The Four Obsessions of an Extraordinary Executive, by Patrick Lencioni, is a business parable that discusses the importance of organizational health. Organizational health refers to the strength and wellness of company culture. A healthy organization is free from office politics—it has high morale, low turnover, and unrivaled productivity.
Lencioni is the founder of a successful consulting firm, a motivational speaker, and the author of many books on leadership, including The Five Dysfunctions of a Team, The Ideal Team Player, and Death by Meeting. In this book, Lencioni offers four steps executives must follow in order to maintain organizational health. The four steps are: establishing a healthy leadership team, clearly defining organizational values, circulating values through repetition, and building those values into an organization’s systems. While none of the steps are especially complex, the challenge is to apply them consistently. Only when you commit to them can you gain access to their unique advantages.
In this guide, we’ll briefly summarize Lencioni’s fable, then we’ll detail each of the four steps, offering strategies for bringing them into your organization. For each step, we’ll highlight key moments from Lencioni’s parable. We’ll also include commentary and criticism from other business leaders, as well as psychological perspectives on the factors that contribute to healthy company culture.
Healthy Organizations Are Made of Healthy Employees
While Lencioni’s approach to organizational health focuses on shaping your organization’s culture from the top down, studies suggest that prioritizing employee well-being can be equally impactful. Improving the employee experience at your organization gives you a competitive advantage when it comes to keeping top talent and maximizing productivity.
Specifically, companies that offer flexible roles, reasonable workloads, and job security experienced increased employee well-being and productivity. Additionally, successful organizations adopt a learning culture, where collaboration is encouraged and employees are permitted to take reasonable risks and learn from mistakes.
These findings indicate that in addition to focusing on how leadership shapes organizational health, it’s also worth considering other factors, such as the quality of the jobs your organization offers and the amount of freedom employees have within their roles.
To illustrate the four steps, Lencioni offers a parable about two rival CEOs, Rich O’Connor and Vince Green. While both men are the founders of successful companies, Rich’s Company, Telegraph, consistently outperforms Vince’s company, Greenwich, because of Rich’s focus on the four steps. Throughout the parable, Rich struggles to maintain Telegraph’s health after hiring HR executive Jamie Bender, whose inability to adapt to Telegraph's culture causes considerable damage to the company’s leadership team. At the same time, Vince struggles to understand the secret to Rich’s success, despite at one point even gaining access to the four steps thanks to a leak offered by a disgruntled Jamie.
Do Business Fables Work?
Since the late 90s, fables have been a popular format for management books—many authors prefer to use fiction to illustrate their lessons and to emotionally connect with readers. Notable examples include Who Moved My Cheese and another of Lencioni’s books, The Five Dysfunctions of a Team.
While this format works for some readers, critics argue that business parables often fail to properly advance their arguments. In some cases, the stories can feel flat and constructed, as though they only exist to prove the author’s point. Weak storytelling can create a worst-of-both-worlds situation, where authors fail to tell compelling stories due to their focus on teachable lessons. This weak storytelling in turn dilutes the work’s takeaways.
While many readers respond positively to the parables in Lencioni’s books, some have criticized the roundabout path Lencioni takes before offering his advice. Depending on your perspective, the parable, which comprises the first two thirds of the book, is either a useful teaching tool or a distraction from the book’s most important messages.
In this section, we’ll discuss the first of the four steps—establishing a healthy leadership team. We’ll then move on to discuss concrete strategies for measuring and increasing the health of your team.
Lencioni recommends establishing a healthy team because doing so cuts down on office politics, which can lead to burnout and drive away talented employees. As Lencioni argues, healthy leadership teams depend on a high level of trust between all team members.
(Shortform note: While most authors agree on the importance of establishing a healthy leadership team, each author has a different image of what a healthy team looks like. For instance, while Lencioni’s vision focuses on a lack of office politics and high levels of trust, other experts note that successful teams are focused on a greater purpose that their roles serve. These criteria aren’t mutually exclusive—it may be worth aiming for a lack of politics and a greater purpose when building your team.)
Lencioni’s first strategy for assessing leadership team health is to take note of how your team behaves during meetings. Teams that trust each other are unafraid to disagree on important issues and don't take disagreements personally. This dynamic creates productive meetings characterized by energetic debate. However, your team should still be able to recognize when they’ve stepped on each others’ toes and should go out of their way to apologize.
If your team isn’t debating in a vigorous and respectful way, you can encourage participation by calling upon each member of the team to speak up individually and stepping in to make sure that apologies are given when necessary. Fostering honest debate will help build trust by giving your team the confidence that their peers won’t lie to spare their feelings.
(Shortform note: Experts argue that in addition to calling on individuals to speak up, you should take a variety of approaches to encourage debate. One strategy is to assign one team member at each meeting to act as a devil’s advocate. This team member’s job for the rest of the meeting is to try to come up with reasonable objections to each major point brought up by a colleague. By assigning someone to provide dissenting opinions, you not only give that person permission to freely debate, you make it a job responsibility.)
Have the Right Arguments
In addition to stating the importance of debate in general, experts also stress the importance of debating the right subjects.
Arguments about strategy are often productive and rarely personal. Strategic argument demonstrates that your team is invested in the company’s future. Arguments about values are often similarly productive. It's a good sign when employees maintain interest in shaping the company’s culture, even if they hold differing viewpoints.
However, arguments about specific individuals can be a sign that something is amiss. Gossip about individuals reflects the level of politics within the workplace. If workplace arguments often center around specific individuals in management, it could be a sign that a cult of personality has formed. At any rate, paying close attention to the subject of arguments at your organization can be an invaluable source of information.
The second strategy Lencioni recommends for measuring and increasing team health is to examine your team’s relationships outside of the meeting room. Your team should get to know each other on a personal level because close relationships cut down on counterproductive gossip and politics. By contrast, team members that don’t know or care about their coworkers are much more likely to fall into toxic behaviors.
More Strategies for Team-Building
Experts agree that team-building helps cut down on office politics. However, unlike Lencioni, some authors caution that personal friendships between team members can lead to favoritism and other forms of politics. You can avoid this by focusing on coaching and mentoring instead of personal bonding.
So how can you encourage your team to get to know each other? Lencioni offers more specific advice on this in The Five Dysfunctions of a Team. Among other suggestions, he recommends creating safe, structured environments for offering feedback. Once your employees are confident they won’t face repercussions for being honest, they can begin to open up. Furthermore, Lencioni recommends setting group goals for the entire team. Team rewards for productivity encourage cooperation. By contrast, focusing on individual performance can encourage pettiness and politics.
Moving forward, your next objective is to clearly define the core values of your organization. Lencioni argues that by defining these values, you create a powerful toolkit that can be used to make decisions across your organization.
For example, in Lencioni’s parable, Telegraph faced a key decision about whether to move their headquarters into an upscale complex or a modest but conveniently located building. To make this decision, Rich and his team reflected on Telegraph’s identity as a down-to-earth company that puts clients first. With their values in mind, the decision was a no-brainer.
Don’t Choose Values for Marketing Reasons
Values can help you make important decisions, but only if you choose them for the right reasons. For instance, some observers argue that values fail when they’re too focused on image, noting that many companies choose values they think will attract customers. Suppose that in the parable, in an effort to entice clients, Rich had chosen progressiveness as one of Telegraph’s core values. The team likely would have moved into the fancier, more modern building, despite the fact that it was less convenient for Telegraph and their clients.
To avoid this pitfall, keep values discussions internal, at least at this stage of the process. Values should come from within the company and should be tailored to internal needs. By contrast, if you notice that your values are primarily being used to attract customers, you may need to reassess your process.
Now that we understand the benefits of a shared set of core values, let’s consider how your organization can identify its values.
Lencioni stresses that you should select values that already exist in your organization. Considering the benefits of well-defined core values, it can be tempting to simply dictate values to your staff. However, employees struggle to embrace assigned values—they tend to feel more like corporate buzzwords than real beliefs. Instead, your job is to identify the values that employees already strive for and turn those values into official policy.
To identify your team’s values, Lencioni suggests that you consider the best attributes of your team’s top performers. For example, imagine you notice that one of your employees maintains excellent relationships with clients—she follows up frequently, builds relationships with them, and even knows their birthdays and never forgets to send a card. In supervising this employee, you realize that both of you value warmth in client relations.
Core Values vs. Aspirational Values
In a separate article, Lencioni clarifies that in his view there are a few different kinds of values, each with its own purposes. The two main types are core values and aspirational values. Core values reflect the best traits that a company already possesses. These are the values you should define in the second step, as they determine your company’s identity. When making important decisions, you should always consider these values as a top priority. Deviating from your core values can obscure your organization's identity, which leads to confusion and demotivation.
Conversely, aspirational values are values that your company doesn’t yet possess, but that you’d like to strive toward in the future. While they’re also important, aspirational values should be subordinate to core values. Core values form the foundation on which aspirational values can be built, and prioritizing aspirational values can destabilize that foundation. To correctly prioritize your values, choose aspirational values that are realistic and measurable. Choosing the right aspirational values will help you avoid overextending by trying to change too much too fast.
When defining core values, your focus should be on concepts, not the specific language used to describe them. To continue the previous example, you could use several words to describe the quality customer service your company provides. “Personal”, “warm”, and “human” would all work equally well. It isn’t the word choice that matters, it's your commitment to the customer that really counts.
(Shortform note: According to Lencioni, the language you use to describe your values probably won’t change what those values mean to you. However, your word choice might impact the way others view your values. Studies indicate that it’s possible to identify someone’s political ideology based just on their word choice. While your values may not include political stances, the language you choose for your company reflects back on the team that chose it. Because of this, it may be worth taking a bit more time to consider your language.)
By the same logic, Lencioni specifies that you should identify a small number of values that have the greatest impact on your organization. While it can be tempting to promote as many positive values as possible, the more values you adopt, the less potent each becomes.
For example, based on your employee’s performance, you send an email to the entire department emphasizing warmth in customer relations. Compared to this simple advice, the previous guidance was a slew of buzzwords—“demonstrate interest, concern, kindness, professionalism, and always go the extra mile”—that confused the team. The new policy helps everyone understand what’s expected of them.
How Many Values Is Too Many?
Research supports Lencioni’s assertion that it’s best to choose a limited number of values. According to some psychologists, the human brain can hold at maximum about seven objects in short-term memory at once. The actual number here isn’t as important as the idea that the human brain can only hold so much information at one time. These findings suggest that if you choose too many values, it will be difficult for your team to keep them all in mind.
So, how many values should you have? Entrepreneur Marc Lore recommends choosing at most three values. Adopting a limited number of values forces you to choose what’s most important to you. Even if your company ultimately adopts one or two more values, attempting to choose just three can be a useful exercise to determine your priorities.
Once your organization's values have been identified, your next objective is to take the values established in the second step and circulate them throughout your entire organization. Circulating values is the ongoing process of getting your employees to embrace your values. Successful circulation of values improves performance by allowing each employee to connect their role to the big picture. Additionally, Lencioni believes individual employees who have internalized core values are more motivated and more likely to stick with an organization through hard times.
(Shortform note: Experts agree that circulating values throughout your organization helps increase productivity and morale. Additionally, they specify that it’s best to circulate your values early in the organization’s history, while the team is still relatively small. While circulating values is an ongoing process, starting that process as soon as possible ensures that your values influence your organization’s growth.)
The first technique Lencioni offers for circulating values is repetition. While it may seem counterintuitive, repeating values ad nauseam actually increases retention—people need to hear an idea many times in order to fully internalize it. Especially in modern workplaces, where employees receive a near-constant stream of information from Slack, email, and social media, your job is to make sure each member of your team has many opportunities to absorb important information.
Communicate Your Values Simply
Repetition alone might not be enough to ensure that employees internalize your message. In addition to repetition, experts recommend that keeping your messaging simple helps improve employee retention. Specifically, stick to one value per communication, and keep phrasing consistent across each instance of communication. If you find you need to communicate in more detail, limit yourself to a maximum of three sub-points.
Simple messaging helps counteract the effects of information overload. Information overload occurs when you receive a high volume of low-quality information and results in fatigue, confusion, and sometimes anger. Employees in contemporary workplaces are at especially high risk for information overload. Keeping your communication simple helps prevent overload and protects employee morale.
Along with repetition, Lencioni advises you to communicate values across a variety of media, including both traditional tools such as face-to-face meetings as well as more modern options, like company-wide email bulletins. This is necessary because individuals have unique learning and communication styles—different people communicate differently.
For example, suppose you have a friend who moved to a rural area with the intent of “getting off the grid,” and you’d like to find the best way to keep in touch with them. Given your friend’s disdain for technology, you probably wouldn’t have much success trying to contact them via email or social media. Instead, knowing how your friend communicates, you’d take the time to write a letter, or better yet, visit them in person.
(Shortform note: Using a wide variety of media is a strong strategy because new communication technologies offer specific advantages. For example, one study found that on average, people spend 140% as much time on web pages with video as compared to pages with text only. This increased engagement can help your communications get through to your staff. Similarly, tools like Slack can help your team communicate more efficiently—teams using Slack respond to each other more quickly and close more deals. Making use of a range of new tools like these allows you to bring their unique advantages to your team.)
Once your team is ready to circulate its values, there are a few key concepts to keep in mind.
First, before circulating values, your team needs to get on the same page about what, when, and to whom you will communicate. Lencioni stresses that taking time to nail down these specifics leads to clear and consistent communication, which cuts down on costly miscommunication and builds trust. By contrast, allowing information to travel by word of mouth causes tension and confusion, much like a game of telephone.
(Shortform note: The consistent internal communication Lencioni recommends can help prevent toxic environments from forming in your organization because it ensures employees know what to expect from you. The opposite is also true—when managers communicate confusingly or with a negative attitude, it creates a tense, fearful environment.)
As an example, imagine that a coworker from another department tells you about a mass email from management about a rumored wave of layoffs. Naturally, you panic and immediately go to your manager to ask if your job is safe. Your manager shows you the email, which explains that the layoffs are only a rumor, and apologizes that you didn’t receive it in the first place. While you’d likely feel some relief, you’d also probably feel exhausted, and less inclined to trust your manager.
Communication Goes Both Ways
While Lencioni offers many suggestions for effectively communicating with your staff, he neglects the second part of the process, which is effectively receiving communication from employees. Effectively receiving communication from employees builds trust and allows you to access important feedback that could improve your value circulation process.
To make sure you’re hearing everything your employees have to say, create a variety of channels for employees to communicate with you. You should set up designated times to meet with your employees and hear their feedback. Make sure managers at all levels also go out of their way to get feedback from employees.
Additionally, consider creating anonymous channels for employees to offer feedback to ensure that employees aren’t afraid to offer criticism. Be sure to offer electronic options to protect anonymity—dropping a note into a suggestion box isn’t really anonymous if everyone can see you doing it.
Finally, practice active listening and reward employees who offer frequent, useful suggestions. Creating an environment that rewards thoughtful feedback will ensure that useful ideas always reach your ears.
Once your team is in sync, Lencioni recommends that you introduce your new hires to your core values. This ensures that new hires transition into their roles successfully and helps prevent the time-consuming process of correcting unwanted behaviors later on.
(Shortform note: Ensuring that new hires adopt core values may have even more benefits than Lencioni suggests. Studies state that new hires who feel aligned with their employer’s values are more likely to stay with the company. To help find new hires whose values align with yours, list desired values and interests in your job descriptions, not just technical qualifications.)
For example, suppose you’re hired at a new company. Wanting to put your best foot forward, you put extra time into your first few presentations, and as a result, they go a little long. At your first performance review, your manager explains that because the company really values conciseness, your presentations have actually been working against you. You’d probably wish management had mentioned that a lot earlier.
Compared to the other steps, assessing the circulation of core values is simple. If your messaging is working, any member of your organization should be able to name the organization’s values and explain how those values impact their individual role. If not, you have more work to do.
(Shortform note: As a more specific strategy for asking your employees about core values, some authors recommend company-wide surveys. Using surveys can give you access to more hard data than simply asking employees about values. These data can be used to identify specific areas for improvement. For instance, if your values are failing to reach a particular department within your organization, this will likely be reflected in that department’s survey responses.)
The fourth and final step is to build your core values into the systems that shape your organization’s daily life. When your organization is able to successfully incorporate its values into its systems, it will hire the right people, promote the right people, and fire the right people when necessary. According to Lencioni, this results in high morale and a competitive advantage in terms of acquiring and keeping talent. Moving forward, we’ll discuss how to incorporate your values into your hiring process, your performance management, and your firing process.
(Shortform note: Data supports Lencioni’s assertion that values should play a major role in personnel decisions. According to a 2021 survey, 44% of millennials and 49% of Gen Z participants reported making career decisions based on values. Incorporating values into your human systems allows you to speak to the massive segment of the workforce who prioritize values. Without strong values, many of these individuals will leave your organization, and some will be discouraged from applying in the first place.)
At the front end of this process is values-based hiring. Successful organizations will always have plenty of qualified candidates for open positions—hiring based on values gives you a surefire way to choose between them. And, according to Lencioni, a candidate’s alignment with your organization’s core values is a much better indicator of their potential than their résumé.
For example, in Lencioni’s fable, Rich O’Connor used an unconventional interview process to help determine a candidate’s values. By holding interviews in public locations and favoring personal questions over business-related ones, Rich was able to have candid conversations with candidates in which both parties had the opportunity to consider each other’s values.
Additionally, Lencioni believes potential candidates should be interviewed by as many members of your team as possible, both to assess their values and to determine how well candidates gel with each member of your team. In addition to this, as previously suggested, you should spend a few hours each week with new employees, monitoring their progress, answering questions, and using repetition to ensure new hires have many opportunities to absorb core values.
(Shortform note: While experts agree that conducting interviews with multiple team members is a great way to assess a candidate's cultural fit, they also caution that having too many interviews creates a slow and inefficient process that can be discouraging to candidates. Including just a few interviewers is often enough to cover individual blind spots.)
Reduce Confirmation Bias in Hiring
One potential pitfall of Lencioni’s values-based hiring process is the possibility for confirmation bias to come into play. Confirmation bias occurs when you interpret new information in a way that reinforces pre-existing beliefs.
For example, suppose that because your company values work ethic, you’re encouraged to select candidates who are hard workers. In particular, you interview a candidate who really wins you over. They mention taking pride in frequently having stayed late at their previous job, even when their “lazier” peers had gone home. Because of your belief that this person is a hard worker, you interpret this as more evidence of their determination, instead of scrutinizing the negative way they talk about their coworkers. In this scenario, your confirmation bias gives you an incomplete view of the candidate and could damage your company’s culture should their harsh speech turn out to be part of a broader pattern of cutthroat behavior.
Rich’s interview strategies from the parable can also be susceptible to confirmation bias. While asking primarily personal questions can be a useful tool for determining a candidate’s values, it leaves room for your personal opinion of a candidate to color your judgment about their fit with the organization.
To reduce the effect of confirmation bias in hiring, experts recommend asking negatively framed questions (“What’s your biggest weakness?”). Asking these kinds of questions can give you a more complete view of a candidate, including their shortcomings. Additionally, you can reach out to previous coworkers who candidates had not listed as references in order to get more objective opinions.
Another possible strategy for eliminating bias is conducting blind résumé reviews. Reviewing résumés without any identifying information attached helps maintain objectivity and protects you from making costly hiring mistakes due to bias.
Just like hiring processes, your performance reviews should be values-based. According to Lencioni, assessing whether or not an employee is embracing an organization’s core values is even more important than measuring their performance. Employees who struggle to produce are likely not fitting into company culture, and helping them to do so often leads to better performance. On the other hand, consider promoting employees who strongly align with company values as they are often top producers.
According to Lencioni, performance reviews should be free of dry questionnaires and quantitative judgments. Your reviews should focus on actionables—employees should walk away with a clear sense of what needs to be done to better align with the team’s core values. Additionally, you should offer feedback continuously, not just during scheduled reviews. Your employees should never feel confused about their roles in your organization.
Reduce Bias in Employee Evaluation
Lencioni argues that review processes without objective performance measures can help you focus on values. However, subjective strategies may be more susceptible to being influenced by reviewer bias.
For example, one study found that race and leadership status significantly affected performance reviews, even when all employees had made similar mistakes. Allowing these kinds of bias to influence performance reviews can lead to poor personnel decisions and in extreme cases can put your company at risk for a lawsuit.
Experts recommend two strategies for eliminating bias in employee evaluations. First, review materials should require managers to provide multiple pieces of evidence for each point of assessment. Second, managers should be thoroughly trained in using these new evidence-based materials. Requiring that reviewers support their claims with evidence introduces a level of objectivity while still allowing for reviews that focus on values.
Additionally, you should set clear goals for each employee. As long as these goals are aligned with your values, you’ll have a more objective measure of both performance and values, which will help mitigate reviewer bias.
Like hiring and performance reviews, your firing decisions should be values-based. When firing decisions are based solely on performance, you risk allowing negative individuals to slip through the cracks.
For example, imagine that you’re on a high school basketball team and one of your teammates is 6’6” and a gifted scorer. However, the same teammate constantly brings down team morale: He’s lazy at practice, hogs the ball during games, and talks trash to his teammates afterward. A coaching staff in sync with the four obsessions would recognize the player’s negative impact. They’d decide to bench him or remove him from the team in spite of his natural ability.
(Shortform note: In addition to helping you make the right firing decisions, values-based firing may also help reinforce your values throughout your organization. Experts say that firing people over values violations demonstrates to the rest of the team that you’re serious about values. Demonstrating your commitment to values in firing decisions encourages the rest of the staff to take core values seriously.)
Build stronger relationships with the other members of your team.
Open debate is a necessary part of productive meetings. Think back to your team’s most recent meeting. Did you disagree with your team members on any key points? How did you handle it?
Think back to the last time you failed to speak your mind about something important. Consider how this failure could affect your organization. When is your next chance to share your thoughts with the rest of the team, and what specifically would you like to say to them?
Consider how the other members of your team handle conflict. Some of them are probably stronger communicators than others. What steps can you take to encourage even the more soft-spoken members of your team to speak up?
Identify the values your organization most deeply represents.
Chances are your organization has some stated values. These could be reflected in a company slogan or a mission statement. List these values here, as they are stated in official company materials. Reflect on how these values are stated. Are they clear and concise, or is there a long list of confusing terms?
Think about one of your favorite people to work with. Consider the specific qualities that make this person such an effective member of your team and list them here. Try to describe these values in just one or two words each.
Compare the values you listed in the first two questions. If they differ significantly, your organization may need to clarify its values. Take a moment to reflect on your organization’s values and whether or not they need to be restated. If they do, how could you address this with the rest of your team?