John Quincy Adams once said that "if your actions inspire others to dream more, learn more, do more and become more, you are a leader." I mention this because I have been thinking about leadership quite a lot over the last week, having been asked to put together a guide for Leaders. The brief was to create something simple that will help leaders to understand how to act in such a way that their actions will help to enhance the employee engagement within the business.
As usual, I started my research by turning to the web for inspiration and ended up in complete data overload. If you google "Leadership", you will get roughly 120,000,000 results. If you google "How to be a Leader", you will get just over double the results at 241,000,000! The results came in formats from videos and images to tweets and standard web pages. All of them with advice that ranges from truly inspired to utterly baffling.
It was as I was growing rather more frustrated than inspired that I remembered a piece of advice that I was given a long time ago when I was 8 years old; "Always treat others as you would yourself be treated". Although I haven't always kept it front of mind (to my own detriment as a leader) it has been the one rule that I have found to have the most power when in a leadership position.
Thinking about it, I realised that what I needed to do was to think about what I have wanted or received from the individuals who have been my leaders over the years. A fairly short time later, I had in front of me what I have called the Leadership Commitment (see below). Taking the three key areas of leadership as being Plan, Share and Act. I created a series of personal statements that cover off, to my mind, the key basic actions that every leader must do to ensure that s/he acts as a leader at all times.
Plan
I will create, and agree with each team member, a set of SMART objectives, targets and measures that are aligned to the company strategy
I will create, and agree with each team member, an appropriate development plan that meets their career aspirations and potential
Share
I will hold a regular one to one meeting with each member of my team at least once a month
I will hold a regular meeting with my whole team at least once a month
I will be open, honest and transparent in all my communications
Act
I will recognise individual contributions and reward or correct behaviours, as appropriate, in a timely manner
I will consult with all team members on key decisions that impact them
I will hold myself to the same high standards of professionalism that I ask of my team
You will note that each statement within the Commitment is personal and begins with "I will...". This is deliberate. Ray Kroc once said that "the quality of a leader is reflected in the standards they set for themselves." I believe that if leaders are to act in the way that they should, they need to commit wholeheartedly to the standards espoused in this commitment. One approach to keeping them "honest" is to have each leader receive a signed copy from their immediate leader, which they in turn will sign at a meeting with that leader and then be asked to display on their desk or in their office.
I don't profess to have created a panacea for poor leadership, simply one solution that may work. Where the human factor is concerned, perception is everything. One person's leadership is another person's dictatorship. HR has a funadamental responsibility to enable the success of both the business and the individual employee. Leadership sits across both of these. The key is to keep on trying to drive the appropriate leadership behaviours in whatever way makes the most sense.
There is a Franciscan Friar called Richard Rohr, well known for his writings on spirituality. He and a team of initiation leaders are attempting to guide men in lifetime spiritual learning and to train them to be elders, able and prepared to mentor the next generation and to pass on the wisdom that comes through experiential journeying into what Rohr calls "the true self." As part of this preparation and initiation, he imparts what he calls life's "Five Essential Truths of Initiation". These are:
1. You are going to die. 2. Life is hard. 3. You are not that important. 4. Your life is not about you. 5. You are not in control of the outcome.
Rohr calls the above truths, "ego stripping". Looked at in the right light, they certainly can be. They are also confronting; logically we know we are going to die, but how many of us have actually accepted that truth? I suspect as old age and its infirmities increasingly weigh on one, then that reality becomes more apparent. How about the truth that we are not that important? We humans are a very ego driven species and have become increasingly so over the last few decades until it appears that it is all about the individual. You have only to witness the use of the prefix "i" in common langauge; iphone, idrive and the proligeration of personal sites such as myspace, facebook, linkedin and blogs, even this blog! We are all driven by ego, so how hard is it for us to realise that, in the great scheme of things, we as individuals really are not that important?
According to Steve Biddulph, who writes extensively on this subject in his book "Manhood"; "Initiation centers on the most pressing spiritual task of any culture - making the young wise enough, soon enough, that they may join the tribe as superb and contributory human beings." Whether you agree with the above truths is entirely up to you, they certainly strike a chord with me. Truths, such as the ones proposed by Rohr, were imparted during the course of initiation and became the foundation for individuals to build their lives and their selves upon. They are not intended to break the individual down but to provide them with a different perspective of themselves and therefore how they treat others and live their lives.
Now Rohr's truths and Biddulph's statement got me thinking. What would be the Five Essential Truths of Employment? I gave this some thought and, you know what, I couldn't materially change the five truths that Rohr has posited. Mine are below:
1. Work is hard 2. Your employment is not guaranteed 3. You are not that important 4. Your job is not about you 5. You are not in control of the outcome
So I've changed the words only a little bit, but, and here's the thing, Rohr's five truths seem to apply equally well as an initiation into the working world as they do to life in general. I'm sure there are other variations out there that would fit equally well, and I'd be interested to see what other people think.
One of the first things that you learn when doing DIY is to measure twice and cut once. My father, an ex-military man, used a different phrase with the same meaning; "time spent on reconnaissance is seldom wasted". Following either maxim will ensure that you save time, money and considerable amounts of frustration, take it from a bad carpenter! It is but a very simple step to take the "measure twice, cut once" philosphy and drop it into corporate life, especially when you are talking about reducing headcount in response to business performance figures.
In a recent BCG report, the authors of the report posited a new formula to relate the impact of people on profit; more specifically on EBIT. “At many companies, personnel costs exceed capital-related costs, which skews the relevance of traditional capital-oriented performance metrics such as return on capital. (...) Another approach...shifts the focus from capital to people and thereby provides a more accurate indication of the fundamentals of the business.”
The basic preposition is that employees are at the core of the value chain and therefore the key is to be able to quantitatively reflect the contribution per employee. Such a calculation requires both the Average Cost per Person employed (ACP) and the Value Added per Person (VAP).
We traditionally use the simple productivity metric of revenue per person as employees generate our revenue from our customers. However in order to generate revenue (R), employees need materials, represented by material costs (MC) and they use machines and other assets that are accounted for through depreciation (D). The employee adds value by leveraging those inputs. Thus the Value Added per Person (VAP) productivity metric recognises material costs and depreciation.
See the below for more detail.
R = Revenue MC = Material Costs D = Depreciation PC = People Costs P = Number of Staff
Value Added per Person (VAP) = (R-MC-D)/P
Average Cost per Person (ACP) = PC/P Contribution per Person (CP) = VAP - ACP EBITA = CP*P
Working Example:
Revenue = $300M Material Costs = $120MDepreciation = $4M People Costs = $145M No. of Staff = 2400
Value Added per Person (VAP) = $73,333 Average Cost per Person (ACP) = $60,417 Contribution per Person (CP) = $12,917 EBITA = $31M
EBIT/EBITA can therefore be re-written as (VAP-ACP)*P. With this we could express the profitability of any company through three people oriented metrics, as the difference between productivity per employee (VAP) and the average personnel cost per employee (ACP) multiplied by the number of employees. The BCG equation links the control of HR performance with the key financial metric, making it, I feel, a powerful whole of company and BU metric for potential use and review by any company on a monthly and quarterly basis.
Sure, putting this in place may need you to do some tweaking to the formula and engagement with Finance to ensure it is appropriate to your specific company but as the authors conclude; “These new HR metrics are easy to calculate for companies or business units. Value added per person can be the starting point for understanding the productivity of business units and for adequately compensating value-added performance, as well as for controlling personnel costs and headcounts. The resulting insights into people performance will enable companies to make smarter and better-balanced decisions, especially if their goal is to cut costs wisely in times of crisis.”
Why not give it a go? You lose nothing by doing it and may be surprised how seriously your CEO or Business Unit Leader starts to take you when you show him/her the results.
I'm a Director in a boutique consulting firm specialising in HR, Change Management and Business Effectiveness solutions.
Check out our website: http://hr2be.com.au
John Quincy Adams once said that "if your actions inspire others to dream more, learn more, do more and become more, you are a leader." I mention this because I have been thinking about leadership quite a lot over the last week, having been asked to put together a guide for Leaders. The brief was to create something simple that will help leaders to understand how to act in such a way that their actions will help to enhance the employee engagement within the business. 
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