Performance Talk

How is it possible some of our most deplorable commercial acts in living memory have resulted in catastrophic losses for investors but in many instances, personal fortunes for the perpetrators? What has caused us as a society to be hoodwinked by self-serving fraudsters over the willingness of more competent parties?

During the past two years we have seen an inordinate amount of evidence to suggest the time has come when commercial entities the world over need to re-examine the purpose of leadership if they are serious about driving a step change in their performance.

The global economic crisis, coupled with untold stories of questionable, and in some instances, disgraceful practise by executives, has compounded the need for the commercial sector to take a good hard look at how it views (and rewards) leadership performance - because if the results of recent years are anything to go by, the model we have endorsed for decades has finally failed.

During this time we have borne witness to too many companies misinterpreting ambition and self-promotion as indicators of competence and capability. Whilst confident leaders are essential in driving performance, wisdom and maturity are equally vital to ensure an organisation’s long term prosperity. Sadly there is little doubt our future generations will now not only have to deal with climate change and an ageing population, they will have to pay for the extraordinary loss of value caused by self-indulging leaders.

As a modern and supposedly sophisticated society I believe we need to not only re-examine the purpose of leadership, but how we recognise and reward our leaders i.e. further to our interest in replacing those who demonstrated blatant disregard for those they were entrusted to serve, let’s not overlook the fact that it is infinitely more important to agree on a model that will inspire a new generation of talented individuals to take the lead - for if there is one thing the economic fall-out has taught us, it is the fact that we are dangerously short of intelligent and visionary leaders.

Redefining Leadership

To further this debate, I wonder if we couldn’t eliminate the seemingly regular occurrence of ineptitude and greed by the advent of a new leadership framework (criteria) and an incentive model to match. In other words, could we create a new breed of leader who understands the meaning of value and works tirelessly to create it?

Could we reward them for a change in approach to ensure they as individuals benefit as and when we all do? Could we change the landscape regarding leadership mind-set and thus their priorities to ensure they leave the organisations they represent in better shape than they found it? In essence, the question I believe we need to ask is ‘could we enable our future leaders to do the right thing?’ - for it is only by initiating a change in the performance of those on whom we rely to improve our economic wealth that we will be in a position to improve the nation’s social status and wellbeing.

To advance from where we are I believe we need to change the rules of the game to ensure all future leaders understand their role and are encouraged to succeed rather than perceiving the invitation to lead as recognition of past efforts and thus a license to occupy or exploit.

In my opinion, successful leaders of the future will be those who understand the purpose of leadership and thereby focus their attention on what I refer to as the ''Principal Responsibilities of Leadership''.

The Principal Responsibilities of Leadership

• Creating a Strategic Vision

• Setting Performance Standards

• Improving Performance Capability

• Building a High Performance Culture

If a company is to realise its potential, its managers need to invest their time driving initiatives that will deliver growth and improvement. The days of rewarding people for the job they are paid to do are surely over i.e. hitting the numbers shouldn’t justify an exorbitant bonus (providing of course the targets are appropriate and considered), nor should meeting budget be considered an over achievement. Rather it is the value of one’s contribution to increasing the organisation’s capacity to perform that should qualify or determine one’s ability to participate in such a scheme. After all, a bonus in its purest form is designed to 1) recognize value (contribution) ‘over and above’ what was expected and 2) encourage ‘more of the same’ i.e. promote more highly ‘appropriate’ actions and behaviours to drive further growth and/or improvement.

It is important not to misinterpret the above as a suggested replacement to ‘at risk’ portions of salary. Any company committed to becoming a high performing organisation should, in my opinion, link at least a portion of staff salaries (wherever possible) to its performance and profitability. It is only by sharing the benefits and/or shouldering the burden of losses that a group of people will ever learn to unite and align, and thus take responsibility for its actions.

Summary

If you are serious about building a high performing executive or management team and would like to know more about our unique leadership framework, please refer to our white paper ‘The Principal Responsibilities of Leadership’ located under the resources section on our website www.craigsteel.co.nz or call us for further information