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  • Leadership of a Privately Held Company

    Jun 11, 2020

    IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses.  The following blog has been provided by Chris Brennen of Insperity (www.insperity.com):

    Leadership of a Privately Held Company

    When leading an organization through a challenging season, it may seem like the whole world is looking to you for answers – your employees, your customers, your investors and even the public at large.

    It’s often wise to lead with a message of hope and optimism in the face of adversity. For some, this may include making promises about the future.

    While promises might seem like a simple solution, they come with stipulations that, if left unfulfilled, risk damaging your reputation.

    Instead of promises, make commitments.

    For example, let’s examine the difference between the following sentences:

    “I promise employees will remain safe and employed.”

    “I’m committed to keeping employees safe and employed.”

    The Problem with Promises in the Workplace

    When you make a promise – like the one above – to your employees or customers, it plants specific expectations in their minds about how you will act in the future.

    Making promises is like accruing financial debt. When you use credit to buy something, you’re committing your future income to an old expense.

    When you make a promise, you’re pledging your future time and effort to a past choice. Much like debt, promises lock you in to a timeline for acting upon them.

    In the example above, you’re promising to keep people employed and safe in perpetuity. Any number of scenarios could make it difficult (if not impossible) to keep that promise.

    Why?

    Because many variables that might force your hand are simply out of your control. As a result of an unforeseen event, you might have to let an employee go, while the rest of your staff witnesses you go back on your promise.

    What’s at Stake?

    Trust is everything when you’re a leader.

    During normal times, trust helps inspire your staff to achieve your business’ common goals and motivates them to give discretionary effort. In challenging times, trust in leadership can help calm anxieties and fears that might otherwise cripple the business.

    When you make a promise that you can’t deliver on, you damage and potentially destroy people’s trust in your word – even among groups that support you and believe you’re doing your best.

    Whether the damage is temporary or irreparable, that lack of faith can weigh heavy on the morale and productivity of your team. From that point on, you’re digging yourself out of a hole that was completely avoidable.

    If you feel the need to make a promise, be careful and intentional about what you say and be sure your promise is achievable. Otherwise, you put yourself and your business at great risk.

    The Strength of Leadership Commitment

    Leadership commitments are bigger and more powerful than promises. They’re also less specific but stronger in their intention.

    Commitments can and should be backed by action, but leave room for those actions to evolve based on new information and attitudes. There’s also no inherent deadlines.

    With a commitment, your strategy may change, but your word stays true as long as your actions are in alignment.

    Let’s circle back to a variation of the original example:

    “I promise to keep our employees safe.”

    Instead, you should say, “I’m committed to the safety of our employees. Here’s how.”

    As a promise, this statement can seem hollow. How can you guarantee anyone’s safety?

    A commitment, instead of guaranteeing, shows that you’re dedicated and have humility – a nod to the fact that leaders aren’t in control of everything.

    The seemingly innocuous choice between a promise of safety or commitment to it can result in wildly different outcomes in the event of an employee injury:

    1. It could signal failure on your part (because you broke your promise).
    2. Or, it could be an opportunity to renew your commitment to safety by revising and improving your action plan moving forward

    Both scenarios result in a negative outcome (an employee injury), but the second allows you to address and rectify shortcomings without eroding trust.

    In this scenario, a strong leader would:

    • Make an unwavering commitment to employee safety.
    • Back it up with a sound plan.
    • Regularly communicate the strategy.
    • Be honest about what you don’t know.

    Don’t Fear Commitment

    Do you have a tendency to clam up – refusing to provide any guidance or insight – in difficult situations?

    Don’t let the difficulty of a leadership situation or fear of commitment put you into silent mode.

    Perhaps it isn’t fear keeping you from making commitments, but an intentional plan to hold your cards close to the chest – to under promise and over deliver.

    However, research shows that going above and beyond doesn’t actually pay off. As it turns out, people put more value in someone who keeps their word than people who exceed it.

    Silence, no matter the justification, can be damaging to trust, morale and productivity of your team. When there’s no transparency, when there’s no vision, employees are left with little to follow or believe in.

    Building trust that lasts

    During a challenging leadership situation, make commitments based on your values and company identity. Communicate early and often and follow up more than seems necessary about where your organization stands.

    Any small victories you make that reinforce your leadership commitments will help you build trust with your employees and customers. When your team believes in where you’re going, what you’re committed to and what you’re doing, they’ll follow you.

    For other Small Business and HR-related Blogs visit https://www.insperity.com/blog/

    Visit our COVID-19 resource center for webinars, updates and tools.

    Terry Polyak is a CBPA (Certified Business Performance Advisor with Insperity, a market leading company in outsourced HR services.   If you have questions about the content of this article or would like to obtain information related to the services Insperity offers its clients, Mr. Polyak would welcome communication at (425) 748-7565 or Terry.Polyak@insperity.com

    IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.

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