Developing and testing new business simulations at CMOE is always a lot of fun. It’s a time when the CMOE staff gets free lunches, prizes, and the opportunity to meet countless new people we ask to join us. So in addition to creating or reworking our products, we create a culture of fun.
This past week I was assigned to pick up the food for a volunteer test group. I went to get Pizza and as I was standing at the payment counter, I noticed a computer screen on this wall. In big, black, block print, it read “LEADERBOARD.” I was immediately excited to see this. As I was waiting for my order to be finished, I was trying to identify what was being tracked by the “leaderboard” and how it worked. It was obvious that the leaderboard was networked with other stores and I quickly noticed that the store I was purchasing from was second from the bottom. This piqued my interest further. I decided to speak with the manager to understand how it worked.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
Manager: Yeah, it tracks just about everything in the store from the time a phone call was placed to the time the order leaves the store for delivery. Corporate can pull up data on just about anything in the store.
Me: It doesn’t sound like you believe it’s a good thing by the way you are speaking. Do you get recognized or rewarded for hitting certain levels of performance?
Manager: No, it basically indicates what you have to do as a minimum to keep from getting fired.
The manager continued to explain that this tracking system was to help employees have higher levels of customer service, reduced mistakes, and shorten production times, among many other things. While those are great focus areas, I was emotionally deflated by the way he explained it. This employee was telling me that the “Leaderboard,” this scorekeeping system, was the worst thing about his job.
If organizations are to succeed against strong competition and have higher levels of profitability, measurement cannot build fear and negativity into employees. Driving bottom line performance with the right measurement will engage people and get people excited and committed to push performance levels. By using our piles of data, managers can help employees sort out measurements that drive individual results.
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I believe there is a correlation between employee happiness, customer satisfaction, and increased profit margin. We all know in order for a company to stay in business it must produce profits. Too often though, the focus is centered around profits and not enough on the drivers of profits, the employees. Employees tend to treat the customers, whether internal or external, to the extent to which they are satisfied and happy with their current position. The question becomes how does a leader create enthusiasm and ensure job satisfaction for their team members.
Most satisfied employees feel empowered. This means they must have the tools, support, training and ability to make decisions. In addition, a leader needs to become more of a coach than a “teller” or dictator. Coaching creates an atmosphere of collaboration, trust, and confidence, where constructive and sincere feedback is accepted. Remember, “The worst feedback is no feedback”.
Employees need to understand how their job function contributes to the bottom line of the organization. Employees will tend to work harder if they feel like their work is meaningful and adds value. My first job in high school was at a dry cleaner. I staffed the front counter taking in clothes, entering the information into the system and creating an invoice for the customer. The job was not exciting and every day I wished for the fewest customers possible. When a customer came in I would get the order entered as fast as I could and get back to doing nothing but wait for the next customer. Looking back, I imagine that not everything was entered properly and those mistakes, although small, cost the company some profits.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a scorecard. What if we created a scorecard review of my key functions so I could see the importance of the work I was doing. Even the “front counter” employees need to understand how important the work is that they are doing.
If employees are happy, customers are happy. When customers are happy, they come back and tell others of their experience. Repeat business and referrals equal greater profit. Sometimes we need to step back and look at our own performance. Are we focusing solely on the profit and forgetting about the people driving the profit? Are we creating an atmosphere where employees are coached or are we a dictator? Do the employees know how important their job function is? Do the employees feel empowered and find their work meaningful? Are we tracking the important functions that help build profit? We need to look at these questions often as we lead for greater profit.
The Value of You We all like to see results. Whether it is in the work we do, our bank account, or other personal activities, results make us feel good. The life of Warren Buffett is a great story about leadership that gets results. He spent decades mastering the financial industry and understanding how to get results. Regardless of how you feel about his approach, philosophy, or business style you cannot argue with the effectiveness and success he and his organization has had. In 2008 Warren Buffets net worth was estimated at $62 billion dollars. Those results were achieve by a lot of focus on the bottom line.
So how does Warren Buffett’s success apply to you? In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University. During this event the following question was posed by a student:
Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today. My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”
Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written. So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE] But let me add one point because — to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE] If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it’s not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value. See me after the class and I’ll pay you 150-thousand.”
Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication. As individuals, it is important to develop ourselves. Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth. Investment in learning will pay huge dividends. If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.
Heavily Invested
Ask yourself this question. What would an investor ask you at the annual shareholders of YOU meeting? At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?
If you can answer those questions, you are doing great. If not, look to refocus your efforts. Educate or develop yourself to the point where you can answer them. You are heavily invested in yourself so what do you want your future earnings look like? Are you a million-dollar person? It’s hard to argue against hard results.
Traditional rock climbing is a style of rock climbing where a climber places pieces of protection gear, such as camming devices and stoppers, into the rock as they climb up. In traditional climbing there are at least two people, one who climbs andone who belays. Traditional climbing also requires more gear than other styles of climbing. At the base of the climb two people attach themselves to the rope. The climber ties the rope into his harness and the person on belay connects the rope to his harness using a belaydevice, giving him the ability to manage the rope as the climber ascends the wall. The person that begins climbing up and placing gear to get to the top leads that wall. This leader has the responsibility to plan out and take the correct line or route, use the proper pieces of gear throughout the climb, and to set up a secure anchor to which he and the other climbers following him will rely on. Once he reaches the top and sets up his anchor, he takes over the role of belay and manages the rope as those who follow ascend. Often times the reward of traditional climbing is phenomenal as the climbers are able to stand at the peak of their climb and take in the beautiful view hundreds of feet off of the ground.
To run a successful business there must be those who rise up and lead, and as a lead climber does, one must step up and make many decisions that will be crucial to the life of the company. As a leader you will not be alone. You will have those who are beside you who, when you begin the climb, will be there to catch you if you fall. There are also many tools available that you must use to aid you in getting to the top.
To have leadership that gets results many of the same responsibilities that a lead climber has must be taken on. The first responsibility a leader has is planning out and taking the correct line. Remember, others who follow behind you will take the same rou
te you did, make sure its where you want them to go. The second is using the proper tools available at the right times. Often, leaders feel like they have to do everything. Trust and teamwork must come into play. You hire specific people who all have different skills an abilities for a reason, use them. Lastly, setting up a secure anchor. If you do not have a secure anchor to rely on and keep you steady as you make your way to the top, there will come a time when something will happen and because of a lack of an anchor you and others may fall.
These of course are only a few of the responsibilities necessary to lead, and every leader will need to carry out these responsibilities in the way that is specifically tailored to their companies needs. When things get a bit challenging, tie in and climb on, the rewards waiting at the top are well worth the effort.
Me: I noticed your leaderboard on the wall; it looks interesting. It appears to be tracking certain success factors and percentages. Do you get rewarded when you hit certain levels of performance? The reason I ask is I work for an organization where we use effective management, measurements, and scorecards to drive bottom line profitability.
I wonder if it would have been different if the manager took some time to explain how my work added value to the company through something simple like a 
Traditional rock climbing is a style of rock climbing where a climber places pieces of protection gear, such as camming devices and stoppers, into the rock as they climb up. In traditional climbing there are at least two people, one who climbs andone who belays. Traditional climbing also requires more gear than other styles of climbing. At the base of the climb two people attach themselves to the rope. The climber ties the rope into his harness and the person on belay connects the rope to his harness using a belaydevice, giving him the ability to manage the rope as the climber ascends the wall. The person that begins climbing up and placing gear to get to the top leads that wall. This leader has the responsibility to plan out and take the correct line or route, use the proper pieces of gear throughout the climb, and to set up a secure anchor to which he and the other climbers following him will rely on. Once he reaches the top and sets up his anchor, he takes over the role of belay and manages the rope as those who follow ascend. Often times the reward of traditional climbing is phenomenal as the climbers are able to stand at the peak of their climb and take in the beautiful view hundreds of feet off of the ground.
