A wonderful article by LIFE Founder and INC Magazine Top Leader Orrin Woodward. Are you a person who leads people and manages numbers? If not, perhaps this article can provide some insight as to what you need to work on.
Leadership is a necessary ingredient in all successful lives and companies. The problem is that many people confuse Leadership with the ability to call a meeting and pontificate to existing members on all they know about life & success, while real leadership is lived on the front lines in making tough decisions, strategic planning, follow through with unhappy customers etc. Performance comes before leadership, but since performance is much tougher than pontification, most skip past performance and promote themselves to Grand Master Manager Level – a rank requiring no results, just a mouth that prefers to talk than act. That statement can sound a little harsh, but the amount of damage that managers, who will not lead, who feel successful when giving seminars on concepts they are not doing, cause by their inactivity is beyond the ability to measure. Meaning, you cannot measure leadership directly, but you can certainly measure the effects of leadership in the results of a group the leader is leading.
Measuring results reminds me of the Hawthorne Studies. In the early 20th century, studies were performed at the Western Electric Hawthorne Works that revealed an interesting correlation between measurements and results. Here is a description of the Hawthorne Effect:
In essence, the Hawthorne Effect, as it applies to the workplace, can be summarized as “Employees are more productive because the employees know they are being studied.” Elton Mayo’s experiments showed an increase in worker productivity was produced by the psychological stimulus of being singled out, involved, and made to feel important.
Additionally, the act of measurement, itself, impacts the results of the measurement. Just as dipping a thermometer into a vial of liquid can affect the temperature of the liquid being measured, the act of collecting data, where none was collected before creates a situation that didn’t exist before, thereby affecting the results.
The major finding of the study was that almost regardless of the experiment employed, the production of the workers seemed to improve. One reasonable conclusion is that the workers were pleased to receive attention from the researchers who expressed an interest in them. The study was only expected to last one year, but because the researchers were set back each time they tried to relate the manipulated physical conditions to the worker’s efficiency, the project extended out to five years.
Leaders must lead themselves, lead others, and then manage the numbers. After leading yourself, the next best move is to expect others to lead themselves and teach them how to keep score. In order to manage the numbers, you must start tracking the numbers and learning to keep score to identify if you are winning or losing. Some people don’t want to keep score because they feel it would be negative, but nothing is more liberating than knowing the scoreboard so you can start the PDCA – Plan, Do, Check, Adjust process. When leaders start keeping score, an amazing thing happens, people start scoring more. If you are going to be in business, you might as well keep score so you can learn, grow and change. Life is not ultimately as much about winning and losing as it is about growing & changing through the wins and losses experienced in life.
No one would go to a football game and pay big money for seats only to find out that both teams decided not to keep score. The fans would demand a refund and feel cheated that professionals were playing the game, but not keeping score, but that is exactly what 90% of the people in America do everyday! Managers love to play the game and are even will to track other people’s score so long as they don’t have to track their own. Let’s agree that today, we will lead our teams, track our own scores, and only then, track the scores of our teams. Business is as good or as bad as you make it in your mind and actions. Let’s take business to the next level by tracking our numbers after leading ourselves, giving us the ability to help others track their scoreboard.
Some of the essentials in business to start keeping score are the following.
- Profit margin
- New growth
- Lost customers
- Profit per employee
- Profit per employee cost
- Total Revenue
- Customer Complaints
There are certainly others, depending upon what business you are in. One thing I can tell you for certain, those who keep score will adjust quicker than people who do not keep score. If you run a company, identify the key variable necessary to track to understand whether you are winning or losing. Losing is a temporary situation if you are willing to change and fatal for those who deny reality. Learn, perform, lead, score, and repeat the process with others is the way to lead people and manage the numbers.