Rank has its responsibilities

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What makes a leader? The answer is not found in rank and privilege. The answer is found by understanding a leader’s responsibilities, Scott Sedam says.

July 08, 2013

You know you’ve made it as a writer when you get hate mail or, barring that, sincere emails challenging you to quit avoiding a subject or imploring you to take something up of particular concern to a reader. The hate mail was abundant last fall after I published my series on the supplier-trade shortage and dared to suggest that a guest-worker program and path-to-citizenship for non-resident labor might be the only way out of our labor quandary. One of the emails proclaimed, “It is people like you that are destroying this country!” 

Regarding more constructive emails, I received several of late noting how many of my articles and columns in the past few years have concluded that at the end of the day, year, decade, or millennium, the single variable that trumps all others in the organizational success equation is company leadership. More specifically, the direction leaders set, the culture they build, the systems they create, and the attitude they promote. Having attained the official age of sage-dom (which is 60, for those keeping score at home), I can state unequivocally that this is not a theory or even a hypothesis. 


After 35 years of intensely studying organizations, I have not a shred of doubt. This is not ideology. This is simply a fact of organizational life. It’s all about the leaders.
 
What the readers challenged me with was, “What makes a leader?” Specifically, what does a good leader do? I started working on this topic about 10 years ago with a couple of blog posts and a short article. I felt I had the basic model, but then something interesting happened—the greatest crash of any major industry in the history of the United States. It is one thing to lead when times are good or perhaps merely stable. The degree of difficulty rises exponentially while trying to lead people through a storm of epic proportions. Some leaders who looked great before the fall lost their luster almost overnight. Others less heralded rose to the challenge and emerged on the other side with healthy companies now growing with the re-emerging markets. Having worked with more than 200 builders along with a host of suppliers and trade contractors, I have not seen it all, but I have seen more than I could have imagined. That exposure combined with my former life working for and with companies such as U.S. Steel, Motorola, John Deere, Caterpillar, Cummins Engine, and several units of the old Bell System, among many others, provides me with a pretty strong database. Thus my job now is to flesh out the model, write about it, and hope I can illuminate the issue for others. So let me take you back to the specific day that launched my evolution from merely observing the good, bad, and ugly of leadership to a more conscious attempt to analyze and understand it. 
 
It was 1992, more than 20 years ago, that eleven corporate vice presidents of a major home builder sat around the conference table as the senior vice president led them through another weekly exercise in non-decision-making. The MO of the senior VP was to appear initially supportive as each VP made his or her report. He then took carefully aimed potshots and asked unanswerable questions such as: 
 
“Ron, so far it looks to me like Todd here has wasted about a half-million on his software analysis when we all know what the problem is. What do you think?” Then there was, “I am committed to a system of paying our superintendents 100 percent by this list of monthly metrics I created. I am excited about this. Do you think it will work, Tony?” The SVP, of course, had never spent a single day working in the field. And how vividly I remember this one: “John, how long will it take the Atlanta division to recover from Steve’s recent supplier-trade training efforts that have all of the subs up in arms?” After pitting each VP against the other and taking everyone down a few notches, the SVP figured he had opened them up to change and would then regale everyone with principles from the latest management book he had read. Most of the VPs learned to hide their angst and just play along.
 
On this particularly frustrating Friday morning of going through multiple rounds with such questions, the talk finally turned positive—to golf games, country clubs, and boondoggle trips that harbored only a vague business connection. One of the VPs, Steve, evidently telegraphed his growing disgust over the fact that the team had once again managed to avoid making any number of tough, important decisions needing their attention. The SVP looked at him with a smirk and declared loudly in front of all, “Well Steve, I see you do not approve. You understand, don’t you? Rank has its privileges?” Steve, never one to back down from a fight, returned the look with the iciest of stares and said in a low but emphatic voice, “What I understand mostly is, rank has its responsibilities. If we spent as much time on responsibilities as we do on rank, maybe we’d be getting somewhere.” With that, Steve picked up his notebook and coffee, turned his back, and walked out of the room. A stunned silence ensued. Someone tried to make a joke, but it fell flat. Another said, “Well, there goes Steve again,” but the group was already breaking up. Something important had happened, but they weren’t quite sure what.
 
I’d like to say that everything changed that day in the company, but that would be a fantasy. Yet Steve’s brazen comment did launch some good discussion about what our roles were, and what the roles of leaders in an organization should be. I began watching leaders that day even more closely than I had the previous 10 years. What did this one do so well? Why did that one fail miserably? How about this one who just sort of spun in circles? What did leaders do that made work easier or harder for people? What behaviors garnered respect from the troops? Which behaviors turned the willing workers into a pack of attack dogs or into indifferent employees just putting in their time and hanging on for the weekend? Which actions by leaders enabled people to do even more than they thought they were capable of?
 
Take a quick trip over to Amazon.com, click books, enter “leadership,” and you get more than 93,000 hits. I don’t have the year it might take to sift through all the listings, but I did review the first eight or 10 pages and I saw at least 50 books on leadership, half of which sounded compelling and about half of those I have read. Interesting though, I have not read any for more than five years, and I don’t plan to until I get my own thoughts crystallized on the subject. It is impossible not to be influenced by others but as I launch into this effort, I want to have the cleanest sheet of paper available. There is the distillation of my years of experience trying to answer the question, what makes a leader? The answer is not found in rank and privilege. The answer is found by understanding a leader’s responsibilities. The order is not important, except for No. 7. By putting the other points first, the last one takes care of itself.

The seven responsibilities of leadership:

1. Responsibility to self. If a leader is not together personally, keeping an organization on track will be extremely hard. Responsibility to self is the antithesis of self-absorption, but it does require a high level of self-understanding. The ethical and moral compass that is missing in so many of our companies is because leadership has either lost its own bearings or lacks the will to extend ethics throughout the company. “Do the right thing” is popular to say, but knowing what that is and doing it consistently is harder. As Dr. W. Edwards Deming would have said, “It’s essential, that’s all.” 
 
2. Responsibility for strategy. Leaders set the direction of a company, the highest level of strategy. Strategy requires first and foremost knowing which business you are in, which business you are not in, and why. It requires an understanding of your market and your customers on a macro level. Strong, clear, consistent strategy results in strong operational tactics deployed by managers up and down the line. Do that well and associates at all levels will understand the company strategy and how their work is tied to it. 
 
3. Responsibility to people. Jim Collins, author of “Good to Great,” said it best. Leaders are responsible for getting the right people on the bus and in the right seats. Then a leader challenges them, removes obstacles, and supports them relentlessly. Leaders who insist on such an approach in the first few levels find it becomes pervasive all through the company, all the way through the selection of suppliers and trades. But overlook that one division president’s malfeasance because he is producing good numbers and you erode the foundation. There are no secrets in a company. Everybody knows. You can destroy in one day what took 10 years to build.
 
4. Responsibility to customers. The purpose of a business is not to make money. The purpose of a business is to solve or prevent problems, fulfill needs, and remove pain. Do those things well and you make money. Money is the result. Don’t believe it? Ask any customer what they care about: their problem or your profit margin? Knowing this, how can we have any other attitude toward customers but to love them, cherish them, and adore them rather than just merely take care of them. Leadership that demonstrates this responsibility continually has half the battle of a successful business already won. 
 
5. Responsibility for systems and process. The job of a leader is to lead the creation of great systems and processes where solid everyday people can do a good job. This responsibility is so often missed. You cannot build a business on the backs of heroes. There are not enough heroes and not enough hours in the day. The business landscape is littered with the bodies of good people, even great people, who gave up because they toiled away in broken systems and could not accomplish good work. Here is the acid test: Do your systems and processes help your people get work done, or do they hinder work getting accomplished? You don’t know, so ask them—beg them—to be brutally honest. Now lead the effort to create new, improved, and more productive systems.
 
6. Responsibility to community. True leaders understand that customers, employees, suppliers, and the company are all part of a community. Accepting responsibility for that community should go without saying, and the strongest leaders won’t have to be reminded. Their frustration is not being able to get to all their ideas that will help make the community better. Ideas are essential, but never discount the meaning—and joy—that comes from getting your hands dirty in the process of helping others. Wear a little dirt and your employees will respond in kind. There is no greater builder of respect and appreciation than working hard together to improve the lives of others. Do it for the right reasons, but prepare to be amazed at the positive impact it has on business.
 
7. Responsibility to investors. A key result for any business is profit. Anyone with a checkbook—or a debit card—understands the basic principles. Finance and accounting make things a lot more complicated but the essence is unchanged. The stark truth is if investors make their return, most don’t care much how you do it, and many won’t even care about the long-term future prospects. That’s why people still invest in tobacco companies or soft drink manufacturers. So leaders have to care even more. The ultimate responsibility to investors is to create a sustainable organization that generates consistent profit in an ethical and moral way. If you take care of the first six responsibilities, is it even possible to do otherwise?
 
George Box, a renowned professor of statistics at the University of Wisconsin who passed away this year, left us a remarkable quote that is good to remember when considering any model that tries to explain some part of our world be it statistics, chemistry, adolescent behavior, or leadership. “All models are wrong. Some models are useful.”
 
The statement is important to remember as we venture into this series. My concern is not did I capture every last nuance of leadership, but did I establish a useful model to analyze the impact of leaders and, more importantly, help you build your own leadership paradigm? 
 
Was Steve right? What if leaders and managers spent as much time worrying about their responsibilities as they do their privileges? Would our companies improve? Would our employees have greater satisfaction? Would our customers love us? Would the investors line up to offer us more money? We can say for sure that Enron, Tyco, and Madoff Securities would never have become household names. But do the responsibilities of leadership apply to your business, even down on the street level? I’m interested to hear your feedback. 
 
In Part II of this series we’ll take a deeper dive into each of the seven responsibilities for more examples of what works and what does not. In Part III, we’ll look at seven builders who have shown exceptional leadership in one of the seven responsibilities and show you how to create the complete package. If we garner enough response, perhaps we can go with Part IV, written by you. Send me examples of your best and worst leadership stories and whether I can use your name, of course. That could provide the deepest learning of all.
 
Scott Sedam is president and founder of TrueNorth Development. His articles appear in Professional Builder and his Lean Building Blog appears on www.HousingZone.com. Sedam welcomes your feedback at [email protected] and invites readers to join the LeanBuilding Group on www.Linkedin.com.

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