When I say honoring your commitments, I actually mean the following: do what you say you are going to do. This message has been given to many of us at some point in our lives, whether it be from our parents, religious leaders, teachers, bosses, friends, etc. It seems pretty basic on the surface level, right? Well, that is not always the case when it comes to real life.
Surely we can think of examples of when others have broken their promises of what they said they were going to do. A friend breaks a promise to meet you for dinner one night. A colleague breaks a promise to help cover your shift. A child breaks their promise to their parents to do their homework. All are very common. For our purposes, however, let us focus on the examples in leadership and the resulting consequences thereafter.
In leadership positions, doing what you say you are going to do has long-lasting implications. Those implications go beyond the leader's moral character and trustworthiness; they apply to the organizations they represent. In other words, if a leader does not follow through on what they say they are going to do, their employees may negatively change their perspective on the organization.
Let's use a recent real-life example as a case study.
Los Angeles-based Farmers Insurance Group had told their employees around late 2022 that most of them can continue to work remotely. This had been going on since the pandemic began in 2020. The insurance company's new CEO stated this not too long after taking the position in October of 2022.
Employees took the company's word for it - and why wouldn't they? Employees made lifestyle changes such as selling their cars to no longer concern themselves with commuting traffic. Others sold their houses and relocated to other cities and states. Working from home had become the norm since the pandemic began, and now employees got clarity for the foreseeable future as to how their professional work setting would be.
Recently, however, the new CEO of Farmers Insurance Group reversed that decision and advised employees they would be required to return to the office 3 days a week under a hybrid work plan beginning September 2020. Employees subsequently were outraged by this decision. The backlash made national news via the Wall Street Journal (article link is here; however, it is behind a paywall. A summary of the events can be found here via Insurance Business Journal).
Let us pause and study this case.
What happened? Put simply, the leader on behalf of Farmers Insurance did not do what they said the organization going to do. In fact, the leader addressed the change in the company's position on what they were going to do. Regardless of where you stand personally on this decision, the objective fact is a commitment was made and then later not followed through on.
What are the internal consequences of the leader's and organization's decision? Employees of Farmers Insurance did not take this well...at all. Employees who made significant decisions in their life like selling houses and cars are now tasked with figuring out what they are going to do going forward. Do they comply? Do they find new employment? Do they stay and fight the decision? Needless to say, employees are upset. Upset employees can lead to mistrust of leadership and the organization as a whole, leading up to potentially seeing employee attrition rates increasing across the board for the organization.
What are the external consequences? The employees certainly made national news via the Wall Street Journal article, which leaves us with another consequence: negative public opinion. Customers of Farmers Insurance who are aware of what happened may have planted the seed of doubt in their minds. This may lead to customers taking their business elsewhere. It also does not bode well for investors, shareholders, or anyone who stands to lose money on their investment with the organization.
What were the leadership challenges in this case? Let us assume that we define leadership as an activity and not a position; that way we are not confusing the position of authority with the activity of leadership. With that in mind, the leadership challenge I see that is most prevalent is cultivating a trustworthy system within the organization
A trustworthy process within an organization is something employees can rely on. In other words, employees can take the organization's word for what they are saying. In this case, Farmers Insurance made a decision in 2022 to allow most employees to work remotely. Previous leadership made this decision, but the fact still stands that the organization is responsible for the process of trust they cultivate within their walls (literally and virtually). When new leadership makes a decision that is counter to what was previously made, that trust has a good chance of being broken.
I am not saying Farmers Insurance should not have made the decision they did. Rather, I am saying the challenge of creating a trustworthy process stands to be tested in this case. Whether or not that factor was considered in leadership's decision-making process is unknown. The consequences of that decision may have yet to be seen (employee unionization and strikes, higher employee attrition, drops in productivity, etc).
The point of all of this is simple - there are far-reaching consequences when leadership does not say what they are going to do. Sometimes it may be as minor as not following through on a promise to provide free coffee for the office. Other times it might be offering an annual Jelly of the Month club in lieu of bonuses without telling anyone it would happen. No matter the scenario, the loss of trust from employees is not something that should be so easily dismissed. It is hard to imagine that free donuts and pizza each week will solve the issue at Farmers Insurance, or any other company for that matter.
Leadership challenges like the case study presented are not quick easy fixes. They are messy, challenging, and provide no clear-cut answer. They do, in fact, require more than just the use of positional authority to get solved.
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