The 4 Stages of Leverage:
Sometimes if feels like the whole world is against you. Organizations can experience different stages of leadership leverage, each with its own challenges and opportunities. It can be a hard climb, but you can do it!
Lets take a look at the 4 stages you will need to work through to get to the top of the leadership leverage mountain.
The Backwards Leverage Stage, characterized by when the balance of power between the leadership and staff becomes unbalanced and the leadership loses its grip on having meaningful influence on the culture and direction of the organization. This is a difficult position for any organization to be in. Leverage can erode quickly if not taken seriously and assertively.
Leaders can recover their influence and move towards the Responsibility Stage by facing the truth about the root cause of the decline. A lack of leadership is always the cause of decline, and leadership is always the answer to moving to the next stage. The Responsibility Stage is the season of re-establishing fundamental aspects of the business and removing the infections and distractions that led you astray to begin with.
During this stage, it may require some restructuring and re-alignment of trust and direction to get back on track towards positive momentum.
In the Momentum Stage, organizations build a culture of personal responsibility and accountability, leading to empowered teams that attract better-qualified candidates. A culture of leadership and training is also essential at this stage. Finally, in the High Leverage Stage, a high leverage team is solidified through coaching, trust, and transparency, and the organization’s original vision comes to fruition.
While each stage comes with its own set of challenges, with a clear focus on personal and organizational growth, organizations can transition through each stage and achieve success.
Stage #1 – The Backwards Leverage Stage:
The Backwards Leverage Stage is a phenomenon that organizations can experience when they become trapped in a negative pattern of behavior and struggle to achieve positive change. The primary cause of the Backwards Leverage Stage is a lack of leadership within the organization. When leaders fail to address the underlying issues and take action to uphold standards and fail to address compromise, the organization can begin to deteriorate into a negative cycle losing influence little by little.
As Brian Ahearn notes, this can manifest in the organization always “chasing its tail, putting out fires, and seeming to fall short over and over again.”
The Backwards Workplace:
A workplace with backwards leverage can be characterized by a multitude of negative traits, including chaos, uncertainty, and entitlement. Backwards leverage refers to a situation where an employee has the leverage to exert influence over their manager or the company.
Years ago, my company purchased four restaurants in the Des Moines, Iowa area. The previous owner was excellent at marketing but lacked operations and leadership skills. The average hourly wage was over $2 higher in these locations than our current restaurants at the time. This isn’t necessarily an issue providing the talent matches the wages, however I found out quickly that was not the case.
Upon taking over the restaurants, it was apparent that it was in the backwards leverage stage. Back then I didn’t even know such a stage existed. Operational standards were poor, procedures were not adhered to, and the culture was very entitled. The inmates were running the asylum. There was one guy that basically ran all four stores and bounced around putting out fires and desperately working to keep people from quitting. It was a mess, but the staff of each store seemed acclimated to this style of operation. It was a little strange. It’s like they just accepted that this is how the hospitality business is, always.
After the first week or so of spending time with many of my new team members, I began being approached one by one about a raise. A few had mentioned that the previous owner had promised them a raise a while ago and had never received it. They would be looking elsewhere if they did not get their raise. One gal told me she started a few months ago and found out that she is not being paid what they agreed upon. A few others simply put in their 2-week notice. I later found out that they had done this several times prior only to be given a raise to stay. The ironic factor was that none of these people displayed dependable, productive, and trustworthy characteristics that I was accustomed to gladly giving a pay raise.
Most of the employees of these stores were overpaid and underperforming according to the market standards. They knew that the leadership didn’t have control over the company and was in no place to replace them. The truth was that they didn’t have to produce to keep their job. Many had been around a while and called their own shots, comfortably showing up when they wanted and taking the liberty of deciding how each product should be made. I had my work cut out for me.
Chaos & Uncertainty:
Chaos is a state of disorder, uncertainty, and not being able to plan. It is marked by a lack of planning, structure, or control, which leads to chaos and disorder. In a chaotic scenario, things may happen at random, which makes it hard to predict or understand their patterns or results. It’s the opposite of order and security, showing a state of chaos and uncertainty.
Backwards leverage creates a climate of uncertainty in the workplace. In such workplaces, workers use their power for personal gain rather than the common benefit. They do this because there have not been boundaries established to direct expected behavior. Employees experience anxiety because of this lack of clarity, which in turn erodes their trust in management and each other. One of the top reasons people leave their job is that they do not know what is expected of them.
This unpredictability is a result of the backwards leverage’s effect on the decision-making process. When workers put their own needs before those of the company, decision outcomes become haphazard at best. Everyone does their own thing independently and product consistency dissipates. The workplace culture becomes fractured, drama creeps in and order turns to chaos. The customers lose, the company loses, the leaders and employees all lose. No one gains from backwards leverage in the long run.
To deal with uncertainty in a workplace with backwards leverage, leaders must put openness and communication at the top of their list of priorities. A new, better vision needs to be cast to the team. Clear explanations of the decision-making process and criteria, as well as involving workers as much as possible in the decision-making process, can help reduce anxiety and build trust. Setting up a culture of shared goals and putting an emphasis on the importance of group success can also shift the focus from individuals’ needs to the company. Leaders can reduce uncertainty and rebuild trust among workers by making the workplace more open and collaborative.
Entitlement:
Entitlement is also a common feature of a workplace with backwards leverage. When employees can get what they want by using their leverage, they may begin to feel entitled to special treatment or privileges. This can lead to resentment among other employees, who may feel that the entitled individual is not pulling their weight or contributing to the team in a meaningful way.
While it may be difficult to eliminate backwards leverage entirely, it is important for companies to be aware of its negative effects and work to minimize its impact on their operations.
Getting the Leverage Back:
Back to my story about my four stores in Des Moines. I did not respond to any of these employees by granting them a pay increase. They weren’t producing at the rate they were already being paid. Over the next couple of weeks, each of them began coming back to me mentioning that they would probably keep working with us. I am sure they were likely looking for a job elsewhere, realizing that they were making far more than they could make starting a new job. I took this opportunity to grant them their original wish to leave the company. I recall only one leaving on their own. One employee that had been with them for 4 years or so looked at me with eyes wide open saying “Are you kidding me? You can’t let me go! Who is going to run this place?”. “I am not letting you go; I have your written 2-week notice.” I replied… “But I do appreciate your long service to the business”.
As it turns out people prefer making a fair rate of pay that is earned while working in a culture with clear expectations and boundaries that values them, while working toward something significant is better than being over-paid, being bribed to stay in an environment of chaos, drama, and disunity.
A backwards leverage culture is difficult to turn around. I wish I could say I was able to turn it around quickly, but it took a couple of years. If I knew then what I know now, it would have been much quicker.
Tug of War Culture:
A culture with backwards leverage resembles a game of tug of war with three outcomes, a win-lose relationship, a lose-win relationship or a lose-lose relationship. Either the employee (or team) wins at the employer’s expense and is allowed to rule the roost, the employer wins at the employee’s expense, or they both allow their interests to escalate to a boiling point and they both lose. It takes a leader to resurrect the culture back to a win-win environment. In any scenario, if leadership doesn’t prevail soon, like a bubble hitting its maximum capacity it will burst and turn into a lose-lose proposition for all.
A lack of leadership can contribute to the organization being stuck in a cycle of repeating the same actions and getting the same results. This can lead to a sense of hopelessness and a lack of control, as noted by Ahearn, leaders may tend to blame others for their problems rather than taking responsibility for their actions.
The Hope:
The Backwards Leverage Stage can plague organizations and lead to a lack of progress, demotivated employees, and high turnover rates. But it doesn’t have to be this way. There is hope. You can break free from this negative cycle through developing effective leadership, a growth mindset, open communication, and a commitment to change. By taking these steps, leaders and organizations can overcome the symptoms of the backwards leverage stage and achieve long-term success.
Now whenever one of our stores falls into the backward leverage stage one of my senior leaders can go in and get it turned around usually within a month. This is only because we understand the process well and have a proper perspective of the importance of leadership.
Stage #2 – The Responsibility Stage:
Transitioning from the Backwards Leverage Stage to the Responsibility Stage can be a challenging process, but it is essential for organizations that want to achieve positive change and sustainable growth. It requires a significant shift in mindset and behavior.
100% Responsibility:
The first step towards positive change is taking 100% responsibility for your position and future results. Creating a clear vision for the future is critical in breaking free from backwards leverage. This vision should be communicated clearly to all employees and should inspire them to work towards a common goal. According to John C. Maxwell, “A leader is one who knows the way, goes the way, and shows the way.” Leaders should set an example by fully committing to the vision and holding themselves accountable for achieving it.
A Vision of Your Future Team:
The next step in this process is to develop a vision for your future team. Decide what your future team looks like and create a compelling vision that drives you forward. This vision should be based on a clear understanding of your organization’s strengths, weaknesses, opportunities, and threats. It should also be aligned with your core values and purpose. If you have not established your purpose and core values, this is the place to start.
Organizational Charts:
It can be very beneficial to use organizational charts to help set a vision for your future team. Start by creating a current organizational chart with leaders and team members in their hierarchical structure. You can even rate each of your team members if you like. I recommend rating each of them from 1 to 10 by dependability, competence, and productivity as well as leadership for those in leadership roles. Next, create a future organizational chart based on a more ideal hierarchical structure. Create all the positions you anticipate regardless of currently having a person to fill it. Invent positions if needed and label them TBF (to be filled). Add the names of your current employees that you wish to retain that are adding value to your company. Keep the right people on the bus and get the wrong people off the bus. Don’t feel the need to put them in the same position if they are better suited for a higher or lower position. Put them where they belong in the right seat on the bus.
Once you have your new org chart in place, it becomes your measuring stick and vision that will direct your recruiting practices over the next several months. Every position that is not filled by a competent person is a vacancy to be filled. Without a clear visual picture of your current staff in contrast with your future staff, you will remain blind to your needs, limping along just trying to make some kind of progress. Your new insight will provide clarity for the mission set before you.
The Future You:
Once you have a clear vision of your company and your future team, it is time to commit to working on the future YOU. I’ll bet you thought I was going to tell you it’s time to start working on your team. You can’t fix your team until you begin fixing yourself, and second, begin working on the culture. This means taking a proactive approach to developing the skills and competencies needed to achieve your vision. It also means being willing to take risks, make mistakes, and learn from your failures. This is all for the purpose of becoming the person that can lead in such a way that you find success in building your team.
One of the most critical steps in the transition process is to take full responsibility for your future culture. You need to create an environment that fosters trust, respect, and accountability. This means leading by example and holding yourself and others accountable for their actions. Culture is not something that happens to you, but rather something that you create. It also means prioritizing culture over people, recognizing that your culture will ultimately determine the success or failure of your organization.
Open the Front Door:
One of my pet peeves as a leader has been when I would have a conversation with a store manager that would go something like this.
Me: How are you coming along with [task]?
Manager: “I didn’t get that done; I am short-handed.”
Me: “How many interviews have you done?”
Manager: “I haven’t even had time to look at the applications. I have been covering shifts”.
Sometimes the answer is right in front of you if you just pull your face out of the cheese and make yourself look at it. To attract more qualified applicants, you need to open the front door permanently to invite more people into your world. There is strength in numbers and a larger array of choice. This requires creating a positive employer brand that attracts top talent by being transparent about your organization’s culture, values, and vision, and actively promoting your brand as a desirable place to work. People are drawn to organizations that offer competitive salaries and benefits, provide opportunity for growth and development. By doing so, you can attract a more diverse and talented pool of candidates, which can help you achieve your goals more quickly and efficiently. We will talk more about this in chapter 5 when we discuss the Law of Magnetism more closely.
To close the back door to negative turnover, you will need to put a higher priority on your top performing employees’ well-being and development. This means exploring opportunities for growth and advancement and providing a supportive and inclusive work environment. By doing so, you can reduce turnover and retain your best employees, which can help you achieve your vision and goals more effectively. If done effectively, these top performers ultimately could be running your company and be the doorway to your freedom.
Communication:
Effective communication is also essential for organizations to break free from the Backwards Leverage Stage. This means fostering a culture of open communication where employees feel comfortable sharing their thoughts and ideas, and leaders are willing to listen and act on feedback. As noted by Patrick Lencioni, “Not finance. Not strategy. Not technology. It is teamwork that remains the ultimate competitive advantage, both because it is so powerful and so rare.”
When you and your team have reached the Responsibility Stage you will recognize it by observing that your team is primarily made up of people who are able to work independently with minimal supervision for daily activities. They can generally solve most of their problems under their watch and feel empowered to do so.
Remember, it’s not about you, but the results you achieve. By taking 100% responsibility for your position and the future results, you can transition from the Backwards Leverage Stage to the Responsibility Stage and achieve your vision.
Stage #3 – The Momentum Stage:
Once an organization has successfully transitioned from the Backwards Leverage Stage to the Responsibility Stage, the next step is to move into the Momentum Stage. This stage is characterized by a strong sense of direction and purpose, with a focus on attracting and retaining top talent.
One key aspect of the Momentum Stage is to focus daily on the future team. As John C. Maxwell notes, “Leadership is about going somewhere. If you and your people don’t know where you’re going, your leadership doesn’t matter.” By having a clear vision and constantly working towards it, leaders can keep their teams focused and motivated.
The Law of Magnetism:
Another important principle in the Momentum Stage is the Law of Magnetism, which states that “who you are is who you attract.” This means that leaders need to work on themselves and improve their own skills and abilities to attract high-quality team members.
As Jim Rohn famously said, “Work harder on yourself than you do on your job.”
To build a strong team, leaders must connect with their people and find out what they desire. By understanding their team members’ goals and motivations, leaders can create an environment that supports growth and development. When you know what people really want and are searching for, you can tailor your approach to become the leader they need and want to work for.
Focus on what your leaders and your company need to become to be the most attractive option to job seekers. You can also ask yourself what the best candidates expect out of their leaders. This will give you an idea of what will attract them. Make your job description reflect the positive qualities and traits you want in your employees. Use language that is welcoming, upbeat, and focuses on the benefits of working for your restaurant. This will help to attract individuals who are motivated by similar goals and values.
Highlight the unique culture of your business in your job postings and during the interview process. Discuss the values, mission, and vision of your business, and emphasize the opportunities for growth and development. This will help to attract individuals who share your values and are motivated by a sense of purpose. Great leaders should sell themselves and the vision of the organization if they want to be attractive to applicants. Remember, they are interviewing you at the same time. You will need to sell yourself and sell your company convincingly. The question isn’t just if they are hirable, but it’s if they will hire YOU.
Cultural Immune System:
A culture of excellence is difficult to obtain and even more difficult to maintain. Great leaders develop strong cultural immune systems for their organizations. Protecting your eagles at all costs becomes a top priority. Your workplace culture is the playground where it all happens. There are many cultural values, and many ways groups of people interact with each other in any closed system but make no mistakes they are not all equal as it relates to cooperation, effectiveness, and unity. The culture you craft will be the one you live with.
There are many people out there that will not fit your culture. Organizations must open the back door to positive turnover. It is essential to establish a bottom 25% rule, which involves identifying the employees who are not meeting the company’s standards and providing them with the support and resources they need to improve. If they are still unable to meet the organization’s expectations, they may need to be let go. This helps to ensure that the team is made up of individuals who are committed to the organization’s vision and values and who are actively contributing to its success.
Accountability:
In the Momentum Stage, building systems of accountability becomes a crucial factor in maintaining progress and achieving sustainable growth. This involves setting clear expectations and holding team members accountable for their actions, ensuring that everyone is working towards the same goals. As noted by business expert, Brian Tracy, “Accountability breeds response-ability.” To foster a culture of personal responsibility, organizations must establish clear communication channels and a system of rewards and consequences. This creates an environment where team members feel empowered and motivated to take ownership of their work and contribute to the organization’s success.
As Jack Welch, former CEO of General Electric, said, “The team with the best players wins.” By constantly investing in their team members and pushing them to improve, organizations can create a culture of excellence that drives success. Accountability isn’t just a stick; it is also a carrot. Together they will produce a person who fully understands the rules of the game and is inspired to follow them.
Empowered Recruitment:
Empowering teams to recruit and attract is another key aspect of the Momentum Stage. By giving team members the tools and resources, they need to attract top talent, organizations can create a culture of excellence that attracts the best and brightest. Surveys suggest 70% of current workers were attracted to their current position through the proximity principle, someone they know in the organization. There is a level of trust that comes from a suggestion from a friend that has first-hand experience in their position. Exploring the world of uncertainty can be intimidating.
Culture of Leadership:
In the Momentum Stage, creating a culture of leadership and training is vital for sustained growth and success. It involves investing in employees’ growth and development to empower them to take ownership of their roles and responsibilities.
A culture of leadership can also be fostered by creating opportunities for employees to lead and take on new responsibilities. Giving team members ownership of specific projects or initiatives can help them build confidence and develop their leadership skills. This can also be done by setting up a peer-to-peer mentoring system, where employees can learn from each other’s experiences and share their knowledge.
By creating a culture of leadership, organizations can develop the next generation of leaders. Employees who feel empowered to make decisions and take risks are more likely to develop the skills and qualities necessary to become effective leaders. This culture of leadership can also help identify potential leaders within the organization, allowing for targeted training and development opportunities.
Stage #4 – The High Leverage Stage:
After reaching the Momentum Stage, organizations can transition to the High Leverage Stage. In this stage, the focus shifts to building a high leverage team through 1 on 1 coaching, trust, and transparency.
John C. Maxwell said, “Leadership is not about titles, positions or flowcharts. It is about one life influencing another.” By investing in their team members, leaders can create a culture of inter-dependence that leads to opportunities for all.
A Culture of Inter-Dependence:
A culture of interdependence is one where team members work collaboratively and rely on each other’s strengths to achieve common goals. This type of culture recognizes that everyone has unique skills and perspectives, and that success is best achieved through teamwork.
Stephen Covey, in his book “The 7 Habits of Highly Effective People,” describes interdependence as the highest level of human effectiveness. He states, “Interdependence is a higher value than independence. Independence is the paradigm of I. Interdependence is the paradigm of we.”
In a culture of interdependence, team members communicate openly and honestly, share knowledge and resources, and support each other in achieving individual and team goals. They recognize that their success is dependent on the success of their colleagues and are willing to put aside personal differences for the greater good of the team. This type of culture can be fostered by creating an environment of trust, where team members feel safe to share their thoughts and ideas without fear of judgment. Leaders can also encourage interdependence by recognizing and rewarding collaborative efforts, and by providing opportunities for team members to work together on projects and initiatives.
In a culture of interdependence, everyone benefits, as each team member contributes their unique skills and abilities to achieve shared goals. As Covey notes, “When you combine the unique talents of individuals and the strengths of the team, you create a culture of interdependence that can accomplish great things.” This culture attracts higher qualified candidates to the organization. As Jim Collins stated in his book “Good to Great,” “When [leaders] began focusing on getting the right people on the bus, the wrong people off the bus, and the right people in the right seats, they didn’t need to worry about motivation.” By creating a culture that values and invests in its team members, the organization can filter out those who do not fit in and attract those who do.
A Culture of Coaching:
Everyone needs a coach. From top to bottom, everyone in your organization needs a person looking out for them and their current and future interests. Most organizations get this wrong. Most one-on-one conversations between supervisor and subordinates are targeted on recalibrating the employee to overcome deficiencies that allow them to perform at a higher targeted level. They can also be strategic and exploratory, working towards goals or a better outcome. Either way the normal interaction doesn’t tend to focus on the needs and development of the coachee for the purpose of their personal benefit. They are focused on the other constituents such as the organization, team members, customer, vendors, supervisors etc.
These interactions are not bad and need to happen, however they don’t even come close to the impact of a genuine coaching experience focused on personal empowerment from a trusted leader dedicated to the personal growth of their people.
Zig Ziglar said “You can have everything in life you want, if you will just help other people get what they want.”
Leaders notoriously miss this reciprocal approach that in my experience changes everything and opens the floodgates of opportunity for all parties involved. This is the secret sauce. When people feel their leader has their back and is fully engaged in their success, they will run through walls for them. Nothing is more powerful in the world of leadership.
People are all borne upside down seeing the world through their own perspective. We don’t know a better perspective until someone can come and help us see a better way. We can’t find our way to the paradigm shift that must take place in our mind without the right leader at the right time with the right message to share it with us. Bosses often try to mold people with sticks and carrots using external factors to direct them toward a favorable outcome, but the truth is that we cannot change anyone. Our job as leaders is not to get people to do something. It’s to get people to desire to do something.
Everyone needs a hero to help guide them. Leaders need to be the guide and not the hero. Real leaders are the influence behind the hero, providing support and encouragement helping the hero gather strength and skills to conquer the challenges and save the day for those who they were entrusted with.
A Culture of Credibility:
In the complex and fast-paced business world of today, it’s hard for companies to build and keep the trust of their stakeholders. A culture of credibility, on the other hand, is a strong way to build and keep trust within a company. By putting integrity, transparency, and responsibility first, a culture of credibility not only makes employees more engaged and happier, but it also helps the company succeed in the long run. In this piece, we’ll talk about what a culture of credibility is, how it can be built up within an organization, and how it affects the performance of that organization.
A culture of credibility is a work setting in which trust is the foundation of all relationships, decisions, and actions. It includes a set of shared values, norms, and behaviors that help everyone in the company be honest, reliable, and act in an ethical way. In this kind of society, people at all levels are expected to act with honesty, talk openly, and take responsibility for their actions and choices.
For your team to appreciate and adhere to a culture with a high level of credibility, they need to have a clear understanding of the company’s purpose, mission, vision, and goals. They must also see consistency in the way the leaders of the organization conduct themselves in alignment of these principles. A high level of empowerment will be present throughout the organization. Empowerment becomes the driving force behind performance. An organization shows its credibility when it has stood the test of time, producing at a high level, and doing so with style and excellence.
Culture of Opportunity:
Employees need to see a pipeline for future opportunities and advancement, or they won’t take you seriously or at least not the serious candidates. Most employers focus on their current position, the requirements and what success will look like in that position. Advancement may be mentioned as a carrot, but seldom articulated effectively in the interview stage. When people are offered a “job” trading time for money, there lacks a spark of excitement if their longer-term future is not part of the conversation. When offered a vision of a pipeline of opportunity and a path to get there, one’s imagination can be inspired. This often makes a difference in career choices. People may settle for less, but they want much more. As a hiring employer, don’t miss this.
Working On Your Business:
At a certain point in the pursuit of organizational development and success, leaders must go from working “in” the business to working “on” the business. To accelerate growth and make their vision a reality, executives must adopt a strategic strategy known as the High Leverage Stage. In his book “The E-Myth Revisited,” Michael Gerber argues “The problem with most failing businesses is not that their owners don’t know enough about finance, marketing, management, and operations—they don’t, but those things are easy enough to learn—but that they spend their time and energy defending what they think they know.” By stepping back and focusing on the big picture, leaders can accelerate their growth and see their original vision come to fruition.
Reaching the High Leverage Stage requires a focus on developing a high leverage team, creating a culture of inter-dependence, attracting higher qualified candidates, working on the business rather than in it, and accelerating growth through a focus on the big picture.
The High Leverage Stage relies on its leaders’ ability to maintain a big picture perspective while staying in touch with the core operations of the business. They don’t let themselves get bogged down by the mundane tasks of running the business and instead focus on long-term goals like improving processes and developing new ideas. Leaders can help their companies thrive in the long run by putting in the time and effort required to develop the firm.
Stephen Covey also wrote, “The key is not to prioritize what’s on your schedule, but to schedule your priorities.” By prioritizing the right actions, organizations can reach the High Leverage Stage and achieve their goals.