The following is a paper I recently wrote for one of my M.B.A classes through the University of Massachusetts Amherst.

Abstract
Over the last few decades, two competing theories of corporate social responsibility have gained prominence in both the academic and business worlds. The first theory, as defended by Coelho, McClure and Spry (2003), is known as the Shareholder Theory or Stockholder Theory in which all corporate decisions, so long as they are legal and profitable, are made with the shareholders’ interests as the highest priority. The second theory, as defended by Post (2003), is referred to as the Stakeholder Theory, in which corporate decisions are made with equal regard for all immediate stakeholders in the business’s environment including suppliers, customers, employees, management, shareholders, and the local community. This paper analyzes the theories as presented by the authors above, mediates their differences, and offers advice for the modern day corporate executive to assist with her own ethical business decisions.

Introduction
Corporate executives are coming under an increasing amount of scrutiny over their presumed lack of socially responsible decision making. From the astonishing fall of Enron in 2001, to BP’s current environmental and economic disaster unfolding in the Gulf of Mexico, this decade alone has seen more than its fair share of ethical lapses in leadership and the demand for change is great.

In 1970, economist Milton Friedman published an article for The New York Times Magazine in which he declared “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud” (Friedman, 1970). Commonly known as the “Shareholder Theory” or “Stockholder Theory”, Friedman’s paradigm of corporate social responsibility has served as an ethical baseline for multiple generations of business leaders but critics argue it doesn’t go far enough in addressing the realities of the business environment. Consequently, a growing number of individuals from industry and academia are leaning towards the stakeholder theory of social responsibility suggesting that it is a more comprehensive and thoughtful approach to making ethical business decisions. Predictably, the competing schools of thought frequently offer new perspectives on why their particular theory is superior to the other, and how the only way to move the interests of society forward is to adopt one comprehensive model. What follows is a scrutiny of one such debate as featured in the American Journal of Business.

The Argument for the Shareholder Theory
In support of the shareholder theory Coelho, McClure, and Spry (2003) argue that the legal structure upon which corporate entities are established demand that the considerations of management must be in favor of the shareholders’ interests. The authors’ state that “their [the company executives] fiduciary responsibility, within the legal strictures of society and without deception, to husband and increase the wealth that has been entrusted to them by shareholders. All other responsibilities of the firm’s agents must be subordinated to this one.” (Coelho, McClure and Spry 2003).

This “fiduciary duty”, the authors’ argue, is based on the implication that corporations have not only a contractual duty to serve the interests of the shareholder, but also an obligation to serve the shareholder’s interests since they are the owners of the corporation. To further advance their claim of “fiduciary duty”, the authors’ suggest that there is an agency relationship between shareholders and corporate executives in which the financial interests of the shareholders is recognized as first and foremost.

Coelho, McClure and Spry (2003) also point out that the stakeholder theory is too ambiguous and conducive to “managerial corruption” and “chaos”. The authors’ argue that contemporary managers favor the stakeholder theory as it affords them the opportunity to pursue personal causes with corporate resources. Given that executives are presumed to have the best understanding of their company’s business model, the temptation for an executive to invest in a particular cause, at the expense of shareholders, may be too enticing to resist. The authors present a similar reason why contemporary scholars overwhelmingly support the more broadly defined stakeholder theory. They claim that academic institutions have a vested interest in doing so: “Faculty members who champion the view that academia is an institutional stakeholder that corporations have a duty to support are more likely to attract business philanthropy than faculties who eschew the stakeholder doctrine” (Coelho et all, 2003). This theory as presented by the authors is fascinating, but there is no evidence in provided in their paper that supports their claim.

The Argument for the Stakeholder Theory
In his defense of the stakeholder theory, Post (2003) attacks the ethical dimension he claims is lacking when implementing the shareholder theory. “It is my view that management decisions ought to be based upon three different dimensions: economic-Is this profitable?; legal-Is this legal?; and ethical-Is this right?” (Post 2003). Post maintains that being ethical under the shareholder theory means simply abiding by “the rules of the game” (the law), with the rules (the law) being a “reflection of the lowest moral minimums” (Post 2003).

Post (2003) also takes aim at the three “legal underpinnings” Coelho et all cite as the primary reason Friedman’s paradigm is the only ethical basis by which to base ehtical decision in a corporation. First, Post argues that no “contractual obligation” exists or is implied between a shareholder and a corporation. “There is no express contract that the parties sign, since shareholders buy their stock from previous owners, not the corporation. In an initial offering, the only legal document specifying the conditions of the purchase is the prospectus which does not constitute an express contract with management who often remain to be hired in the future” (Post 2003). Second, Post takes issue with the “agency relationship” between a shareholder and a corporation referring to black letter law. According to Post, The Restatement of Agency clearly identifies three key elements for an agency relationship to be valid. “(1) There is consent to the relationship, (2) the agent acts on the principal’s behalf and (3) the principal controls the agent” (Post 2003). Post is quick to point out that “none of these three elements of the agency relationship exist between management and the shareholder group” (Post 2003).

Finally, Post looks at the underlying claim of a shareholder’s “ownership rights” in regards to being the primary beneficiaries of any corporate actions. Post cites examples in which “ownership rights” have been limited by government for the betterment of society. “The theoretical notion of “legal ownership” of private property does not allow unlimited ownership rights and, therefore, does not support the shareholder theory that “legal ownership” of stock alone requires that management consider only the interests of the shareholders” (Post 2003). Post’s statements on ownership rights reminded me of a friend’s recent experience. He owned a parcel of waterfront property on a lake in Maine and was significantly restricted in the improvements he could make on the properly due to local environmental ordinances. Naturally, the ordinances existed for the benefit of society over the “ownership rights” of one individual.

What is an Ethical Manager to Do?
While contemporary scholars, including Post, seems to increasingly focus on the virtues of the stakeholder theory, the modern corporate manager is no less burdened in defining what exactly her strategy should be as she navigates her company through the perilous seas of social responsibility. In an effort to alleviate this burden I would like to interject a few observations of my own to help amalgamate the competing theories of corporate social responsibility as set forth in the two competing papers discussed earlier.

First and foremost, contrary to Post’s assertion, Friedman absolutely embraces an ethical dimension in his doctrine of corporate social responsibility. “That responsibility is to conduct the business in accordance with their [the shareholder’s] desires, which generally will be to make as much money as possible while conforming to the basic rules of the society, both those embodied in law and those embodied in ethical custom” (Friedman 1970). Given Post’s educational background, his failure to recognize the ethical component of Friedman’s paradigm is understandable as he seems to have appointed himself general counsel for proponents of the stakeholder camp. Surprisingly, Coelho et all also failed to recognize Friedman’s ethical component in their sustention of the shareholder theory.

The question remains then, what is does Friedman mean by the “ethical customs of society”? Given this “new” understanding of the shareholder theory as inspired by Friedman (the understanding that Friedman’s principle does indeed provide for an ethical litmus test), the corporate manager has a valuable tool in defining ethical management decisions. She can pursue what she feels is in the best interest of the shareholders so long as she abides by the law, and, so long as the action is “ethical” in the society (or societies) the business is operating. Admittedly, the more complex the societies, the more difficult it will be to define “ethical” in this respect.

To illustrate this point, suppose you managed on an oil rig operating on the Outer Continental Shelf of the Gulf of Mexico. One day, one of your workers approached you to ask if he could purchase a new biodegradable hydraulic oil to use in the installation’s machinery. He points out that in the event of an accident, the hydraulic oil would be less damaging for the environment. The improved oil was 4 times more expensive than conventional hydraulic oil although the total cost was marginal in comparison to the rigs total operating budget. There was no law mandating the use of biodegradable hydraulic oil, but you felt that increase in cost was worth the mitigation of any potential environmental pollution. Under Post’s (2003) or Mackey’s (2005) interpretation of the Shareholder Theory, you would be unethical if you approved the expenditure since you where not pursing the exclusive interests of your shareholders. However, I believe Friedman would have supported the expenditure with the understanding that marginal corporate expenses directly beneficial to the environment are an “ethical custom of society”, even if they are not mandated by law or in the express interests of the shareholders.

Amazingly, Post makes a few admissions in his paper that seem to undermine the main arguments he so passionately makes. First he states “…in the end there is always a tiebreaker that determines the interest to be weighed the most heavily, the long term survival of the company” (Post 2003). Later in his paper Post makes a similar statement “…management makes the final decisions based upon its judgment regarding what is in the best interest for the long term survival of the corporation” (Post 2003). The logical corporate executive should question Post’s premise by asking “since when is the long term survival of a company not in the best interests of a shareholder?” Perhaps Post will attempt to answer this question during the next inevitable evolution of the stakeholder vs. shareholder conundrum.

Conclusion
Having read the works of Friedman (1970, 2005), Post (2003), Coelho et all (2003), Mackay (2005), and Rodgers (2005), it seems that contemporary scholars and business leaders are engaged in a vehement agreement on the big picture of corporate responsibility. When applied as they were originally presented, both the Shareholder Theory and the Stakeholder Theory ethically address the priorities of all immediate stakeholders in the business environment including suppliers, employees, customers, employees, management, and the local communities. Deciding whether or not to go above and beyond the ethical duties of corporate social responsibility, as Whole Foods CEO John Mackey (2005) has so proudly done, is a business decision that relies on the judgment of corporate management. Whole Foods has enjoyed great success establishing themselves within the niche of enhanced corporate social responsibility, but I do not believe an across the board adaptation of this model, as suggested by Mackey (2005), would be sustainable in this business environment.

I believe the ongoing theoretical debate to define the social responsibility of corporate management has hindered the practice of business ethics. The more the sides argue, the more the underlying concepts sound the same. When taken in their full context, the Stakeholder Theory and the Shareholder Theory adequately address the interests of all stakeholders with an ethical regard for the customs of society. The final measure of an ethical business executive is her ability to hold true to the ethical course she has plotted. Knowing what is ethical is one thing, doing what is ethical is quite another.

References
Coelho, McClure & Spry, The Social Responsibility of Corporate Management:
A Classic Critique, American Journal of Business, Spring 2003: Vol. 18, No. 1.

Friedman, Milton, The Social Responsibility of Business is to Increase its Profits, The New York Times Magazine, Sept. 13, 1970.

Friedman, Mackey & Rodgers, Rethinking the Social Responsibility of Business: A Reason debate featuring Milton Friedman, Whole Foods’ John Mackey, and Cypress Semiconductor’s T.J. Rodgers, Reason.com, October 2005.

Post, A Response to “The Social Responsibility of Corporate Management:
A Classic Critique, Amercian Journal of Business, Spring 2003: Vol. 18, No. 1.

As I mentioned in another article, anyone can be a manger.  However, if you want to truly inspire, motivate, and continually improve the performance of your team or organization, you need to understand the five most important qualities of leadership:

1. Personal Commitment
2. Passion
3. Walking the Talk
4. Actively Caring
5. Trust

Personal Commitment:

If you want to build your stock as a leader within an organization, you need to be personally committed to the goals of the team, division, or organization. 

When you lack a personal commitment to the expected outcome of a task, your team will see right through you.  Your team will begin asking themselves why they should care about performing well if their supervisor isn’t sure if it is the right thing to do.

No matter what goal a team is working towards, each individual needs a sense of purpose.  They need to understand that what they are doing is important.  An effective leader instills this sense of purpose in his or her team by demonstrating they are personally committed to the groups goals or objectives.

Passion:

Along with a personal commitment to the objectives of your team, demonstrating passion for these objectives is also very important.  As a general rule, most people are fascinated by what their boss finds interesting. 

The more you are able to demonstrate your passion about your organization’s  goals, procedures, and policies, the more interested your team members will be in executing them.

Walk the Talk:

Like trust, your ability to lead, inspire, and motivate people is developed over time.  Unfortunately, it only takes one misstep to lose this ability.

If your team members hear you saying one thing, and then see you doing another, your credibility as a leader will be severely damaged.

To effectively lead within any group or organization, you MUST maintain a strict adherence to the team’s vision, mission, and core values.  Remember, it only takes a second to lose your credibility as a leader.

Actively Caring:

When you demonstrate that you truly care for the people within your organization, they are more likely to trust you and show a willingness to follow your guidance. 

Demonstrating to your team members that you actively care for them goes far beyond periodically asking how their family is doing.  To truly demonstrate that you care about your team members, you need to engage them in conversations about their goals and aspirations.

You need to sit down with each member on your team to create a career progression plan with them.  It may be counter intuitive to some, but in my experience, developing a person (even if it means they may jump ship for an opportunity outside your organization) is the best way to demonstrate you care.

Demonstrating that you care to your team members may also mean that you need to have the occasional difficult conversation to correct any improvement areas in their performance.

When an employee knows they have the full support of their supervisor(s), they are more willing to stay within the organization even if they might be paid slightly more with another company.

Trust:

In a previous article I explained the Seven C’s of building trust. If you haven’t yet read my article on building trust, it compliments this article quite well. As a quick review, here is list of the 7 factors that help you build trust:

The Seven Elements of Building Trust:

1. Communication
2. Consistency
3. Commitment
4. Consensus
5. Character
6. Candor
7. Caring

How important is trust when it comes to leadership? Look at it this way; would you ever be able to recognize another person as a leader if you were unable to trust them? Trust is the bond the holds the other 4 qualities of leadership together.

Trust is never given, it MUST be earned.  The trust between a leader and her team are continually built over time, day after day, project after project.  Unfortunately, it only takes a second to loose your team’s trust through a momentary lapse in judgment.

As a leader, the challenge is not only building trust within your organization, but maintaining and continually developing it.  In order to succeed in a leadership role, your ability to influence, inspire, and motivate must continue to grow.

To nurture this trust as a leader, it’s important to understand the seven key components of trust building (sometimes referred to as the Seven C’s of Trust Building).  The better you understand the building blocks of trust, the better you will be able to lead.

Communication:

There seems to be an overwhelming amount of “buzz” about the importance of “communication” between a leader and her team. In fact, I could easily make a case the word “communication” is the most overused and misunderstood term in organizational leadership today.

So how does communication affect a leader’s ability to build trust within a team environment?

In it’s most basic form, communication is nothing more than two or more parties speaking to each other, listening to each other, and understanding each other.  

In order to guide her team in achieving a particular goal, a leader must relay her ideas to the team either through speaking or written word.   It then becomes the team’s responsibility to listen or read what the leader has to say and put the plan into action.  Each teammember should also be given an opportunity to offer their ideas into the plan.  Doing so helps to build a consensus and sense of purpose within the group. 

The element most affecting trust as it relates to communication is in “understanding” what each person is saying.  The “understanding” is the final piece of the communication triangle.  As a leader, it is fundamentally important to ensure your team understands exactly what everyone is saying.  You may think you’ve made your expectations clear, only to discover well into a project that your team is heading towards an entirely different goal.

We are all familiar with the popular elementary school game called ”telephone” were a simple message is relayed from one student, and then to the next.  By the time the message makes it way from the first student to the last the message has changed dramatically.

An effective leader ensures her team fully understands her expectations and then verifies this by periodically monitoring the teams performance as they work towards a particular objective.

Clearly communicating your expectations reduces the possibility that you and your team will be at odds over the outcome of a project.  If your team feels you haven’t given them an appropriate amount of information to perform a particular function, their trust in you as a leader will be diminished.  

Consistency: 

Another important element of trust building is the leader’s ability to remain consistent.  

Why is consistency so important in building trusting relationships with your team? 

If your team sees you responding wildly different to similar situations, they’ll never truly be comfortable with you as leader.  People need to know were they stand with their supervisor.  Leaders who are unable to offer their team this basic level of support will never truly earn their teams trust.

Commitment:

In order to build trust within your organization, its important to demonstrate that you are committed to achieving results.  If you’re not aligned with the vision, mission, and core values of your organization, it will be virtually impossible to motivate and inspire your team.

People can instantly recognize when a leader is not fully committed to a particular task.  They ask themselves “why should we care, if our supervisor doesn’t?“.

When a supervisor continually demonstrates that she is committed to the goals of her team and then does everything she can to support these goals, she will have made significant strides in building trust with her people. 

Consensus:

Forming a consensus within your team is another important element in building trust.  In order for team members to regard you as a leader, you need to help them understand their work is important, and worthwhile.  This is accomplished by allowing team members to contribute their ideas on how to accomplish a particular task. 

When everyone is involved in the planning, its much easier to form a consensus within the group. 

Instinctively, when a consensus is not reached within a team those not in agreement will blame the leader thus straining any levels of trust the leader may have had.

Character:

In regards to leadership, Merriam-Webster defines character as having moral excellence and firmness.  In other words, character is about doing the right thing by your team and organization. 

When you consistently do the right thing, people are naturally drawn to you as a mentor.  No matter what your role is in an organization, the fact that you do right by your team (even if it means being brutally honest) will inevitably build your team’s trust in you.   

Candor:

Being honest and candid with yourself and your team is another important aspect of building trust.  If someone is not performing to your expectations, be honest with the person. 

In my own observations, managers often go out of their way to avoid a crucial conversations. Their personality traits make it very difficult for them to confront underperforming employees.

As time goes by, the manager’s dissatisfaction grows until it reaches the point were it overcomes his willingness to ”let things slide”.  When the manager is finally upset enough to do something about issue, their emotions often get in the way of having an effective coaching moment.

You owe it to each individual on your team to be candid and honest.  The more you practice candor, the easier it will become and the better leader you will be.  Not every individual will be receptive to your honest evaluation of their performances.  However, if your evaluations are accurate, under-performing team members will come to appreciate them over time. 

Individuals that do not appreciate honest feedback of their performance (when you exhibit all remaining qualities of trust), probably don’t deserve to have you as a leader.

Famed leadership visionary Jack Welch (former CEO of GE) advises leaders to “get rid of” individuals who are not open to constructive criticism and are unable to align themselves with the values of the organization. 

Caring:

Last but certainly not least is showing your team members that you care.  People know when you sincerely care about them.  However, most managers fail to realize that caring for their people is much more than occasionally asking about their family.

Leaders build trusting relationships with their people by supporting and encouraging their development within the organization.

Leaders build trusting relationships with their people by asking them about their goals.

Most importantly, leaders build trusting relationships by letting their people know that their opinion counts and they can make a difference. 

As I’ve mentioned many times in the past, the best ideas often come from people closest to the front-lines of an organization.  Leaders can never do everything; when trusting relationships are made, each individual, the team, and the organization will flourish.

Last year I reviewed a great leadership book called “It’s Your Ship” by Captain D. Michael Abrashoff.

In the book, Captain Abrashoff shares the leadership techniques he used to turn one of the most under-performing warships in the US Fleet (the USS Benfold) into the “best damn ship in the Navy“.

Not only is the book full of “actionable” leadership techniques you can begin implementing immediately, it also draws entertaining parallels between the challenges faced by commanding officers in the US Navy and those of civilian executives in the corporate world.

As luck would have it, Captain Abrashoff accepted an invitation to speak at my company’s annual leadership conference in Sugarland, Texas March 24, 2010.  The following is a review his “commanding” performance.

The Introduction:

After a brief introduction was given by one of the managers in my company, a video clip was played over a projector to “formally” introduce Captain Abrashoff to the audience.  The video was from a Monday Night Football game in which “It’s Your Ship” was featured. 

The clip told the story of how Cincinnati Bengal’s quarterback Carson Palmer was given a copy of Captain Abrashoff’s book by his father.  Carson Palmer read the book and implemented many of the leadership principles into his position as quarterback of the Bengals.  It wasn’t long thereafter that Carson Palmer was voted offensive captain by his teammates.

Ironically, Captain Abrashoff wasn’t the biggest fan of the Bengals at the time and was disappointed the team went on to beat his favorite team twice the following year.   

The Delivery:

If you’re familiar with Captain Abrashoff’s book “It’s Your Ship”, you’ll remember that Captain Abrashoff prided himself on being approachable by anyone on his crew.  His humble approach and genuine interest in people translates into his speaking as well. 

Where most “highly regarded” guest speakers speak at you in more of a condescending tone, Abrashoff’s style is very open and welcoming; he speaks to his audience.

Another thing that stood out for me was that Abrashoff did not use a single PowerPoint slide during his entire presentation, yet he kept a consistent flow during his entire speech.

The Content:

Most of the material in It’s Your Ship was covered by Abrashoff during his lecture. 

I was surprised that he didn’t tell the story of how himself, the ship’s XO, and the five department heads were in the mess hall eating lunch with 6 Naval Inspectors when the ship got underway from the dock.  It was a great story emphasizing the amount of trust and competence he had established with his crew.

Captain Abrashoff talked about his background as a military assistant to former Defense Secretary William Perry and how Perry’s unique leadership style helped shape his own success as a leader.  (If you ever have the opportunity to see him in person, ask him about his Monika Lewinsky story!)

Abrashoff shared many great stories of how he developed trust within his team.  One story in particular that stood out was how each day he climbed down 5 levels of ladders to access the sewage treatment area on the USS Benfold to emphasis to the sailor assigned to this station how important his job was to the success of the operation.   

Abrashoff also shared the three major events in his life that really changed how he looked at leadership, people, and getting the job done.

The Conclusion:

After a very entertaining and informative hour of speaking, Commander Abrashoff opened the floor to questions from the audience. 

Not one to miss out on an opportunity, I asked him about one of the regrets he had mentioned earlier in his speach about not doing more to help other captains in his carrier group.  I asked him what specifically he would have done to accomplish with the hope that it might help my own company better communicate between “competing” business units.

Captain Abrashoff (or “Mike” as he asked us to call him) said there was only so much he could do as a commander on one vessel.  His idea would have been to speak with the commanding officer of the carrier group and schedule periodic meetings between the captains of each vessel sharing what was working, what wasn’t working, and what could be done to make each ship better.

After answering a few more questions for 20 minutes or so, Captain Abrashoff was presented with a small token of our company’s appreciation (a fancy pen set with our company’s logo) and left on his way.

I’m not exactly sure how much Abrashoff charged for his appearance, but there wasn’t a single person in attendance (that I spoke with) that wasn’t very impressed with what he had to share.

I would recommend hiring Captain Michael Abrashoff as a guest speaker or lecturer to any organization looking to build teamwork, empower their leadership team , and improve their ability to get things accomplished.

In It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy, Captain D. Michael Abrashoff shares his leadership skill in turning one of the Navy’s most underperforming war vessels into the “best damn ship in the Navy”.

Although the USS Benfold was one of the most technologically advanced fighting machines sailing the high seas, moral within the crew was low and the vessel’s performance scores routinely dipped below the Navy’s expectations.

From his first day on board, Captain Abrashoff set out to improve the moral and competence of his new crew. He improved living conditions onboard the vessel, improved training, and restored a sense of pride that had long since disappeared on the vessel.

He freed up his crew member’s time by eliminating tasks on board that added no real value, and he also reduced maintenance costs by replacing mediocre equipment with products of more durability.

While some of the leadership techniques described in his book had his superior officers scratching their heads, Abrashoff stuck to his guns. In his mind he answered to his crew, and the taxpayers who were paying for his ship. Traditional practices of the Navy were of little importance to Abrashoff if there was a way to do things safer, more efficiently, or less expensive.

It’s Your Ship begins with Abrashoff reflecting on the day he assumed command of the USS Benfold. His predecessor was not the most highly regarded skipper and during the change of command ceremony, the departing skipper’s crew let him know exactly how they felt. “I can still feel my face flushing with embarrassment when I remember how some didn’t give him a respectful send-off” Abrashoff says in the book.

Abrashoff wasn’t worried about being liked as the Benfold’s new commander, all he really cared about was restoring the respect, trust, and effectiveness the former captain had lost.

During his first few weeks onboard the Benfold, Capt. Abrashoff begins implementing his belief that there is always a better way to do things. To improve the ships food he sent the cooks to culinary school, to prevent painting over rusty fastener stains on the superstructure of the vessel he ordered stainless steel fasteners instead (stainless steel is heavily resistant to rust).

Captain Abrashoff made a point of connecting directly with every crewmember on board his ship through conversation or formal interviews. What he discovered was an alarming number of individuals who couldn’t wait for their time in the Navy to come to an end.

Curious about the real reasons people wanted to leave the Navy, Abrashoff read exit interviews from Navy personnel who had not “re-enlisted” for another tour with the branch. His research revealed a large number of people leaving for unnecessary reasons:

They were not treated with respect.
They were unable to impact the organization.
They were not listened to.
They were not rewarded with more responsibility.

Armed with this new information, Abrashoff set out to retool his crew member’s perception of the Navy. He wanted them to realize that they were important, and they could make a difference. Captain Abrashoff made a commitment to listen to (and respect) any member of his crew who had an idea to improve the vessel. He cross trained various departments’ duties with each other, and gave entry level navy personnel responsibilities unheard of on other Naval vessels.

The book is packed full of useful managerial skills and ideas, suitable not only in a military environment, but in a corporate and family environment as well.

It may sound cliche’ but it’s true, It’s Your Ship: Management Techniques from the Best Damn Ship in the Navy is a great resource for anyone looking to improve their own leadership ability. It is an entertaining look inside the inner workings of the Navy and a perfect example of how traditional values can limit our ability to reach full potential.  If you want to take command of your leadership potential, you need to take command of this book.

What is the difference between Management and Leadership? This question has sparked much debate among business leaders, educators, and performance coaches over the last 10-15 years.

While the terms were once used interchangeably, the distinction between a leader and a manger has spread signficantly in today’s “New Era” of business.

The Role of a Manager in an Organization:

A manager is responsible for ensuring his organization’s policies, procedures, and values are understood and executed by all people under his direct supervision. 

If an organization’s policies, procedures, and values are clear enough, virtually anyone can be a manager. 

The Role of a Leader in an Organization:

A leader has the same responsiblities as a manager yet possesses an additional set of skills that a manager has yet to develop.  The inspire, motivate, and influence others within their organization to continually things safer and more efficiently.  Being good is never good enough for a leader. 

A good leader has an infectious passion for excellence and absolute commitment to the desired results of the team.  Some of the most important qualities of a leader are as follows:

• Vision: A leader is always looking for improvement opportunities within every level of his organization. If the leader does not have the authority to act on an improvement opportunity, he seeks out someone who can.
• Development: A leader develops his employees by rewarding them with increasing levels of responsibility as they become more competent, but he always remains accountable for the results.
• Respect: The golden rule comes into account here, “treat others as you would expect to be treated”. Where leaders are selfless, managers are often selfish caring only about what is in it for them.
• Trust: Trust is earned over time. Leaders eventually earn the trust of their team by sticking to their word, admitting when they have made a mistake, and being honest in their relationship with others.
• Purpose: Leaders instill a sense of purpose in their subordinates by reinforcing the importance of their job as it relates to the organization. Having to do something just for the sake of doing it is never a productive use of anyone’s.

Anyone can be a manager, but it takes a person of integrity, insight, and motivation to be a leader.

In a previous article I explained my theory of Proactive and Reactive Feedback and how their use can make or break the productivity of your team.

I made the case that feedback is better given when an employee or team’s performance is on the upward swing rather than waiting until their performance starts to dip.

In this article I offer the 5 key elements of effective feedback:

Descriptive:

Tell the person exactly what they did right, and where they have opportunities for improvement.

Immediate:

The quicker you can offer feedback to reinforce or discourage a particular behavior, the more effective it will be.

Timing:

Although feedback should be “immediate”, you need to make sure the environment is appropriate for offering the feedback. Are there other people around, is it too noisy, etc.

Use Data:

Whenever possible, use data to reinforce your feedback. If the person isn’t meeting the company’s expectations in a particular area, a visual representation of where that individual stands can be highly effective.

Honesty:

Last but certainly not least is honesty. You are doing yourself, the organization, and the individual a disservice if you are not completely honest in your evaluation. It’s difficult to “criticize” someone else, but if you don’t take effective action from the beginning you will most certainly face even more uncomfortable circumstances down the road.

While the practice of leadership can very from one supervisor to the next, there are a few basic assumptions about leadership that apply to nearly everyone.

People Want to Succeed:

I have met very few individuals that didn’t want to be successful at their job. Your task as a leader is ensuring they have the Authority, Knowledge, Experience, and Skill to complete the tasks you assign them. If a person’s performance is not meeting your expectations, ask yourself if you have covered the 4 needs above before you start blaming him.

People Want to Know How Their Doing:

One of the most importing things a supervisor can do is let her people know where they stand with her. Offering honest and detailed feedback in a timely matter goes a long way in building trust with your employees.

A Leader’s Impact on Morale and Performance is Greater Than They Realize:

I’ve had the displeasure of sailing with many captains who had the ability to crush the spirits of the crew just by walking across the deck. Don’t let your personal problems affect how you interact with your team. Although it can be difficult, making a distinction between your professional life and your personal life will serve you well.

The People Closest to the Action are Best Able to Identify Opportunities and Solutions:

Understanding this principle is what truly separates leaders from being a mere manager or supervisor. You can’t expect to do everything yourself. Encourage ideas from your people, they see things on the frontline of the operation that you never will. Write down every idea you receive no matter how ridiculous an idea may be.

When Captain D. Michael Abrashoff took command of the underperforming USS Benfold, one of the keys to his vessel’s turnaround was his active solicitation of improvement ideas from the XO down to the most junior seaman. Each suggestion was tracked and any actionable items were implemented after they were reviewed by senior officers on board the vessel.

This technique has proven effective not only in the military, but in civilian occupations as well. Chevron USA incorporates a similar “idea tracking log” among its fleet of offshore drilling rigs. Improvement opportunities are captured after nearly every task. At the end of the day, these ideas are reviewed by management and acted on if need be.

There is an overabundance of highly educated scholars in the field of leadership that have very little managerial experience. Those having experience managing others did so at such a high level they were often disconnected from employees on the frontline.

If you’re looking to advance your ability to lead rather than theorize about it, do yourself a favor and pick up a copy of Strengths-Based Leadership.

Strengths-Based Leadership is the culmination of 30 years of intensive research by Gallup Scientists as interpreted by best selling author Tom Rath and renowned leadership and performance coach Barry Conchie.

The authors of the book had access to over 40,000 personal interviews with leaders, 20,000 interviews with followers, and surveys from nearly one million work teams from around the world.

They discovered that teams were most successful when the “Four Leadership Domains” of Relationship Building, Strategic Thinking, Influencing, and Executing were covered.

To help you indentify your own strengths as a leader, the book comes with a code for a “free” leadership evaluation at www.strengthsfinder.com.

The leadership evaluation identifies your top 5 leadership strengths and guides you on applying these strengths to meet the four basic needs of your followers (Trust, Compassion, Stability, and Hope).

In Strengths-Based Leadership, Rath and Conchie identify the “Four Basic Needs of Followers” as part of the “Three Keys” to being a successful leader:

Knowing Your Strengths

Getting People with the Right Strengths on Your Team

Meeting the Four Basic Needs of Followers:

• Trust:  Do you keep your word as a leader?
• Compassion:  Do you have your workers’ best interests in mind?
• Stability:  Do your employees always know what to expect from you?
• Hope:  Are your employees inspired about the future?

Strengths-Based Leadershipprovides inspiring stories and actionable ideas to help reinforce the basis of the book. Not only is the book informative, but it is entertaining to read as well!

Having read so many leadership books over the years from self proclaimed “experts” in the field, it was a refreshing to read a book based on data rather than speculation from a professor isolated in an ivory tower while a student aid teaches her leadership class.

Many people confuse the relationship between responsibility and accountability as they relate to leadership. In many cases the two terms are used interchangeably to the detriment of a project’s outcome. To help clarify these terms, and improve your understanding of the leadership process, I will attempt to explain the difference between responsibility and accountability below.

RESPONSIBILITY:

When it comes to leadership, responsibility is the before-the-fact mindset of taking ownership for the results of a project or job. To be responsible, you must first acknowledge that action must be taken on a particular issue.

As a responsible leader, you must also acknowledge the task may require additional people to be completed effectively. To take ownership of a project, managers, supervisors, and individuals must first assume responsibility.

When a manager, supervisor, or individual accepts responsibility for a situation, she also accepts accountability for the result or outcome, good or bad.

In my professional career I have heard many people (including myself) complain about being responsible for a job but lacking the authority to take appropriate action. I have been responsible for many projects that would have been made much easier (and safer) if I had the authority to order better equipment or hire expert technicians, but I didn’t.

When you encounter a situation over which you have responsibility but do not have authority, you must contact whoever does have the authority and work out a way to complete the task and achieve the results. It’s all about involving the right people in the job!

ACCOUNTABILITY:

Accountability is the after-the-fact ownership of the results of your project. It is the commitment to honestly explain why things were done a particular way.

Example: If you ever find yourself in court answering questions about why an employee was injured under your leadership, you are being held accountable.

When results are poor, everyone (particularly managers and supervisors) should avoid blame and act immediately to correct the problem and learn from the experience to prevent it from happening again.

Accountability includes accepting the consequences of decisions made to meet a specific agreement between you and your direct supervisor.

In a team or group situation, people must clearly understand their own responsibilities and be individually and jointly accountable. Each individual brings a unique set of skills to a group and it is the responsibility of the leader(s) within this group to ensure these skills are effectively utilized. Additionally, the leader(s) within the group need to be held accountable if the results of the group do not meet the expectations of management.