Vail Daily column: Leaders look beyond the balance sheet
A balance sheet is one of the main financial reports for an organization. It tracks assets, liabilities and the equity of the company. Its companion, the income statement, tracks operating performance through revenue and expenses. Great managers master these two documents and can read deep into the numbers to quickly assess trends and shifts in the risk level or growth possibilities.
What these two reports do not do is provide the reviewer with a glimpse into “how or who” will be driving performance in the future, and if the past results will continue. Wouldn’t it be nice to be able to predict how your people will perform in three years, and their impact on your bottom line? If we could predict this, would we start to track our people as an “asset” on the balance sheet just like a piece of equipment that may produce an intended set of results during a period of five to 20 years.
When Lee Iacocca was at Chrysler, he developed the 9Cs as a way to measure a candidates’ leadership for a position. The list consisted of curiosity, character, charisma, creativity, courage, competence, conviction, communication and common sense. He would score you 1-5 in each segment and determine a final score.
So how do you determine what to track within your organization? Should you adopt Lee Iacocca’s system, or another one that you have read in a book or blog? The answer to this question becomes evident once you build the “specific criteria” for your organization. A leader or leadership team needs to first start with defining themselves and their values. Next, they need to fully assess their “implicit” and “explicit” culture before they can measure if people are supporting that culture through their actions. Once these items are documented, a leader will be able to start tracking their people as closely as they track their finances.
Leaders should be comfortable managing outside of their traditional financial statements, and realize that measuring the specifics of culture will be challenging. One measurement example could be, “How long do we spend at each staff meeting talking about our culture and activities that have contributed or distracted us in the past month?” The scorecard could then track which managers were “taking the time.”
Louis Gerstner, former CEO of IBM, said, “The thing I have learned at IBM is that culture is everything.” Although I am no longer working “in” a company, I am now working “with” executive teams at multiple companies, and I am increasingly convinced that “company culture” is extremely important, yet difficult to measure and rarely managed well. As I look back on the leadership roles I have had, I wish I had spent more time cultivating organizational culture, says Vail Leadership Institute mentor Charlie L’Esperance.
In the end, getting clear of what pieces of the culture need to be measured, and taking the time to review the results with your team, can be an effective way to ensure your financial statements don’t become to sole ruler of your organization.
Ross Iverson is the president and CEO at the Vail Leadership Institute. Reach him at firstname.lastname@example.org. Join the Vail Valley Partnership and the Vail Leadership Institute May 20 from 8:30-10:30 a.m. at the Vail Marriott, as Iverson facilitates a workshop on how financial management affects leadership and what you can do within your firm to measure both effectively in order to enhance your culture.
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