On many occasions leaders have to make difficult or unpopular decisions to keep the business up and running and they are often enticed to not share the truth with their employees or partners or divert their attention in order to act undisturbed. Often the thought is to share the results of their actions in the right moment while avoiding the unpleasant debate about what should be done. Sometimes things go as far as the leader believing that they are the only qualified person, thus discussion is a sheer waste of time and nerves.
No matter what the case though, my advice is to not fall into that trap. Years ago I had the opportunity to observe exactly what happens when a leader decides to act independently and the truth is that it cost him everything.
Reasons in that particular case were lack of trust, many definitive stakeholders (Agle, Mitchell, Wood, 1997), variety of policy issues and political challenges, insufficient financing, internal fights and conflicts of interests. Many of those were caused by tough policy, lack of transparency and consensus, no discussion or stakeholder involvement. It is arguable whether many of those issues were not just inherited but there is no doubt that the policy of independent control and silence only deepened them.
The result was that a leader who did fight a good cause and tried to make a difference ended up voted out from the organization by the majority of those who he had worked with side by side in the previous 8 years.
I have to point out that I do not claim he never did anything wrong policy-wise. However, considering the context of the social and business environment, he did not do anything outrageous. He did create enemies by following dedicatedly his strategy but in doing so he achieved a lot in terms of organizational goals.
Then why did his allies vote him so rigorously out of the organization?
First reason: No consensus on policy.
Even though the organization was meant to be lead by a management council most decisions were made by the leader alone. Many of the interests of those from the council were never taken into account which resulted in much expected outrage.
Second reason: Conflict of interests.
The social, business and political environment presented the leader with many challenges. First, it was the challenge of defending the interests of the organization and in doing so creating enemies both in the government and within the ranks of the organization itself when he would fail in negotiations. Second, unfortunately, influence meant privileges and high earnings, thus virtually everyone was trying to become a leader, regardless of the consequences for the organization and those dependent on it. As a result many managerial decisions were ruled out just in an effort to sabotage the leader.
Third reason: no regard to rules and regulations.
In order to achieve his goals the leader disregarded rules in connection to elections and power distribution. This resulted in outrage.
Fourth reason: no transparency.
Transparency is important as clarity about what is happening and why is a potent support drive. Not understanding or not knowing the reasons/goals/methods resulted in confusion, doubt and lack of support. In a more traditional organizational environment it would also lead to lack of motivation in employees.
Reflecting on this example a few things become obvious. A leader should accept that they cannot achieve their goals alone. They need support from employees, partners, allies, government and other key stakeholders. In this sense, an organizational understanding will mean understanding the need to engage key stakeholders in a productive dialogue. By that I mean that you must:
1. Understand the structure of the organization and the power distribution.
2. Understand the need to follow rules or propose changes when inefficiency is found.
3. Identify opinion leaders and make them your allies.
4. Understand the environment you do business in – institutions, regulations, competitors, partners, communities, identify important stakeholders.
5. Understand processes of decision making and analyze results from past experience. Consider process enhancement.
6. Understand the need of stakeholder management as a complete strategy.
Along this process you should realize that transparency is directly connected to stakeholder support and corporate image. You cannot upkeep a good image without reporting your activities and you cannot successfully manage an organization without achieving consensus on strategy. Therefore two more must-dos should be added to the list above and special attention should be paid to them:
7. Optimize internal and external communication channels enabling discussion, feedback and reaction to reported issues.
8. Maximize transparency.
Business today cannot really have secrets as there are too many ways for the truth to reach the public. Therefore it is advised to provide informational access to your activities. As a matter of fact transparency is becoming a currency in terms of both image building and image protection. Being honest with your stakeholders builds trust and support which result in sticking with the company even when a crisis hits (see for example the Johnson and Johnson Tylenol case).
What concerns internal stakeholders, it is very important to keep them informed and to involve them in decision making. Transparency and consensus are probably even more important internally as the support or lack of support by your employees and partners means the success or the failure of the organization. A frustrated employee can do incredibly a lot of damage by not doing their job, affecting the motivation of their colleagues, going public or spreading the company’s secrets.
In two words, there are good reasons to work transparently, maybe consider different forms of reporting and stakeholder involvement, and to work on achieving consensus within the organization on organizational goals and policy, all the while keeping in mind stakeholder interests.
No matter what the case though, my advice is to not fall into that trap. Years ago I had the opportunity to observe exactly what happens when a leader decides to act independently and the truth is that it cost him everything.
Reasons in that particular case were lack of trust, many definitive stakeholders (Agle, Mitchell, Wood, 1997), variety of policy issues and political challenges, insufficient financing, internal fights and conflicts of interests. Many of those were caused by tough policy, lack of transparency and consensus, no discussion or stakeholder involvement. It is arguable whether many of those issues were not just inherited but there is no doubt that the policy of independent control and silence only deepened them.
The result was that a leader who did fight a good cause and tried to make a difference ended up voted out from the organization by the majority of those who he had worked with side by side in the previous 8 years.
I have to point out that I do not claim he never did anything wrong policy-wise. However, considering the context of the social and business environment, he did not do anything outrageous. He did create enemies by following dedicatedly his strategy but in doing so he achieved a lot in terms of organizational goals.
Then why did his allies vote him so rigorously out of the organization?
First reason: No consensus on policy.
Even though the organization was meant to be lead by a management council most decisions were made by the leader alone. Many of the interests of those from the council were never taken into account which resulted in much expected outrage.
Second reason: Conflict of interests.
The social, business and political environment presented the leader with many challenges. First, it was the challenge of defending the interests of the organization and in doing so creating enemies both in the government and within the ranks of the organization itself when he would fail in negotiations. Second, unfortunately, influence meant privileges and high earnings, thus virtually everyone was trying to become a leader, regardless of the consequences for the organization and those dependent on it. As a result many managerial decisions were ruled out just in an effort to sabotage the leader.
Third reason: no regard to rules and regulations.
In order to achieve his goals the leader disregarded rules in connection to elections and power distribution. This resulted in outrage.
Fourth reason: no transparency.
Transparency is important as clarity about what is happening and why is a potent support drive. Not understanding or not knowing the reasons/goals/methods resulted in confusion, doubt and lack of support. In a more traditional organizational environment it would also lead to lack of motivation in employees.
Reflecting on this example a few things become obvious. A leader should accept that they cannot achieve their goals alone. They need support from employees, partners, allies, government and other key stakeholders. In this sense, an organizational understanding will mean understanding the need to engage key stakeholders in a productive dialogue. By that I mean that you must:
1. Understand the structure of the organization and the power distribution.
2. Understand the need to follow rules or propose changes when inefficiency is found.
3. Identify opinion leaders and make them your allies.
4. Understand the environment you do business in – institutions, regulations, competitors, partners, communities, identify important stakeholders.
5. Understand processes of decision making and analyze results from past experience. Consider process enhancement.
6. Understand the need of stakeholder management as a complete strategy.
Along this process you should realize that transparency is directly connected to stakeholder support and corporate image. You cannot upkeep a good image without reporting your activities and you cannot successfully manage an organization without achieving consensus on strategy. Therefore two more must-dos should be added to the list above and special attention should be paid to them:
7. Optimize internal and external communication channels enabling discussion, feedback and reaction to reported issues.
8. Maximize transparency.
Business today cannot really have secrets as there are too many ways for the truth to reach the public. Therefore it is advised to provide informational access to your activities. As a matter of fact transparency is becoming a currency in terms of both image building and image protection. Being honest with your stakeholders builds trust and support which result in sticking with the company even when a crisis hits (see for example the Johnson and Johnson Tylenol case).
What concerns internal stakeholders, it is very important to keep them informed and to involve them in decision making. Transparency and consensus are probably even more important internally as the support or lack of support by your employees and partners means the success or the failure of the organization. A frustrated employee can do incredibly a lot of damage by not doing their job, affecting the motivation of their colleagues, going public or spreading the company’s secrets.
In two words, there are good reasons to work transparently, maybe consider different forms of reporting and stakeholder involvement, and to work on achieving consensus within the organization on organizational goals and policy, all the while keeping in mind stakeholder interests.
DIDI
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