Leadership – Leading with Heart and Mind

Leadership – Leading with Heart and Mind or How Can You Achieve Peak Performance?

Which leadership behavior is necessary to drive a company to market leadership? What can young entrepreneurs, aiming to bring their own product idea to market, learn from successful entrepreneurs? Which findings from modern brain research can help them advance?

This article introduces you to a persuasive leadership model that incorporates findings from neuroscience and leverages the solid experience of NLP modeling. You’ll learn how effective methods are put into practice and the results achieved when leaders act not only rationally but wholeheartedly.

Here in Germany, many mid-sized companies have market shares exceeding 80% in their sector. Yet these companies are barely known among university students, even though Germany’s chancellor has described them as “driving forces of growth and employment.” They are the engines of the German economy in the global market, the so-called Hidden Champions.

A Hidden Champion (definition by Hermann Simon, 1990¹):

Ranks among the top 3 for market share in Europe or worldwide.
Has an annual turnover of under 3 billion euros.
Has low public visibility.

This year, the family-run company Wurst Stahlbau was awarded the “Hidden Champion 2011.” The jury’s rationale reads: “Wurst Stahlbau represents mid-sized businesses as an economic driver and operates promisingly in all categories. The company is financially successful and also committed to social, cultural, and volunteer efforts.

In all of this, Wurst Stahlbau never forgets its own employees; among other distinctions, it’s gained national attention for its progressive system in occupational health management.”²

Evidently, these successful companies care about more than mere sales and profitability. They have recognized that they can only achieve lofty goals in tandem with motivated employees. Many such firms have been on the market for a long time and boast a rich history.

Robert Dilts, one of the developers of NLP, and his brother John drew on their extensive consulting and coaching experience with international companies, entrepreneurs, executives, CEOs, and investors, among others, from 2003 to 2005 to develop a model that systematically compiles the achievements of these highly successful businesses. This leadership model pinpoints not only the success factors but also what motivates even the smallest firms to deliver outstanding performance. For example, a French telecommunications company with just 25 employees managed to displace a large corporation of about 1,000 employees from market leadership due to its innovative power.

German family-owned companies like Deichmann, Britta, Würth, or Miele display comparable structures and factors³. In his new book, Matthias Pittrof⁴ “illustrates the great significance of corporate culture for business success, focusing on the so-called Hidden Champions—the little-known mid-sized world market leaders. The author identifies the corporate culture of Hidden Champions as an intangible strategic success factor. Thus, these mid-sized world market leaders exhibit a performance-oriented atmosphere shaped by visionary leadership, high-performance staff, an ability to innovate, and customer orientation, which is tied to measurable economic success.”

But what exactly does visionary leadership entail? How is a performance-oriented atmosphere created? How does a company attract high-performance employees—do they just fall from the sky or appear randomly on the roadside? A highly successful mid-sized entrepreneur in machinery once said, “I can hire and pay workers, but I have to earn their willingness to perform.”

So we need to address the question of how a leader can earn that willingness to perform. Against the backdrop of this year’s published Gallup Engagement Index 2010, this question becomes particularly significant. For the past ten years, the Gallup Institute has polled workers worldwide about their sense of connection to their companies. The outcome in 2001 caused a stir, with 74% of German respondents saying they had only a minimal or no emotional tie to their company. Why should a worker remain motivated and high-performing for a firm they feel no connection to? This year’s data shows that more than one-fifth (21%) have mentally resigned from their jobs.⁵

If entrepreneurs and executives understand that effectively only 13% of their workforce truly drive their company’s competitiveness, they’ll realize the untapped potential across the whole staff. The art of visionary leadership is not just bringing employees along toward market leadership, but involving them emotionally from the start. This significantly boosts a company’s long-term innovation capacity.

NLP’s major contribution has been the analysis of success, breaking it down—or “chunking down”—into small, comprehensible elements, making success reproducible. The Dilts Success Factor Model® (SFM®) systematically captures the success factors of top leadership and the communicated core values of top-tier companies in a detailed way. This innovative leadership model serves as a modern guide to developing effective, ethical leadership skills that guarantee lasting business success. Interestingly, many of these factors can be explained biologically through cutting-edge medical measurement and analysis, so in the following sections, I will span a wide arc between economic relevance and medically verifiable needs.

The identified success factors are:

Results = Achieving positive business outcomes
Change = Embracing change
People = Fostering people and teams in their development
Values = Putting core values into practice

How do we measure company success?

Obviously, a company’s success is generally judged by whether it operates profitably or, at least, reaches its break-even point quickly. To do so, it’s vital to repeatedly adapt corporate structures to changing market needs or encourage innovation. By nature, though, people fear change. They tend to hold onto the familiar, even if they complain about its flaws and disadvantages.

Based on the biological principle of conserving energy, employees don’t want to constantly adapt to new changes in corporate policies—especially if they don’t understand the purpose. On the other hand, people also don’t want to do the same thing every day. Thus, there’s a balancing act between security and variety, sometimes swinging more toward one side and sometimes toward the other. Successful leaders tap exactly into this drive.

Successful leaders give their employees the chance to develop alongside the company. This requires trust in employees’ motivation and transparency about why certain decisions were made. No one wants to be changed, yet people love the changes they can produce or shape themselves, particularly if they can see right from the start how it will benefit them.

In many mission statements, companies claim they “challenge and foster” their staff. Unfortunately, these are often just words, with no genuine strategy to leverage staff development for achieving corporate goals. Employees may be pushed to meet sales targets, but training or support either doesn’t happen or is too generic. Yet the companies stand to gain substantially from unused staff potential.

People are asked to do more tasks in ever shorter timespans with ever fewer employees. This causes significant dissatisfaction and demotivation. Pressure at work leads to psychological illnesses such as stress, burnout, or depression, but also somatic conditions like hypertension, heart failure, or digestive issues, all of which are closely connected. As a result, absenteeism rises and leaves even less time for employee discussions and further development.

This year’s Gallup study confirms that absenteeism among employees who lack an emotional bond is 28% higher than among satisfied employees, costing businesses 3.7 billion euros annually. Much of this economic harm is self-inflicted because severe stress and high performance pressures are associated with inadequate exercise, poor diet, and insufficient relaxation. Neurological deficiencies arise from lack of oxygen, essential vitamins and minerals, and insufficient cortisol. This stress hormone has anti-inflammatory effects and supports the immune system. Consequently, besides burnout and depression, heart attack and stroke are major widespread health problems.

This environment doesn’t create a trusting, transparent atmosphere that prompts employees to commit themselves and their ideas to the company’s success. Are independently thinking employees even desired? Only 8% of employees without an emotional bond fully agreed that their supervisors were open to their new ideas and suggestions. Among the highly engaged emotionally, it was 73%—not even three-quarters. Anyone who’s repeatedly met with deaf ears eventually gives up. No wonder the number of satisfied employees continues to decline. Yet people are the most valuable resource for an organization’s innovativeness.

Open communication within the team and short routes to management can replace drawn-out, rarely held employee reviews. The seemingly higher time demand for these leadership tasks pays off through improved productivity from employees who feel valued. Yet only 71% of employees who are highly emotionally engaged feel that their supervisor truly takes their opinions into account.

Neurobiological studies show how brain activity rises through chemical processes triggered by positive emotions. These employees think proactively, propose improvements, and stick together, even in tough times. “Nothing stimulates us so much as the desire to be recognized by others, the prospect of social acknowledgement, the experience of positive attention, and the feeling of love. From a neurobiological standpoint, the core of all motivation is giving or receiving interpersonal acknowledgment, esteem, and attention.” (Prof. Dr. Joachim Bauer)

However, the brain processes disregard or verbal attacks as if they were physical harm. 98% of the emotionally indifferent or unengaged feel neglected by their leaders. This may explain why 66% of employees work more against the firm’s interests than for them, and wouldn’t rule out resigning in the next 12 months. High turnover, knowledge loss, recruitment efforts, and training for new employees cost companies billions. As long as company owners prioritize near-term profit over their people’s best interests, not much will change. The events of the last few years have made it clear what impact this has on the entire economy.

A company should focus on core values to achieve its goals together with its employees. Especially during crisis-ridden times when almost nothing seems stable, remembering one’s values is paramount. This focus on values is like a lighthouse on a foggy November day. Everyone in the company can orient their work accordingly, forging closer connections. Even small investments that bolster employee emotional engagement bring not only a better work climate but also huge cost savings through fewer absences and reduced turnover.

Ultimately, though, the interaction between supervisors and employees determines what outcomes are reached. The SFMTM® model thus identifies four behaviors as the core competencies of effective leadership.

Outstanding leadership equally relies on:

Stretching = Striving
Empowering = Empowering
Coaching = Coaching
Sharing = Sharing

Stretching refers to the ongoing pursuit of improvement. This includes the willingness to question habitual practices, take risks, and achieve above-average results with limited resources.

Empowering is about enabling and authorizing employees to act independently. Depending on their potential, they are entrusted with responsibility and influence. Both individual and team performance improve when employees understand the value of their work and can express themselves through it.

Through Coaching, employees develop the confidence and skills needed to grow into that responsibility. Leaders guide their people in setting clear goals, giving feedback for achieving them.

Sharing involves exchanging knowledge and information to promote dialogue among people in the company. Modern knowledge management supports this by streamlining access to shared resources. Another essential aspect of sharing is that leadership makes its vision, values, and goals transparent, effectively explaining the “rules of the game.” Employees can then align themselves with these goals and contribute their own ideas and information. As a result, desired outcomes are reached more rapidly.

These four actions differentiate a manager from a leader. A leader consistently strives for improvements, empowers employees to be independent, fosters their self-confidence, communicates goals, and takes their ideas into account.

Behavior stems from beliefs. Values set the framework within an organization. Shared values and beliefs unify a team and are the key to motivation and corporate culture. Rituals play a significant role; they can reinforce solidarity and provide stability and security through structure. Rituals develop over time or can be initiated intentionally to emphasize positive messages.

According to the SFM® model, 8 fundamental values are crucial for peak performance:

Vision = Have a vision
Determination = Follow your purpose
Achievement = Consistently execute your concepts
Generosity = Practice generosity
Motivation = Motivate yourself and your employees
Example = Be a role model
Consistency = Act steadily and reliably
Openness = Be open to your employees’ needs and maintain transparent information policies

To illustrate these values in practice, I’d like to circle back to German mid-sized businesses. The corporate culture of traditional family-run businesses is shaped by the following success factors:

Vision: Often founders follow an idea of how their company will help improve quality of life. Deciding to establish a company becomes a natural result of that idea, frequently made intuitively because they’re personally very enthusiastic about their product.

Consistency: In the past, values, sustainability, and succession typically weighed more heavily than personal fulfillment. Sons would naturally inherit their father’s business, expand it, thus securing the livelihoods of themselves and their employees. Nowadays, corporate succession is one of the greatest challenges for family-owned firms.

The long-term approach of these companies: They’ve built or expanded their firms to pass on to the next generation. These entrepreneurs know that some investments pay off only after a long time. They hire staff particularly during crises because they’re available and not being poached by large corporations.

Capital investment: Relying on one’s own capital fosters healthy independence from banks. Especially today, this is paying off tremendously. Many small to medium-sized businesses remain healthy, whereas others, having grown too quickly on borrowed capital, declared bankruptcy and were dismantled.

Recognition and belonging: Employees of family businesses feel seen and appreciated as individuals. Regular company parties are organized, and there are rituals like honoring long-term service. Supervisors remain open to their staff’s personal issues. They know that monetary incentives only have a short-term effect. Small, frequent rewards—like verbal praise or a pat on the shoulder—are more effective in fostering emotional ties. This releases a cocktail of motivation hormones in the brain that can’t be purchased anywhere else. It enhances concentration and readiness to act via dopamine, lifts mood with endogenous opioids, and, via oxytocin, creates a sense of belonging and a willingness to go the extra mile.

Leading by example: Successful family business owners expect from employees only what they themselves are prepared to give. They model commitment and don’t withdraw in crises. As the English saying goes: “Walk your talk.” Modern neuroscience has an explanation for this as well. Much of our upbringing and learning is rooted in our unconscious ability to mimic others’ actions. This is driven by mirror neurons, which are scattered across various regions of our brains. Because this mirroring often happens subconsciously, leaders must realize the enormous responsibility they carry and carefully consider their actions. Sam Walton, the founder of Wal-Mart, once said: “In less than 14 days, employees will treat their customers exactly the way their boss treats them.”

Consistency: Once agreements are made, they’re kept. Customers can rely on these family firms for quality and timely delivery.

Openness: Even some successful companies still have room to improve here. It’s not easy to build an effective, systematic proposal system to utilize employees’ ideas. That makes it all the more important to maintain personal relationships within the company, so that creative solutions can also surface informally.

Often, a casual chat during breaks or after work spawns a vital insight for the business. Founders or CEOs willing to embrace change and innovation can use the SFM® model in a coaching process to identify these success factors for their own companies and integrate them into their leadership.

What Does the SFM® Model Mean for Your Company’s Leadership?

Step 1

How do you answer the following questions? What results do you want to achieve? Are these results purely financial, or do you aspire to something more lasting? On what values is your leadership based? Which people are crucial to your business—investors, customers, suppliers, employees? How can you engage them in your company, and what changes will be necessary to reach your goals?

Step 2

How are the 8 core values realized in your company? More important than simply stating the values is specifying sense-based fulfillment criteria. By which metrics can you gauge if all 8 core values in the success model are being met to your satisfaction? Which measures could strengthen certain values further?

Step 3

Ultimately, true success depends on consistent action. The SFM® success model describes the interaction between the leadership team and employees. Information exchange tops the cycle. How have you communicated your company’s vision and goals internally? Who is aware of these goals, and who acts on them? For instance, through casual lunchtime conversations, you can informally gauge the staff’s grasp of company objectives.

Continue through the steps: Everyone should strive together to achieve the best results. How strongly is the will to succeed embedded in your company? How cohesive are your employees, and how emotionally committed are they to the company? What level of dedication can you expect? Show that you enjoy what you do and ensure employees are placed where their interests lie. A motivated team is passionate, takes pleasure in their work, and strives to do their best.

Encouraging independence fosters engagement. May employees implement their own ideas? Are they encouraged to take responsibility, or do strict guidelines persist? For example, must every sales rep justify every hour worked? Are all office employees forced to adhere to a rigid schedule? Or do you only require that someone is always available by phone, leaving them to decide how they meet that requirement?

People want to develop themselves. Regular employee reviews support this development if they are properly planned and conducted in a trusting setting. Ask what support the employee wants, and give honest, constructive, and specific feedback on their work. If you’re pleased with their performance, give them concrete praise for their actions. Encourage the employee to voice which responsibilities they’d like to take on.

Information exchange and contributions of ideas close the loop. Here, it’s about how information is networked. How much can staff suggest and propose ideas? How often are these accepted and implemented? A knowledge database accessible to everyone can make work easier. “Mobile learning” is another concept. Encourage staff to take charge of their learning, and give them the time and opportunity to do so. You could also implement a suggestion system where the best or realized ideas are rewarded.

The degree to which employees engage and thus take responsibility for the company’s success depends on four factors:

Do they want to do the tasks at hand?

Do they understand exactly what needs to be done and the ultimate goal?

Are they able to do what is expected of them?

Are they permitted to do what they want to do?

If people feel over- or under-challenged, their performance declines. It’s better to define a more expansive scope so they can grow into their responsibilities. It’s not who they are or appear to be that matters, but what they could become. Leadership is not about doing everything right; it’s about doing the right things!

From a neuroscientific viewpoint, a person’s personality reflects the makeup of their unique neural network. Leading with heart and mind means accepting each individual’s uniqueness, identifying their potentials, nurturing them, and building upon them.

Summary

This essay introduced the SFM® model, developed by Robert and John Dilts between 2003 and 2005. From interviews with top executives about their success formulas, common factors and strategies were identified, with their interrelationships illustrated in Figure 2. Using this success model, you can learn to program your company for success. Sometimes it’s wise to enlist a neutral observer for a company’s self-assessment—someone who can uncover blind spots. Depending on the company’s size, this might be a friend, relative, or an expert in your sector.

References

¹ Simon, Hermann: “Hidden Champions”: Speerspitze der deutschen Wirtschaft. In: Zeitschrift für Betriebswirtschaft (ZfB) 60(1990)9, pp. 875–890

²http://www.n-tv.de/Spezial/Mittelstandspreis/Wurst-Stahlbau-ausgezeichnet-article2578916.html

³ Inga Michler, Wirtschaftswunder 2010, Campus 2009

⁴ Matthias Pittrof, Die Bedeutung der Unternehmenskultur als Erfolgsfaktor

⁵ http://eu.gallup.com/Berlin/118645/Gallup-Engagement-Index.aspx