Everywhere I travel, I hear the same refrains: "We need more regulation," or on the flip side, "If we hadn't deregulated, we wouldn't be in this financial mess."
It looks like the White House is of this mind-set. Citing Wall Street for helping to create a "culture of irresponsibility," President Obama wants to impose more rules on the financial industry by, among other things, creating a Consumer Financial Protection Agency.
More regulation, and in particular a Consumer Financial Protection Agency, could be a very good thing, but I would suggest we don't rush to regulation without careful consideration of two key questions:
What is the source of the regulation? Is regulation being imposed on people from the outside or is it coming from within?
Is the mechanism another list of "dos and don'ts" or is it something deeper, something that inspires consistent and right behavior?
We all know that Thomas Jefferson once said, "That government is best which governs the least," and this quote is often used to support the argument for less regulation. But what many don't know is that Jefferson went on to say: "... because its people discipline themselves."
In this way, Jefferson isn't making an argument against regulation but rather putting forth an argument for the most effective source of regulation: self-regulation.
Theodore Roosevelt echoed Jefferson's sentiments when he said: "Men can't escape from being governed. They either must govern themselves or they must submit to being governed by others. If from lawlessness or fickleness, from folly or self-indulgence, they refuse to govern themselves, then most assuredly in the end they will have to be governed by the outside."
So as we, in 2009, work to overcome our "culture of irresponsibility," we need to embrace self-regulation and discipline and understand and embrace the most effective mechanism for it, which is values.
Don't get me wrong; I'm all for regulation. People need limits and boundaries. Thoughtful regulation can make financial transactions more transparent so consumers better understand the risks they're taking. But the more important questions we need to ask are:
Will regulation fix our culture of irresponsibility?
Can external rules prevent another financial Katrina?
Or does the culture itself — how we behave — need to change?
I would argue that our culture needs to change. And it can change only if it is driven by something more compelling than rules.
While I understand why we need rules, I also know that we need to understand what rules can do and what they can't. For example, I live in Los Angeles, and I am grateful that rules, based on solid science, have been implemented to govern the construction of buildings to make them earthquake-resistant. We need rules that prohibit sales of new drugs before they are approved by the U.S. Food & Drug Administration. Regulations can also promote transparency, as do laws that require publicly held companies to disclose their earnings, governance structure and executive pay.
But rules are less successful when they seek to govern human conduct and behavior. Rules ultimately fail because you cannot write a rule to control every possible behavior or cover every possible circumstance. It is very difficult to regulate deception, for instance. A rules-based law will do little to deter someone who wishes to be deceptive in their mortgage application. By setting floors for behavior, rules unintentionally also set ceilings.
This is a problem inside business as well as government. Let's agree that companies want to do the right thing. But they need and want to do more. They want to engage their people. They want to innovate. They want to encourage creativity and prudent risk-taking. To accomplish those goals, employees must be inspired. Rules and regulations do not inspire. To the contrary, too many rules and regulations limit behavior. They diminish autonomy and risk-taking. They suggest that people can't be trusted. Rules can be dangerous because they dictate what you can and cannot do and not what you should or should not do.
Rules are fundamentally coercive. If you misbehave, you'll be in trouble. Traditionally, business leaders have used a mix of motivation and coercion — carrots and sticks, if you will — to induce people to perform and to get them to abide by rules. Today, we are discovering the limits of carrots and sticks. We're learning that we can't write enough rules to get the behaviors we want. Nor can we deliver enough motivation.
All Rules Have Loopholes
If my carrot is a paycheck, I will leave the company for a bigger salary. If I chose to buy from a company based on price, my loyalty ends at the bottom line. Motivation turns out to be an expensive way to compel behavior, particularly in a recession when there are fewer carrots to go around.
Let's take the example of an Alaskan postal clerk who chose to express his individuality by wearing ties to work decorated with The Three Stooges and cartoon characters. His bosses were not amused and told the clerk to follow the rules regarding permissible neckwear. Now he wears suspenders that feature the caricature Taz, the Tasmanian Devil. Is this the outcome the bosses wanted? Of course not. But in focusing on the specific language of the dress code rather than the intent behind it, management has boxed itself into a situation where it really can't complain about the postal clerk's cartoon-character suspenders. Technically, the postal clerk is following the rules.
Or how about the Wisconsin law that uses taxpayer money to support a child-care-assistance program? The program pays for in-home child care, so the parents can work. But four sisters in Racine figured out they could stay home, watch each other's kids and be paid for it. They netted over $500,000 in taxpayer funds in less than three years. Legal? Yes. What the Wisconsin lawmakers had in mind? Of course not.
Rules create loopholes — values do not. If those in leadership roles want to shape behavior, they must pay more attention to instilling values. They are the underpinning of belief, and that's what inspires people and gives them a sense of mission and purpose. Only beliefs and the values that underpin them can be shared. Values perform a kind of double duty by acting as both a source and a mechanism for regulation.
If we go bowling, we can put a guard rail on the lane so that you don't throw gutter balls. But there is no mechanism to help you bowl a strike — either in life or in business. How do you throw strikes? By inviting people to buy into shared beliefs and values so that they are inspired — not coerced or motivated — to act responsibly. That's the way to avoid engendering a culture of irresponsibility.
Regulation can only go so far. Let's not try to regulate our way out of a financial meltdown. We must find the values and behaviors that will sustain innovation and ethical action. How you do things can never be based solely on rules.
Inspiration is the most sustainable and effective method of engendering principled performance. In response to those who say values are too "soft" to be reliable sources of inspiration, we need to make them "hard" by turning values into practices and behaviors.
Let's walk away from the mind-set that dictates "too big to fail" as a reason to act. Let's find a way to demonstrate that size doesn't matter, values do. Let's create a culture of responsibility by inspiring responsible behavior.
If we don't, we may find ourselves in trouble again.
Dov Seidman is the founder, chairman and chief executive officer of LRN, a company that helps businesses develop ethical corporate cultures and inspire principled performance, and the author of "HOW: Why HOW We Do Anything Means Everything...in Business (and in Life)." LRN has announced the acquisition of leading green strategy firm GreenOrder.
*This column appeared in, and was written for, BusinessWeek.com.
The owner of a McDonald's franchise made news recently by opening an eco-friendly restaurant in Cary, N.C. It has energy-efficient refrigerators, low-flow toilets, tables made from sunflower seeds and even recharging stations for electric cars.
This McDonald's is surely going green. But that doesn't make it sustainable.
To many people, sustainability means solar panels, wind turbines, and LEED-certified buildings. And that means that too often, sustainability is parked over by the recycling bins and isn't core to the work. But sustainability is more than just going green or being green. It is, fundamentally, a mindset. It's a way of thinking about business — a mode of leadership and behavior that aims to create lasting value as opposed to piling up short-term transactional wins. It's not as much about wind turbines or solar panels or green buildings as it is about the reason we want those things: so that our companies and our world will be better off tomorrow than they are today.
We need to reframe and reclaim sustainability to take the term beyond "green" and make it relevant to the work businesspeople do every day. We need to recognize that sustainability is a powerful way to forge deeper connections with employees and customers.
Making these deeper connections with stakeholders is more important than ever. Let me offer a brief look backward to explain why. Throughout most of human history, sources of power were finite. In the land-based economy of the middle ages, the more land people owned, the more rent they could charge. In the capital-based economy spawned by the industrial age, the more capital people had, the more interest they could charge. Money talked. So did oil and minerals.
Goodbye, Command-and-Control Management
In these zero-sum economies, people accumulated and hoarded the sources of power in order to impose their will upon those who had less. And hierarchical leadership habits arose — such as command-and-control — that worked well enough for a time.
No more. In today's knowledge economy, the sources of power — information and ideas — are infinite. Since we can't hoard information, leadership habits forged under the old rules are less effective. Just as important, people want more than a paycheck from their jobs — they want to feel that they're working with others to accomplish something important that they could not accomplish alone. So we are shifting from "command-and-control" to "connect-and-collaborate," from exerting power over people to generating power through them.
There are some companies that have been around a long time that understand what it means to be sustainable in every sense. DuPont (founded in 1802), Procter & Gamble and General Electric are all big companies, but their size is not what has kept them going. All have become environmental leaders in recent years, but that's not the key to their success, either. They are sustained by their values and culture, by how they do what they do.
Finding Meaningful Sources of Connection
Which brings us back to McDonald's. Like many other large companies, McDonald's now takes an expansive view of sustainability rather than a narrow one. On signs outside its restaurants, McDonald's used to brag that it had served billions of people billions of burgers. In the closed, fortress world, they said: "Look at us — we're big, so we must be successful." In today's more connected and transparent world, McDonald's is finding deeper and more meaningful sources of connection.
Some franchise owners may still post signs about "billions" served, but the company has stopped counting and instead is more likely to talk about values, its workplace, health and philanthropy. Now, McDonald's tells its employees: Perhaps the single most important thing to consider in a McDonald's career is the role you play in the community.
Protecting the environment is a big part of that community role. McDonald's minimizes the weight of its packaging and maximizes the use of recycled materials. It won't buy beef from rainforest areas. It encourages its suppliers to follow best environmental practices. It's transparent about its activities and engages with outsiders on a company blog devoted to social responsibility called "Values in Practice."
The New Pardigm: Connect and Collaborate
Those values go well beyond being green. McDonald's has responded to America's obesity epidemic by offering healthier choices on its menu, being transparent about its ingredients and even encouraging customers to get more active. The company is trying to connect on values across the board and not just in a "siloed" approach. It provides training and promotional opportunities for entry-level workers. And like many companies, it gives back to communities, notably through the long-running Ronald McDonald House Charities.
In these tough times, values matter more than ever, and coercion and motivation are becoming less effective and less relevant leadership modes. Leaders can't coerce their people and expect to be sustainable in today's work. And they can't use money to motivate them, either -- there's not enough money to throw around. Instead, leaders who aim for maximum impact must inspire their people to connect, collaborate, behave and perform. And in case you're wondering, I have no commercial relationship with McDonald's. However, I do see McDonald's as an example of a company that is not compartmentalizing its values and is working hard to live them.
Ric Richards, the franchise owner of that eco-McDonald's in North Carolina, gets it. Sure, he's doing the green thing — but it's what's behind those efforts that matters. At the restaurant's grand opening, which was attended by other franchise owners, staff, friends, family, the city's mayor and, yes, Ronald McDonald himself, Richards declared: "Passion is what built this restaurant." And a passion for making the world better is what makes companies truly sustainable.
Dov Seidman is the founder, chairman and chief executive officer of LRN, a company that helps businesses develop ethical corporate cultures and inspire principled performance, and the author of "HOW: Why HOW We Do Anything Means Everything...in Business (and in Life)." LRN recently announced the acquisition of leading green strategy firm GreenOrder.
*This column appeared in, and was written for, BusinessWeek.com.
Everyone is asking the same questions: Have we hit bottom yet? When will the recession end? When will things go back to the way they were?
As a chief executive, I'm as eager as anyone to put the recession into the past. A growing economy benefits everyone. More importantly, there has been a lot of loss--not just economic loss but human loss, hardship, pain and adversity, affecting all of our lives and all around us. This pain should be acknowledged, and whatever can be done to alleviate it should be done. At the same time, how could we not take this opportunity to ask some fundamental and existential questions?
But now that there are signs of recovery, there's a part of me--and I'm reluctant to admit this--that doesn't want things to get too good too fast. I think we could use some more time to understand what went wrong with our economy.
That's because I'm not sure we've fully absorbed the lessons from this difficult, painful, and troubling time.
Saving for the Future
To be sure, we've learned some things. We've begun to save for the future instead of spending money we don't have. We're more wary, as we should be, of people selling us investment products that sound too good to be true. And we've learned that no company is too big to fail. Size alone does not guarantee long-term survival. To the contrary, the aggressive pursuit of scale--whether it's more revenues, profits, customers, or stores, or a bigger market capitalization--tempts companies to lose sight of the values and principles that lead to true sustainability.
If we return to business as usual too quickly, we will miss the opportunity to create the new habits of thought and behavior that we need to build sustainable economic growth.
One place to start is by restoring Wall Street to its proper role in society, which is to serve investors, entrepreneurs, and companies. For the past couple of decades, America's best and brightest college graduates and MBAs flocked to Wall Street. And they did so for a simple reason: They could get rich quickly.
As Simon Johnson, a professor at Massachusetts Institute of Technology's Sloan School of Management, reported in The Atlantic, between 1948 and 1982, average compensation in the financial sector ranged between 99 percent and 108 percent of the average for all domestic private industries. On average, Wall Street bankers made just a little more than executives elsewhere. Compensation in financial services began to climb in the mid-1980s, and in 2007, it topped out at 181 percent of pay elsewhere.
Financial Balloon
Wall Street's profits grew rapidly, too. During the market slump of the 1970s and early '80s, the financial sector never accounted for more than 16 percent of domestic corporate profits. By the 1990s, banks and insurance companies were capturing between 21 percent and 30 percent of U.S. corporate profits. During the 2000s, the figure topped 40 percent.
By then, the investment banks were focused on "innovation" and "financial products," including the structured finance products, collateralized debt obligations, and credit default swaps we've heard so much about. While some of these creations were well intentioned--mortgage debt was pooled, in theory, to reduce risk and enable more people to buy their own homes--much of it was overly complicated and intended to enrich the bankers at the expense of their clients.
In the rush to create new financial "products," banks lost sight of their core mission. In truth, their role is to safeguard the financial resources of their customers and to help allocate capital to productive uses in society. In the future, bankers should worry less about their own "innovation" and more about supporting the real innovations of entrepreneurs and others who create tangible value. Wall Street is supposed to be in the financial services business--that is, the business of serving others.
A society that has too much of its energy, smarts, and capital flowing to Wall Street is, by definition, underinvesting in the rest of the economy.
In the future, let's focus on the traditional strengths of the American economy. Here are three things we do well:
1. We produce trust better than other societies.
The U.S. economy has prospered because we respect the rule of law, contracts, intellectual property, and transparency. That's why it's so painful when trust is betrayed. By rebuilding trust, America will attract the capital and the people we need to thrive. Banks will again lend, investors will embrace risks and entrepreneurs will dream big--but only after trust is restored.
2. We solve problems by deploying the forces of capitalism.
While government policy is important, businesses built the railroads, created the automobile industry, enabled global communications, and generated the growth in personal wealth that, even now, after the housing bust, allows about 67 percent of Americans to own their homes. We need our best and brightest today to devote themselves to our big problems: the environment, health care, and education. Business can help lead the way. Many companies already are--look at Wal-Mart's commitment to sustainability or GE's new effort to help deal with the cost and availability of health care.
3. We create real value from values.
We do our best when, instead of pursuing short-term success, we are inspired by values. Most great businesses are driven by values. By that, I mean that they are other-directed; they focus on the needs and wants of their customers, workers, and communities. Just as important, they go about their business in a principled, consistent and transparent way. Examples abound: Google with its drive to organize all of the world's information, Walt Disney with its desire to entertain families, UPS with its goal of enabling global commerce to thrive.
These are among the big ideas that we can take away from the global economic meltdown. They're about more than spending, saving, borrowing, regulating, or reading the fine print in an investment prospectus. Business leaders need to have a thoughtful conversation about these ideas--and that will take time. Let's get started now.
Dov Seidman is the founder, chairman and chief executive officer of LRN, a company that helps businesses develop ethical corporate cultures and inspire principled performance, and the author of "HOW: Why HOW We Do Anything Means Everything...in Business (and in Life)." LRN recently announced the acquisition of leading green strategy firm, GreenOrder.
Years ago, I heard about an unusual doughnut vendor in New York City. During the morning rush, instead of calculating the correct change for every customer, he put a pile of coins on the counter of his pushcart and asked people to pay what they owed, and make change for themselves. That did two things: It enabled him to serve more doughnuts in less time and it told his customers that he trusted them to be honest. The customers, in turn, repaid that trust with their loyalty. This donut vendor found a way to "outbehave" his competitors by using trust to forge a deeper connection with his customers. I wrote about the doughnut man in my book, "HOW: Why HOW We Do Anything Means Everything...in Business (and in Life)," and thought about him again recently when I saw this headline over a feature story in The New York Times: "Making Honesty a Policy in Indonesia Cafes".
The Times reported that Indonesia, a nation plagued by dishonest politicians, is "pressing ahead in its long-running anti-corruption drive by opening up cashier-free "honesty cafes" across the archipelago."
"By shifting the responsibility of paying correctly to the patrons themselves, the cafes are meant to force people to think constantly about whether they are being honest and, presumably, make them feel guilty if they are not," the newspaper said. A dozen honesty cafes opened last month on the island of Borneo, and the government plans to have 1,000 opened by 2010.
More than 1,000 doughnut guys in Indonesia!
Companies have a lot to learn from the doughnut guy and the honesty cafes. One of the problems in business today is a lack of trust. At its core, that's what the credit crunch is all about. Lenders don't trust borrowers to pay them back. Even after the so-called "stress tests," regulators and investors don't fully trust that the banking system has recovered from last fall's financial crisis.
And Indonesia is not the only country — it was ranked 126th out of 180 nations in a recent corruption perception list compiled by Transparency International — or business trying to tackle endemic corruption, but its approach is unique.
What the honesty cafes and doughnut guys tell us is that the best way to rebuild trust is to extend trust to others. Think about a company that wants its employees to be honest when filling out their expense reports or dealing with vendors. One approach is to hire more auditors, but that's costly and not likely to be effective. A better idea is trust to people to do the right thing. Most will respond.
By giving away trust — prudently, of course — companies can build win the loyalty of their customers, as well as their employees. Here are three examples:
Nordstrom has a great reputation for customer service because, among other things, the department store trusts people who bring their purchases back to the store and gives them refunds.
The rock band Radiohead agreed to let fans decide what they wanted to pay for their album "In Rainbows." The band's income from the 2007 release dwarfed all of its previous digital publishing income, according to Warner Chappell U.K.
Google, FORTUNE's "best place to work," allows its engineers to spend one day a week on projects that interest them. Gmail, Google News, Orkut (a social network) and Adsense were all developed by Google workers who were trusted to do the right thing.
If, as an employer, you trust people to do their best, and accept the occasional failure, people will feel empowered to take risks, eager to invent new things and ready to contribute whatever they can.
So trust is not just a way to guard your reputation. It's a spur to innovation.
By extending trust, you've controlled for the downside — and inspired the upside.
Like many of you, I have followed the recent headlines related to Pope Benedict XVI’s call for a “return to ethics in the global economy.” I’ve been seeing this thinking in many arenas — and we cover it regularly on the site HOW Online — and I was meaningfully struck by his desire to see business reconnect with values in these troubled times.
Pope Benedict’s words are powerful:
The Church’s social doctrine holds that authentically human social relationships of friendship, solidarity and reciprocity can also be conducted within economic activity, and not only outside it or “after” it. The economic sphere is neither ethically neutral, nor inherently inhuman and opposed to society. It is part and parcel of human activity and precisely because it is human, it must be structured and governed in an ethical manner.
The pontiff went on to stress the important of ethics in business, writing: “Every economic decision has a moral consequence.” I recently wrote that the financial crisis we’re now experiencing is the result of numerous misguided attempts to disconnect — in our now-connected world — from the fundamental values and principles that propel and guide human endeavor. So long as these principles guide our daily behavior, we are compelled by a deeper purpose and propelled by values we hold fundamental. And living these values pays dividends in the business world by building trust.
Organizations that trust one another set off an upward spiral of cooperative, value-creating behaviors. During the crisis, people regularly tried to outsmart the system instead of out behaving their competitors; they aggressively pursued profits over values and ethical behaviors that lead to more sustainable enterprises.
Pope Benedict echoed this ideal in his letter when he expressed a desire for a new understanding of business that encourages a focus on ethics and social responsibility over financial returns:
Space also needs to be created within the market for economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit, without sacrificing the production of economic value in the process.
Like many of you, I have followed the recent headlines related to Pope Benedict XVI’s call for a “return to ethics in the global economy.” I’ve been seeing this thinking in many arenas, and I was meaningfully struck by his desire to see business reconnect with values in these troubled times.
Pope Benedict’s words are powerful:
The Church’s social doctrine holds that authentically human social relationships of friendship, solidarity and reciprocity can also be conducted within economic activity, and not only outside it or “after” it. The economic sphere is neither ethically neutral, nor inherently inhuman and opposed to society. It is part and parcel of human activity and precisely because it is human, it must be structured and governed in an ethical manner.
The pontiff went on to stress the important of ethics in business, writing: “Every economic decision has a moral consequence.” I recently wrote that the financial crisis we’re now experiencing is the result of numerous misguided attempts to disconnect — in our now-connected world — from the fundamental values and principles that propel and guide human endeavor. So long as these principles guide our daily behavior, we are compelled by a deeper purpose and propelled by values we hold fundamental. And living these values pays dividends in the business world by building trust.
Organizations that trust one another set off an upward spiral of cooperative, value-creating behaviors. During the crisis, people regularly tried to outsmart the system instead of outbehaving their competitors; they aggressively pursued profits over values and ethical behaviors that lead to more sustainable enterprises.
Pope Benedict echoed this ideal in his letter when he expressed a desire for a new understanding of business that encourages a focus on ethics and social responsibility over financial returns:
Space also needs to be created within the market for economic activity carried out by subjects who freely choose to act according to principles other than those of pure profit, without sacrificing the production of economic value in the process.
Lots of attention will be paid this week to the sentencing of Bernard Madoff, and rightfully so. There are no words for his actions. He was epic in his perfidiousness. His behavior was monstrous.
But when we talk as business people about the times we are living in, we do ourselves a disservice if we pay too much attention to the 71-year-old former chairman of the NASDAQ who pulled off one of the largest investors frauds of all time. Sure, Madoff was a creature of Wall Street who lied to his investors, betrayed the trust of his friends and disgraced his family.
But Madoff is not to our times what Enron was to 2001. He is not a symbol of the collapse of Wall Street, the global financial crisis, greed, dishonesty or anything else. He is one-of-a-kind. Thank goodness.
If we pay too much attention, we risk missing the bigger or more important story of how the U.S. wound up in the longest recession since the 1930s. There’s no one company and no one person whose story summarizes the economic crisis we are still struggling to overcome. Our problems are wider, deeper and rooted in a crisis of values that has affected thousands if not millions of people, very few of whom were crooks or thieves.
Consider the chain of poor decisions that led up to the collapse of housing prices across the country. People borrowed money to buy homes, unsure if they could pay it back. Lenders were reckless, pushing money out of the door and inventing products like NINA (no income, no asset) loans. Investment banks packaged the loans into complex financial instruments, the collateralized debt obligations that we’ve heard a lot about. The ratings agencies carelessly certified those mortgage bonds as safe and sound. Global investors chasing high yields bought in. Regulators turned the other way.
Then the house came tumbling down.
During each one of these transactions, people were disconnected from values. They didn’t stop to ask themselves some fundamental questions: Am I doing the right thing? Am I creating sustainable value? Am I behaving in ways that will benefits others, as well as benefit me?
During each of these transactions, people were trying to outsmart the system instead of outbehaving their competitors. They were operating in the shadows, rather that embracing transparency. They were thinking short-term, instead of trying to create sustainable value.
For me, at its essence, this crisis is the result of countless misguided attempts to disconnect – in our now connected world -- from the fundamental values and principles that propel and guide human endeavor.And it is also the result of countless misguided attempts to abstract and obfuscate – in our now transparent world -- responsibilities and obligations that make mutual relationships possible and sustainable.
And these actions are not limited to the housing crisis.There is a deeper and more systemic problem in business – in our habits of thought and behavior.We have falsely linked size and scale with sustainability.Companies for decades have pursued size and scale, equating bigness with success.No longer is a company too big too fail.Size alone does not make something sustainable.To the contrary, the aggressive pursuit of scale – whether it’s more revenues, profits, customers or stores, or a bigger market capitalization – is exactly what tempted some companies to lose sight of the values and principles that lead to true sustainability.
Bernard Madoff will go to jail for many years, and that’s good. (Frankly, I had hoped to see a significant sentence for the man who not only swindled people of their money, but who stole our trust and robbed from the world all the good works that won’t be completed by the many nonprofits he defrauded and destroyed.) But the rest of us still have a lot of work to do. As I’ve said before, sustainability is not about size and scale, but how we do business, and how we do what we do is an untapped source of competitive advantage in business. This economic crisis hit us hard because too many people didn’t get their “Hows” right. Let’s do the hard work now so that we don’t make the same mistake again.
I believe there are three fundamental ways to get people to do things: You can coerce them, you can motivate them or you can inspire them.
Historically, business has used carrots and sticks to get performance OUT of people.Today, we need to become leaders who can INSPIRE performance IN people.
Carrots and sticks are necessary and always will be; however, 21st century leaders also recognize their limits and disadvantages.
Coercion requires an ongoing investment in a bureaucracy of rules, processes and enforcement. Motivation is expensive, particularly in a down market where money does not flow as freely, dollar-based performance targets are more difficult to achieve and bonuses are more difficult to pay out.Plus, motivation cannot be shared and rarely connects individuals to a higher sense of purpose.
We have entered an era of inspiration, where we will see great results from employees who are invested in not just the company’s potential for success but also the company’s underlying mission.Employees do not work just for the pay but also for their ability to achieve something they find inspiring.
Inspirational leadership is also a lot more efficient. The Beth Israel Deaconess Medical Center in Boston announced it will lay off 140 or fewer employees, using a combination of delayed raises, a temporary reduction in benefits and donations from department heads to avoid wider job losses – they are also using inspirational leadership.
“I want to run an idea by you that I think is important, and I'd like to get your reaction to it,"President and CEO of Beth Israel Deaconess Medical Center, Paul Levy, presented to an auditorium full of technicians, secretaries, administrators, therapists, nurses and doctors earlier this month as the hospital was facing budget constraints and layoffs. "I'd like to do what we can to protect the lower-wage earners - the transporters, the housekeepers, the food service people.A lot of these people work really hard, and I don't want to put an additional burden on them.Now, if we protect these workers, it means the rest of us will have to make a bigger sacrifice.It means that others will have to give up more of their salary or benefits.”
The heads of 13 medical departments committed to collectively donate $350,000 to the Boston hospital in an effort to further reduce planned staff layoffs.They are also calling on hundreds of other doctors affiliated with Beth Israel Deaconess to donate money as a way to save colleagues' jobs.
What makes a company sustainable is not when it adds more coercive rules and regulations to control behaviors. It is when its employees are driven by values and principles to do the right things, no matter how difficult the situation. It is a leader’s job to inspire in us those values.
Whereas coercion and motivation happens to you, inspiration happens in you.
Values are at the root of Inspiration.Values are efficient: a handful help us navigate infinite situations better than any rule book. They are timeless: giving us strength to be consistent even though the pressures of life tell us to be situational.They are enduring: inspiring us to be principled however inconvenient, unpopular or dangerous that might be. Values elevate us to act beyond what we can do, to embrace what we should do.
