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.
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