Many business owners, small and large, provide performance incentives for their staff, eg annual bonuses, gift vouchers, time in lieu, equity schemes and the like. But what exactly are you rewarding? Incentive programs don’t typically reward performance, rather they reward results. Business success demands results. Fair enough, too. But, let’s go back a step.
“Most incentive programs don’t reward performance, they reward results.”
Results are outcomes, eg sales targets, profit, market share, growth, customer satisfaction. They are all business outcomes. In a cause and effect relationship, they are the effect. What then drives results? Performance drives results and is the cause in the relationship. So, what then constitutes performance and how do you measure it?
End Goals v Performance Goals
There are two types of goals. End Goals and Performance Goals:
• End Goals are the outcomes or results you achieve from having done something, eg sales, turnover, profit, customer satisfaction. They are measured ex post facto (after the fact) or what are commonly referred to by management consultants as lag indicators.
• Performance Goals are the drivers that get you the results, eg sales calls, customer visits, prospects, outbound calls, customer response times. These can be measured in real time and are referred to as lead indicators.
There can be considerable and costly time delays between when a lag indicator is first brought to the attention of a business owner for corrective action. Time means money. Do your performance measures include lead indicators?
Lead indicators are predictive measures of future success. And success is the cumulative effect of doing the little things day-by-day.
Lead indicators are predictive measures of future success.”
Lead and Lag indicators form an integral part of what Harvard academics, Kaplan and Norton, call a Balanced Scorecard. Many large corporations use Balanced Scorecard measures and increasingly franchisers are too. They are equally applicable to small firms and truly are essential to driving performance to higher levels.
What drives Performance?
If performance drives results then what drives performance? Well, there are two things that drive performance:
1. Skills
2. Behaviour
What is the difference? A skill is learned knowledge of how to do a task whereas behaviour is a conscious/ subconscious response or choice. Ask yourself; does this person know how to complete the task? Have they ever completed the task beforehand? Have they received skills training? Have they demonstrated competency in the skill? If not, then you may have a skill deficiency that needs addressing through skills training.
On the other hand, if your employee is competent or has the necessary skills but for some reason doesn’t apply them, then you may have a behavioural issue. In which case as the manager/employer it is incumbent upon you to call them on it. Behaviours tend to run in patterns so it is likely that the employee will repeat the behaviour (at work and at home). So, you are really doing them an enormous favour long term.
In essence you bring to their conscious awareness the subconscious (or conscious) choice they have made. It now becomes their conscious choice whether to amend the behaviour or not. Either way hold them responsible for their choice and the resulting consequences.
Try these exercises:
• Create a Performance based incentive program. Offer staff gift vouchers or lifestyle rewards based on performance not results. Reward behaviours such as proactivity, attention to detail, customer focus, team work.
• Ask your staff to benchmark themselves. Empower them to take responsibility for their own performance. Nurture the talent you have within your reach. If you are self-employed benchmark your sub-contractors/ suppliers.
• Include a lead indicator in each functional area – Sales & Marketing (customer visits, qualified prospects, customer complaints); Finance (reminder notices, daily cash position); Operations (capacity, occupancy rates); Service Delivery (response times, compliance with packing slips); People (absenteeism, timeliness, overtime).
• Call an employee/ sub-contractor on a behavioural issue, eg coming late to work, failure to meet a deadline, failure to keep a promise. Give regular and informal praise for good behaviours.
• Practice asking open questions. What? When? How? Engage your employee’s creative genius. Encourage them to come with solutions and not problems. You’ve got enough on your plate.
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Words 708
Sunday, March 27, 2011
Creating the space for change
When you are the boss of an enterprise it is easy to assume responsibility for making the decisions. It doesn’t make the decisions any easier but the buck stops with you. This is how most owner/ operators work. The position demands that you take responsibility and be accountable. It’s your money so who better to manage it than you?
Well, if you had your money invested in financial securities there is a fair chance you would engage a fund manager, whether it be superannuation or managed investments. You place your reliance upon the professionals.
When you employ staff in a small business environment you are buying the knowledge, skills, talent and aptitude of your staff. Often they are closer to the action than you are. And if you are managing your business wisely that should hold true.
Many years ago I worked in a retail department store. It was a vacation job during university. At first I served customers in our stationery department. It was simply order taking. I later migrated to selling menswear where there was more finesse, and salesmanship.
Have you got your staff simply taking orders and performing assigned tasks? Every job function requires some degree of creative problem solving. People will create work arounds and adapt either their talents and skills to fit the demands of the job or vice versa, they will adapt task to skill.
The real opportunity to step into your leadership potential is to cease playing boss and making the decisions and create a space for your people to make their own decisions. This is art not science. I’d love a dollar for every time I’ve heard, “It is quicker if I do it myself.” It reminds me of the native American Indian proverb, “If you want to go fast, go alone; if you want to go far, go with others.”
What practical steps can you take to create this space for change such that your people assume personal responsibility and autonomy?
- Conduct weekly meetings – set a simple agenda wherein you ask everyone on your team to give updates. Everyone gets to talk. Your role as Chair is to listen more. Agenda items may include: Highlights from last week, wins/ losses, roadblocks to success, priorities for the coming week, acknowledge staff contribution.
- Keep the tone positive, constructive and supportive – everyone is doing the best they can. Ask how can you support them to perform at their best?
- Lead the way – if the room goes quiet when you pose a question, then lead by example. If your staff aren’t used to public acknowledgements then show them how. If all this is new then set the context for your new methods by stating upfront, “I’m going to change the format of our meetings so that I talk less and encourage you to share more.”
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Words 470
Know thyself
True leaders know how to express themselves fully. They know what they want and effectively communicate same. They have the dexterity to be flexible in their communication so that the messages lands as intended.
Authentic communication demands that you not sugar coat your messages so as to tell people what they want to hear. It doesn’t mean that you have to be right or always know the answer, quite the contrary. The legend of Henry Ford has it that under ruthless enquiry before a Senate investigative committee, where his intelligence was brought into question, he responded that why would he need to know all the answers to complex commercial matters when he had surrounded himself with the best minds in the country.
On the other hand, Donald Rumsfeld’s infamous attempt to explain the need for a war on terror with his “known knowns and unknowns unknowns” did little to shed light on the call to arms. I suspect that was a case of a mastermind group gone wrong.
Have you surrounded yourself with a mastermind group? Can you access astute professional advisers as and when you need them?
In your zest for making fast decisions and living your busy life set aside time for others to share the load. If you make all the decisions then you may stifle the effective decision making, and creative problem solving of your people. And when it comes to professional advisers that is what you are paying them for.
If you don’t know the answer the best policy might be to simply declare, “I don’t know. What do you think?” Faced with complex problems there are three ways to resolve them. First, use logic and rationale to analyse problems and propose solutions. Second, follow your intuition and imagination to create solutions from broad ranging scenarios thus giving yourself options, and third hold the unresolved tension and allow an answer to come. You may pose a question of yourself and your team. Tap into their mental genius.
In the world of problem-solution it may be counter intuitive to deliberately hold a situation unresolved for a time. It doesn’t have to be a long time. State the problem, ask a question and let it go. Allow an answer to come. It may appear as idea, suggestion, spark of inspiration, intuitive flash or from a chance encounter. When you free your mind you allow the greater intelligence within you to be activated. Trust in yourself.
Make the freeing of your mind a daily ritual. Creative ideas spring from the recesses of your mind. What are you doing when you get your most creative ideas?
- Ends-
437 words
How do you learn?
Every waking moment is a learning opportunity. It is a mindset and philosophy as much as practical skill set. We all learn at a different pace and in different ways. The challenge as a leader is to acknowledge the diversity in the learning opportunity.
Learning is a form of growth and growing pains and discomfort come with the territory. Positive reinforcement is essential to creating an effective learning environment. Aside from formal education through our schools and tertiary institutions the workplace is an ideal learning environment.
Learning results from stimulation of the senses and the field of neuro-linguistic programming suggests we may have sensory preferences where one is more prevalent than another.
There are four critical elements of learning that must be addressed to ensure effectiveness:
Personal coaching is based on these adult learning principles. You can play a major role in the development of your people. When you lead an organisation make sure you devote time and energy to the performance of your staff and their ongoing personal and professional development.
- Ends-
Words 395
Learning is a form of growth and growing pains and discomfort come with the territory. Positive reinforcement is essential to creating an effective learning environment. Aside from formal education through our schools and tertiary institutions the workplace is an ideal learning environment.
Learning results from stimulation of the senses and the field of neuro-linguistic programming suggests we may have sensory preferences where one is more prevalent than another.
There are four critical elements of learning that must be addressed to ensure effectiveness:
- Motivation – it is a critical pre-condition that the learner has an appetite for acquiring new knowledge or skills. The environment must be conducive to learning and growth. Mistakes will be made and they form an integral part of the learning experience. Reward the leaner’s participation and find the right level of stretch in creating the learning experience.
- Reinforcement – be generous in giving constructive feedback, both formal and informal. Positive reinforcement is essential to creating the desired behavioural change. Note: constructive feedback is neither positive nor negative, it is constructive.
- Retention – give context to the learning. Retention of new information is easier to digest, understand and integrate when it is understood in context with the business goals, desired outcomes of the learning, practical application of new skills, etc.
- When learners can see the meaning and purpose of new information they more readily embrace it. If the learner does not learn the original material well then they will not retain it well either. Give practical, on the job, opportunities to demonstrate retention and application.
Personal coaching is based on these adult learning principles. You can play a major role in the development of your people. When you lead an organisation make sure you devote time and energy to the performance of your staff and their ongoing personal and professional development.
- Ends-
Words 395
Talent – are you fighting an unwinnable war?
According to business analysts and commentators, our labour market displays chronic skills shortages. Human resource professionals channel much energy into strategies designed around attraction and retention of talent. The phrase "War on Talent" is freely bandied about.
The dynamics of the labour market are much more fluid and transient than they once were. The average lifespan of the CEO is under three years. So you could safely assume the majority of your employees will have a short tenure. The dynamic that is different within the small to medium enterprise sector is that the CEO is often Owner/Principal. There is a double bind – leaving the job role and selling the business often go hand in hand.
Rather than focusing your energy on retention strategies for your employees, you would be far better served going deeper into the employment dynamic and devoting your time, energy and financial investment into strategies designed to engage your staff in their work function.
At some point your talent will leave your employ, that much seems certain. It is a question of when. Even if you are lucky enough to retain talented employees for longer periods the engagement, development and productivity is still relevant.
Regardless of tenure, your challenge as leader is how get your employee to "bloom" in the short time they are employed by you.
There are two perspectives on talent. Some consider employees, or human capital, an asset and others consider employees to be an overhead cost. Marcus Buckingham suggests your people may play to their strengths as little as 20% of their time. If this is true, then you definitely have your people as an overhead. If it is not true, ie. people are an asset, then your asset is under-performing. You are CEO of the enterprise and may also be Director and Proprietor. In any one of these stewardship roles it is your responsibility to manage your assets and the associated returns they generate.
This area of people and performance represents one area of your business that you can achieve quantum improvement. Very few small business proprietors can claim mastery in the realm of people and performance.
Here are some quick and easy strategies to realise tangible benefits:
The dynamics of the labour market are much more fluid and transient than they once were. The average lifespan of the CEO is under three years. So you could safely assume the majority of your employees will have a short tenure. The dynamic that is different within the small to medium enterprise sector is that the CEO is often Owner/Principal. There is a double bind – leaving the job role and selling the business often go hand in hand.
Rather than focusing your energy on retention strategies for your employees, you would be far better served going deeper into the employment dynamic and devoting your time, energy and financial investment into strategies designed to engage your staff in their work function.
At some point your talent will leave your employ, that much seems certain. It is a question of when. Even if you are lucky enough to retain talented employees for longer periods the engagement, development and productivity is still relevant.
Regardless of tenure, your challenge as leader is how get your employee to "bloom" in the short time they are employed by you.
There are two perspectives on talent. Some consider employees, or human capital, an asset and others consider employees to be an overhead cost. Marcus Buckingham suggests your people may play to their strengths as little as 20% of their time. If this is true, then you definitely have your people as an overhead. If it is not true, ie. people are an asset, then your asset is under-performing. You are CEO of the enterprise and may also be Director and Proprietor. In any one of these stewardship roles it is your responsibility to manage your assets and the associated returns they generate.
This area of people and performance represents one area of your business that you can achieve quantum improvement. Very few small business proprietors can claim mastery in the realm of people and performance.
Here are some quick and easy strategies to realise tangible benefits:
- Your people are assets – This is a great ideology from which to start. Assets may either appreciate or depreciate, and perform or not perform. Set performance expectations on a quarterly basis. The old annual performance review cycle is far too slow.
- Offer to remove the clutter – Research suggests our people spend only 20%, or one day per week, doing tasks for which they have a genuine aptitude. For sure they are busy all the time. You can add real value and unearth strategies to engage and fulfil your staff by identifying roadblocks and helping remove them. In your informal discussions ask, "How can I help make your job more fulfilling, engaging and productive?"
- Learning and development is an investment – The investment of your training dollar is either for remedial or developmental purposes. If it is remedial, it may highlight deficiencies in your recruitment practices. Remember the adage "hire slow, fire fast". When assessing any training/coaching programs for your staff, quantify the economic benefits. All investments yield a return on investment. What is yours?
How do you hold volunteers accountable?
One of the greatest challenges faced by Not For Profit organisations is how they hold their volunteers accountability for their contribution. It can be quite tricky to rely upon the good graces of a volunteer workforce. NFP’s are not exempt from customer service standards and in being accountable for producing outcomes.
In the relief efforts relating to the Queensland flood disaster a veritable army of volunteers has enrolled. There are three primary challenges in engaging in relief effort. They are logistics, communication and productivity.
Perhaps the easiest part of leading a relief effort is motivation. Unlike engaging corporate stakeholders there is little challenge in motivating the workforce. Similarly selling them into the vision doesn’t require much energy either. All change programs require a level of strategic thinking and in the case of the relief effort much of that is assessing the risk and prioritising tasks.
With floodwaters present and/or receeding crucial supplies like power and water are of paramount concern. And the DR ABC training they teach you in basic first aid training is paramount - Danger Response, Airways, Breathing, Circulation.
The basic tenet of first aid is “Don’t become a victim yourself.” The graphic footage of an attempted yacht rescue on the Brisbane River was testament. A good Samaritan paddled his dinghy alongside a yacht in distress only to become embroiled himself and end up in the drink.
If you find yourself organising a community event whether it be a social gathering, charity fund raiser, sausage sizzle how do you hold people accountable for doing what they say they will do?
Ask the volunteer at the outset, “What are you volunteering for?” and “What contribution do you bring to the volunteer effort?” All volunteers support the cause. The challenge is to match skills to task. For basic tasks like a barbequeing sausages, collecting cash, elling raffle tickets, handing out food parcels and general rubbish clean up the tasks are not overly complicated and require minimal supervision. These tasks lend themselves to a more directive style of leadership. They are about delegation not empowerment.
In the flood recovery effort restoring power supply is an urgent priority. It is a skilled and potentially dangerous task that must be managed with due care and is something only suitably qualified electricians should undertake.
If a well-meaning volunteer fronts up and says “I’m an electrician. I’m here to help.” Do you take them at their word or insist upon sighting their work card? Imagine the ramifications if someone dies as a result of an unlicensed tradesperson restoring power. The challenges with logistic and speed of response must be balanced with prudent risk management. The volunteer effort must be managed and skill assessments quickly made.
Our hearts go out to all those affected throughout Australia.
- Ends -
Words 460
In the relief efforts relating to the Queensland flood disaster a veritable army of volunteers has enrolled. There are three primary challenges in engaging in relief effort. They are logistics, communication and productivity.
Perhaps the easiest part of leading a relief effort is motivation. Unlike engaging corporate stakeholders there is little challenge in motivating the workforce. Similarly selling them into the vision doesn’t require much energy either. All change programs require a level of strategic thinking and in the case of the relief effort much of that is assessing the risk and prioritising tasks.
With floodwaters present and/or receeding crucial supplies like power and water are of paramount concern. And the DR ABC training they teach you in basic first aid training is paramount - Danger Response, Airways, Breathing, Circulation.
The basic tenet of first aid is “Don’t become a victim yourself.” The graphic footage of an attempted yacht rescue on the Brisbane River was testament. A good Samaritan paddled his dinghy alongside a yacht in distress only to become embroiled himself and end up in the drink.
If you find yourself organising a community event whether it be a social gathering, charity fund raiser, sausage sizzle how do you hold people accountable for doing what they say they will do?
Ask the volunteer at the outset, “What are you volunteering for?” and “What contribution do you bring to the volunteer effort?” All volunteers support the cause. The challenge is to match skills to task. For basic tasks like a barbequeing sausages, collecting cash, elling raffle tickets, handing out food parcels and general rubbish clean up the tasks are not overly complicated and require minimal supervision. These tasks lend themselves to a more directive style of leadership. They are about delegation not empowerment.
In the flood recovery effort restoring power supply is an urgent priority. It is a skilled and potentially dangerous task that must be managed with due care and is something only suitably qualified electricians should undertake.
If a well-meaning volunteer fronts up and says “I’m an electrician. I’m here to help.” Do you take them at their word or insist upon sighting their work card? Imagine the ramifications if someone dies as a result of an unlicensed tradesperson restoring power. The challenges with logistic and speed of response must be balanced with prudent risk management. The volunteer effort must be managed and skill assessments quickly made.
Our hearts go out to all those affected throughout Australia.
- Ends -
Words 460
Planning in Reverse
The anecdotal evidence is that 80% of small business owners don’t prepare a business plan and certainly don’t run their business from a plan. Understanding and managing business cycles are fundamental to success in business. From a planning perspective you can use one of two annual cycles – calendar year or financial year.
If you haven’t prepared a business plan before there is a really simple and obvious place to start – right where you are. Rather than planning how you will manage your business going forward try analysing how you currently manage your business looking backwards. Analysis is a great precursor to planning.
Business cycles present you with valuable intelligence on how you run your business. For example, let’s look at cashflow forecasting. Many of your outgoings will be repetitive and cyclical in nature. Rather than trying to predict where your cash is coming and going from in the next 1-3 months start the process by examining where your cash came/went last month.
The easiest place to start the planning process is to decode your default settings. If you keep operating the way you do currently what will your business look like going forward. If you are not happy with the projected outcomes then change your projections and strategies, this is the real benefit of preparing a business plan and financial projections. You are now managing your business.
The key principle behind forecasts and projections is that it gives you a baseline against which you can manage your performance. It is commonly known as management by exception or variance reporting.
Let’s assume your cashflow forecasts come up short on where you want your business to be, or you may even have a short term deficit. What to do? Well this is where managing from a plan puts you firmly in the drivers seat. If your cashflow is lumpy, say you are hit with a quarterly tax bill, or super contributions the financial forecasts serve to alert you to a need for proactive corrective action. This is where the plan becomes a living breathing document.
Here are a couple of practical things you can implement today:
If you haven’t prepared a business plan before there is a really simple and obvious place to start – right where you are. Rather than planning how you will manage your business going forward try analysing how you currently manage your business looking backwards. Analysis is a great precursor to planning.
Business cycles present you with valuable intelligence on how you run your business. For example, let’s look at cashflow forecasting. Many of your outgoings will be repetitive and cyclical in nature. Rather than trying to predict where your cash is coming and going from in the next 1-3 months start the process by examining where your cash came/went last month.
The easiest place to start the planning process is to decode your default settings. If you keep operating the way you do currently what will your business look like going forward. If you are not happy with the projected outcomes then change your projections and strategies, this is the real benefit of preparing a business plan and financial projections. You are now managing your business.
The key principle behind forecasts and projections is that it gives you a baseline against which you can manage your performance. It is commonly known as management by exception or variance reporting.
Let’s assume your cashflow forecasts come up short on where you want your business to be, or you may even have a short term deficit. What to do? Well this is where managing from a plan puts you firmly in the drivers seat. If your cashflow is lumpy, say you are hit with a quarterly tax bill, or super contributions the financial forecasts serve to alert you to a need for proactive corrective action. This is where the plan becomes a living breathing document.
Here are a couple of practical things you can implement today:
- Count backwards – prepare a back of the envelope cashflow analysis or reconciliation of your cash inflow and outflow for December. Keep it simple and apply the 80/20 rule. At a minimum know your big ticket items.
- Listen to your internal voice – look at the numbers you have prepared. Where does your eye go? You may find yourself commenting, “that’s not right”, “that’s too high”/low”, “did I get value for that money?” The longer you have been in business, the more intuitive your analysis may be. Use it.
- Celebrate wins – I’m not suggesting you crack upon the champagne, I’m suggesting that variance analysis is not only highlighting negative variances. It is critical to recognise those events and decisions where you exceeded your expectations. The adage “catch people doing things right” applies to you too!
Sunday, March 20, 2011
Necessity is the mother of reinvention
Your ability to reinvent yourself, products/services, brand and even your category is key to enjoying sustained business success. Sadly, most business owners don't look at reinvention or innovation until it is too late. In fact, 80% of the population adopts reactive behaviour. They wait for the external environment to create such discord or circumstance that change is demanded.
When you run an enterprise the best advice I can afford you is to reinvent yourself and your business on an ongoing, if not scheduled, basis. You may well ask, "Why take action when it's not broken?" Well, the business environment moves so fast and with such volatility that if you are standing still or operating from yesterdays assumptions and beliefs you will be dead in the water.
In the education sector curriculums which are set at the beginning of the year are outdated before they have run their term! Fortunately, you are an enterprise and a small(er) one at that, and this affords you the flexibility and ability to alter course more quickly than larger institutions. Herein is a major competitive advantage for you. If you program annual reinvention of yourself and your business you not only take out the reactivity, you create a decisive advantage over your competitors, big and small.
Quite simply, if there was one new thing you did in your business all year, let it be this – reinvent yourself and your business. Question the very assumptions upon which you started the business. Everything is fair game.
When you run an enterprise the best advice I can afford you is to reinvent yourself and your business on an ongoing, if not scheduled, basis. You may well ask, "Why take action when it's not broken?" Well, the business environment moves so fast and with such volatility that if you are standing still or operating from yesterdays assumptions and beliefs you will be dead in the water.
In the education sector curriculums which are set at the beginning of the year are outdated before they have run their term! Fortunately, you are an enterprise and a small(er) one at that, and this affords you the flexibility and ability to alter course more quickly than larger institutions. Herein is a major competitive advantage for you. If you program annual reinvention of yourself and your business you not only take out the reactivity, you create a decisive advantage over your competitors, big and small.
Quite simply, if there was one new thing you did in your business all year, let it be this – reinvent yourself and your business. Question the very assumptions upon which you started the business. Everything is fair game.
Here are some things for you do:
- Make reinvention an annual event: Given that reactivity is so widespread, take the spontaneity out of the equation by programming an annual review, or time to reinvent yourself. This applies equally to you as an individual as it does for your products, services, brand and category.
- Go offsite: The process of reinvention, innovation or lateral thinking is best explored when you are free from the constraints of your day-to-day activities. Get out of the office, commune with nature, or find some avenue where you disrupt the limits of your current thinking. Creatives adopt techniques like writing ideas with your non-preferred hand, engaging in musical or theatrical stimulation, or any right brain activity.
- Innovation is play: Business is too serious. If managing a business is science then innovating is art. Give you and your team permission to explore the unexplored. The creative powerhouses like Google and Apple have made art an art form. Huh? Give yourself permission to play and reap rewards unimagined by your logical, linear, conservative left brain.
Sunday, March 6, 2011
The myth of leading by example
A fully functioning work team doesn’t need an example. What they need is the freedom to be led by their own example. And this is where leadership is more about empowerment than delegation. There are times when an individual may lack insight, skill or ability. Much of that can be learned, trained or developed but where people act autonomously in their job role is very different.
“It is desirable for you to be AN example but not THE example.”
As a principal, owner/ operator of an enterprise it is desirable for you to be AN example but not THE example. I understand that information flows upward and for major strategic decisions you may realistically be the only one with all of the facts and figures, strategic perspective and skin in the game. All of the factors empower you. What is worth exploring is how and when is it appropriate to share the leadership responsibility.
Strategic decision making can be shared with a Board, professional advisors and mentors. Some aspects of a small enterprise like cashflow management, exit strategies, downsizing are sensitive issues. There is a strong case for selectively choosing your confidente. One business owner I knew was in grave financial difficulty. In the absence of proper counsel she shared the business’ woes with her staff. All that achieved was to spread panic.
There is a case for the judicious sharing of sensitive information. Being transparent doesn’t mean showing your dirty underwear in all of its finery. What would have been appropriate in that circumstance would have been to acknowledge that the trading performance was down, cashflow was tight, budget cutbacks likely, and reaffirm the commitment to devise strategies to trade through the temporary setback. The key in this instance was not sharing the facts objectively but remaining calm and emotionally centred in doing so.
“Fear feeds off the unknown.”
Where is the line between being inclusive and transparent whilst averting misinterpretation and panic. Fear feeds off the unknown. I recall a time where I worked in a financial institution, subsidiary of one of the large four Australian banks. All manner of rumour and innuendo surrounded the firms’ future. I took consolation from the fact that the parent company had invested $6m on system upgrades. At the time I figured a parent company would not invest such money if it intended to close the firm down. Four weeks later the firm was closed. Go figure! And you wonder why I now write about business leadership.
Here are three practical strategies to tryout today:
• Answer a question with a question – the next time one of your staff come to you with a problem and asks, “What should I do?” refrain from giving them a solution, your solution. Ask them a reply question, “What do you think you should do?” It may take some practice and you may need to set in the context of encouraging them to think for themselves.
• Table the facts, explore the feelings – the role our emotions play in everyday business life is grossly understated. Emotions form the basis of many of our decisions and drive much of our behaviour. They are rarely discussed in a strategic or problem solving context and that limits the creative solutions available for consideration.
• Form your opinion on the best available facts at hand – the fields of management accounting and decision support environments serve the primary purpose of providing “timely and accurate information.” Speed of fact gathering is very important. Make your decisions, as best you can, with due consideration of the relevant facts. You will get better at this with practice. Cut yourself some slack with this one. You will get some things wrong and when you do have risk mitigation strategies in place to cover yourself.
- Ends –
Words 626
“It is desirable for you to be AN example but not THE example.”
As a principal, owner/ operator of an enterprise it is desirable for you to be AN example but not THE example. I understand that information flows upward and for major strategic decisions you may realistically be the only one with all of the facts and figures, strategic perspective and skin in the game. All of the factors empower you. What is worth exploring is how and when is it appropriate to share the leadership responsibility.
Strategic decision making can be shared with a Board, professional advisors and mentors. Some aspects of a small enterprise like cashflow management, exit strategies, downsizing are sensitive issues. There is a strong case for selectively choosing your confidente. One business owner I knew was in grave financial difficulty. In the absence of proper counsel she shared the business’ woes with her staff. All that achieved was to spread panic.
There is a case for the judicious sharing of sensitive information. Being transparent doesn’t mean showing your dirty underwear in all of its finery. What would have been appropriate in that circumstance would have been to acknowledge that the trading performance was down, cashflow was tight, budget cutbacks likely, and reaffirm the commitment to devise strategies to trade through the temporary setback. The key in this instance was not sharing the facts objectively but remaining calm and emotionally centred in doing so.
“Fear feeds off the unknown.”
Where is the line between being inclusive and transparent whilst averting misinterpretation and panic. Fear feeds off the unknown. I recall a time where I worked in a financial institution, subsidiary of one of the large four Australian banks. All manner of rumour and innuendo surrounded the firms’ future. I took consolation from the fact that the parent company had invested $6m on system upgrades. At the time I figured a parent company would not invest such money if it intended to close the firm down. Four weeks later the firm was closed. Go figure! And you wonder why I now write about business leadership.
Here are three practical strategies to tryout today:
• Answer a question with a question – the next time one of your staff come to you with a problem and asks, “What should I do?” refrain from giving them a solution, your solution. Ask them a reply question, “What do you think you should do?” It may take some practice and you may need to set in the context of encouraging them to think for themselves.
• Table the facts, explore the feelings – the role our emotions play in everyday business life is grossly understated. Emotions form the basis of many of our decisions and drive much of our behaviour. They are rarely discussed in a strategic or problem solving context and that limits the creative solutions available for consideration.
• Form your opinion on the best available facts at hand – the fields of management accounting and decision support environments serve the primary purpose of providing “timely and accurate information.” Speed of fact gathering is very important. Make your decisions, as best you can, with due consideration of the relevant facts. You will get better at this with practice. Cut yourself some slack with this one. You will get some things wrong and when you do have risk mitigation strategies in place to cover yourself.
- Ends –
Words 626
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