Category: Articles

Leadership Confidence Pulse Infographic

Energy is the ability to do work and is predictive of performance. We measure working and optimal energy to identify the health of organizations and leaders.

energy level

Average Energy for the leadership sample is well below where these leaders are saying they are at their best.

Our research shows that negative performance issues begin when energy is more than one point from where at the best. Over 50% of leaders are more than a point away from the energy level where they say they are at their best.

The majority of leaders are working below their best energy level.

While leaders are very confident in their personal leadership skills, they are much less confident in their organization’s strategy making process and ability to change as needed.

Change for those that participated in both 2016 and 2018

For those who responded to confidence in both 2016 and 2018, confidence in the economic climate has increased, but confidence in their organization strategy making process and that they had the right people and skills decreased.

energy level 5

Be part of our July Leadership Pulse as we explore how innovation and automation can affect you and your employees. And don’t miss our new energy diary just for participating!

Energy Calibration Infographic

In the Leadership Pulse™, we ask working energy and optimal energy. The difference between these two numbers is the Energy Gap™. In the latest Leadership Pulse, 55% of leaders had an energy gap of more than one point. In the latest Pulse, we conducted Energy Calibration™. This process looks at the way energy is related to pace, efficiency and job satisfaction. Calibration tells a story about why studying the energy gap is important to you and your business.

Energy Gap
Pace Energy Image

Part 1 of Calibration: Energy and Pace of Work with the November Leadership Pulse data. Leaders with a higher pace of work have a higher energy. But,higher energy is not always better; a lower gap between working energy and optimal energy is the goal.

Part 2 of Calibration (using the November Leadership Pulse data): Satisfaction and efficiency decrease as the Energy Gap increases. Highest levels of both satisfaction and efficiency are at zero gap.

Higher Energy Gap scores have a significant negative effect on satisfaction at work as well as a negative effect on efficiency.In our research with larger and more diverse samples, the results are similar. We run the Energy Calibration to determine if energy is behaving in the same manner with different groups of people and clients; regardless of country, type of business or period of timewe run the analysis –we find the same results. The Energy Gap is a measure of productivity. The person who ‘owns’ energy is you –each individual employee. Learning more about how to manage your own energy at work is just like learning how to manage your body pulse when you exercise. You optimize your workout –at work or at the gym –when you monitor, learn and use that learning to make positive changes.

So what can we do about it?

1-Mind the Gap!

Monitor your energy level regularly. Become aware of when you are working far from your best energy level and what tasks and people might be contributing to that gap.

2-Master your Pace!

Increase the pace of your work when your energy might be lagging. Create artificial deadlines or personal challenges to help rachet up your energy. Remember, this will increase both your efficiency and satisfaction. And look for ways to create breaks and recovery time when your pace is too high.

3-Mix it up!

Identify the tasks that drain your energy level. Sandwich those tasks between two energy boosting activities. These can be either tasks you enjoy or people who energize you.

Leadership Energy Calibration Infographic

Leadership Pulse

In the Leadership Pulse™, we ask working energy and optimal energy. The difference between these two numbers is the Energy Gap™.  In the latest Leadership Pulse, 55% of leaders had an energy gap of more than one point.  

In the latest Pulse, we conducted Energy Calibration™. This process looks at the way energy is related to pace, efficiency and job satisfaction. Calibration tells a story about why studying the energy gap is important to you and your business. 

Business Drivers A Technical Report

Leadership Pulse™ Technical Report 

Theresa M. Welbourne, PhD
May 5, 2019

What Business Drivers Teach us about Strategy Eating Culture in 2019

The Leadership Pulse project is a study that started in 2003. The goal is to provide leaders with real-time data so that they can learn from their peer thought leaders. The latest Leadership Pulse focused on business drivers. 

This topic is an area of work spearheaded by Dr. Theresa Welbourne, Affiliate Research Scientist at CEO, Professor at The University of Alabama and President, CEO of eePulse, Inc. Her work on business drivers, which are factors or assets managed by companies, has shown what drivers are important (which means they usually receive more financial resources), and which are shown to drive individual and firm-level performance. Over the course of several years of studies within individual companies and over large samples of firms over time, one big learning has been the disconnects between what executives think is important and what are critical when predicting things like firm survival, stock price growth, earnings growth and more. 

In this latest Leadership Pulse a small version of the larger business drivers survey was used. A total of 200 leaders from firms around the world answered the pulse, and of those 25% of the sample are Clevel executives while another 25% represent executive levels that report to the C-suite (e.g. senior VP, VPs). The remainder of the sample are senior managers and some educators / consultants.

Business Drivers: The business drivers study covers a range of organizational assets or areas of strength, from ability to manage profits and cash flow, to brand and pricing strategy, strategic planning process, employees, culture, leaders, internal technology and more. The business drivers uniquely focus on multiple assets vs. doing a deep dive on just one line of inquiry (e.g. study of just leadership issues). Unique to the business driver work is the way people can respond. Each item can be positive or negative in affecting the firm, and in addition it can be strong or weak. A unique combined scale is used in this validated questionnaire: 

executive leadership questionnaire

Reviewing the percent of respondents in each scoring category shows how using the data can provide insights about what leaders are thinking. Below are sample distributions for firms with less than 100 employees and those with 50,000 or more people on ability to manage cash flow. Not surprising, there are more low scores (red and orange) in the smaller firms while only neutral and positive in the larger organizations.

Executive leadership

Below is the same reporting for company culture, which is generally something smaller firms emphasize as an important asset.

executive leadership chart

As seen above, results for an item like “the way we manage cash flow” can be negative or positive and a respondent can answer the degree (slightly to extremely). In this short version of the business drivers assessment we asked about 20 items. The top 3 of those that were rated as positive and powerful in driving company performance were (in order from high to low):
 1) Quality of offering

2) Quality of client relationships

3) Brand and reputation
The bottom three items, or those that were rated as having a negative impact on the firm’s overall performance are:
     1) Ability to manage cash flow
     2) Internal technology solutions
     3) Ability to manage profitability
The results for all questions (from high to low), reported by percent positive scored, are in the next table:

Next, we looked at the various demographics in the sample and examined where statistically significant differences existed. Two areas of interest came out of this analysis: 1) comparison of C-level executives vs. the levels that report to them and 2) the data by firm performance.

Firm level financial performance 

Firm performance is self reported in the survey; however, for a subset of companies that are public we have their ticket symbol. Periodically, we run analyses to determine the validity of the self report data, and consistent with other researchers we find strong and positive relationships with the self report data and the more objective measures of performance. Therefore, although certainly not perfect, we have come to have high confidence in the self report measures of financial performance in the Leadership Pulse. Below are average survey scores for the items where statistically significant differences were found between the high and lower performing companies. 

Average scores are reported per question per group along with the gap score (high/very high minus ow/very low). The table is sorted by gap (high to low).

executive leadership scoring

The biggest gap is on results dealing with culture, with high performing firms scoring much better than the lower performing companies. All the other significantly different items are focused on important parts of running a successful business (e.g. managing cash and profitability, planning process, etc.).

C-suite employees vs. those who report into the C-suite

Average scores per question for items that are statistically significant (per group) and the Gap score (Clevel minus Senior VP) Sorted high-low by gap.

c suite employee scoring

The only two items that overlap with the analysis done on firm performance are culture and the strategic planning process, and the data show that for those two items, higher performing firms have higher scores (see highlighted rows on each table). 

Predictive work with index scores 

The individual questions can be aggregated up into overall index scores (using factor analysis). When we did this analysis, we found six different indices. Below is a table identifying each with the mean scores (sorted high to low based on average).

Strategy’s time has come around in 2019

In order to put together the results and understand which of the index categories predicts outcomes of interest, we ran regressions predicting employee energy and overall financial performance of the firm. 

What predicts leader energy?

The questions related to the strategic direction index are the only ones significantly predicting employee energy. That is interesting in that questions / indices more directly related to employees (employee focus, leadership) are not predictive. Although this may seem counter intuitive, it is consistent with a lot of our interview and company-specific work. The definition for employee energy we use as our guide for measurement is “the ability to do work,” which is from physics. The energy measure focuses on how close employees are to their ideal (most productive) energy level (like taking your body pulse when you assess where you are in comparison to your target heart rate). The measure used for the regression analysis is the absolute value of the gap score (current or working energy minus optimal energy). Large gaps are negative; as the gap increases, productivity decreases (note that we have done studies showing this relationship predicting sales, retention, customer satisfaction and other performance-related outcomes).

Our company and leadership pulse data have shown for some time that most leaders are scoring below where they are at their best on energy, and the reason is due to constant interruptions and not having time to focus on what is really the most important task at their jobs. In fact, in many cases they don’t know what the most important work is; thus, it’s not surprising that the data tell us that employees who think their strategic planning process is working have better personal energy at work. Perhaps they are better at directing their energy to drive higher firm performance because they have a clearer line of site between their work and outcomes via their strategy. 

What predicts financial performance?

The key metric here is focused on the financial model – whether the firm is managing profits, costs and cash flow effectively. We looked at another measure of firm performance, total revenue, and two things were predictive – both the financial model index and strategic direction.

Culture may be done eating strategy

In 2006 the saying “culture eats strategy for breakfast” was attributed to Peter Drucker by Mark Fields (who served as the CEO of Ford). Later, a book titled “Culture Eats Strategy for Lunch” was published (in 2013). Perhaps culture has been munching and eating a bit too long, and it’s time for strategy and core business levers like managing cash and profitability.

Even though our data show that the questions related to strategy are not rated at the top of any lists, they do seem to be important in predicting individual and firm-level outcomes. Taken with the significant differences in scores between C-suite executives and respondents in the level below the Clevel participants, it appears to be a good time to take stock and clearly understand the attention being given to various business drivers and whether there is synergy in what’s needed for high performance today.

Perhaps when the economy is strong and unemployment is low, change is faster and new competitors can quickly disrupt a market, the role of strategy is more critical than it was in the past. Also, with such competitive environments, one might ask if culture / engagement and other related items are really creating a competitive advantage. Consider that most companies are doing the same thing when it comes to engagement (using the same vendors, the same survey questions, identical interventions, etc.). They are not creating competitive advantage but basically copying the competition. Thus, today, perhaps strategy eats culture because culture is not very different from company to company.

Understanding business driver disconnects    

Members of the  Leadership Pulse receive their own data in addition to the benchmarking information. This kind of study is important because it allows the leaders to use the results to engage their teams in high quality dialogue. Consider the C-suite vs. the next level of leaders. In many ways, it doesn’t matter who is right and who is less correct. What really matters is that the leadership team gets on the same page. Why? Decisions about what gets funded, which projects are allocated resources (e.g. not just money but people, equipment, etc.), are made based on what the decision makers think is important. If the C-suite does not have enough information to understand why their direct reports think what they are investing in is not making a difference (or at least a positive one) in their firms, then chances of success of those same initiatives go down because the people reporting to the C-level executives are the ones tasked with implementation. Also, if certain business drivers are working and the next level of executives is unaware,  they could be focusing on the wrong driver creating opportunity cost and perhaps even financial losses.  

Use Data to Learn  

We started the Leadership Pulse to transform how companies use employee survey data. Our goal is to provide real-time learning to leaders on topics that are important for their personal success and the growth of their firms.  Anyone interested in becoming part of this learning community can learn more at www.leadershippulse.com.   

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The Leadership Pulse is a registered trademark of eePulse, Inc.  www.eepulse.com  

Latest Leadership Pulse™ Shows Misalignment between Top Executives and Direct Reports

executive leadership
LOS ANGELES–(BUSINESS WIRE)–The latest edition of the Leadership Pulse survey of 200 leaders from firms around the world suggests widespread misalignment between how the top executives view the drivers of their companies performance and what their direct reports are seeing.

“The question one must ask is: If these programs are indeed working, then why are the people in the group most likely in charge of implementing them – SVPs and Directors – scoring them so much lower?”

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Key Leadership Pulse Findings:

  • C-suite respondents rate key drivers of performance higher than do those who report to the C-suite across all but one of the categories;
  • Financially high-performing firms have higher scores for all business drivers, with the highest gap between these top performing and lower performing firms being ratings of the importance of company culture in driving firm performance;
  • Employees who think their strategic planning process is working have better personal energy at work.

Twenty-five percent of the sample were C-level executives, while another 25 percent represent executive levels that report to the C-suite, with senior managers, managers, business educators, and consultants the remaining participants. In this study of what drives business, the identified business drivers cover a range of organization assets or areas of strength, from ability to manage profits and cash flow, to brand and pricing strategy; from strategic planning process, to employees, culture, and leadership. Unique to this survey is the response mechanism, with each item scored on a -5 to +5 scale of “extremely negative” to “extremely positive.”

“Perceptions of corporate culture initiatives are among the most interesting findings in this survey,” said Dr. Theresa M. Welbourne, Affiliated Senior Research Scientist with the Center for Effective Organizations at the USC Marshall School of Business, Executive Director of the Alabama Entrepreneurship Institute at The University of Alabama, and CEO of eePulse, Inc.

“The perception gap between C-suite leaders and those who report to them is largest on programs a lot of C-level executives have been paying for and bringing into their companies,” Welbourne said. “The question one must ask is: If these programs are indeed working, then why are the people in the group most likely in charge of implementing them – SVPs and Directors – scoring them so much lower?”

Table 1: Average scores per question for items that are statistically significant (per group) and the Gap score (C-level minus Senior VP) Sorted high-low by gap.

Question C-Level

Sen. VP to Director

Gap
Ability to be agile and change quickly 1.86 -0.10 1.96
Our organization’s ability to innovate 2.23 0.46 1.77
Leadership team 2.25 0.65 1.60
Level of employee engagement 1.95 0.44 1.51
Our organization’s approach to employees 2.18 0.77 1.41
Culture of our company 2.58 1.39 1.19
Unique product characteristics 2.25 1.19 1.06
Skills and knowledge of our employees 2.38 1.37 1.01
Internal technology solutions 0.84 -0.08 0.92
The strategic planning process 0.51 0.67 -0.16

The only gap that is in a different direction (where Senior VPs and Directors have higher score than do the C-suite executives) is on strategic planning; it is interesting to note that this factor also is significant in predicting employee energy.

Dr. Welbourne notes that “in multiple case studies within organizations we are finding that leaders are working at levels of energy below where they are at their best or most productive; they cite a key reason as the inability to focus on the key activities driving the business. Perhaps it’s time to start paying more attention to strategy.”

Additional information on these findings and other editions of Leadership Pulse are available at www.leadershippulse.com.

About the USC Marshall Center for Effective Organizations

Since its founding in 1979, the Center for Effective Organizations (CEO), at USC’s Marshall School of Business, has been at the forefront of research on a broad range of organizational effectiveness issues. CEO’s mission is to improve how effectively organizations are managed. It brings together researchers and executives to jointly explore critical organizational issues that involve the design and management of complex organizations. Its leading-edge research in the areas of organizational effectiveness and design has earned it an international reputation for research that influences management practice and makes important contributions to academic research and theory.

By actively involving companies as research partners, CEO’s research yields practical, data-based knowledge that enables companies to design and implement changes that improve their effectiveness and competitiveness. CEO’s research is the foundation for its educational and certificate programs.

About eePulse, Inc.

Since 2003, eePulse has been using our energy pulse technology to survey global business leaders on topics such as: Leadership energy, business confidence, employee engagement, change management, business drivers, and innovation.

Participants in the leadership pulse program receive a customized report that offers industry benchmarking and information on leadership trends. This information can be used to improve business practices and business performance on a global scale.

Contacts

Matthew Simmons, USC Marshall Media Relations 213-821-9868 or matthew.simmons@marshall.usc.edu

Employee Direction – it matters if your employees understand on how they fit in.

Direction by financial performance

Figure 8, below, shows the scores for the direction questions by financial performance. A few observations emerge from this data.

1. Very high performing firms score highest on all direction questions.

2. Comparing high performing firms to average or below average shows high performing scoring lower on individual and team scores but higher on linking individual priorities to business strategy.

3. This data indicates that direction is the link to higher performance and that linking
individual priorities to business strategy may be the most important element in driving high performance?

Direction by job level

Figure 6, below, shows the scores for the direction questions by job level. A few observations emerge from this data.

1. Senior leader positions have the highest scores on direction.

2. The higher the position the higher the score on direction, except for the CEO.

3. CEO’s are the lowest scoring for senior leaders. Does this indicate CEO’s do a better job of providing direction to their teams than the board of directors provides to the CEO?

4. If direction drives performance, then there is a high cost for direction scores falling as you move down the company hierarchy. This suggest performance improvement can be achieved by additional directional communication at the lower levels of the hierarchy.

Figure 7, below, plots clarity of individual priorities and goals versus clarity of team priorities and goals for job level and financial performance. This shows senior management and very high performing firms have clear team and individual direction. If we learn to move this clarity to lower level positions in the hierarchy and if low performing firms spend more time on direction clarity, we would expect to see higher performance as a result.

Summary

• Energy has stabilized at 7 out of the10 point scale and is at its highest level since we began reporting in 2003.

• Overall, energy is still below where leaders say they are most productive and over 52% of the respondents are more than one point away from where they say they are at their best. This group is at risk of low performance.

• Leader confidence dropped slightly to 3.58 after being stable for the last three years at 3.61. The biggest drops in confidence were in the strategy making process (-9) and the leadership team overall (-4).

• Direction dropped from the prior survey. The data indicates direction is a key component in driving high performance, so this drop is troubling.

• There continues to be a high opportunity cost indicated by a continued high energy gap, lower leader confidence and a drop in direction. This opportunity cost may result in organizations being less agile and unable to act on opportunities or weather financial or regulatory challenges.

Actions for energizing leaders and non-leaders, improving communicating direction especially at lower levels of the organization should reduce this opportunity cost.

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Team Learning

Additionally, any participant can sign up their teams (direct reports) and receive overall group reports. The teams can be up to 100 people. The group reports consist of aggregate data, so the leaders cannot see responses from individuals. The team pulse has been an important benefit for leaders who are interested in data-driven learning. Their teams can attend the knowledge sharing webinars, and they can learn not only from their own results but from what other leaders are doing in response to the challenges discovered in the learning.

To learn more or to sign up as an individual or team, go to www.leadershippulse.com

For more information:
www.eepulse.com
www.leadershippulse.com
Email:info@eepulse.com
+1-734-429-4400

Executive Leadership Learning Expert Advice

Leader Energy and Confidence Ring Alarm Bells. Part 4

Leadership Confidence Patterns for Financial Performance and Rate of Change

Table 5, below, shows the percent confidence leaders have as a function of their organizations’ reported financial performance. There is a very clear pattern with leaders in organizations which reported low to very low financial performance having the lowest confidence, leaders in organizations which reported high to very high financial performance having the highest confidence, and leaders in organizations which reported average financial performance having confidence levels between the other two groups. The exception is confidence in personal leadership skills. It is important to note that the highest performing organizations do not have leaders that have the highest confidence in their personal leadership skills. Aside from this item, however, there is clearly a link between these measures of leadership confidence and financial performance.

The strategy making process and the ability to change as needed are two questions scoring low. This means leaders may want to consider implementing Extreme Strategizing suggested by Dr. Welbourne in her article in the Spring 2009 issue of Leader to Leader. Leaders need to “reach out to a key stakeholder group on a frequent basis and use the data obtained to make changes in strategy on a regular, ongoing basis. Thus the first step in implementing extreme strategizing is to devise a model of obtaining regular, ongoing data from employees and then feeding that data into a dialogue process about direction and strategy. This extreme strategizing process emphasizes the feedback loop as critical in the short term, not just in the long run.”

“Two things happen when employees see a disconnect between their firm’s strategy and reality:

•• The right problems or opportunities are not pursued, as they are not in synch with the official strategy. Leaders look bad to employees because they are doing work and making decisions that are not on target.

•• Leaders realize the strategy is off and they initiate change, and that effort results in lower confidence. Confidence is reduced under the second option (even though it was the right thing to do) because leaders spent so much money making strategy that when they change their minds, others in the organization lose confidence in the leaders’ abilities. The conclusion is that leaders were wrong; thus, they must not have been too bright in the first place. My working hypothesis is that leadership confidence is being driven down, in part, due to a broken strategy-making process that uses outdated models, methodologies, and tools.”

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A moderate rate of change supports higher leadership confidence.

Table 6, below, shows the percent confidence leaders have as a function of their organization’s reported rate of change. In this case, leaders in organizations that have a moderate rate of change have the highest confidence levels on each item. Leaders in organizations with low rates of change have the lowest confidence in their leadership team, economic climate, ability to change as needed, and strategy making process; leaders in organizations with high rates of change have the lowest confidence in ability to execute on their vision, personal leadership skills, and their organization having the right people and skills.

Direction Index

Questions around priorities, goals, and objectives were also asked on the Leadership Pulse, and have been aggregated into a Direction index. While individuals may have confidence in their leaders and the internal and external factors that affect their organization, they may not have clarity of their priorities and goals or see how they tie in with the overall business strategy. Also expending Energy on the wrong priorities or on priorities that don’t seem to tie in with the overall business strategy can leave an individual underproductive and de-energized.

The Direction index is fairly high, with a score of 3.94 on a 5 point scale. Overall, there was a slight decrease in Direction, dropping from 4.01 in April 2012 to 3.94 in April 2014. It is interesting to note that while there has been a modest drop in Direction, there was a substantial increase in Energy over this time period, increasing from 6.57 in April 2012 to 7.00 in April 2014.

Direction Items

Table 7, below, shows the change in Direction items between April 2012 and April 2014. In April of 2014, most respondents felt that their own goals, priorities, and objectives were clear to them, they did not feel that their team’s goals, priorities, and objectives were as clear to everyone of the team, with a 0.38 point difference between the two Direction items. In contrast, leaders not only were clear on their own priorities, but knew how they linked to the overall business strategy, both with a measure of 4.07 on a 5 point scale.

Individual’s priorities being linked to their organizations business strategy did not change between April 2012 and April 2014. Clarity in both an individual’s priorities and team priorities dropped between April 2012 and April 2014, with clarity around a team’s priorities showing twice the decline, down 0.14 points, as clarity around an individual’s priorities, down 0.07.

Leader Energy and Confidence Ring Alarm Bells. Part 3 “Team Energy”

Team Energy Risk by Functional Area and Job Level

Figure 3, below shows a heat map for the team energy risk by the functional area of the respondents. The areas of research and development, marketing, finance and accounting, public relations and general administration all have a team energy risk that is a third or less of the respondents being more than one point away from their best energy level. However, sales at 63.7%, human resource management at 67.6%, and engineering at 71.4% all have substantial team energy risk.

Sample comments from HR and engineering

• free fall, self absorbed leaders completely out of touch
• self centered selfish idiots as leaders
• Leadership seems to be reactive rather than predictive. Those strategies that we are implementing to not seem well thought out.
• We are in process of a full org redesign and shift to digital focus which will be a mindset shift
• Low motivation; no feedback that the work I do matters or is important to the organization
• Uncertainty, Lack of accountability, Poor leadership

Figure 4, below, shows a heat map of the team energy risk by the job level of the respondents. What is of note is the comparison of the team Energy risk of those in the top levels of organizations with those in middle levels of organizations. CEO/President, Other C-Core, and Senior VP or Executive VP all had a team energy risk below 40%. Meanwhile, Senior Manager, Director, and Manager/Supervisor had team energy risks of 59.1%, 61.9% and 69.2% respectively.Figure 4, below, shows a heat map of the team energy risk by the job level of the respondents. What is of note is the comparison of the team Energy risk of those in the top levels of organizations with those in middle levels of organizations. CEO/President, Other C-Core, and Senior VP or Executive VP all had a team energy risk below 40%. Meanwhile, Senior Manager, Director, and Manager/Supervisor had team energy risks of 59.1%, 61.9% and 69.2% respectively.

CEO’s, other C-level and VP’s have lower energy risk. This is as expected and hoped for. However, numbers in the 30’s for energy risk are still high for the senior leaders who need to help their employees manage their energy for peak performance.

Sample comments from senior leaders:

• We’re going through a transition period that has some economic discomfort. Doing some soul-searching and questioning of how we got to the current place

• The company is going through rapid growth/change and entering new markets. Our workforce needs to change quite significantly to support our efforts.
• With all of the changes in the economic situation, it is difficult to determine the needs of our clients making strategic management a little more difficult. I am confident that we will succeed, but not overly so.
• need to delegate; too many irons in the fire, working on training others to take on some of my tasks
• The direction of the economy keeps me awake at night sweating.
• As the CEO and business owner, I sometimes get a bit pessimistic about our ability to change as necessary…including me. Puts a drain on my own energy.
• Lack of planning & alignment; silo’d organization & decision making;
• Too many projects, not enough time

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Change in energy risk

Public administration, transportation and warehousing and wholesale trade all had large improvements in their energy risk, while mining had a large increase in energy risk.

Leadership Confidence

Leadership Confidence has also been measured since 2003. Leaders are asked to rate their confidence in seven items:

• their leadership team
• their personal leadership skills
• the economic climate for their organization
• they have the right people and skills
• their ability to change as needed
• their ability to execute on their vision
• their strategy making process.

The Leadership Confidence Index is the average of the responses to these 7 items, scored on a 1to 5 scale where 1 is Not at All Confident and 5 is Very Confident.

Figure 5, below, shows that a slight decline in the Leadership Confidence Index to 3.58 after reaching a plateau of 3.61. This plateau followed a larger decline since March of 2009 where the Leadership Confidence Index was 3.71. The continuing decline in the confidence of leaders is a large concern, and it is important to get an idea of what is causing this decline.

Confidence trends tell a story of leaders who are feeling more positive about the input to their businesses and less confident about their ability to take action on those inputs.

Table 3, below, shows the change over a 2 year period in the percent of leaders who are confident or very confident in each of the Leadership Confidence items. While confidence in the economic climate and their organization having the right people and skills showed slight increases, there were some noticeable drops. A 9 point drop in leader’s confidence in their strategy making process shows waning confidence in strategy making processes that are often inflexible and slow to implement when they need to be responsive and agile to compete. This is also reflected in a 3 point onfidence drop in their organizations ability to change as needed. Combine that with a 4 point confidence drop in the leadership team, a 3 point confidence drop in leader’s personal
leadership skills, and a 3 point confidence drop in their ability to change as needed indicates that while they may understand where they are at now and where they want to be, they are unsure of how to get there.

Leader Energy and Confidence Ring Alarm Bells. Part 2 “Energy”

Energy matters – it’s the ability to do work – it has a DIRECT LINE to performance.

Rather than measuring and focusing on things that may, sometime in the future, affect energy and then performance, start with the real stuff — energy.

The March / April, 2014 Leadership Pulse focused on three areas, energy, leadership confidence, and direction. A total of 540 people responded to the Leadership Pulse. There have been over 5,000 respondents since May of 2011 and 9,500 different individuals who have participated since the inception of the Leadership Pulse in 2003.

Energy

Energy is measured by asking two numbers; it’s all about the way employees convert potential to moving energy. Based on large studies at the organization level, we learned that energy is a key differentiator of long-term performance. Energy predicts outcomes such as survival and stock price growth when other metrics do not. The measurement of energy at work was derived from this larger-scale research.

We learned early on that energy fluctuates; therefore, making energy measurement simple to do and then creating results that are easy to understand were both key for helping managers take action with the data. Participants are asked (1) to rate their energy level at work today and also (2) to rate the level at which they are at their best. The difference between these two numbers, or gap, predicts performance, and variance over time also is predictive.

Energy is an optimization construct. Therefore, if one is in a situation with too much stimulus, energy can be raised to a dangerously high level. Thus, optimizing energy so it is near where one is at his/her best is the ideal energy level.

Below is the energy measure used in the March/April leadership pulse:

The average energy on the 0 to 10 scale for the entire leadership sample was 7.00. Figure 1, below, shows that the overall average energy of leaders is holding steady since reaching an alltime high of 7.01 in September 2013. Leader Energy reached a low of 6.18 in September 2010, but then rose consistently for 3 years. Remaining at this high energy level might be seen as positive; however, knowing that energy is about optimization, the trend data only tell part of the story.

Table 1 below shows changes in energy by industry from the September 2013 Leadership Pulse. There were several industries with energy changes over 1 point. In all these changes except for mining, the change had a positive effect on the energy gap for that industry.

Energy is up but not necessarily good for business

While tracking the average energy for leaders is a good starting point, it is also important to know how the working energy (energy today) compares to optimal energy (or energy level where they are at their best). The energy gap is used for this assessment; it is calculated by the following equation:

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(Energy today – Energy at your best) = Energy Gap

Aggregating the gap scores, one can visually plot the risk for a given team or company. In figure 2, below, the risk levels for the entire leadership pulse population are described. Our research indicates that a gap of one point indicates high risk of lower performance (note that the gap can be positive or negative so this graph includes the absolute value of the gap).

While 26.5% of respondents are at their best energy or within half a point or less from their best energy, 52.2% of respondents were more than a full point from their best energy. This 52.2% is defined as “team energy risk”, and it is the percentage of individuals who are at risk of poor performance due to factors causing them not to work at their best energy.

Team Energy Risk Change

While the average energy was essentially unchanged from September of 2013, the Team Energy Risk did have a slight drop of 1.4% from 53.6% in September 2013 to 52.2% in April 2014.

Leader Energy and Confidence Ring Alarm Bells

Leader Energy and Confidence Ring Alarm Bells

Leadership Pulse™ Leader Energy and Confidence Ring Alarm Bells It’s true that leaders don’t know everything in the organization. However, if you want the story of how a business is doing, and if you need to get a picture of the trajectory or potential of a firm, certainly it’s a good bet that talking to the senior leaders and managers will provide you with some deep insights. These are the people talking to customers, managing the employees, looking out for the future of the business and creating the strategy that others follow.

So when those leaders tell you that their personal energy at work is suffering, and their confidence in themselves, their leadership team, their strategy, their ability to execute their vision and their ability to change are all declining, I’d say it’s time to take notice. That’s exactly what we learned in the Leadership Pulse data, collected in March, 2014.

Why do we care about leader energy?

Using a classic definition from physics, energy is the ability to do work. Leaders are telling us, in their responses to the Leadership Pulse, that their ability to do work is suffering. That’s just not good.

Why does confidence matter?

When consumer confidence goes up, individuals buy more. The same thing happens with leadership confidence; when it goes up, individual employees provide more to their organizations. Employees are not purchasing from their organizations, but they are giving their time, commitment and energy to their firms. When confidence is low, employees give less, and they start seeking jobs elsewhere; they give less than 100 per cent at work, and as a result, firm performance spirals downhill.

We learned in the last Leadership Pulse that both energy and confidence are trending in ways that are alarming. It doesn’t necessarily mean negative things will happen, but just like consumer confidence, if something is not done, the trend foresees less than ideal outcomes for businesses.

What is the Leadership Pulse?

Taking a step back, let’s examine the Leadership Pulse. For those of you new to the process, the Leadership Pulse started in 2003, and it is an ongoing short survey (we call it a Pulse Dialogue- short and meant to engage the participants in dialogue that drives learning). This short Pulse goes out to a sample of leaders around the globe; however, the majority are still in North America. We ask the leaders to respond to a short set of questions, and each time period we ask them about their energy at work. We also select a second topic, which varies during the year. The March, 2014 pulse, which is the subject of this report, focused on energy, confidence and direction.

How the Leadership Pulse works

  • Short Pulse Dialogue sent out to sample (takes about 3 to 5 minutes to complete)
  • Kept open for 3 to 4 weeks
  • Pulse stopped
  • Reports released to all participants. Each person in the Leadership Pulse receives a personal report, showing his/her own scores vs. the benchmarks for the industry chosen
  • Webinars provided soon after the survey closes to review basic findings
  • Deeper analysis done, findings reviewed and technical report prepared ( this document is the technical report)
  • Another set of webinars and discussions roll out
  • We hope the participants take action – by learning through data, there is a chance to learn and make changes to improve performance
  • That’s what we’re all about – data-driven leadership learning from a group of peers who are running businesses and who want to engage in change
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What’s in this report

On the next pages you will find results from the Leadership Pulse study. The Pulse Dialogue process was conducted in late March, early April 2014.

Call to action

We are worried about leaders and managers. When they say their personal energy at work is nearing what we call the danger zone, this should cause alarm. When leaders tell you that their situation is bad enough that it’s reducing their confidence to deliver, then yes, something should be done.

What amazes me about business today is the amount of money being spent on things like leadership development and employee engagement, and very few people seem to have an understanding of a key concept like employee energy. We’ve been studying energy in detail since 1996 because it matters to bottom-line performance.

What we know, with millions of data points, is that when you do something to improve human energy at work, you take action to improve the organization. We have seen organizations make dramatic turn-arounds by focusing on energy at work.

Energy = ability to do work

High performance, growth and innovation come from OPTIMIZING AND DIRECTING human energy at work. The secret to success is all about energy conversion – converting potential to moving energy and then directing that energy at firm objectives.

Scientists know how to measure energy overall – they look at what it takes to transform potential energy to kinetic or moving energy. What does it take to increase temperature by one degree, for example?

We are examining what it takes to move leaders to their best energy – and we don’t stop there. For firms to succeed, optimal energy levels are not enough – energy needs to be directed and redirected in order to achieve desired goals.

Key learnings about energy at work

When we investigate energy in organizations, we learn that energy, in most organizations, is in a suboptimal state because 70% of respondents say they are lacking direction.

Direction is critical – and direction is NOT strategy. Direction is all about what I am supposed to do today. Why is this a problem? Because in the last week, someone somewhere probably dumped a significant number of new projects on you, and that person failed to take something away. How long can we keep adding to the scope and type of work (not just amount of work) and think employees, leaders or managers can just keep on converting that potential to moving energy beforrunning out of potential energy?

If you are driving your car, you know you have to refill the gas tank to keep moving forward. Manufacturing experts recognize that preventative maintenance is critical to success. Athletes who work out don’t just push as hard as they can and never stop; they aim for a target heart rate and they carefully plan their exercise routines.

At work we just keep dumping more work on people. And the environment keeps on changing. Managers are having a tough time keeping up.

Just for a moment – forget employee engagement – stop talking about commitment – and start diagnosing the energy of your leaders and managers. These things all matter, but they indirectly affect performance through employee energy. So why not spend time to understand the direct line variables?

 

Executive Leadership Advice

Leadership Energy Calibration Infographic

LeadershipPulse-EnergyConfidence-Infographic‘ish Leadership Pulse In the Leadership Pulse™, we ask working energy and optimal energy. The difference between these two numbers is the Energy Gap™.  In

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