Net: One of the most important roles of leaders and managers is to “look for people doing things right and tell them.”

Like most companies, The Loyalty Group (now the LoyaltyOne division of Alliance Data) had Operating Principles.  Ours were:

• Work together
• Be at cause
• Respect & challenge each other
• Teach & learn
• Have fun

One of my goals when seizing the opportunity to start a new company was to create a culture where we were we were all driven by the goal of creating the future first and doing what others found impossible while treating people with respect and having fun along the way.  I quickly learned that simply espousing these principals and putting them on the walls of our offices was perhaps necessary but terribly insufficient to create the kind of culture we envisioned.

After a few (painful) false starts we built these principles into several company processes and policies:

• Recruiting – no one was asked to join the company before a senior executive (often me) had shared our Operating Principles with the potential employee and received their commitment to leading by these principles.
• We hired an industrial psychologist to conduct an anonymous employee feedback survey twice a year. The survey included questions about our managers’ leadership style and asked employees to rate their managers on how well they modeled “leading by the Operating Principles.”
• 10% of the bonus for anyone who managed one or more employees was calculated based on their team members’ responses to “leading by the Operating Principles” questions.
• We probably terminated more employees for violating our Operating Principles than for any other reason.

Given the importance of our Operating Principles and our commitment to taking employee feedback seriously, the semi-annual meeting when our industrial psychiatrist presented the results was well attended and no one was checking email or otherwise “not present.”

Although over two decades ago, I still remember the first meeting we had with our psychologist to review the employees’ feedback like it was yesterday.  Our team member’s feedback was fairly positive until she came to the section on “communication.”  Although our industrial psychologist was a highly professional and buttoned down PhD, I believe her exact words were “you all suck at communication.”  She clearly had our attention as everyone on the management team was at least somewhat stunned at her proclamation.  We thought we were doing all the right things when it came to communication – we had monthly town meetings, a frequent feedback culture, shared company updates through email blasts, I had lunch with five customer service representatives every month and our leadership team “double jacked” in our call center several times a year.

Our psychologist told us we needed to read The One Minute Manager.  Published several years before our meeting, I had seen the book in bookstores but never bought it.  At that time, I was a big reader, but focused on consuming “serious” books published by Harvard, MIT or Oxford; books on strategy, leadership and customer service.  The One Minute Manager looked to be about 50 pages long and I didn’t think it could possibly add value to me or other leaders of our company.  But given her feedback and alarming “you suck” conclusion, I bought it at Toronto’s Pearson Airport that evening and read it on my flight to Montreal.

The book’s most important message was simple: Leaders and managers should make it a priority to “look for people doing things right and tell them.” This is especially important for entry level team members and anyone joining an “apprenticeship business,” like Bain Consulting in the 80’s, Loyalty or Year Up where, over the course of their existence, these industry leaders have developed approaches, processes and other practices to deliver their mission.

Looking for people doing things right and telling them is critical for at least two reasons:

1. Team members, especially those new to the company or industry, often do not realize when they are doing something “right.” I remember this being modeled expertly by my Bridgespan colleague Susan Wolf Ditkoff when we were developing a strategy for the nonprofit Common Cents.  On one occasion, Mandy Taft, a relatively new member of our team (but with significant work experience prior to joining Bridgespan) had presented to our client.  As soon as we got in a taxi for LGA, Susan said to Mandy “you did a great job presenting this morning and let me tell you exactly what you did that was effective…”
2. Thankfully, our industrial psychologist told us exactly what we were doing wrong during the meeting mentioned above at the Loyalty Group. Our leadership error wasn’t that we didn’t give positive feedback – it was that we almost always followed up a “great work” comment with something like “but, did you ever think about doing this…” or “what if we added this…”  Unbeknownst to us, a lot of our team members where hearing “she/he thinks I could have done this better.”  Immediately after this session, our leadership team made it a priority to “look for people doing things right and tell them” and also were more conscious of and thoughtful about adding constructive feedback – often separating the “plus” from the “delta” in Year Up parlance.

Although I believe LoyaltyOne’s specific operating principles have evolved over the past two decades, I’m pretty sure their spirit lives on and that they are one of the major contributors to the company’s extraordinary track record. Long after I handed over the leadership reigns to JS and BAP, the company continues to define what it means to “create the future while treating people with respect and having fun along the way.”  Few companies can match their accomplishments, including: 20%+ annual growth; one of the key drivers of the highest performing North American stocks; perennially selected as one of the best companies to work for, best companies for diversity, best companies for women,and best corporate culture.  I will forever be grateful to Sir Keith Mills who gave me the opportunity to play a small part in getting this wonderful enterprise off the ground, but the real credit goes to my leadership team members, every one of our associates and those that continue to lead the company into the future.

Love to hear your favorite leadership books or others that have had a significant impact on you.

CHU