How to Reignite Financial Performance by Empowering Your Employees

You’re halfway through the year and the company’s financial performance is below plan. You need to act! The most common response is to cut costs to improve the bottom line and/or fire or reassign a senior executive to create a sense of urgency. These actions create disruption and distraction at a time when the organization needs to be aligned and focused. There’s another approach.

June 26 2014 by Brian S. Cohen


Empower your employees to find the solution. Step back and let them take the lead. Invest them with the power to effect change. There are two basic approaches:

  1. Create a cross-functional team to focus on the problem. Early in my career, I was summoned to the CEO’s office along with two people from different departments. The CEO told us that one of our smaller divisions was not doing well. He said everyone in the group was working hard, but no one had any solutions. He asked us to come up with a plan within a week to improve the division’s performance. He said there were “no sacred cows.” We should not concern ourselves with whether our solutions were politically correct. We came up with a plan that adopted an open-architecture product approach where the company’s product was just one of many that our salespeople could offer. Broadening customer selection highlighted the benefits of our product offering, and sales increased markedly.
  2. Empower your front-line employees to find the solution. Most call centers evaluate performance based on the length of a call. Calls that last beyond a certain time limit negatively impact CSRs’ performance reviews. Early on at Zappos, the online shoe website, service reps reported that callers had a lot of questions and that the calls could last 10, 15, even 30-plus minutes. They suggested that Zappos not evaluate their performance based on the time a call lasted, but rather on the call resolution. Zappos adopted this policy and now allows its CSRs to stay on the line as long as needed with a customer. This has translated into pricing power for the company. Zappos’ customer loyalty is so high it enables them to charge full retail for its shoes.

To ensure the success of your endeavor, be sure to show your employees that they come before you. In the March 22, 2014 “Corner Office” column in The New York Times, Don Knauss, the CEO of Clorox, recounted one of his first leadership lessons while in the Marines. After a hard day of drills in the field, the commanding officer had arranged for a special meal for the soldiers. Hungry, Mr. Knauss, a lieutenant, walked to the front of the line to get dinner. A gunnery sergeant tapped him on the shoulder and said, “In the field, the men always eat first. You can have some if there is any left.” As Knauss recounted, “It’s all about your people; it’s not about you. And if you’re going to lead these people, you’d better demonstrate that you care more about them than you care about yourself.”

Research supports this theory. In “Which CEO Characteristics and Abilities Matter?,” a study led by University of Chicago Booth School of Business Professor Steven N. Kaplan to be published in the Journal of Finance, a direct correlation was found between company performance and whether the CEO was “open to criticism.” This is a byproduct of CEOs being willing to empower others.

Your employees are on the front lines every day. They see first-hand what works and what doesn’t. Hand them the reins. You’ll be surprised the ideas that will be uncovered that you would not have known. Some of the changes they suggest or ideas they have may be small, but those suggestions could conceivably drive big gains.