Building trust has always been important in business, and COVID-19 has served to highlight it, according to leadership and workplace culture expert Liz Lugt. In this interview, Lugt sets out the elements of “vulnerability-based trust” and how finance leaders can focus on being effective rather than only efficient.
Lugt is speaking at the upcoming AICPA & CIMA ENGAGE EUROPE conference on 19 May on the topic of “Expanding Your Sphere of Influence”.
What you’ll learn from this podcast episode:
- How to build “vulnerability-based trust”.
- The behaviours of a cohesive team.
- How finance leaders can be clear about priorities.
- Ways to change an unhealthy culture.
- Why it’s important to separate tactical and strategic meetings.
Play the episode below or read the transcript:
— Oliver Rowe is an FM magazine senior editor. To comment on this episode or to suggest an idea for another episode, contact him at Oliver.Rowe@aicpa-cima.com.
Oliver Rowe: Joining the FM podcast is leadership and workplace culture expert Liz Lugt. Liz is speaking at the upcoming ENGAGE Europe Conference on how finance leaders can expand their sphere of influence and become more effective in the workplace. Welcome, Liz.
Liz Lugt: Thank you so much for having me, Oliver. It’s a great pleasure for me to be with you today.
Rowe: The COVID-19 crisis has fundamentally changed the way leaders engage with their teams. As we emerge from the pandemic, what leadership model should leaders adopt in the new hybrid working environment?
Lugt: Well, I first want to just take a step back and just define what we actually mean by leadership, and to me leadership is influence. It’s influencing people to move from point A to point B. Whether that’s meeting a deadline, buying into a vision, or engaging in a project, leadership is influence. And I think, if anything, COVID-19 has highlighted or just made us more aware how important it is the way we lead others. In fact, research done by Gallup showed that the way people are managed, how people are managed has a huge impact in how they experience burnout in the workplace, and whether they will experience burnout in the workplace.
So I think for me, a really big, big change and big focus that leaders need to be aware of is to focus more on building connection with your people, especially when we think of the fact that leadership is influence, and especially when we think of just the wellbeing of our employees. Now, I don’t want to put that full responsibility on a leader, but actually when leaders build connection with their team members, it just changes everything, and I just think of that incredible quote by Brené Brown, where she says, “Connection is the energy that exists between people when they feel seen, heard, and valued.” And I think that just sums up everything that I mean when I say leaders ought to be more deliberate about building connection with those that are in this sphere of influence.
Rowe: Thank you, Liz, and how can finance leaders focus more on being effective in their roles rather than being efficient?
Lugt: Thanks for that question, Oliver. I think what we have seen is that given that a lot of our working is now on Zoom or Teams or whatever videoconferencing method, there is the temptation to be efficient with our time rather than effective. So we want to get straight into things. We want to end the meeting early, but I would say that leaders ought to resist the temptation of choosing efficiency over effectiveness. And what I mean by effectiveness is again just bringing in that whole idea of building connection, and again just talking about the fact that leadership is influence. So what can we do to be effective rather than efficient when it comes to leading others?
And you know, it’s that old fairy tale or fable told of the tortoise and the hare that had that race, and it’s that old adage which is just we ought to slow down in order to go fast. In other words, finance leaders need to slow down and focus on being effective with the people they’re leading rather than efficient. Actually, the tortoise won the race simply because they slowly but steadily focused on their goal, and they in the end beat the hare to the finish line. So we ought to slow down to go fast.
And I think for me I can just share three areas that finance leaders can focus on. The first is, of course, being more deliberate about building connection with the people that are in this sphere of influence. I think the second and very practical example is setting what I call valid expectations. Now, often we see the gap between reality and expectation really determines the level of disappointment and frustration and conflict on a team. And we can narrow that gap by setting valid expectations, but again that means that a leader needs to slow down in order to go fast. They need to be effective rather than efficient. Now, a valid expectation is only valid if we are conscious of what we really expect, and also that that expectation is credible. In other words, I can realistically expect X, Y, and Z from my team member.
The third thing is that it needs to be clear, clear in our minds what we aren’t expecting. Fourthly, it needs to be communicated. I can’t have an expectation that is valid unless I’ve communicated it to the person of whom I have this expectation. And the last step, which is the most important, is that it needs to be confirmed. In other words, I have reached agreement with this person as to what I can realistically expect from them or in this situation. So slow down and make sure that expectations are valid, and that’s the second area.
The third area is avoiding meeting stew. So again what we tend to find in this new hybrid world of working — sometimes working remotely, sometimes in person, and as organisations find their best model, we ought to avoid this meeting stew where we try and talk about all the issues at once in one sitting. Rather we ought to separate out the different types of meetings that we have. In other words, you know, you have a daily check-in, which is that three- to five-minute quick check-in with your team member, just really have a quick check-in. The second is have a meeting for tactical issues, your weekly tactical meeting — just how are we doing on things? What is the progress looking like? Then thirdly, we should have separate meetings for strategic issues. Those are likely to be more ad hoc rather than regular.
But don’t go and throw strategic issues into your tactical meeting and your check-in, and I’d say that that is really important, just to avoid that meeting stew and separate out the different types of meetings. So those are just three things, three simple things that any finance leader can do in order to be more effective rather than efficient.
Rowe: Thank you, Liz. Great advice. And what are the behaviours? You’ve talked a bit about teams and how they can be led. What are the behaviours of a high-performing team, and how can leaders build those behaviours?
Lugt: Well, you know, the behaviours of our cohesive them, well, they’re really five of them, and they’re based on a book by Patrick Lencioni called The Five Dysfunctions of a Team, and so if you flip the model on its head, there are five behaviours of a cohesive team. And the first behaviour is trust. Trust is the foundational behaviour for any team. Without trust, a team will not maximise their potential, and by trust I’m not talking about predictive trust, which is the kind of trust that I’ve come to know how you are going react in any given situation because I know you well enough. That's not the kind of trust I’m talking about. I’m talking about vulnerability-based trust. That’s the kind of trust that is not afraid to be vulnerable around the group, and particularly in being able to say things like “I’m sorry”, “I messed up”, or “I need help”, or “You’re better at this than me.” It’s also when we don’t fear being careful around the group or protective about what we say or don’t say. You know, that’s really the level of trust that teams really need to work on.
Now, the second behaviour is productive ideological conflict. If I don’t have trust on my team, we can’t engage in productive ideological conflict, and that is the debate around ideas in order to arrive at the best outcome. Now, if there’s no trust on a team, I’m not going to share my opinions because I’m going to be afraid of being vulnerable in sharing my opinion on an idea. But actually to arrive at the best decisions, we need to make sure that we are fully debating every stone. We’re not leaving any stone unturned, but we’re engaging in productive and ideological debate without the fear of being judged.
And again, then the next behaviour is commitment. Unless we’ve engaged in that ideological debate around ideas, we’re never going to achieve commitment, because I can’t buy into an idea or a decision unless I’ve weighed in. OK. And again, you’re not going to get that commitment unless you’ve had the ideological conflict, and you’re not going to get that unless you have trust. And then once we have commitment around ideas and even around just behaviours, and values, and goals, and whatever it is we then move onto the next behaviour, which is accountability. And that is not just accountability towards your manager, but peer-to-peer accountability within the team where I can hold my peers accountable for behaviours that might hurt the team, or when I have gone against the things that I have committed to. Now, we’re not going to be able to engage in accountability unless we’ve got commitment. We can’t be committed unless we’ve engaged in that ideological conflict, and we can’t engage in ideological conflict unless we’ve had trust, and ultimately at the end of the day the last behaviour is results. The reason for the existence of any team is not only that we can have a good time, and trust one another, and engage in conflict, and commitment, and accountability, but it is so that we can achieve results. Whether you’re a for-profit organisation or a not-for-profit organisation, the ultimate aim of any team is the achievement of results, and you cannot maximise your results unless you have all those other behaviours in place.
So those are the behaviours of a cohesive team. And so how does a team leader go about engaging and building those behaviours? What I’d say, focus on building trust, OK. Don’t try and overwhelm yourself by trying to get all the behaviours in place because actually without trust you’re never going to be able to progress up that pyramid. So focus on building trust on the team. Also leaders ought to remember is that they set the tone. So we want our team members to engage in this vulnerability-based trust, we have to set the tone. We have to engage in those behaviours ourselves, which is about admitting when we’re wrong or admitting when we don’t have all the answers. It’s being able to say we’re sorry or shouting out for help when we need it, or pulling people onto projects when we know that they’re better at something than us. You know, those sorts of behaviours, and also just to engage in a productive dialogue with the team members on things that might be hurting trust on the team and things that might be helpful for building trust on a team.
You know, I say to teams, “Really, get into honest, open discussion and dialogue. Not just a one-way discussion, but dialogue where everybody is sharing how they feel about trust on the team, and what could be eroding trust, and what the team should do to build trust.” You know, just one example comes to mind. How much gossip is there on the team? Do we end that Zoom call and immediately pick up our phone to another colleague to gossip about our team members? You know, those sorts of behaviours. Do we celebrate everybody’s successes on the team? Do we acknowledge our weaknesses to one another on the team? Do we share our professional successes and our professional failures? You know, what sort of behaviours can you engage in order to build that trust? And I think every team needs to identify those things for themselves.
Rowe: You talked a lot about trust, and it’s always been important in business. Is it more critical now in the era of the pandemic or coming out of the pandemic?
Lugt: What the pandemic has done has simply highlighted just how important it is. I think also when we’re working remotely and teams are dispersed geographically, you’ve got to engage in trust in a much quicker amount of time, ’cause you’re not in the office to catch social cues and be physically present. So building trust has become actually more important simply because of this hybrid way of working. And you know, team working has become far more important, because we cannot just sit at our home office and engage and just kind of try and achieve the best results on our own. So team working and the idea of also collaborating with others has become far more critical. It’s also become more difficult, and so that is why trust has been highlighted as so much more important at a time like this.
Rowe: Thank you, Liz, and an unhealthy organisational culture has a cost. How can you go about changing that?
Lugt: It’s a good question, and first I just want to highlight what is the cost of an unhealthy culture, because sometimes we think our culture isn’t so bad, but if I start highlighting certain things, there’s often the evidence that culture isn’t as healthy as it could be. So some of the things that would indicate to me that they might be an unhealthy culture is when there’s a higher degree of politics in the organisation, and also when morale is low, and when productivity is low, and when staff turnover is high. You know, often my ears always prick up when someone tells me “Oh, so-and-so’s left, so-and-so’s left. Oh, that person’s leaving, or that person has left.” That is often an indication that culture is unhealthy, and, of course, when we see silos springing up within the organisation, and when there is a lack of clarity, and when there’s a high degree of confusion, those are indications for me that culture is not healthy.
So I think when it comes to how do we change the culture of an organisation, there’s so much that one can say about that, and we could spend a whole day talking about that. But I think first and foremost, let’s take a step back and realise that culture flows from the top down. In other words, leaders have more of an impact on culture than anything else within the organisation. We can run great programmes. We can get HR involved to help us with that, but unless the leader takes active steps to buy into that and address culture, those things will fall flat on their face. It will only result in cynicism within the workplace. And the very first step that a leadership team can do is become cohesive themselves — in other words, become a cohesive team themselves. And I’ve spoken about the behaviours that make for a cohesive team, and they can focus on building trust with one another. And I think when people see that there’s trust in the leadership team, that could be a real game changer for the whole organisation.
I think the other thing that certainly a leadership team can do, or any team leader can do, is to make sure that there is clarity on the team, because more often than not confusion and politics and silos results when we have a lack of clarity. And one of the areas where we might have a lack of clarity is knowing what is really important right now, and that’s how silos spring up is when each department or each team has their own idea of what is important, and they’re not communicating with one another, and all of a sudden we see silos. So, two things is just really focus on building vulnerability-based trust, and secondly make sure you get clarity.
Rowe: Thank you, Liz, and finally, what would be your three takeaways for finance leaders listening to this podcast?
Lugt: Three takeaways for finance leaders; as I reflect on that question, I think for me it would be can they remember to focus on erring on the side of effectiveness rather than efficiency? It’s not to say efficiency isn’t important. It is, but not at the cost of effectiveness, because remember leadership is about influence and it’s about building connection with others. You can’t have that if you are racing ahead and you’re erring on the side of efficiency rather than effectiveness. So that’s the first takeaway.
I think the second takeaway for me is there’s so much a team can do and a team leader can do to change culture and to get teams working more effectively, but the most important by far is building vulnerability-based trust. You know, engaging in those behaviours I mentioned, admitting when they’re wrong, saying sorry, acknowledging when they don’t have the answers, enlisting people who are better at them at something than they are, and just not being protective or careful around the group. So, build vulnerability-based trust on the team.
And the third thing to remember, that culture flows from the top down. So if you want to change the culture around you, you start with yourself. You know, I always say leaders may lead organisations. They may lead departments. They lead teams. They lead individuals, but the most difficult person they’ll lead is themselves, and I think that’s where the rubber hits the road. Culture is a result of how we lead.
Rowe: Liz, thank you.
Lugt: It was a great pleasure. Thank you for having me.