3 Warning Signs For Leaders
The other day I
was waiting at a set of traffic lights. At these lights there is a very clear
and obvious sign – “No Right Turn”. The second car in line was a very obviously
marked Police Car complete with its red and blue lights and a big sign saying
“Police”. The lights turned green: the first car in line turned right: the
police officer turned on his flashing lights and siren: both cars pulled in by
the kerb and I can imagine how things went after that.
Today I was in a stream of traffic waiting to turn left at a very busy intersection. This intersection is close to a freeway entrance and the signposting makes it clear that only left turns are allowed and that, during the turn, it is neither permissible nor safe to move across 2 lanes and onto the freeway. The three motor cycles ahead of me plus one car and a truck all cut across the traffic in order to enter the freeway – it could have been very nasty: it was certainly very noisy!
I am often amazed at how, on the road, many people ignore or do not see signs – then, all too often, seem to complain when they reap the consequences of their actions. It’s almost as though they consider themselves to be above any petty regulations and/or immune from any negative consequences to themselves or other motorists.
But this seems to be symptomatic of society at large.
How often do people in business ignore, or fail to see, warning signs about things that could have significant impact on their operations? Then they get upset if things go bad and they suffer the consequences.
I suggest there are 3 organisational warning signs for leaders that something needs to be addressed:
1. Employee turnover
Good people don’t work for bad bosses! That’s almost a truism!
Some years ago a researcher (M.C Knowles) stated that “labour turnover … is one of the most sensitive variables in depicting organisational deterioration”. My own research indicated that labour turnover costs, on average, at least 500 times the average hourly rate paid in an organisation for every person replaced.
Monitor your labour turnover figures. Where turnover is outside the acceptable parameters for your organisation, have a good look at your recruitment, induction, management, and employee development practices.
2. Reduced or stagnant productivity
A critical part of effective leadership is to ensure that the right resources (money, equipment, people, etc) are in the right place at the right time for the right people and that people are competent to do what is required.
True, long term productivity gains come when people are engaged with their work, their fellow workers, and their organisation. Engaged people see themselves as being accountable for the achievement of results to themselves, their team, their leader, and their organisation.
Monitor your productivity. Stagnant or reduced productivity indicates a lack of employee engagement – and invariably that arises from inadequate or inappropriate management and leadership practices.
3. Customer / client satisfaction
Customer / client satisfaction surveys are only as good as the questions they ask. On average I get about 3 customer satisfaction surveys sent to me each month. Almost without exception they have been written from the a priori assumption that the organisation is providing a good level of service.
If you want good customer / client satisfaction data (and you should!) start by going to your customers and asking them to tell you their criteria for excellent service (their “ideal supplier”) and then get them to rank you against their own standards – not by yours or the market research company you normally use.
There is plenty of data that shows it costs more to obtain new customers / clients than it does to retain existing ones. Unless you are receiving rankings of at least 90% for each of the criteria that is nominated by your customers / clients as the assessment they use, then you are dealing with a customer / client that is probably open to approaches from your competitors.
The starting point to address these signs is a broad dream of how you see the future. The next step is to consider the future scenarios that are possible – what are the possible environments (the multiple possible futures) in which your organisation will be operating 10, 20, 50 years’ hence – in other words, long after you are gone!
I am amazed at how many people are reluctant to go through this exercise. It’s as though they don’t want to have any indication of the signs to look for – those things that will have a big role to play in determining whether or not they are successful. They’re a bit like the motorists who cut across lanes to turn onto the freeway regardless of the risks to themselves or other people – I’m going to do it how I want no matter what.
For those who do go through this step, the next stage is to consider strategies that will enable success no matter which of, or what combination of the multiple possible futures actually eventuate. An important part of this stage is to include indicators that will allow the Board and Executive to determine whether or not the strategies need adjustment. These early warning indicators are then included as part of the regular reporting processes of the organisation. Of course, to be effective, the reports have to have attention paid to them and the importance of this is stressed in the planning stage.
From here the appropriate tactics can be developed in subordinate plans that will deal with day to day operations. This is where the management function takes over from the senior leadership team.
Signs are important - at least as important in organisations as they are on the road. We ignore them at our peril.
Have a question for Douglas? Ask or leave a comment below!