The Merriam Webster Dictionary defines transaction as an exchange or transfer of goods, services or funds or an exchange between people. In American foreign policy, our international relationships with some countries are transactional. For instance, in the early days of the Trump Administration, numerous foreign policy experts offered transactional to define our relationship with Russia. While we hold differing views and object to their behavior, there are things we can do for each other. I do this for you, you do this for me yet we can still hold each other in contempt. Transactions, though they can be mutually beneficial, are, at their core, acts void of any relationship. For example, you usually do not seek a mutually beneficial relationship with a car salesman. The objective is to get the car for the lowest price you can. Lower the car’s price, lose some of your commission and I’ll pay you that price and drive away with a car, simple as that. On the contrary, paying for the college education of your child is less of a transaction and more of a one-way act of love. You care for them and want to invest in them, therefore you pay for their education. You do not require repayment or for them to pursue a career of your choosing. You do what you do selflessly because they are family and their happiness is your happiness. This is the behavior of a good leader. Leadership is not transactional.
Leaders of organizations can miss this. I’ve seen some who view pay, benefits and even awards and recognition as transactions necessitating a return of loyalty and improved performance. They equate these transactions to leadership. Some are puzzled when they receive little or nothing in return. It’s because this leadership transactional approach is flawed. I give you something only because I am expecting something in return or I pay you or give you a performance bonus so now you owe me better performance and increased loyalty. Some leaders convince themselves that this transaction approach is the answer. On the contrary, this belief is grounded in selfishness, centered on what the leader wants instead of what the subordinate wants. To be fair, pay, benefits, awards and even performance bonuses are not bad things. They can be motivational offerings which foster loyalty and increased performance. However, it is the spirit in which these acts or transactions are conducted which is key. Indeed, we want our people to perform better and display loyalty in word and deed but that can be obtained in different ways.
Instead of transactions, focus on the environment you create in your organization. Do you have an inspiring vision to guide your people in all that they do? I’ve worked with several companies whose vision is centered on forming and nurturing relationships with their clients. The product they sell or service they provide is secondary to the relationship which they believe to be essential to business success. Their employees follow this vision vigorously and display extreme loyalty. They do so because this vision inspires them. Do your people have a vision to guide them through the fog and friction of the modern business environment? Do they serve a cause? These answers are important. Have you created an environment of belonging? When your people walk through the doors of your business, do they experience kinship as they do when they are with their own loved ones? Do they know that they have a voice and can be critical of what the organization is doing? Do they know that you love them and have their back? Do you listen intently when they speak? Do you take time to know them personally and professionally? My three decades of leadership taught me that the answer to these questions matters greatly. If I wanted my people to be at their best and my organization to thrive, it is these questions I spent time asking and answering. I do believe that pay, good benefits, awards and even performance bonuses are crucial elements to employee performance but I always viewed these secondary to the love and respect I held for my people. Establishing great organizational environments and knowing my people came first. I never once believed a simple transaction was the answer to my organizational woes. You shouldn’t either.