I recently ran a workshop on strategy and accountability for The Executive Connection (TEC). As we discussed ways in which to increase accountability and clarify responsibilities within our team, we workshopped a number of ideas around how we can better use Leading Indicators to improve performance.
A good way to think about Leading Indicators are that they are activity based, looking forwards to the road ahead. They tell you where you are heading and help forecast performance. Lagging Indicators look backwards and measure what you have already achieved and don’t really tell us anything about where you are headed.
The number of Sales calls made per day is a Leading indicator as it will help forecast revenue for the end of month or end of quarter.
Gross profit is a Lagging indicator on a P&L as it reflects sales performance over a given period.
The group asked me for suggestions for effective Leading indicators for Leadership, which is a great question, and I thought it worthy of an article by itself.
Before I start listing activity-based measures for effective leadership, it makes sense to spend some time looking at what great leaders do, then break it down from there.
Firstly, a leader is anyone that can influence the behaviour of someone else. They may be the owner or CEO of a business. But they may also run a small business unit within a larger organisation, the principles are the same.
Leaders need to:
- Define and communicate the vision, mission and values
- Communicate and cascade objectives and plans to create clarity around what people do and why they are doing it
- Be responsible for how changes are implemented within the business
- Develop and communicate the business plan that includes a description of the current state, future state with metrics that demonstrate how the business (or business unit) is progressing
- Consider strategies that encompasses quality, cost, time morale and safety
- Ensure that performance measures are aligned to the achievement of the business plan.
- Walk the Talk
These 7 Steps provide the foundation for effective leadership and accountability. Each one contributes to strong leadership, and they act synergistically. Their implementation should be the initial goal of any leader or manager.
I talk to my clients about the 4 C’s of life and business.
Communication, Clarity, Congruency and Consistency.
Communication because we don’t educate and motivate our teams enough about these objectives.
Clarity because most businesses assume that their teams understand the direction and priorities of the business, even though 93% of employees don’t understand what their organisation is trying to accomplish (according to a recent article in Forbes Magazine).
Congruency, because often the metrics we use to measure performance are inconsistent with what we are trying to achieve through the business plan.
Consistency, because once we get it right, we need to keep driving through, and not easing off the pressure. I once told a mentor when things were going extremely well, that I was going to coast for a little. He told me with a smile that the only way to coast is downhill.
Keep in mind that the Clarity begins with you. This is part of Walking the Talk.
What are you responsible for in the business? If you are the owner, CEO or GM, you have the overall responsibility for Sales and Marketing, Operations and Customer Service, as well as Finance and Administration. Even when other people report to you for these activities, how do you measure performance in each of those areas?
What are your Leading and Lagging Indicators for these? I would suggest that you have a couple of Leading Indicators matched with 1 Lagging Indicator for each area.
Your direct reports need to be held accountable to produce these numbers and they will need their own set of leading and lagging indicators to cover their responsibilities within the business or business unit.
Once your foundations are in place and the 4 C’s are in focus, here are my suggestions for Leading Indicators for Leadership.
- Check in with your direct reports daily about their WIP, any issues or challenges they may be facing, acknowledging any wins they may have had. Remember that good leaders keep their nose in, but their hands out (NIHO). You are listening much more than talking in this session.
- Two to three times per week practice your MBWA. Not your MBA, this is Management By Walking Around. Be visible. Again, NIHO is the name of the game. Be interested, ask questions of the people that don’t report to you. This is not micro-managing but showing an interest in the activities of the people that make your business successful. You are not there during an MBWA session to advise or criticise, but to understand and learn. Get to know your team.
- Hold a weekly meeting for your direct reports where the leading performance indicators are presented and reviewed. Issues and problems, especially those relating to underperformance are discussed and actions are set to improve the performance. This must include a review of the actions decided at the previous week’s meeting to ensure they have been completed and assess the impact.
- Reflect on the performance of your self and your team. Devote time to work on the business, not in the business.
- Hold a Quarterly Management Meeting to assess the previous 90 days and set real targets for the next 90 days. Do the existing performance indicators align to the new plans and targets? If not, adjust them.
- Post meeting, have a Quarterly State of the Nation address for the business. Report on performance for the past quarter, discuss the wins, the misses and share strategies for the misses. Explain the targets for the next quarter and how each division will contribute the successful achievement of those targets.
- Daily Check in with your reports
- 3 per Week Complete your MBWA
- Weekly Management meeting with your direct reports, focus on the numbers
- Weekly Work ON the business, minimum of one hour per week
- Quarterly Management Meeting to review performance and strategy
- Quarterly Deliver the State of the Nation
Clarity around Responsibilities and Accountabilities is the glue that holds the business together. The steps outlined in this article create the framework to support this and outline the Six Steps to help make you a better leader.
Talk to me about how I can help you implement these steps into your business.