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You want loyalty?

“It is not from the benevolence of the butcher or the brewer or the baker that we expect our dinner, but from their regard to their self-interest.”
                                                                                                                                                                                        — Adam Smith, The Wealth of Nations

I’m always amazed at how many leaders expect people to work against their own self-interest. Some examples: Pitch in on an extra project for no possible reward. Sell new accounts when being paid handsomely for existing revenue. Show initiative when constantly second-guessed. Care about the company’s financial performance when treated like a mule and sharing no gain.

Some of these leaders complain that there’s no loyalty anymore. There may be some truth to that, but I see it more as an algebraic equation. L (Loyalty) = PR (Perceived Rewards). PRs, however, can mean different things to different people. Several of my kids who are in their 20s are extremely loyal to their employers, but they also get high PRs. One daughter’s PR is working with other talented artists, even though her monetary rewards are low.

My other daughter gets to work on environmental issues that she’s deeply committed to. My son’s PR is monetary. If my daughter who works with artists had to work with capitalists like me, she wouldn’t be as loyal. (I’m still working on her…) If my other daughter had to work for a smokestack industry, she’d be home on the couch at 5:15 p.m. If my son didn’t receive good tips as a bartender, you wouldn’t catch him volunteering for another shift when he has an 8 a.m. class.

A few years ago, I met with a CEO who didn’t understand why he couldn’t get people to come in early or work past 5 p.m. He “couldn’t find any good people.” He tried mandating longer hours (you can imagine how that went over). He tried hiring new people… repeatedly. He tried tightly monitoring employees’ work. However, he didn’t try positive feedback, allowing them to come up with their own solutions or sharing any of the large amount of money he made every year — heck, every week! He expected big L with very little PR. In algebraic terms, L  PR.

Some people have a natural reservoir of L because they expect rewards. They have a positive outlook and bust their tail. I love working with people like that! However, they still need PRs to stay engaged over the long haul. Others tend toward the “show me the money” end of the spectrum and only put out good energy if they see the reward plainly and quickly. If handled correctly, they can be great assets as well.

The invisible hand of self-interest (apologies to Adam Smith) can either guide your actions as a leader or slap you across the face. Make your choice.

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Todd Ordal

Todd Ordal is President of Applied Strategy LLC. Todd helps CEOs achieve better financial results, become more effective leaders and sleep easier at night. He speaks, writes, consults and advises on issues of strategy and leadership. Todd is a former CEO and has led teams as large as 7,000. Follow Todd on Twitter here. You can also find Todd at http://www.appliedstrategy.info,  303-527-0417 or todd@appliedstrategy.info

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