Leadership Focus and Business Performance

“You don’t get paid for the hour. You get paid for the value you bring to the hour.” ~Jim Rohn

Stock market analysis

I have sat in on far more senior executive meetings than I would care to mention where the majority of time and attention was focused on shareholders. Topics ranging from EPS, profit margins, actual vs stated revenue growth, preparing answers for Wall Street analyst meetings, getting ready for the AGM, take up a lot of time and attention of senior management.

In contrast, leadership meetings focusing on employee engagement, building a high performance culture, and improving the customer experience are rarely seen on most senior executive meeting agendas.

For the past several decades, business leaders have focused much of their time and effort in attempts to appease Wall Street and satisfy shareholders.  Why?  Here’s the usual response: “Shareholders invest their hard-earned money in our company and we have a moral and fiduciary responsibility to give them a good return to improve the value of their shareholdings.”   Sounds like the answer to a question on a MBA final exam!

Who Really Creates Value?

Cramer

When executives pay more attention to Wall Street (CNBC financial analyst Jim Cramer) than their employees, the end is in sight.

It is important to remember that money coming into the company comes from two main sources, not just one.  Sure, shareholders invest money in the company, but so do customers!  Customers give the company money in return for goods and services. Two huge sources of investment in the company.

Yet there is only one group in the business equation that turns money into added value! Employees. Both shareholders and customers give the company money, but it is employees that turn money into added value that results in an attractive share price and goods and services that customers value.

Value added

Leadership Focus

With an understanding of who really creates value, where do you think senior leadership should focus their attention and time?

Seems to me that time should be spent where the value is really created, not just on where the money comes from.  Wall Street and shareholders are important elements in the business equation, but they are not the only ones.  I often advise senior teams to review their time spent and to really look at the ROI of that time.  Wall Street and the stock market is notoriously fickle and trying to run your business in order to please the street and pundits is a design to fail.  Sustainable businesses focus on long-term value creation, not quarterly returns or maximising share price.  And real long-term value comes from employees and the company culture.

Here’s a suggestion for leadership focus.  What do you think?

Leadership focus

 

John R. Childress

Author of LEVERAGE: The CEO’s Guide to Corporate Culture, and FASTBREAK: The CEO’s Guide to Strategy Execution, available from Amazon in paperback and eBook formats.

See the review of LEVERAGE in The Economist (January 9, 2014.

John also writes thriller novels:  novels.johnrchildress.com

 

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
This entry was posted in consulting, corporate culture, John R Childress, leadership, strategy execution and tagged , , , , , , , , , , , , , , . Bookmark the permalink.

2 Responses to Leadership Focus and Business Performance

  1. Anonymous says:

    I like the view. However it will need shareholders and senior management mind sets to change on focusing on employees and the results will follow.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s