Leaders to Leader

Lessons from the Great American Leaders & How They Apply Now

Posts Tagged ‘financial performance

Plans Must Be Rooted in Past Performance

with 2 comments

womanonscreen

Performance planning is not developed in a void, nor is it based upon unsubstantiated estimates of budgets, performance and plans. Effective leadership demands plans be based upon past performance and results. By successfully implementing such plans, leaders can stimulate their subordinates to exceed normal performance expectations.

It is surprising how many managers develop annual plans and budgets without accounting for previous years’ performance and the realistic capabilities of their operational unit. Plans that lack these important elements are typically ineffective as roadmaps for achieving high output from an organizational unit.

Effective leaders understand that in order to move their unit forward, they must look at what has worked in the past and then build upon those successes. They also take proactive measures to eliminate any apparent failures and weaknesses.

This process is important for leaders to understand if they wish to motivate their subordinates to reach higher levels of achievement. Plans are not a worthless set of documents to be viewed only once or twice a year: they outline significant milestones and detail what the unit needs to do to effectively operate throughout the year. Leaders understand that performance plans lay out the path for attaining their goals and objectives.

The importance of proper planning cannot be emphasized enough: if it is to be effective and realistic, it must be focused upon prior performance of the leader’s organizational unit. Therefore, a formal review must be conducted in the following three critical areas:

Operational Performance

A formal review in this area is normally conducted on two levels simultaneously: operational and leadership. The operational review compares the organizational unit’s performance with the stated goals and objectives passed down by senior management. The leadership review compares the organizational unit’s performance with the leader’s expectations. While both levels review the same information, the leadership review is conducted from the leader’s perspective of how he or she can motivate the unit to exceed expectations.

The process of a formal review begins with a superficial selection of areas that need further examination. Particular attention needs to be paid to what did and did not work during the past year. This is where leaders can begin to develop strategies to build upon their unit’s successes and eliminate or correct any failures/weaknesses.

Leaders next need to rate the actual performance of all aspects of their organizational unit, including personnel, tasks, assignments, roles, resources and so forth. At this point, any required changes and adjustments should be noted for inclusion in future performance plans.

A final review of operational performance needs to explore the impact and affect of new trends, changes in economic conditions, and uncontrollable events on the operational unit. A thorough examination should note exactly what occurred, how it impacted the leader’s unit and how the unit responded. Any lessons learned from these experiences should also be included in future plans.

Resource Utilization

A formal resource utilization review should be conducted to determine if the leader and the organizational unit maximized their use of available resources. Typically, this review determines if the unit effectually used personnel, machinery, equipment, time, schedules and financial resources.

Leaders need to analyze the operational or production capacity of their organizational unit. This can be conducted from several perspectives, such as production, operations or administration, depending upon the responsibilities of the unit. A resource utilization review pinpoints any bottlenecks or problems that occurred in these areas.

Next, leaders must determine the causes of bottlenecks and problems, which can include inadequate scheduling or insufficient human or financial resources. The findings should be detailed and included in future planning activities.

Financial Performance

The last step in this review analyzes the unit’s financial performance. First, leaders determine how well their organizational unit worked within its budget. They will often discover problem areas that can be more deeply examined during the performance planning process.

An additional review should be conducted to look at the profitability of the organizational unit, including potential ways for it to cut costs and improve productivity. These findings should also be detailed and noted for further examination as well as inclusion in future performance plans.

If you are seeking proven expertise and best practices in performance planning to train or educate your employees to solve problems and improve their performance in this area, refer to Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series. Click here to learn more.

Related:

Six Key Benefits of Performance Management

Five Critical Steps to Maximize Performance

Measure What Needs to Be Measured

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2014 Timothy F. Bednarz, All Rights Reserved

Performance Indicators Provide Feedback and Insight into All Levels of Leadership

with one comment

woman-w-data

Key performance indicators or metrics allow organizations to create a common reporting system and language that leaders on all levels can understand and use in their decision-making. However, performance measurement decisions deliver key information and data that triggers specific decisions and actions at different levels of the organization.

Performance-based measurement systems provide feedback and insight into all levels of leadership within the organization. Local leaders make decisions based upon trigger points and triggered events as well as overall performance of their organizational units.

On the other hand, senior managers must take a strategic perspective that links the performance of all organizational units into feedback related to the entire organization’s performance; their decisions are global and focus on the sustainability of the entire organization.

It is important for leaders on all levels to understand the links between local performance and the entire organization. Key performance indicators and metrics trigger decisions on multiple levels. Lower trigger points may cause lower levels to react and make decisions and changes based upon the organizational unit in a specific location.

Senior leadership will have trigger points at higher levels that concern the performance of the entire organization, compelling them to make decisions and changes based upon the feedback they receive. While the perspectives may be different at various levels of leadership, the use of key performance indicators and metrics allows all leaders to make the decisions that are their responsibility.

Decisions can be tactical on a local operational level and strategic at a higher leadership level. The decisions are linked in that the strategic decisions will impact tactical decisions, but tactical may not affect strategic. Strategic decisions typically provide leaders with the boundaries and parameters that they must work within.

Leaders at all levels must understand that all decisions impact the organization. Daily decisions may not appear to be connected to the major areas discussed in this section, but, ultimately, all decisions made are based in one of these key areas.

Quality of Execution of Organizational Strategies

The availability of performance measurement systems and key performance indicators provides leaders on all levels of the organization with the decision making tools to measure the quality of the strategy that drives the organization.

Financial indicators are lagging indicators, while non-financial indicators provide leaders with a balanced view of what is happening. Metrics provide leaders with specific questions to facilitate the organization’s ability to make tough decisions and quickly seize opportunities as well as to evaluate how well it adapts to changing technologies and markets.

Improvement of Non-Financial Performance

Non-financial metrics linked with more traditional financial ones provide leaders with the information to make timely decisions that impact their unit’s performance and the entire organization’s ability to adapt. Triggered events and predetermined trigger points provide pivotal moments for leaders to make key performance decisions. These events can be established on both strategic and tactical levels with individual leaders responsible for making specific decisions within the organization.

Value Creation

More companies are using value creation indexes that focus on the relationship between non-financial performance and the organization’s market value. The establishment of a value creation index provides leaders with key insights by establishing direct links between the two areas of focus. Research has shown that a reliance on non-financial performance leads to more accurate forecasts and valuation. Typically the value creation drivers are:

  • Innovation
  • Quality
  • Customers
  • Management
  • Alliances
  • Technology
  • Brand
  • Employees
  • Environment

While value creation is defined and utilized by senior leadership within the organization, its metrics that measure non-financial performance are driven into the organization and become part of the suite of performance measurement tools used by leaders on all levels.

Research has shown that intangible elements such as innovation, alliance, management and employees are the key players in producing the organization’s value. Within the durable and non-durable manufacturing environment, improvement in key value drivers results in higher market values. These are the indicators that allow organizations to measure and predict future performance.

Efficient Resource Allocation

The balanced use of performance measurement systems that evaluate both financial and non-financial performance metrics allow leaders to efficiently allocate the use of scarce resources throughout the organization. Decisions that effectively manage resource allocation allow organizations to sustain their performance and profitability.

While local leadership on the tactical level makes decisions on the use and application of resources, senior leadership on the strategic level is able to ensure that resources are used in ways that benefit the entire organization. The use of performance measurement metrics allows leaders on all levels to evaluate effectiveness and make decisions regarding future performance.

Excerpt: Maximizing Financial Performance: Pinpoint Leadership Skill Development Training Series (Majorium Business Press, Stevens Point, WI 2011) $ 16.95 USD

Related:

Performance Management Must Begin With the Manage

Attaining Organizational Results Requires Visionary Thinking and Planning on Multiple Levels

Performance Plans Create Results and Maximizes Performance

Measure What Needs to Be Measured

For Additional Information the Author Recommends the Following Books:

Performance Management: The Pinpoint Management Skill Development Training Series

Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series

Strengthening Leadership Performance: Pinpoint Leadership Skill Development Training Series

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreword Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web| Blog | Catalog |800.654.4935 | 715.342.1018

Copyright © 2013 Timothy F. Bednarz, All Rights Reserved

Plans Must Be Rooted in Past Performance

with 7 comments

Performance planning is not developed in a void, nor is it based upon unsubstantiated estimates of budgets, performance and plans. Effective leadership demands plans be based upon past performance and results. By successfully implementing such plans, leaders can stimulate their subordinates to exceed normal performance expectations.

It is surprising how many managers develop annual plans and budgets without accounting for previous years’ performance and the realistic capabilities of their operational unit. Plans that lack these important elements are typically ineffective as roadmaps for achieving high output from an organizational unit.

Related: Six Key Benefits of Performance Management

Effective leaders understand that in order to move their unit forward, they must look at what has worked in the past and then build upon those successes. They also take proactive measures to eliminate any apparent failures and weaknesses.

This process is important for leaders to understand if they wish to motivate their subordinates to reach higher levels of achievement. Plans are not a worthless set of documents to be viewed only once or twice a year: they outline significant milestones and detail what the unit needs to do to effectively operate throughout the year. Leaders understand that performance plans lay out the path for attaining their goals and objectives.

The importance of proper planning cannot be emphasized enough: if it is to be effective and realistic, it must be focused upon prior performance of the leader’s organizational unit. Therefore, a formal review must be conducted in the following three critical areas:

Operational Performance

A formal review in this area is normally conducted on two levels simultaneously: operational and leadership. The operational review compares the organizational unit’s performance with the stated goals and objectives passed down by senior management. The leadership review compares the organizational unit’s performance with the leader’s expectations. While both levels review the same information, the leadership review is conducted from the leader’s perspective of how he or she can motivate the unit to exceed expectations.

The process of a formal review begins with a superficial selection of areas that need further examination. Particular attention needs to be paid to what did and did not work during the past year. This is where leaders can begin to develop strategies to build upon their unit’s successes and eliminate or correct any failures/weaknesses.

Leaders next need to rate the actual performance of all aspects of their organizational unit, including personnel, tasks, assignments, roles, resources and so forth. At this point, any required changes and adjustments should be noted for inclusion in future performance plans.

A final review of operational performance needs to explore the impact and affect of new trends, changes in economic conditions, and uncontrollable events on the operational unit. A thorough examination should note exactly what occurred, how it impacted the leader’s unit and how the unit responded. Any lessons learned from these experiences should also be included in future plans.

Related: Measure What Needs to Be Measured

Resource Utilization

A formal resource utilization review should be conducted to determine if the leader and the organizational unit maximized their use of available resources. Typically, this review determines if the unit effectually used personnel, machinery, equipment, time, schedules and financial resources.

Leaders need to analyze the operational or production capacity of their organizational unit. This can be conducted from several perspectives, such as production, operations or administration, depending upon the responsibilities of the unit. A resource utilization review pinpoints any bottlenecks or problems that occurred in these areas.

Next, leaders must determine the causes of bottlenecks and problems, which can include inadequate scheduling or insufficient human or financial resources. The findings should be detailed and included in future planning activities.

Related: Five Critical Steps to Maximize Performance

Financial Performance

The last step in this review analyzes the unit’s financial performance. First, leaders determine how well their organizational unit worked within its budget. They will often discover problem areas that can be more deeply examined during the performance planning process.

An additional review should be conducted to look at the profitability of the organizational unit, including potential ways for it to cut costs and improve productivity. These findings should also be detailed and noted for further examination as well as inclusion in future performance plans.

If you are seeking proven expertise and best practices in performance planning to train or educate your employees to solve problems and improve their performance in this area, refer to Planning to Maximize Performance: Pinpoint Leadership Skill Development Training Series. Click here to learn more.

Timothy F. Bednarz, Ph.D. | Author | Publisher | Majorium Business Press
Author of Great! What Makes Leaders Great: What They Did, How They Did It and What You Can Learn From It (Finalist – 2011 Foreward Reviews‘ Book of the Year)
Linkedin | Facebook | Twitter | Web | Blog | Catalog | 800.654.4935 | 715.342.1018

Copyright © 2012 Timothy F. Bednarz, All Rights Reserved

New Book Reveals The Most Accurate Gauge of Great Leadership is Legitimacy

leave a comment »

At a time when America is crying out for leadership in all sectors of society, a new book, which researched 160 great and influential American leaders, spanning 235 years revealed that the most accurate gauge of great leadership is legitimacy.

It illustrates that the great leaders acquired legitimacy by establishing trust, credibility, respect and emotional bonds and standing with all of their key constituencies, while delivering stellar financial performance.

The research reveals that when leaders balance the needs of all of their key constituencies, they outperform others, who sole focus on shareholder values. The focus on shareholder values concentrates upon the needs of one key constituency, often at the expense of the others. This destroys a leader’s credibility and often the long-term sustainability of the company.

The researcher and author, Timothy Bednarz, Ph.D. designated this pattern in his book Great! What Makes Leaders Great; What They Did, How They Did It and What You Can Learn From It (Majorium Business Press) as the Legitimacy Principles.

The Legitimacy Principles enumerate the linkages of leaders’ legitimacy, credibility, trust and a balance of emotional standing and bonds with all key constituencies. The synergetic relationship produced between these key factors of success is the foundation of effective leadership, and it provides insight into a new definition of it.
The fundamental essence of leadership is legitimacy, whose substance is based upon authority and validity. While authority is conferred, validity is earned through the development of credibility, trust and a balance of emotional standing and connections with all key constituencies.

The presence of the Legitimacy Principles endow leaders with the authority to lead, manage, execute, empower, effectively communicate, sell their vision, generate a passion for success, and overcome adversity. Their absence results in ultimate failure as an effective leader.

It is often assumed that leaders automatically possess legitimacy. Great! substantiates that this is a fallacy. It shows that legitimacy is derived from two separate sources that grant leaders permission to lead.

The first source is authority or the power granted to leaders by either election, or appointment to an office. In the business setting, this is conferred by the stockholders through the board of directors.

The second source is validity. Validity is not conferred, nor is it automatically attained once one is appointed. It is earned. It becomes a contributing factor to the authority granted to a leader, typically over the span of his or her career. This defines a leader as genuine and authentic in the eyes of all key constituencies.

Both sources of legitimacy compliment each other. However, validity provides an enduring, yet fragile acquiescence of all the constituencies that gives a leader the tacit permission to lead. It is built upon three critical factors: trust, credibility and a balance of emotional bonds with each key constituency. The findings of the research presented in this book, demonstrates that these are the hallmarks of great leaders. Without the presence of these three critical factors, the leader’s validity collapses. Once a leader loses his or her validity, the authority to lead is significantly undermined, whether for a corporate executive or a political leader. The Legitimacy Principles are applicable to all forms of leadership.

An executive summary and the key findings published in Great! What Makes Leaders Great; What They Did, How They Did It and What You Can Learn From It can be viewed at http://www.whatmakesleadersgreat.com. The book also can be purchased at this site, or by calling 800-654-4935.

Copyright © 2011 Timothy F. Bednarz, Ph.D. All Rights Reserved

%d bloggers like this: