In today's new normal, we must adapt if we are to meet the
economic and political realities of the next decade. The depth of the current
downturn requires deep and rapid change, which is always driven by effective
leadership.
All organizations are perfectly designed to get the results
they’re now getting. All organizations have two things in common, a present and
a future. During the present we program our future. If the future you envision
is different from your present, you must exercise effective leadership to
implement change starting today. Otherwise
you will fall into the insanity trap; doing
the same thing over and over and expecting different results.
To achieve a
different future, effective leaders define their intended vision, translate this
into a plan, communicate the plan to employees, and develop their commitment.
Defining the strategic direction is an extremely important leadership function.
It focuses the team on the longer term. The purpose of strategy is to produce
improved results on a continuous basis.
New market and
customer realities make change imperative in our current economy if we are to
have future sustainable revenue and profitability.
Strong leadership is required to change the
organization to reach the ideal. These leaders involve their
employees in discovering the need for change and include them in the plans for
change so they don’t become change critics and change resistant.
Change is always
carried out by people in the organization. The transformation of a company is
really about the growth of people. Organizational transformation is really about
the growth of the people of the organization. Effective leadership is the
necessary catalyst for the development of people and implementing change.
To build an outstanding organization we must transform at
each management level. Managers are task oriented.
They focus on the functional areas of
business. Changes in process are easy to measure and quantify.
Young managers are rewarded for efficiency.
They focus on doing things right.
As they progress up the management ranks, we measure their
effectiveness by how they change from just doing tasks to how they focusing on
doing the RIGHT tasks. Many mangers don't make this shift because they don't
understand the powerful effect of strong leadership. They continue to focus on
role related tactical issues of revenue, shipments, and quality. A manager
becomes an effective leader by focusing on developing opportunity and increasing
value in the organization.
Leadership has become increasingly important to creating a
successful future. However, it is often identified with softness, which implies
tolerance and compromising standards. Even those who acknowledge the effects of
positive leadership believe that leadership is qualitative, that we can't
measure the results of our leadership. This limiting attitude has a far-reaching
effect on performance and long term sustainability.
An effective
leader builds a results based a culture of enthusiastic, motivated, confident
teams of employees committed to achieving the organization's future vision. The
effective leader wants to build competitive advantage and long term value.
The Key to Leadership Effectiveness: Leaders
Understand Personal Attitudes
People want to be appreciated.
Henry James, the father of American Psychology, identified appreciation as one
of the most basic human qualities. Observe your employees. You will notice that
all of them have the letters "MMFA" emblazoned on their foreheads: “Make me feel
appreciated.”
Who do your employees work
for? A sophisticated view is that you pay your employees to work for themselves.
Your most effective employees understand that they work for themselves. You
value these employees because of their positive attitudes about work and the way
they continually develop their capabilities.
John Maxwell says that people follow a leader because of what the leader can do
for them.
An effective leader
understands that he needs to have significance in the lives of his employees. He
understands the connection between performance and development and builds a
culture that promotes and rewards personal growth.
Cost of the Status Quo without Leadership
Lack of
leadership commitment to people performance can have an enormous cost. The ideal
organization has a team of enthusiastic, motivated employees. What if some
employees are not motivated and maybe even become de-motivated?
The cost of this
status quo can be significant. When you have low profit margins, for every
dollar these employees waste in unproductive time and mistakes, you need to make
many more dollars in sales to cover that mistake. For example, if you scrap a
$100 part due to a demotivated employee, not a systems error, and you have a 25%
margin you must have sales of $1200, a multiple of 12, to cover the cost of the
scrapped part.
Measuring Effective Leadership
When you develop
your people, the rewards can be significant and will drop directly to the bottom
line. To illustrate:
Key staff employed to Cost
•
Produce 33% of Revenue
•
Sell 15% of Revenue
•
Control 15% of Revenue
•
Profit 6% of Revenue
A 4% improvement in the effectiveness of key staff reduces
cost and increases profits.
Cost Reduction
Produce 33.0%
1.3%
Sell 15.0%
.6%
Control 15.0%
.6%
2.5%
Original Profit 6.0%
New Profit 6.0% plus
2.5% = 8.5%
The 4% improvement in effectiveness brings a 42% increase
in the bottom line.
Of course every organization is different. The key concept:
When through effective leadership, you create a small improvement in the
effectiveness of key personnel, you always create a much greater impact on
profitability.
Effective Leadership
Dramatic results can be achieved when we develop a
performance culture focused on employee growth. When employees realize their
personal goals as they help meet organizational goals, great results are
possible.
Great results accrue directly to the leader. Many forget
the adage of leadership. Our success is dependent on the success of our
employees. Good managers achieve results through other people. Great managers
achieve results through other people and develop them in the process.
The strong leader is not soft. He establishes a culture of
accountability where employees work together to reach the vision of the
organization. With strong commitment and goal alignment they achieve outstanding
measurable results.
He understands that successful people have a positive
mental attitude. They continually develop their personal capabilities to manage
and lead. The effective leader hires, promotes and fires to attitude.
If leadership is
so important, why not develop consistent, high quality leadership throughout the
organization? Leadership comes from the collective leadership
style of individual employees, particularly those charged with formal leadership
responsibility.
Most leadership cultures are the random result of many
individual styles. Research indicates that only about 17% of these styles are
highly effective. Leadership modeling is as likely to be negative and
ineffective as it is to be positive and effective. Development of leadership
capability has a significant profit impact. Effective leaders ensure their
leadership culture is positive.
Leadership:
-
Establishes strategic direction
-
Leads organization through
change
-
Develops people who carry out
change
-
Improves the status quo
-
Motivates employees for a
results based culture
And most
importantly, it builds organizational value
To quote John
Kotter, “A paralyzed senior management comes from having
too many managers and not enough leaders. Management’s mandate is to minimize
risk and keep the current system operating. Change, by definition, requires
creating a new system, which always demands leadership.”
Leadership is
directly related to results, results that can be measured.
Leadership culture is the single most important factor in determining the level
of organizational productivity, achievement – your results.
