If you're reading this post, you're likely one who leads other leaders. Are you providing performance feedback to those leaders? If so, on what basis? How are you measuring their leadership effectiveness?
Leaders are accountable for several broad categories:
- Developing a successful business strategy
- Executing the strategy
- Nurturing a culture that supports growth and sustainability
Measuring the strategy
Good strategy generates revenue growth. It also creates an increase in market share - perhaps even domination in the market. Better strategy ensures a continuation of market advantage year over year. For CEOs, who have nobody providing direct performance feedback (in the case of privately held firms), these are the numbers that feed (or bruise) egos. Revenue is the number that measures whether the company is headed in the right direction.
Measuring execution
While strategy creates revenue, execution determines profit. Gross profit is the king of business sustainability measures because it funds ongoing operations. It determines whether the business model can throw off enough money to meet the operation's needs and the owner's goals.
Speed is increasingly an important execution measure. Given two comparable alternatives, customers choose the one they can get faster. Your company's strategy helps your leaders determine the extent to which quality and speed are competing or complementary forces.
If the criteria for daily decision making are not clear to leaders in your strategy, it is likely that they will be inconsistent under the influence of day to day pressures. The potential for preventable conflict is greater.
Measuring culture
Culture can be perceived as a squishy, "I'll know it when I see it" sort of thing. It can be both the cause and the effect of leadership actions. But there is measurability inside culture. Absenteeism, for instance, is an indicator if employee engagement. Employee turnover can tell the CEO about leaders' skills in hiring well and maintaining productive relationships with their teams. Any number of behaviors are measurable, and behavior is the outward expression of company culture.
The dilemma of the player/coach
In larger companies, executives dedicate 90% of their time to people issues. In growing enterprises, leaders are also engaged in personal production with technical roles: sales, technical support, etc. The split of people/technical can vary significantly from company to company, from role to role. The issue is that individuals working in the business sometimes have difficulty stepping back enough from the scrum to work effectively on the business. So upon what basis do you measure the performance of the player/coach?
If the super-worker is now the leader, he or she cannot be solely measured on the basis of the super technical work. Leadership also has to be part of the equation. Leadership brings a broader scope of accountability with it - including overall execution and culture at the least. The player/coach might be accountable for strategy as well - if the business is flat enough structurally that the player/coaches are involved in developing it.
The CEO needs to provide parameters around what percent of a player/coach's time is to be invested in personal production versus leading others. Since leadership is unlikely to be a 90% people job for the player/coach, what percent is it to be? Be careful not to under-allocate on the side of leadership, or the demands of personal productivity will override the player coach's crucial role in helping you to move the business forward as a whole.
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