How do your values affect your personnel policies?
Three leadership practices that help leaders keep people and performance in balance
Dan Price, CEO of Gravity Payments, made headlines in 2015 for declaring an annual minimum wage of $70,000 for all of his company’s 120 employees. After it was fully implemented, the average employee’s salary jumped about 50% making it possible for many to move closer to the office and reduce their commute times (an estimated 1,600 hours on the road were saved in that first year), start families, and invest for retirement. Not surprisingly, turnover went down, while employee happiness went way up.
What about the company’s performance the next year? In the four metrics that mattered most, client attrition dropped to all-time lows, new accounts were up by much as 105% in some months, and the dollar volume of transactions processed increased by 25%. Profit, the most important metric, was up 85%.
In hindsight, Dan Price looks like a genius. But to make the minimum wage possible, Dan took a 94% pay cut. Put another way, he made a decision to take a million dollars out of his pocket and place it in the paychecks of his employees. About now, skeptics might be thinking that the potential payoff for the CEO made this a smart bet. However, when asked why he instituted the $70K minimum wage for his employees, Dan Price offered a different response: It was the right thing to do for his people.
Leaders are influenced by their core values—what’s right and wrong, and what’s most important in life--but relatively few have had to put their paychecks on the line to live out those values. It raises a series of good questions though. Does what I believe about the way we should treat people align with or collide with the way we pursue our mission?
These questions are easier to debate in hypothetical form in grad school classrooms than on shop floors or in conference rooms where there are real ramifications. But the questions must be answered, nonetheless. The reality is that leaders often face a dilemma: Do I focus on driving results, or do I take care of my people?
Fortunately, it’s possible to do both. Doing so, however, relies on the right mindset and skill set. The right mindset is one that embraces a balance between people and performance. When coupled with the right leadership practices, the best of both is achievable.
Here are three leadership practices that can help you link people and performance:
Clarity. Ensuring that everyone is clear on the mission—what you’re there to accomplish—is a critical first step when organizing for any task. It’s equally important to be clear about what is and isn’t acceptable when it comes to how people are treated. In one of Abraham Lincoln’s most famous speeches, he proclaimed that a “house divided against itself will not stand,” thus taking a clear stand on the hot button issue of his day and explaining the consequences of continued disunity. Now, of course, we applaud Lincoln’s moral courage and clear vision; however, his bold move came at a cost. His opponent, Stephen A. Douglas, used Lincoln’s clear position against him to win the Senate election of 1858.
Your clear stand will have implications as well. When Dan Price put his money where his mouth was when it came to paying a fair wage to his employees, everyone knew where he stood. Does your team know where you stand on matters of importance? Does each person know how they fit into the big picture? Have you been clear on what’s acceptable and not acceptable in terms of how people are treated? If not, it’s time to embrace clarity.
Communication. Active communication, delivered in a way that resonates with the recipient, is perhaps the best evidence that the relationship is important. The way we communicate also reveals our values and the impact we want to have on the people around us. Mark Twain said it this way: “A man’s character might be gained from the descriptive words which he constantly utilizes in discussion.” What do your words say about who you are?
Compassion. Let’s face it. Life has been tough over the last couple of years for many people. Whether physical, financial, or psychological, just about everyone was beaten down to some extent during the pandemic. It’s incumbent upon leaders to meet people where they are and give them what they need if it’s within our power. And speaking of power, expressing compassion toward others is a sign of strength rather than weakness.
The good news is that most leaders don’t need to empty their wallets to create a mission first, people culture. You have the opportunity to live out your values in your daily interactions, and the last time I checked, a kind word or sincere question are still free of charge. Yet, the impact may inspire a new level of commitment to your organization’s mission.
Dr Mike Patterson is the author of Mission First, People Always: The Definitive Guide to Balancing People and Performance. He also teaches in the doctoral programs at California Baptist University and Pepperdine University’s Graduate School of Education and Psychology.