“What is the most important thing you have learned about leadership?”
Leadership is a skill, the mastery of which takes many years. Don’t assume you’ve learned it. This is particularly true for “natural born leaders” who are most susceptible to thinking they have it covered.
When people say someone showed great leadership they usually mean one or all of:
- A person set a great example for others to follow.
- A person made a tough or even courageous decision to change something for the better.
- A person was able to motivate a group of people to cooperate and achieve something substantial.
It is true that some people will naturally exhibit the first two points above. Some will even perform some of what is needed for the third point by force of their personality. But, I am yet to meet someone who possesses all of the skills out of the box to get people to cooperate to achieve something substantial. Some people get a head start because of their competence, courage or social skills. But it takes time for anyone to learn how to lead well.
I’ve previously written about some of the most important aspects of leadership. As a person progresses over their career from team lead to senior leader, new skills and levels of capability are required. Read leadership theory, certainly, but seek out those who have done it successfully and learn from them.
One of the most effective learning experiences I have had is regular formal catch-ups with other CEOs where the more experienced help the less experienced understand how to handle specific situations. In these discussions there are normally a number of options put forward by the different CEOs. From this, the person learning is able to choose their path. But once the path is chosen, the learning hasn’t really taken place until it’s put into action. Once done, positive or negative reinforcement will tell the CEO whether to take the same action next time or try an alternative route. Much of leadership is learnt this way. Theory provides a foundation. Natural ability provides a partial foundation. But true learning takes time and a myriad of experiences.
There are two elements to this answer.
One is the desire to be a leader. The other is possessing some of the skills needed to be a leader.
The motivation to be a leader can come from a number of places. The desire to collaborate with a group of people is a good starting point, but not enough on its own. Couple with a drive to help people, pass on your knowledge/experience and influence people to be able to achieve more and you have a good starting point. Later as you encounter tough problems, you’ll know whether you want to stay a leader.
Next are the technical skills needed to be a leader. A survey of over 300K people identified 7 key skills needed:
- Inspires and motivates others
- Displays high integrity and honesty
- Solves problems and analyzes issues
- Drives for results
- Communicates powerfully and prolifically
- Collaborates and promotes teamwork
- Builds relationships
You need a number of these skills and be on the way to developing the others.
A friend wanted to be a school teacher. Luckily, early on in her training she experienced a classroom environment and her first real introduction to teaching. This experience provided her with the insight to know that teaching wasn’t for her. Getting early experience in leadership can be equally valuable in helping you answer the question.
In my last article, I gave a run-down of three talent management trends that I thought would be particularly influential in the new year. Though I briefly summed up my thoughts on each one, I’d now like to go in-depth on performance management (PM).
Across public, private, and government sectors, elite organisations share a common understanding: performance management is what fosters employee excellence. It’s what makes a good organisation into a great organisation.
So, needless to say, I think it’s worth doing a deep-dive when it comes to the study of performance management. Which is where an important article, “The Impact of Performance Management on Performance in Public Organisations: A Meta-Analysis,” comes in. Published in the Public Administration Review by Ed Gerrish, Ph.D., it offers us some valuable insights into separating the wheat from the chaff when it comes to maximising effectiveness of PM processes.
Dr. Gerrish saved us a lot of reading by reviewing 49 studies of performance management and synthesising the results with what’s known as a “meta-analysis.” His findings are conclusive and critical to any successful organisation: the efficacy of PM is entirely dependent on the system used to institute it.
Keys to success in performance management
1. Simply measuring isn’t enough
Don’t just measure performance. Treat your data as actionable intelligence. We’ve all been involved with stagnated organisations that simply “go through the motions.” They usually don’t last very long. In the case of PM, this might mean tracking performance, but only taking superficial measures to correct problems. That’s not going to cut it. Measuring performance without managing performance has a negligible effect.
Performance measurement works best when integrated with best practices and strong organisational culture. Important steps include clear – and clearly stated – goals, using performance data as a basis for strategic planning, and incentivising strong performance. Gerrish’s meta-analysis shows just how important best practices are when it comes to PM: organisations tying those best practices into PM are up to three times more effective than “average” PM systems.
2. Benchmark your way to success
One technique that the analysis shows to be quite effective is benchmarking – comparing performance to industry leaders and ensuring year-over-year improvement. I’ve long been a believer in benchmarking, and have seen employees, teams, or entire departments re-energised when given a clearly stated goal. It’s also a clear way to identify both high-performers and underachievers – a logical starting point in performance management.
With an appropriate frame of reference, outstanding employees can be properly acknowledged and rewarded and under-performers can be correctively trained to improve their performance. On a larger scale, departmental budgets or autonomy can be tied directly to clear benchmarks so that teams know exactly what is expected of them.
One example of where benchmarking works as a determinant of budgeting is in local government. A comprehensive study of over 300 county and city governments in the US found that the “greatest applicability” of PM through benchmarking is during budget development.
3. Survival of the fittest PM
Organizations are subject to the same Darwinian laws as living organisms. As a result, they are constantly adapting to survive and thrive in their environment. Performance management systems are one of the most important tools an organization can use to survive change. This is why “Second-generation” PM systems, defined by Gerrish as those which have been in place for longer than two years and are significantly different from their first-generation predecessor, can make or break an organization.
The most effective second-generation PM systems are those that do more than pick low-hanging fruits. A key to success is thinking proactively. It’s easier to build a fireproof house than put out a fire. For instance, if an organization recognizes that a department is underperforming, it’s not enough to cut funding. A first gen PM system might recognize a problem. That’s good. But a second gen PM system should both recognize, react to, and safeguard against future problems.
Xerox, the American copier manufacturer, saw its stock plummet from $70 to $5 a share within 18 months at the turn of the century. Looking overseas at Japanese competitors, Xerox found that their product took twice as long to produce and at three times the cost. With the help of an outside consulting firm, Xerox was able to make real structural changes that have sustained them in the 21st century like just-in-time inventory, quality control improvements, and emphasis on leadership training.
Using PM systems and benchmarking, Xerox identified the areas they were failing in. As an established firm, Xerox certainly had second gen PM systems. These systems were then used as a launching point to react to shortcomings and make strategic decisions that would prevent the organization from repeating its mistakes.
The right way to manage performance
Be mindful of the following steps to keep your organisation on track:
- Remember that measuring is only the first step – there’s no benefit to gathering data if it doesn’t lead to action. A strong management team will use performance measurement to start moving in the right direction. Your stakeholders want results, not a case study.
- Put everyone on the same page with benchmarking – it’s easier to communicate when everyone is speaking the same language and understands where they stand in comparison to their peers. Differentiate high- and low-performers and make corrections accordingly.
- Be aware that PM systems change with time – identify ways that your second-generation PM system is different. Did you make necessary and proactive changes or just react to immediate problems by picking low-hanging fruit?
- Step outside of your organisation for a new perspective – there’s more than one way to skin a cat. Oftentimes solutions can come from an entirely different field or industry. Don’t fall into the trap of “this is how we do it because this is how we’ve always done it.”
If you’re a leader hoping to spur change in your organisation measuring and benchmarking can be effective tools, but they’re powerless until you’re ready to follow them up with necessary heavy lifting. Put data to work for you, don’t be afraid to see how you stack up to the competition, and don’t be reactive. Be proactive.
Performance Management can be hard without systems and experience. Let us help.
Those of you who caught my October article on Upgrading Performance Management will be familiar with the trends and changes that shook up the field in 2016. Since Human Resources is constantly evolving, I thought I’d give you a jump on your 2017 planning with a quick run down of the three studies that, for me, turned up some of the most important insights into our field this year.
The Impact of Performance Management on Performance in Public Organizations: A Meta-Analysis.
If you want an overview of how performance management (PM) works across different organisations, a meta-analysis is the way to go. The authors looked at data from 49 studies evaluating PM in the public sector to see what worked, what didn’t, and where improvements can be made.
To measure their effectiveness, the report graded the 49 individual studies on everything from data collection to performance management structure. Now, we’re managers not academics, so not every measure is of interest to us. However, if we focus on the assessments of benchmarking (its absence, limits, and structure), performance measures, and feedback; we unearth some valuable insight.
Top of the list, measuring performance doesn’t improve it. That’s not to say it’s time to ditch the performance metrics, but it does mean we can’t let them drive our performance management systems.
What this analysis shows us is that PM success hinges on management. Systems with a dedicated performance leadership team, that provided regular actionable feedback, increased organisational performance by as much as three times that of systems that simply measured objectives. Interestingly, organisations that used benchmarking to rank employee performance also performed better, probably because leaders could see who was learning well and tailor their approach to individual needs.
- Management practices have a significant impact on the effectiveness of PM practices.
- Managing performance is more important than measuring it.
- PM systems with poor benchmarking are associated with lower performance.
Full study available from: http://onlinelibrary.wiley.com/doi/10.1111/puar.12433/full
When Employee Performance Management Affects Individual Innovation in Public Organisations: The Role of Consistency and LMX.
Firstly, let’s address the concept of ‘LMX’. An abbreviation of Leader-Member Exchange, it is basically a description of the relationship an individual has with their line manager, a relationship that impacts their experience of management and PM practices. High LMX means employees will experience management as supportive rather than controlling.
This study took a detailed look at the working environment of 1095 caregivers in 68 care homes across Belgium. The data was collected with self-assessed questionnaires, and workers asked to grade performance management, LMX, and individual innovation on scales designed for each variable.
(For those of you who are wondering, ‘individual innovation’ in this study refers to the tendency of workers to generate and implement new ideas).
The long and short of it? Continuous monitoring and feedback in an environment where leaders and employees trust and respect each other leads to great LMX, and drives organisational performance by allowing individuals to innovate and improve workflows.
A word of warning: new employees were found to experience higher LMX than their long-serving counterparts. So don’t overlook those individuals who’ve got their roles down – good performance management practices are just as important to them, arguably more so since it encourages individual innovation.
- LMX has the biggest influence on employee perceptions of performance management practices.
- Great LMX creates high performing employees with a strong inclination to innovate and improve services.
- The best performance management systems are on-going, consistent, and personable.
- Employers have a tendency to undervalue the importance of performance management to long-serving employees.
Full study available from: www.researchgate.net/M_Audenaert
Do Similarities or Differences Between CEO Leadership and Organizational Culture Have A More Positive Effect on Firm Performance? A Test of Competing Predictions.
The authors of this study set out to quantify the interaction between the CEO, organisational culture, and performance. They collected data from 119 CEOs in the software and hardware industries, and 337 members of their top management teams (TMT – think board executives). The TMT rated CEO leadership, the CEO and TMT rated organisational culture, and the unbiased Technology Consortium provided an objective measure of company performance.
As the captain of the ship, the CEO’s impact on performance is multifaceted and far reaching. It is not, however, a case of one-size-fits-all. CEO behaviours that reduce performance in one organisation optimise it in another – and it’s organisational culture that determines which.
There are two prevailing theories on this phenomena. The first is Similarity Theory, and it states that leaders who align their actions with organisational values send out a unified message to staff. Theoretically, these consistent cues drive everyone towards the same objectives and enhance performance.
The alternative is Dissimilarity Theory, which suggests that leaders mirroring organisational values create redundancies. Rather than parroting the same values, CEOs take a contrasting approach, providing the support and frameworks missing from the organisational culture.
The findings of this study suggest Dissimilarity Theory best describes the interaction between CEO behaviour, culture, and performance. Organisations where social interactions were not valued, were seen to benefit from CEOs with strong interpersonal skills and a social focus. Businesses that lacked strong performance-based goals performed better under results-driven leaders.
- CEO leadership behaviour has a significant impact on organisational performance.
- The interaction between CEO leadership and company culture has a critical impact on performance.
- CEOs are most effective when they provide the support missing from the organisational culture.
Study available from: www.researchgate.net/Patricia_Corner
To Sum Up…
What these three studies (and the host of others published on their heels) demonstrate is that, as an industry, we’ve still got a lot to learn about how our employees, leaders, and organisations interact with each other.
With each year we gain more valuable, actionable insight. It’s up to us as managers and leaders to make the most of it, optimising our performance management systems to create processes that deliver tangible results at an individual, team, and organisational level.
Organisations that implement regular performance feedback have 15% lower turnover rates than those that don’t. Source.
43% of highly engaged employees receive regular feedback. Source.
80% of millennials say they prefer on-the-spot recognition over formal reviews. Source.