Still reflecting on yesterday’s engaging conversation with Christian Hunt who invited me to record an episode of his Human Risk Podcast The Human Risk Podcast. We discussed how leaders should deal with the fact that people and their behavior are the key to an organization’s success but are also a risk factor to a its integrity and reputation. It is the ingenuity of people that lead to an organizations’ success and it’s sloppiness, dishonesty, or greed of one employee to bring disaster over an otherwise healthy firm.
For leaders this creates a dilemma. Stanford professor Jamil Zaki gave an illustrative example of it in a recent HBR podcast. He described the story of a new Boston Fire Chief who was appointed in 2001. When looking at his department he realized that his fire fighters took a disproportionate number of sick days on Fridays and Mondays. He concluded that his fire fighters were exploiting the department’s generosity. So, he introduced a limit of 15 sick days max. per year. Where employees would go beyond that number without a doctor’s note their pay would be severely cut. This move had unintended consequences. In the year after the introduction of the policy the number of sick days across the department more than doubled, from 6’000 the year before to 13’000! The fire fighters were given the message that they were not trusted – and they retaliated.
People are greatly affected by the way we treat them. If leaders go in with the cynical assumption that their people are selfish, greedy, and dishonest by nature, this has toxic effects on the culture and performance of a company. It leads to disengagement and stifles productivity. However, we also know that people do bad stuff and boards and regulators make sure that leaders can’t be naïve and look in the other direction.
So, what should leaders do? They should apply a fundamentally positive leadership approach which assumes that most people want to give their best and will return trust with trustworthiness. Research shows that this works and is the key to an engaged, creative, and diligent workforce in a healthy and productive organization. However, positive leadership also needs to stay rooted in reality. While cynicism is destructive, a healthy level of skepticism protects organizations from the risks that come with blind trust. Human beings are not perfect and there will always be those who breach the rules. To catch the few, however, is much easier in a trusting culture. Trust creates psychological safety for every person in a team. Safety enables people to speak up when someone takes the wrong turn and policies and rules are being breached.
Leaders have no choice than to make the leap of faith even if sometimes they get disappointed. Positive leadership trumps cynicism.