly sticking your nose in an employee’s “best” friendships – is quite intrusive when the relationship between company and worker is increasingly transactional. One week you’re asking about their best friends, the next week you’re sending a few thousand of them home with severance packages. So if they either had best friends at work or were the best friends of someone still there, you’ve opened yourself to some well-founded criticism that you abused their trust.

More important, in the studies my teams and I have conducted, the “best friend” concept does not hold up well in driving results compared with more

business-related questions such as trust in leadership, perceived future of the company, and collaboration. Asking about those is your business and is better connected to your results than asking what The Washington Post once called a “high school” popularity question.

 

“Transparency tells people you trust them and you can be trusted.” –Rodd Wagner

 

What can a professor teaching more on the left side of the classroom teach us about motivating teams?

Leaders Require No Fine Print

No Fine Print Required

There I was, staring at the clock. It was late at night, or really early in the morning, and I had a meeting the next morning. Sleep was eluding me. Like a surfer, I would almost catch the wave to take me where I needed to go, but then it would dissipate before I could get going.

I tried deep breathing. Prayer. Meditation. I have never sought pharmaceutical help, but I have tried various herbal remedies. That’s when I remembered that I had purchased a new product that had melatonin in it. Melatonin is a hormone that supposedly helps with sleep. There have been times when that has been an aide to me, so I wandered downstairs to try it. Getting back into bed, the exhaustion once again seemed to take over…

Bam!

Suddenly, I was wide awake. Completely wired as if I had three cups of coffee. Not only was I no longer tired, I had a surge of energy. When that happens, I get up and read a book or do something productive around the house.

A few hours later, I picked up the bottle.

There, in the fine print, I read the words on the label. “Valerian.”

Valerian is an herb that helps some people sleep. I tried that before many years ago. I was one of the small percentage of people who don’t react with sleep, but in the opposite way. Apparently, this pill had a nice dose of it mixed with the melatonin.

 

“Leaders require no fine print.” -Skip Prichard

 

Pow!

How often do we read the fine print? How many times do you see an asterisk and read that footnote?

Nothing is more important than our character. A reputation or personal brand built without character inevitably fades, fails, or fizzles. Integrity is solid. When we have it, our friends can rely on us; our business partners trust us, and even our competitors admire us.

 

“Personal brands built without character fade, fail, and fizzle.” -Skip Prichard

 

Leadership and Punctuation

Top Reasons for Leadership Fails

This is a guest post by Alison Brattle. Alison is a marketing manager with AchieveGlobal (UK) Limited. Feel free to connect with her on LinkedIn.

Reducing the Risk of Leadership Failure

The world’s greatest leaders know that success is fleeting and that no amount of success in the present can prevent a future failure. It’s so easy to fall into the trap of thinking that it can’t happen to you, but the truth is, it’s much easier to fail than you think. An essential part of leadership development is understanding the warning signs that indicate potential problems; learn what they are and how to combat them to reduce the risk of a leadership failure.

 

Leadership Question: Are you able to write down your focus area in just a few words?

 

Your Focus Shifts

A focus shift can happen in many ways. Some leaders lose sight of what’s important; they get caught up by the pressure that leadership brings, and they lose the focus that they had on the job. In some cases, leaders start to focus too much on the finer details of the job, they start micromanaging, and they end up taking over tasks that are better carried out by other people.

What’s your primary focus in terms of your leadership role? If you can’t write it down succinctly in just a few words, you may be losing focus. Remember that you should be concentrating on leading, not on micromanaging.

 

You’re Communicating Poorly

If you’ve lost focus as a leader, you’re going to have a very hard time communicating your vision and intent to other people. Don’t fall into the trap of thinking that your team will automatically know what you’re talking about or know what you want without being told.

 

Leadership Trap: thinking your team automatically knows what you are talking about.

 

You’re Afraid of Failure

A good leader is driven by a desire to succeed, but sometimes, doubt and uncertainty creep in, and that desire for success turns into a fear of failure. Past success starts to feel less like achievement and more like pressure, and for some leaders that translates into a fear of taking reasonable risks and a fear of innovating.

Are you still comfortable with risk? Good leaders aren’t reckless, but equally so, they’re not afraid of taking on a reasonable level of risk.

 

Leadership Question: Are you taking the appropriate amount of risk?

 

Your Personal Integrity is Slipping

Why the Best Innovators Are Unreasonable

The World’s Most Creative

  • What does it take to make it into the history books as one of the world’s greatest innovators?
  • Do creative geniuses have any unique characteristics?

Rowan Gibson, one of the world’s foremost thought leaders on business innovation, previously shared some of his thinking about his new book, The 4 Lenses of Innovation: A Power Tool for Creative Thinking.  Part of what makes his research unique is that he studied innovators throughout history to understand their thinking, their characteristics, and their methodology.  What he shared with me about history’s greatest innovators may influence the way you manage, the way you look at your boss, or the way you look at others we label as stubborn.  Because, as we will see, the best innovators are often the most unreasonable people.

 

Why the Best Innovators Are Unreasonable

Rowan, throughout your new book, you give examples ranging from da Vinci to Richard Branson. By studying these innovators, you developed a unique perspective. What does one need to possess or do to get mentioned in the history books?

I think those that make it into the history books are to some extent unreasonable people. George Bernard Shaw put it best when he argued that, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man.” Innovators like the ones I just mentioned – Steve Jobs, Jeff Bezos, Elon Musk –these are not reasonable people. They don’t just accept that the world is the way it is. They have this deep, insatiable urge to improve it or radically change it to fit their own vision of how things should be.

 

“You can’t harvest big ideas unless you sow the right seeds.” -Rowan Gibson

 

Unreasonable Innovator: Leonardo da Vinci

Take da Vinci. Was he a reasonable person? Here’s a man who filled 13,000 pages of notebooks with scribbles, drawings, scientific diagrams, and designs—everything from human anatomy and facial expressions to animals, birds, plants, rocks, water, chemistry, optics, painting, astronomy, architecture, and engineering. He once coated the wings of a fly with honey just to see if it would change the sound of the fly’s buzzing noise in flight. Why would anyone do that? Da Vinci did it to establish that the pitch of a musical note is connected with the speed of the percussive movement of the air. In this case the fly’s wings became heavier due to the honey, so they couldn’t beat as fast, resulting in a lower-pitched buzzing sound–which of course might be interesting at some level, but reasonable people don’t do things like that.

 

Unreasonable Innovator: Richard Branson

Let’s say you opened a little record store in London, UK. That’s nothing out of the ordinary. But would you call it “Virgin”? And would you then create your own record label and start backing unknown musicians like Mike Oldfield or controversial bands like the Sex Pistols? Would you try to grow your one little record store into a national chain of media hypermarkets? I mean, if you did all of that, it would be quite remarkable. But would you then decide to start your own transatlantic airline and go up against British Airways on their own turf? Would you try to build your own mobile phone business from scratch and then your own bank or take a big risk by investing in a space tourism company? These are not reasonable things to do. So clearly Richard Branson is not a reasonable man.

 

Unreasonable Innovator: Elon Musk