Managing Cultural Leadership
How the CEO makes decisions makes all the difference.

I was recently a member of a discussion group of 8 CEOs. One member, Alan, CEO of an eighteen months old startup, described his problem. "Our product is selling well but I'm not sure that our technology can handle future growth and large clients. I'm not a technology expert myself and I don't know if our Vice President of technology is capable of scaling up our product to meet future demand."

Several group members suggested he hire an outside expert, perhaps a semi-retired senior technology manager from a large corporation, to assess whether Alan's VP of technology had the needed skills. Another commented that, because Alan was about to bring in venture capital, that the venture capitalists would probably replace Alan and the VP of technology with their own trusted people. Alan said that the VP of technology was a friend of his, "We run together every week." Several people thought it was bad to mix friendship and business.

My own feedback to him was that it is not a good idea for leaders to keep their problems to themselves. Ideally leaders should share their problems—and a lot more—with their team. Sharing builds teamwork, openness and trust. In this case he might share his concerns with the leadership team, get people's thoughts and ideas, and ask the VP of technology to himself assess whether he had the needed skills, and if not, what he might plan to do about that. Alan could tell his VP to use outside experts to help with the assessment. Setting a short timeline would determine the scale of the effort and signal its immediacy.

After the meeting I thought about Alan's struggle. He is a young CEO. He has hired a friend who has developed the technology but may not currently be capable of scaling it up. But people are not a limited asset. They can rise to an occasion, develop new skills, and if inspired, can develop amazingly creative solutions. Alan is bringing in venture capital that will change his role from what is effectively a sole proprietorship. He will become an appointed CEO, or perhaps be an outsider. His relationship with the company may be long or short. Alan's situation is uncertain and volatile.

What guidelines could Alan follow in his decision? When it comes to people and culture, the first guiding principle is the Golden Rule, "We should treat others as we would like to be treated." If Alan put himself in the VP's shoes, how would he like to be treated? There is a subset of the Golden Rule, which I recommend to every manager; it is, "If people are affected by a decision, they should be involved in it in some way." It managers followed this principle they would quickly build powerful and productive workplaces.

As CEO, Alan's decisions set the tone for the company culture. If Alan wants an involving, engaged, motivating culture that attracts top performers, he can achieve that by making decisions in ways that involve, engage, and motivate. Bringing in an outsider to assess the vice president's skills, and retaining or firing the vice president on the basis of the report, gives everyone a strong—and undesirable—cultural message about "how we do things here."

Culturally speaking it is not so much what is done but how it is done that makes a difference. Alan certainly needs an assessment of the vice president's capacities. How he does that sets the cultural tone. More than any single decision, it is the fledgling company's culture that will determine its future success.

Statistics-the Economic Benefits of Employee Engagement

This month's Statistics again come from the Gallup Company that has for decades collected data from the public and from hundreds of companies. These particular numbers highlight the economic benefits of Employee Engagement.

For more than 15 years, The Gallup Organization has worked with one of the largest for-profit hospital networks in the United States. During this time:

• More than 26,000 client employees have moved from being "not engaged" or "actively disengaged" to being engaged, or emotionally invested, in their jobs resulted in a savings of more than $46 million in reduced absenteeism costs.
• Hospitals with the lowest levels of employee engagement incurred an average of $1,120,000 more in malpractice claims per year than did hospitals with the highest employee engagement. Under-performing hospitals cost the client more than $52 million in additional malpractice claims per year.
• Hospitals that significantly improved employee engagement exceeded the corporate average of earnings per admission by $172.
• Hospitals that did not improve employee engagement were $161 per admission below average.
• Hospitals that significantly improved their employee engagement boosted their bottom line by more than $48 million system-wide.
• Over three years focusing on employee engagement, improved hiring, and leadership development, this hospital experienced a 15% drop in nurse turnover.