Shareholders measure success through share price, debt ratios and other financial measures. For this reason, management teams make decisions that attempt to maximize financial performance – buying equipment, investing in systems, right-sizing the workforce, etc.
What about the subjective decisions that management makes? When anyone is given a management title, they are “crowned” with the ability to make subjective decisions as a privilege of being on the management team. These decisions involve interactions with people and appear to be “optional” – whether to attend meetings, whether to solve problems, whether to encourage feedback, the choice to protect personal power, etc. The connections between these decisions and the bottom line is fuzzy, so little thought is given to their impact to earnings. These decisions are often accepted as part of “the culture” – proactive if they are good decisions and reactive if they bad decisions. They are also often viewed as something that can’t be changed.
WHAT IF… the connection between subjective decisions and the bottom line was clarified?
WHAT IF… the subjective choices made by management directly contributed to the bottom line?
WHAT IF… better choices immediately translated into reshigher
WHAT IF… it was easier than most people think to stop making poor subjective choices and begin making great subjective choices – not because management was told to do this but because they saw the value in doing so for themselves.
Well, the connection CAN BE clarified and these choices DO affect the bottom line! The next time you are faced with a subjective management decision, what would your shareholders expect you to do?