Momentum Podcast: 672
Is Your Management Style Destroying Trust With Your Team
by Alex Charfen
One concept that we talk about often is the difference between transactional management and transformational leadership. And one of the most dangerous places for an entrepreneur to be is when they're managing somebody transactionally. It can be exhausting and overwhelming for you as the entrepreneur, but it's also dangerous because of how damaging it can be. In this episode of the momentum podcast, Alex is going to talk about how damaging the difference between these two management styles is, and most importantly, how you can fix it.
Transactional management versus transformational leadership is a topic that I speak about often. I shared this yesterday with the attendees at Stephen Larsen's event. Each time I share this information, I have new awareness is an understanding of just how critical these concepts are.
When I was speaking yesterday, I became acutely aware of just how fast and how damaging transactional management is. There's this recurring story I hear from entrepreneurs about the people they've hired… It goes something like this:
“I hired this person and they were amazing for the first few months and then things started going bad. I think I need to replace them.”
More often than not, the problem is how the person is being managed, not the person themselves.
Full Audio Transcript
Alex Charfen: This is The Momentum Podcast.
Speaker 2: One concept that we talk about often is the difference between transactional management and transformational leadership. And one of the most dangerous places for an entrepreneur to be is when they're managing somebody transactionally. It can be exhausting and overwhelming for you as the entrepreneur, but it's also dangerous because of how damaging it can be. In this episode of the momentum podcast, Alex is going to talk about how damaging the difference between these two management styles is, and most importantly, how you can fix it.
Alex Charfen: I'm Alex Charfen, and this is The Momentum Podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop and we don't know how.
While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be.
Yesterday I had the opportunity to speak at a really good friend of mine's event. Stephen Larson had his offer event where I think there was five or 600 people there, it was absolutely awesome. And he asked me to share some of the process, structure, and routine that creates profitability in a business. And here's one of my beliefs about running a business. Once you hire a team the fastest way to profitability is to increase the effectiveness of your team, that's really a reality. If you think about it when you start hiring people on your team, the growth of your business is going to be completely almost 100% due to how effective those people are, how efficient those people are, how clear they are, how much clarity, confidence, and commitment they have to move forward and get things done.
And that's why yesterday I shared one of the concepts that I talk about often, transactional management versus transformational leadership, and just how dynamically different the two are. Let me just explain the two really quick and then talk about why transactional management erodes trust and why it will make really good people look really challenged in your business so keep listening.
If you've ever tried to work with somebody and have them be awesome at the beginning and then they started not being so awesome. Or if you hired people in your business that you really liked working with, and then there was a shift or a change or something happened, or if you've hired A players and they've left your company for any reason, this is really important. And if you feel like you're not making the progress you want, if you feel like your team's not making the progress that you want, if you feel like you're not getting what you want out of the activities you're doing this maybe why.
Here's the difference between transactional management and transformational leadership. Now, transactional management is exactly that, it's transactional. It's telling people what to do, checking that it got done and telling them what to do again. And it goes on and on, telling them what to do, checking that it got done, telling them what to do, checking that it got done, telling them what to do, checking that it got done. It is excruciating. And the challenge with transactional management is that it literally makes you the biggest bottleneck in the business because people have to come figure out what they're going to do next from you every time they have a new outcome.
Now, transformational leadership is dynamically different and it sounds completely different. Transactional management, transformational leadership, so you'd think that to go from transactional management to transformational leadership is this tectonic shift, it really isn't. It actually is a lot easier than you think. Transformational leadership where we grow people, we grow ourselves, we help people become better at who they are. In fact, transactional leadership is a personal development system for the leader and the person being led.
Because here's what we do in transformational leadership, we show people a clear outcome. We tell them where we want them to go, we cast a vision for the outcome, we tell them how we want things to end up. Then to ensure that they are successful we coach their success along the way, and by coaching their success and giving them input and answering their questions we get leveraged results and here's what I mean by leveraged results. The leveraged results are that when you get to a place where you're transactionally managing, or sorry, transactionally leading leverage results look like, you get better at being a leader because you're coaching, you're learning, you're bonding with the person. Leveraged results look like when you are leading transformationally, when you are giving clear outcomes and coaching success, you're actually developing the human being in the chair.
Running a business, working in a business can be the most intense personal development program on the planet. In fact, I often make the statement, there is no personal development program that will give you as much benefit as successfully running a business to the point where you hire a team and then hiring a team and learning how to work with them effectively and efficiently in a place where they believe in you and you believe in them. That is I think I believe the most intense personal development system that there is. In fact I always tell people, running a business is one of the most spiritually-engaging and enhancing decisions you will make in your lifetime. It's also one of the most difficult, and here's why.
Habitually and instinctively we will transactionally manage people. Will tell them what to do, check that it got done and tell them what to do again over and over again and here's what happens. I often hear this story from entrepreneurs, people in our programs, when I'm at events, when I'm at masterminds, when I'm speaking, somebody will say, "Hey, I've got this weird issue. It's the second time it's happened to me, I hired this incredible assistant. She was amazing," or, "He was amazing," or, "They were amazing for the first four to six months and then things started getting challenging and they started missing things and we didn't get along anymore." And I really didn't like them anymore."
Well, here's a potential reason that happens so often with entrepreneurs and people that they hire. When we transactionally manage people, transactional management erodes trust, transactional management actually destroys trust. Let me show you how. When you have somebody working with you who's intelligent and capable and ready to do things, and motivated to show up, and motivated to change things for you, that's one of the biggest gifts we can get in business.
And when they start working with us and then we manage them transactionally, we tell them what to do, "Check that it got done. Tell him what to do, check that it got done," we're micromanaging that person. And micromanagement, that process of them having to get something done and come check with you and get something done and come check with you, whether they know it consciously or less than consciously, that relationship is eroding trust between the two of you.
And here's how it looks from both sides. From the team member's side you're eroding trust because they don't get enough responsibility. You're not actually transferring responsibility for what they're doing to them, you're transferring steps and bits and pieces of the process, but you're not really giving them responsibility and A-players, awesome, incredible people, they crave responsibility. The best ones will demand responsibilities or responsibility or they bail on you.
And now from the other side of that coin let's look at it what it feels like from the person managing transactionally. It erodes trust for you whether it's consciously or less than consciously because you're telling somebody to do something, they're coming back to you and you're telling them to do something and they're coming back to you and that process of them coming back over and over and over again, whether you consciously realize it or not you will trust that person less. So on both sides, transactional management is destructive like crazy.
Now, moving into transformational leadership, here's what's intense about it. It builds trust, it creates a relationship and it creates massive momentum. Let me show you from both perspectives how this works. When you give people clear outcomes, coach success along the way and get leveraged results, here's what it looks like from the person's point of view who's working with you. They sit down with you, you give them clear outcomes that can base trust. You don't tell them, "Here's all the things you need to do," you tell them, "Here's how I want it to look when you're done. This is the outcome I want." And then you tell them, "As you're going through this, this is how I'm going to meet with you so that we can talk. I can coach success, I can help you with your questions, I can help you clear roadblocks. And then we're going to get the result that we've set out to get."
And so from the person's point of view being led through transformational leadership, here's what immediately happens. Trust is inherent because you've transferred responsibility to them, you've given them the outcome, not just steps along the way, so now you're building trust between the two of you. Then you're checking in and you're coaching success along the way which doesn't just build trust, it builds trust, it builds relationship, it builds the two of you knowing each other and understanding each other better, I love this stuff. This is where rubber really meets the road in business.
Everybody thinks business is about marketing and transactions and getting the right product here, and it is, it is, but there's a point where business is almost near 100% relationships. That's what will create your success, is relationships especially once you have a team. And so from that person being transformationally-managed, or sorry, transformationally-led, they feel the trust and it increases and enhances the trust relationship.
Now let's look over the other side. You as the manager or the leader will also feel an enhancement of the trust you're going to build trust because when you give somebody a clear outcome and they start pursuing it, that increases the amount you trust them. When they come back to you and they ask you the right questions you can give them answers, they proceed as you would want them to, that increases the trust between you and increases the communication between you, and builds the relationship between you and then you get leveraged results. You develop the person, you develop as a leader, it helps you rocket your company forward like crazy.
And this I believe once you've started building a team, the shift from transactional management to transformational leadership, specifically with your team, with the people on your team is the fastest way to radically increase your results. And I mean, radically increase your results because here's what happens. When you shift from transactional management to transformational leadership, you get a higher return on the investment you're making in every person in your business, think about that. What would your business look like if you got 10% more, 20% more, 30% more, or even as much as 80 or 90% more? Because when you switch from transactional management to transformational leadership, that's how big the returns can be.
What would your business look like if you got 10, 30, 40, 50, 90% more out of each person in the business? For most companies it transforms everything, it changes everything, it changes their entire trajectory. That's why when you look at our company we work with a lot of businesses around the world and a lot of them explode. We started working with Kosmos BBQ, Darian Khosravi, Dustin Hart, Hayley Hart who is my Director of Operations. Her husband is now Kosmos Director of Operations or operator. And Kosmo is one of our members and Darian Khosravi, we all call him Kosmo, He owns Kosmos Q and he sells barbecue products.
And when we started working together I think Darian was riding around a couple of million dollars a year, a little over a couple million dollars a year. We've been working together I think for a little over a year and we just heard yesterday that he's at a $10 million plus run rate. A big part of that, not all of it, but a big part of that is that Darian has shifted from transactional management to transformational leadership. He stopped telling everybody what to do and checking that it got done, and he's transitioned to giving people clear outcomes, taking the pressure off of him and creating massive returns and success.
If you're interested in more information on this, if you want to understand how to clearly go from transactional management to transformational leadership, I got you covered. We've actually created an entire report on exactly this, I think it's five or six pages. You can go to charfen.com/transformational. So my last name dot com forward slash transformational and download it.
And I think it's going to blow you away because it's literally a step-by-step process to go from the painful world of transactional management to the empowering universe of transformational leadership and get more out of every member of your team, develop them, and develop yourself. Be more excited about going to work every day and grow your business like crazy. Go to charfen.com/transformational and check it out. And if you do, come back and let me know what you think of the free report, I'd love to get your feedback. And I think that's it. Charfen.com/transformational, thanks for being here.