Pt. 10 of 18. Loyalty, leadership lessons from organised crime

For the good of society - 18 leadership lessons from organised crime

Preface

In Part 1, "Ambition" we set the scene.

According to Interpol, the UN and WTO the organised crime industry is one of the worlds largest with quantifiable revenues of at least $3 Trillion per year and despite trillions of dollars worth of investment to counter act their growth the industry is growing faster than ever leaving a trail of devastation in its wake.

In a world first we reveal how Syndicates, some of whose annual revenues top $200 Billion use influence, resources, technology and vision to build global empires and translate it into a business language that philanthropists can use to build prosperous companies that can help repair some of the societal damage by creating new jobs, simplifying international expansion, building engaged workforces and creating new, selfless collaborative cultures.

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During our investigation we uncovered 18 categories, to read them just click on the link below:

1. Ambition
2. Customer Service
3. Bribery and Corruption
4. Devolved decision making
5. External Problem Resolution
6. Internal Problem Resolution
7. Local Touch
8. The Lean Team
9. Consistency
10. Loyalty
11. Perks
12. Disruptive Innovation
13. The Flight to Favourable Jurisdictions
14. React to Real Time Events
15. Process as the Enemy
16. Spying on the Competition
17. Emigres Clusters
18. Trust, Faith and Openness

(10) Loyalty

What this means to the Shadow Industry

Loyalty stands shoulder to shoulder with Trust as one of the most highly regarded traits within the shadow industry and we can easily see how the two are intertwined but in the interests of fairness loyalty must be two way otherwise an imbalance forms that can undermine the syndicates very fabric.

Syndicates expect and demand loyalty to the organisation - everyone united under one banner to fulfil a common purpose and in return they offer a lifetime of wealth, protection, promotion and resources.

The shadow industry learnt a long time ago that loyalty is important, not only are loyal Soldatos less unlikely to shop their colleagues to the law enforcement agencies but more importantly it enhances the consistency and trust within the organisation, speeding up decision making, increasing organisational agility and flexibility and most importantly allowing the organisation to maximise new opportunities for growth.

What this means to legitimate industries

We have all witnessed how loyal the Executive Board are to their shareholders but a recent survey of over 15,000 Americans found that 67% of employees don’t feel their organisation values or returns their loyalty so academically at least we can be comfortable saying that many employees feel let down.

Loyalty can be one way but as we’ll all attest to that can often lead to disappointment in the end. Loyalty is far more rewarding for everyone involved when it is two way but this is where the problems begin to emerge – especially in larger public organisations. In today’s results driven world you’ll find that many leadership teams’ remuneration packages are tied to the organisations share price performance and this creates a dichotomy. The leadership teams focus on increasing the organisations share price and Earnings per Share are at odds with protecting and looking after the interests of their employees and the reason for this is simple.

EPS is calculated by taking the Net Income of the organisation minus the dividends on the preferred stock divided by the organisations total number of shares so, as we can see, when net income falls, perhaps because of the effect of a recession or competition, or changes in the market then the board have three options to return it back to growth – acquire or create a new profitable source of revenue, restructure to improve productivity or lastly make people redundant. Unfortunately for many employees the third option, when coupled with a share buyback program, is the fastest quick fix because while the first two can take up to three years to return results letting go of employees only takes three months and done en masse it can quickly cut overheads and boost net income in turn increasing EPS and putting the leadership team back on the front foot with their shareholders.

It is hard for an organisation to be truly loyal to their employees when their remuneration packages are wholly dependent on boosting net income because as we’ve seen creating new value is much harder to do than making people redundant and if employees were once loyal to their organisation then when they see their colleagues being made redundant en masse – wondering if they’re next, then that loyalty fades and so does morale and when your organisation begins loosing those two values revenues normally continue to slide, profitability continues to erode and employees begin to abandon ship.

Over the past decade we have all become increasingly used to the fact that very few jobs are for life and that change is the only constant but there are organisations out there, like Google that manage to find the right cultural balance between being loyal to their shareholders and being loyal to their staff and while we could argue that it’s hard to accomplish it inevitably comes down to just three factors – communication, integrity and respect.

Takeaway

Loyalty is one of your organisations most valuable assets and nurtured properly your organisation will reap the benefits but without it your employees will behave tactically and leave at the first opportunity - increasing your hiring expenses, breaking valuable relationships and impacting your revenues and growth.

The key takeaways are:

• You must navigate the right path to manage and resolve conflicting priorities
• Loyalty must be two way and your commitment to it must be consistent
• You must be open and honest in your dealings with your employees
• Treat your employees as individuals