Are You Headed in the Right Direction?

 

As a leader, how do you know if you’re headed in the right direction?

 

Let’s say you’ve chartered a bus to take your department of 40 people 3 hours away to a retreat center. How do you know what directions to give to the bus driver?

Perhaps you would first go to Google Maps and find the exact route you want the bus driver to take. In other words, you make a plan – you plan out the route and give that information, including a copy of the map, to the bus driver.

First, you make sure that you know the directions, before giving the directions to someone else.

 

Now,  let’s say it’s 10 years later, and you’ve been made CEO of the entire company of 10,000 employees.

First, how do you know that you are headed in the right direction?

 

Again, as with your retreat,  you start with a plan. Let’s say you’re meeting with your senior leadership team to develop the plan.

After completing your vision, mission, and values, what are going to be the major categories of your key objectives?

It’s been my experience that any size organization should have no more than 5 key objectives. I actually prefer having only 4. And the 4 major umbrellas for these key objectives, in my view, should be:

1. Employees

2. Customers

3. Finances

and

4. Operations

Now, let’s say you and your team have chosen your 4 objectives – one for each of these categories and you’ve also made goals under each one of the 4.

And let’s say now that you’re going to tell your senior management team that their incentive bonus pay will be dependent on meeting all 4 of these objectives and that no bonuses will be paid unless all 4 objectives are met.

And let’s say that you assign a total of 100 points, collectively, to all 4 objectives. What’s the math? How do you split up the 100 points between the 4 objectives?

Would you say that half the points should go to the finance objective?

With all due respect, I can understand why many might say that, but I think that’s exactly where businesses have gone in the wrong direction these past 15 years or so.

It’s been my observation that so much focus has been put on finances that the employees, the customers, and the operations have been neglected – and that this neglect is what has caused the meltdown in so many well known companies.

I strongly advise that if you, as a new CEO, want to make sure you’re headed in the right direction, that you insist that the 100 points be divided equally between all four major categories – employees, customers, finances, and operations.

The employees, in many cases, are the company in the eyes of the customer.

The customers, in most cases, are the vast source of company revenue. If employees are satisfied, they’re much more likely to satisfy customers by collectively making the operations excellent. And in turn, excellent operations will result in excellent products or services to the customers. And, in turn, the satisfied customers will be much more likely to keep spending money to produce your company revenues.

In other words, I strongly believe that in any given organization you have cause and effect relationships. Employees can be both cause and effect. Customers can be both cause and effect. And operations can be both cause and effect.

However, I believe strongly that finances are not a cause.

Finances are only an effect of the other 3 categories.

So, yes, I agree that finances are extremely important. But not more important than the other three.

 

I have an analogy that I use of a four legged bar stool. Let’s say each one of the legs represents one of our four major categories. In the past 15 years or so the finance leg has had so much more focus and gotten so tall that the bar stool has become totally out of balance – you can neither sit nor stand on it any more.

So, I highly recommend that you break up your 100 points into 25 points for each of the four categories and get the bar stool back in balance. Then you can sit on it again and I would feel much more confident that you are headed in the right direction. And, in turn, your 10,000 employee company will be headed in the right direction.