I’ve had two conversations recently that highlighted the importance, as a leader, of creating clarity for your organization. While one looked retrospectively over the course of 2022, the other focused prospectively on 2023, and both had implications for the employees of their respective organizations.

In the first situation, the person I was speaking with described that they were in the process of calculating year-end bonuses. The organization had experienced strong results in the past few years and, as a result, giving every employee their full bonus did not represent a hardship for the organization’s bottom line. 

This year, however, the organization’s results were not as strong and it became important to differentiate performance. Unfortunately, the organization had not done a good job of delineating the criteria for the bonus pay-out and, consequently, had not effectively communicated to the employees the link between the company’s results and the bonus pool or the link between the bonus pool and their performance.

As a result, many of the leaders expressed their discomfort with having to relay messages to some of their team members that they would not receive a bonus while their peers would receive their full bonus. As the person I spoke with explained, “It doesn’t seem fair to tell them now, when there is nothing they can do about it, that their bonus is tied to their performance.” 

Ultimately, the leadership team chose to split the pool equally among the employees. The result, as you might have guessed, is that the highest performers in the organization were frustrated and demotivated to see their peers whose performance was subpar receive the same bonus.

In the second situation, the person I was speaking with had been leading the efforts to craft the strategic plan for their organization. When it came time to establish the goals and OKR’s for the coming year, there was pushback from the senior leadership team. The sentiment being shared was that this felt too confining, that it would limit innovation. 

The reality, though, is that without a clearly defined mission, vision, goals, and OKR’s, employees are left to their own devices to try and figure out how best to contribute to the success of the organization. This clarity, rather than constraining innovation, enables employees to understand what types of innovation would propel the organization forward.

Think about it this way, innovation in Whole Foods — which describes its mission as, “Our purpose is to nourish people and the planet. We’re a purpose-driven company that aims to set the standards of excellence for food retailers.” And Trader Joe’s — which describes its mission as, “We are committed to providing our customers outstanding value in the form of the best quality products at the best everyday prices. Through our rewarding products and knowledgeable, friendly Crew Members, we have been transforming grocery shopping into a welcoming journey full of discovery and fun since 1967.” will be quite different. 

Employees at Whole Foods might be rewarded for forging partnerships that reduce carbon impact in delivering products to the stores, even if that may represent a nominal increase in the product cost. Whereas Trader Joe’s employees might be rewarded for forging partnerships that allow products to be delivered to the stores more cost effectively, even if that may represent a nominal increase in carbon impact. 

Now imagine that the only framing given to employees is that they work in the food retail industry. How would they know whether reducing carbon impact or reducing cost of product are more important to the company and, consequently, a better investment of their time and energy?

As a leader, one of the most important things you can do for your organization, for your employees, is to ensure that there is clarity throughout the organization. This clarity begins with mission, vision, and values. It extends to goals, OKR’s, and individual performance expectations. 

This coherence allows each employee to understand how they can contribute to the success of the organization.