It doesn’t matter whether you are a chief executive or a newly hired intern, it is up to each and every one of us to tap into our drive, our ambition, and our creativity to transform our work and the business of business. We do this by taking on the responsibility for both actions and results. We do this by reaching out to members of our village – drawing them in, sharing a vision and encouraging them to build on, and take ownership in, the opportunities for transformation.

But in amongst all this, we must also understand the nature of the implied leadership contract.

I was reminded of this by Wally Bock’s excellent post, Don’t Just Tell Me. Show Me. In this post, Wally writes of a colleague who challenged him early in his career – rather than offering praise, she said “don’t just tell me, show me”. As Wally explains, praise is powerful and financial incentives can be very effective:

But if that’s all you use with team members, you risk moving out of the realm of social covenants and into the realm of economic contracts.

And this is one of the most important aspects of leadership. Just because you may not “know” every person that works in your business unit or across your enterprise, this doesn’t mean that those people don’t have a sense of who you are. It doesn’t mean that they don’t have some sense of relationship with you. After all, if you have been following my advice and working on your communication skills, you will have built a great deal of rapport with and amongst your teams. But with this sense of relationship also comes a covenant – the leadership contract.

The leadership contract goes way beyond a mere transactional relationship. This is not just about financial reward, recognition or even performance. It is both personal and collective. When your teams buy-in to your vision and commit to making it their own, they are doing so by first providing what Robert Putnam describes as “bridging capital” – the type of social capital that connects us to people outside of our close circle. But I think that the leadership contract spans the space between bonded and bridging social capital (bonded capital refers to those close personal relationships and trust that we have with family and friends). As time goes on, and as leaders deliver on their promises, the bonds between us change. This happens because we derive satisfaction from our work far beyond the financial reward. We identify with our company, with our business unit and with our colleagues – so our work becomes “part” of who we are.

Leaders who recognize the complexity of this type of relationship – the leadership contract – will find higher levels of performance, resilience and innovation within their organizations. And in this day and age, that can only be a good thing.

Nina Nets It Out: As leaders our influence extends far beyond the casual employee-employer relationship. It is multi-faceted. Understanding some of the nuances of the leadership contract can keep us all ahead of the curve.