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What is Missing?

Robert Greenleaf’s ideas on Servant Leadership have gained quite a group of dedicated followers since the publication of his essay in 1970. He articulated, “It begins with the natural feeling that one wants to serve, to serve first. Then conscious choice brings one to aspire to lead. That person is sharply different from the one who is leader first, perhaps because of the need to assuage and unusual power drive or to acquire material possessions.” While the foundation of his ideas is very sound advice on leadership, Servant Leadership has not become the pervasive mainstream theory of leadership. Why is this so and can his foresight be leveraged with additional insights?

Here are some thoughts for you to ponder that hopefully will be fruitful in leveraging Servant Leadership into our practical day to day world of business.

Confusing Contrast

The contrast to a servant leader by Greenleaf is a leader being driven by power and material possessions. This line of thinking would have been natural at the time as the prevailing autocratic model of management was indeed driven by power and authority. That model was under challenge particularly in the 1960s from insightful thinkers such as Douglas McGregor’s Theory X and Y, Rensis Likert’s work on the performance of different leadership styles, Blake and Mouton’s managerial grid and so forth that we discussed in my blog on The People side of Leadership.

Unfortunately, Greenleaf’s depiction of leadership becomes obfuscated without a clear distinction between managers and leaders. I addressed that in a previous blog Manager vs Leaders. In essence, a manager has a position of authority and responsibility within the organization that involves making decisions such as setting plans and budgets, organizing and staffing, controlling through accountabilities and so forth. Leaders quite simply have followers on where they are going.

Greenleaf does not explicitly discuss managers; however, he implicitly intertwines the functioning of institutions and “the system” with leadership insights in his essay. This is not surprising as too often managers and leaders are equated with HR vernacular like “she was promoted to a leadership position.”

The idea of assigned leadership is still prevalent in modern leadership theory. In my opinion, this misrepresents the actions of followers. An employee may obey a manager’s direction. That is different than followers who want to follow.

When Greenleaf talks about an unusual power drive or material possessions that too gets all intermingled with the role of a manager with little to do about leadership. Managers because of their role in the organization make more money than the employees working for them and the position has inherent power which in many respects depicts the leadership contrast Greenleaf presents. But unfortunately, that tells us little about the manager’s leadership ability. Greenleaf’s alternative in many respects is a false alternative to Servant Leadership because someone focused entirely on “me” being driven by power and purely self-interest will not be a leader. Leadership requires a “we” not a “me” mindset.

We Mentality

Leadership requires more than one. The leader must persuade someone to follow their advocated vision, goal, or simply direction. For someone to follow, their needs must be met in some meaningful way of value to them. The direction should include a common goal. There must be a form of a value proposition that motivates or better inspires them to follow that direction. Thus, the leader’s mindset must shift from “me” to “we.” The leader must serve the needs of followers. As many authors suggest this leads to some form of collaboration. If that direction and collaboration achieves meaningful results, then the followership is strengthened. It is a natural process. There is no need for the leader to have a position of authority in the organization or institution in Greenleaf’s vernacular. Anyone can be a leader at any point in time.

Managers Need to be Leaders

In pursuing the leader’s advocated direction, the leader has needs that are met in some meaningful way as well. Thus, the foundation of leadership is that mutual benefit is naturally derived for both the leader and the follower. In essence, leader and follower are serving one another.

Clearly, a manager is in a hugely attractive position to provide leadership because of their designated authority to direct. If the advocated direction is seen to provide meaningful value to the employee, then following can occur naturally, and there is mutual benefit derived by both parties. But for that to happen, the manager must be reaching out to employees and get them engaged and aligned with the direction. When this occurs, then indeed a manager can be a leader and, in the process, unleash inspired motivation from employees because the direction aligns with their higher-level needs.

Some may argue that leadership is not about “we” but rather about strictly serving the other person. This is not really a discussion about leadership as leaders have followers. Serving may or may not lead to following. There are many ways to get others to follow you. One of the strongest is to develop them, get them engaged and guide them in the pursuit of their personal purpose. In the case of managers, developing employees is a key responsibility. A centerpiece of people development is serving, coaching, guiding, and mentoring others.

Think Value Propositions

What Greenleaf advocates is core to being a leader. The leader must understand the needs of people in order to provide a direction that will meaningfully fulfill their needs through value propositions. Leaders dedicate themselves to fulfilling value propositions.

For a leader and followers plus managers and employees, mutual benefit for me is the leader serves by providing a value proposition that is meaningful to followers (employees in the case of a business owner). Likewise, the follower or one can correspondingly think of employee should provide a value proposition to the leader/manager to create mutual benefit.

Still, the manager and hopefully leader has other stakeholders. There are many stakeholders that must be considered in a business enterprise including investors/banks, the relevant community, and so forth. It is not simply the employees accountable to the manager even though they are crucial to success. Practically there are tradeoffs in vision, goals, and directions for the various constituencies. Thus, the reality is more complex than simply one on one relationships of manager and employee.

In serving to fulfill other’s needs, the manager/leader’s needs will also come into play which leads to the centerpiece of achieving mutual benefit. Mutual benefit lends itself to adaptability depending on the situation with various people shifting in and out of the leadership role (not managerial role) as appropriate depending on their relative strengths, capabilities, and foresight.

Think Teamwork

Thus, there is mutual support serving one another to achieve the greatest benefit for all. This is the nature of teamwork and collaboration. Leadership is very much like a team sport where everyone wins. In Greenleaf’s essay the leader’s role is much more static with less dynamism than required in our fast paced always changing world today.

Without this concept of mutual benefit and its derivative teamwork, people in managerial roles find it challenging to pursue only a servant leader mentality. For example, companies stay in business because they provide a meaningful value proposition to their targeted customers. In that respect, successful companies serve the customer just as leaders serve their followers.

Servant seems Demeaning

The term servant can get in the way as well for managers even though there are interesting philosophical underpinnings in Greenleaf’s essay. No one needs to be a true “servant” to a master. The humbleness and will to serve are terrific traits of leaders. Tom Collins found this in his book Good to Great: Why some Companies Make the Leap and Others Don’t. But for many the term servant seems demeaning.

Transcending to a more comprehensive state of mutual benefit with a “we” mentality, collaboration, engaging value propositions across the board, teamwork leading to successful outcomes more readily lends itself for managers to become leaders. The positive momentum of a company grows enormously when managers become leaders too, which is why organizations spend so much time and money on leadership development programs. When managers become leaders, they can unleash the motivational potential of their employees and correspondingly significantly increase the performance of the organization. Remember that people follow success.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

How often does a business owner attempt to buy inventory and realize that his bank account does not possess the necessary balance? Or pay his employees and understand that he doesn’t have the funds to cover the necessary tax payments?

Was this entrepreneur aware of the balance in his bank account? One would bet probably not.

A business possesses many assets—a strong management team, an excellent marketing strategy, and outstanding products. But if it doesn’t have any cash, these assets will be of no value as far as liquidity is concerned.

We often find this especially true of the entrepreneur who has recently created a business and is attempting to solve the many problems he is encountering for the first time. However, this issue is not limited only to “rookies”. Often seasoned executives find themselves strapped for cash.

Despite all of the virtues a business might possess, if it doesn’t have cash it can’t operate. Therefore the rationale for the topic of this article—CASH IS KING!!

Avoiding Pitfalls

In this review, we will present several ideas that will allow the executive to avoid the pitfalls and potentially life-threatening consequences of not possessing sufficient cash in the bank. They are:

Knowledge
Controls
Forecasting

Knowledge— Today with the advent of on-line access to a bank account an individual can maintain virtually up to the minute knowledge of his bank account. When deposits are made and checks are written on the account, some form of a ledger should be maintained that details every transaction.

By accessing the bank account on-line the individual can track the status of the transactions posted and verify that they have been processed by the bank. Generally, deposits are recorded immediately but checks sent to vendors or employees might not be cashed immediately. It is important to track these outstanding transactions. The bank account might show a positive balance but the outstanding checks could exceed this balance.

In 2020 no individual should have a bank account from which he cannot gain up to the minute information on-line. The same access should be provided on all credit cards owned by the business as in many situations, credit card balances can be as important as cash balances.

Knowledge of bank balances is vital, but this awareness can be meaningless if the account is not reconciled. Earlier we have stated that deposits have been made to the account yielding a positive balance but checks have been issued that have not been cashed. Potentially, these outstanding checks could exceed the positive bank balance. Reconciliation of the bank account is the process required to ensure an individual maintains accurate knowledge of his cash position.

With on-line access to bank accounts, this process can be completed daily. It is not necessary any longer to wait until the end of the month when statements are received from the bank. These statements can arrive after the damage has been done. Current reconciliations of the account can prevent short term disasters but they can also present short term opportunities. The reconciliation process can inform the owner of excess balances with which he might be able to make additional investments in the business.

Controls— Since there is no denying the importance of cash in the success of a business, it is mandatory that the owner maintains absolute control over this asset. In a small business, generally, only the owner has access to the bank account. He/she maintains the checkbook in a secure location at all times. If checks are paid on line, they are the only individual who knows the access codes to the account. In a larger business, there are often other people involved.

Trusted employees might be allowed to sign checks following approved procedures. But the ultimate control should be a review of the bank account. On-line access allows an individual to see all of the checks that clear the bank. This review can then be compared with the company’s internal records of authorized checks that have been issued.

Forecasting— Clearly understanding the current cash balance is important. But what will be the future cash balances? To accomplish this objective, companies must forecast their future cash balances. At a minimum we would recommend that cash forecasts be made monthly for the next six months and perhaps quarterly thereafter.

A forecast is the result of a rather simple formula: current balance plus receipts less payments. Receipts represent collections from customers and other sources while payments represent the accumulation of expenses such as employee costs, other office expenses, and vendor purchases.

The forecast can become complicated but in its simplest form it is mandatory. The final aspect of any forecast is the reconciliation of actual results with the forecast. For example at the end of the month, compare actual cash balance with the forecasted cash balance with the goal of understanding the reasons for differences. By understanding variances from forecast, the manager can improve future forecasts and improve his knowledge of the business.

Final Answer

Cash is the most important asset. Only by maintaining accurate knowledge, completing repeated reconciliations of balances, controlling its utilization, and forecasting its future availability can the entrepreneur insure that his business will achieve its stated objectives.

Reflections on Servant Leadership