The Throttle

An already recurring theme in these emails is the alignment of incentives to achieve optimum performance. Everyone's individual incentives lined up squarely with the mission and objectives of the business. Do that well, and all oars hit the water at the same time and pull together in the same direction. Voila'! Unbeatable.

But even the best vessel vastly underperforms its peak if its crew is only moderately engaged. So where does motivation come from and how does a company get more? Local leaders and supervisors. They have their hands on the motivation throttle, even if they don't fully realize it. No one and nothing has more influence over whether people care or don't than the local company representative who's judging their value and controlling their compensation and career. Local leaders win on relevance.

No inspiring CEO, no heartfelt mission statement or company values can overcome the pall of a disappointing boss. Likewise, an inspiring local leader can motivate a team even when other company factors are eh. The quality of leadership more than any other factor, determines the outcome.

Given that outsize impact, getting leaders' incentives (i.e. actions) aligned with maximum company performance (i.e. max people performance) isn't just a nice idea, it's fundamental. It's precisely why leaders exist at all, to bring out the best and multiply the benefit of the people they lead.

Unfortunately, standard practice incentivizes leaders to manage people, not to lead them. The incentives, the equivalent to marching orders, emphasize delivery of financial outcomes, but essentially ignores any expectation of leadership performance and leaders impact on people. Important because, of course, people actually are the business, whereas financial outcomes are just transient business results.

"Give a manager a financial goal and he'll kill the company to achieve it."

You can't manage people into becoming motivated or to perform at their utmost. People simply don't like being managed, especially hotshots. The lukewarm results of employee engagement surveys consistently bear this out. Managers command compliance, little more.

To unleash maximum results, incentives need to encourage actual leadership, not just management. After all, leadership is the job, right? Good leadership catalyzes motivation, enthusiasm, loyalty and sacrifice, yielding far better financial results than managed compliance. That's not a theory. It's a fact.

Leadership incentives can be simple, but must carry weight. For example, make 1) voluntary turnover rate and 2) the results of a brief bi-annual leader rating by staff, 51% of every leaders' bonus calculation, then see how quickly things improve. (Voluntary turnover BTW is primarily the local leader's responsibility. If it's no ones responsibility, it will never improve.)

Assuming you have a bevy of leaders already in place, your immediate priorities are these:

1) Define leadership (vs management) and what good leadership looks like at your organization. 2) Lay out basic leadership expectations. Start with "Conduct yourself at all times in a manner that causes people to care more about the company and its mission, and never ever less". 3) Incentivize good leadership (e.g. staff retention, staff leader rating). 4) Regularly assess how individual leaders' are impacting the business, i.e., the people. 5) Reward good leaders and swiftly remove poor ones. Tolerance for poor 'leaders' should be very very low. Stop protecting poor leaders.

Nothing impacts the performance of a company more than the people it names leaders. As long as companies continue to incentivize their leaders to manage people rather than lead them, employee engagement will remain lukewarm and the actual potential of the enterprise will remain muted. There's a competitive advantage here for the taking.

Have a great weekend,

Dave

Feedback: dave@goodnewsfriday.com

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