Embracing the Principles of Best Practice

Best practice is often misunderstood, as what’s best for you is constantly developing and changing over time. What is best practice today won’t be best practice tomorrow. Also best practice for one organisation won’t necessarily be best practice for another, so it isn’t just about copying what everybody else is doing; but is about identifying your organisations specific needs to get you from where you are today to where you want to be tomorrow.

I often tell clients that you can find many reasons why you shouldn’t do the right thing in business; the trick is to find the one reason why you should. Best practice only appears daunting because we allow it to be, we create negative images in our head of unachievable goals and create unrealistic expectations and happily reject a solid business principle based on our uncertainties and fears. However best practice, when implemented correctly will;

 keep your organisation focused on realistic goals and objectives,
 have realistic timeframes for implementation, (that you’ve agreed),
 will take your organisation on a journey of incremental improvement and sustainable growth,
 will be ‘enjoyable’ and enhance job satisfaction as all employees will be contributing to organisational efficiency and improvement.

Deciding to adopt a best practice approach to business is not a difficult step and can start today. In its simplest form, adopting a philosophy of best practice, is asking you and your organisation if there are ways to improve your approach to business. In fact, best practice asks;

 Do you have a best practice culture, where the organisation looks beyond just continuous improvement to improvement via best practice;

 Do you fully understand and engage with your customers (and do you engage with those who aren’t your customers, but could be);

 Have you developed the optimum strategy for your organisation, and in doing so considered all the potential strategic options;

 Is your strategy being implemented in the most efficient and effective manner;

 Have you identified a credible and sustainable competitive advantage that is understood by the whole organisation;

 Have you the right people in the right positions;

 Are your leaders effective and leading and developing your leaders of the future;

 Are your business teams working efficiently together, at all levels, where the
focus is on the organisation rather than the individual;

 Do your systems, processes and performance measures support your strategic objectives;

 Does your organisation have a solid business foundation for it to grow.

So as 2011 approaches, decide that it is going to be a year when you and your organisation challenge your business principles and practices to become the best that you can be.

References

Brownbill, N. (2009). Be the Best in Business. Advanced Corporate Concepts: Cape Town

Defining Corporate Social Performance.

As the year comes to an end much has been written about corporate social responsibility, with many organisations adding socially responsible statements to their websites and mission statements. Some organisations have even established ‘high level’ positions, accountable for developing their socially responsible ‘footprint’ and then a few, a very few, have truly integrated corporate social responsibility into their organisational strategy and culture; and are year on year making a real difference. But how many organisations are actually measuring their contribution to social responsibility?

The essence of corporate social responsibility isn’t about the talk or the plans, but the continuous improvements generated through corporate actions, where corporate social responsibility is defined as actions and activities that improve and/or protect social welfare on a local or global level; and where corporate social performance is the ‘measurement’ of the organisations overall performance in improving and protecting social welfare compared to their leading competitors in the industry, measured over a period of time, (Luo and Bhattacharya, 2009, p. 201)

In their 2009 article Luo and Bhattacharya take the time to explain the difference between corporate social responsibility and corporate social performance, where “corporate social responsibility initiatives are related to but different from corporate social performance in several aspects;

First, the former refers to firms’ programs and investments in responsibility and/or sustainability, while the latter represents stakeholders’ assessment of the overall quality of those programs and investments (McWilliams and Siegel 2000).

Second, the former captures the noncumulative, one-time involvement in corporate pro-social behaviours, while the latter can be a proxy for a firm’s cumulative, historical involvement in these behaviours (Barnett 2007, p. 797).

Third, the former is a non-competition based construct, while the latter is relative to the competition in the industry. While firms invest in corporate social responsibility initiatives; corporate social performance, as the measure of firms’ aggregated historical social performance relative to competition, is what stakeholders reward the firms for and, therefore, what is potentially linked to firm financial performance”, (p.201).

Organisations need to take the next step in 2011 and not just make statements about what they’re doing and how much they are investing in social responsibility projects, but actually show how they are performing year on year. In this way, social responsibility performance can become a meaningful measurement of organisational performance and continuous improvement along with the other core performance metrics.

It’s no good organisations ‘promising’ social responsibility initiatives that aren’t congruent to their own business success, just to get on the social responsibility band-wagon, as this will only be a recipe for disaster. In fact Luo and Bhattacharya highlight that “too often, executives pursue a corporate social responsibility agenda without prudently considering broader contexts of the firm. Disconnected responsibility initiatives not in synergy with firms’ marketing strategy instruments can obscure many opportunities for companies to benefit society and can even lead to more harmful, unintended stock risk (good intentions end up with bad numbers; Porter and Kramer 2006)”, (p.210).

Organisations need to spend the time integrating corporate social responsibility into their formal strategic development processes – identifying the opportunities, the strategic options and the long-term benefits for their social focus and their organisational growth. As part of their long-term focus corporate social performance needs to become a key business indicator, not just for the strategic leadership but, for their stakeholders and their customers as well; as it won’t be long until both investors and customers are asking organisations to prove their achievements, in a meaningful, quantified and sustained way.

Finally, Luo and Bhattacharya “urge firms to conduct rigorous research to determine stakeholder perceptions of firm actions and more precisely map how corporate social performance and firm strategic levers interact and align before settling on the appropriate corporate social responsibility initiatives. In doing so, managers may build a more resilient firm that can leapfrog the competition and better ride out economic downturns”, (p.211).

References

Luo, X. and Bhattacharya, C.B. (2009). The Debate over Doing Good: Corporate Social Performance, Strategic Marketing Levers, and Firm-Idiosyncratic Risk. Journal of Marketing; Vol. 73, Issue 6, p.198-213.

The Gender Imbalance: Why Aren't There More Women Executives?

In an excellent Harvard Business Review article in March 2010, entitled ‘Women in Management: Delusions of Progress,’ Nancy Carter and Christine Silva mention that, “the accepted message on gender disparity in the workplace has for the past 10 to 15 years been one of acknowledgment and reassurance: Yes, women represent just 3% of Fortune 500 CEOs and less than 15% of corporate executives at top companies worldwide, but give it time. It’ll change. After all, women also make up 40% of the global workforce, with double-digit growth in certain countries. They’re earning advanced professional degrees in record numbers and in some areas surpassing men. Companies have implemented programs to fix structural biases against women and support their full participation in leadership. Women are finally poised to make it to the top, the argument goes. Not yet, but soon,” (p. 19).

Shareholders and other corporate owners should start demanding fully diversified boardrooms and executive teams, so that they can reap the strategic and performance benefits.

Robbie Melton, Chairwoman of Women in Bio, believes that “women and men need to do more to educate business leaders and stockholders that a diverse workforce affects the bottom line to the positive. There have been studies that show this to be true, but who is paying attention? Marc Pritchard, president of Global Strategy at Procter & Gamble, spoke at a global businesswomen’s conference about how a diverse workforce has increased P&G’s profits. He needs to tell this to groups of male CEOs, not women. Men need to speak out on behalf of women; only then will the paradigm shift,” (cited in Ibarra and Hansen, 2010, p.14).

Organisations shouldn’t pay lip service to the principles of effective talent management and should be looking for the best talent to take the organisation forward into the future It’s no good asking for the best talent to step forward and then saying, ladies where do you think you’re going..

A 2009 article by Susan Adams, Atul Gupta and John Leech, reports on a study of 61 female CEO’s between 1992 and 2004 that found, “women continue to be under-represented in the senior ranks of corporate executives, and the literature documents a variety of barriers to women’s advancement in the corporate hierarchy. These realities, combined with recent findings suggesting that women leaders are more willing to take risks than men, suggest that women may self-select into leadership positions at firms in precarious financial health. If true, such self-selection would increase the likelihood of ‘failure’, in that successful leadership outcomes are less likely at firms in precarious financial condition, and provide another possible explanation for the under-representation of women in the senior ranks of corporate executives. In their attempt to find any chance to move up, such less risk-averse women leaders may in fact be hurting themselves,” (p.10).

Anne Mulcahy (Xerox chairwoman) proposed a simple test for companies to see if they have systemic bias; “take the resumes of the last 100 people hired, remove the names, do an assessment of where the hires should be positioned, and compare that with where they were placed,” (Carter and Silva, 2010, p.20). Anne Mulcahy’s statement is true for all kinds of bias and possible prejudice and one would hope that this process is being carried out as part of the HR department’s internal audit on a regular basis – as this should be a requirement of good governance and compliance within all organisations.

Carter and Silva (2010) highlight how, “research shows that diverse talent supports innovation and business success, yet organizations underutilise and undervalue their highest-potential female talent. Given the commonly held misperception that the talent pipeline is robust, companies are at risk of allowing complacency to inhibit their competitive advantage. While progress has been made in many firms, more work clearly needs to be done,” (p.21).

References

Adams, S.M., Gupta, A. and Leeth, J.D. (2009). Are Female Executives Over-represented in Precarious Leadership Positions? British Journal of Management; Vol. 20, Issue 1, p.1-12.

Carter, N. M. and Silva, C. (2010). Women in Management: Delusions of Progress.
Harvard Business Review; Vol. 88, Issue 3, p.19-21.

Ibarra, H., and Hansen, M.T., (2010). Women CEOs: Why So Few?: Interaction. Harvard Business Review; Vol. 88, Issue 3, p.14-15.

Are Leading Organisations Effectively Using Social Media?

A 2009 study found that the CEO’s of top U.S. companies tend to avoid social media, according to UberCEO.com. The study found that most of the Fortune top 100 CEO’s were markedly absent from the social media community, including Facebook, Twitter, LinkedIn, and Wikipedia. The study specifically revealed that;

1) Only 2 CEO’s had Facebook accounts;
2) Only 13 CEO’s had profiles on the professional networking site LinkedIn;
3) Three-quarters of the CEO’s had a Wikipedia entry, but nearly a third of these had limited or outdated information; and
4) Not one Fortune 100 CEO had a blog.

But what is social media? Professor Nora Barnes highlights six prominent social media tools, (2010, p.9);
1) Blogging;
2) Podcasting;
3) Online Video;
4) Social Networking;
5) Message Boards; and
6) Wikis.

This list includes the micro blogging service of Twitter and the popular social networking sites like Facebook, LinkedIn and MySpace.

Looking at the Fortune 500, research has shown that 16% of the Fortune 500 companies were blogging in 2008, double the figure for 2007 which was only 8%, (cited in Barnes, 2010, p.10). Yet, Jose Esteves writes in the 2008, Business Strategy Review, after analysing the blogging strategies of the companies in the Fortune 500, that “blogs have moved from being sales support tools to becoming essential elements in brand advocacy and communication. There is no longer any question that corporate blogs have become a channel to engage brand enthusiasts (rather than simply engaging in light dialogue with consumers: ‘thanks for your feedback’ and the like) and a communication tool for stakeholders and potential investors,” (p.65).

Barnes highlights how “the adoption curves for different social media technologies are not the same. Interestingly, while social networking and blogging have enjoyed growth in actual adoption, the use of message boards, online video, wikis and podcasting has levelled off or declined. The addition of Twitter (considered both a micro-blogging site and a social networking site) in the latest study showed that 35% of the Fortune 500 are already using this tool for their business. In addition, as they ramp up their usage, companies are also seeking to protect themselves legally with 22% of the Fortune 500 companies having implemented a formal policy concerning blogging by their employees,” (p.13).

Some still believe that CEO’s aren’t embracing social media enough and Sharon Barclay states that “it’s shocking that the top CEO’s can appear to be so disconnected from the way their own customers are communicating. They’re giving the impression that they’re disconnected, disengaged and disinterested. Barclay said many CEO’s are cautious about social networking because of regulations, such as the Sarbanes-Oxley Act. However, she says the ones who are not involved in the rapidly growing form of communication are missing a great opportunity to connect with customers and raise their company’s profile.” (cited in IM, 2009, p.10).

In her 2009 article Lyne Noella, gives 10 simple tips to raise your visibility in social networking (p.17);

1) Join several networks;
2) Get a great head shot;
3) Create a compelling message;
4) Make invitations a habit;
5) Join special interest groups;
6) Update your profile regularly;
7) Share knowledge;
8) Use you network as a resource;
9) Stay alert to opportunities;
10) Engage.

Though maybe considered obvious by many, the tips above also highlight the need to invest quality time in developing ones social media activities. The underlying business principles are similar to talent management, in that you want to attract and retain the ‘best talent’ to your social networks, where this talent should be both current and future focused.

Finally as Barnes mentions, “the continued steady adoption of blogs and the growth of Twitter among Fortune 500 companies demonstrates the growing importance of social media in the business world,” (p.13). “In his own blog, Jonathan Schwartz, President of Sun Microsystems says that we’ve moved from the information age to the participation age, and trust is the currency of the participation age,” (cited in Esteves, 2008, p.65). Esteves concludes that “at best, corporate blogging is about leadership, visibility and conversion in the digital world. It is an excellent way for CEO’s to express their opinions and visions about their companies and about topics such as corporate social responsibility, diversity, market sector evolution and even crisis management,” (p.67).

So how social media savvy are you and your organisation?

References:

Barnes, N.G. (2010). Tweeting and Blogging to the Top. Marketing Research. Spring, p.9-13.

Editorial. (2009). CEO’s Cautious About Social Networking. Information Management, Vol. 43 Issue 5, p10-11.

Esteves, J. (2008). Where is your blog? Business Strategy Review. Vol. 19, Issue 4, p.62-70.

Noella, L. (2009). Ten Tips to Raise Your Business Visibility Through Social Networks. Financial Executive. Vol. 25, Issue 9, p17.

Is December a Month to Reflect or to Panic?

At this time of year, with the end of the year approaching, most organisations will soon find themselves operating at the extremes; the retail sector, for example, can find this the busiest time of the year (hopefully); and other business sectors can come to a virtual standstill.

Organisations in the SME sector, especially, often finds themselves in a reactive ‘panic’ trying to finish outstanding ‘tasks’ before the December holidays; with little time to reflect on the year they’ve just had. Where reflection would include, which objectives they succeeded in reaching, those they didn’t, changes they didn’t foresee coming and how they reacted, opportunities lost, and threats combated. December should be a time to reflect and review the year gone by; highlighting lessons that have been learnt at all levels in the business.

December is important for another reason, especially for organisations whose staff are going to have some extended holiday – and that is to remind the organisation of the motivational challenges for the year to come, before they go on leave. The reason for this is that January will come around soon enough; and you want all your employees to be refreshed when they return, focused and excited about the year ahead.

It’s in this hectic period before many organisation go on holiday that these two important business principles are often forgotten. This means that the leadership misses the ideal opportunity for strategic reflection and employee motivation, claiming to be ‘just too busy’ and ‘putting things off’ until next year. Yet this period is a perfect time to re-motivate, re-focus and re-energise the organisation for the year ahead; giving them something to look forward to. Hence the organisational leadership should find the time for reflection and review before the opportunity passes them by.

This is especially true considering the global economic climate and the past year most organisations have had to deal with – if you are a SME and have survived the year, however bad it might have been, you should be proud of what you’ve achieved. So in between the end of year parties and the rush to get last minute tasks completed, ensure that you use this opportunity and find the time to be open and transparent with your organisation about two key business principles;

1) How has the past year gone, and what has been achieved?
2) What are the motivational challenges for the year ahead?

Why? Because you want your employees to end the year, proud of what they have achieved and to start the next year motivated to tackle the new challenges ahead.

Are You a Transformational Leader?

Wang and Huang state in a 2009 article, that “in the last few decades, within the field of leadership, transformational leadership behaviour has come to represent the most effective form of close engagement between leaders and followers that motivates the latter to perform beyond their transactional agreements. Robbins (2001) defined transformational leaders as, leaders who provide individualised consideration and intellectual stimulation, and who possess charisma,” (p.381).

Yet research also tells us that many employees in leadership positions at various levels of an organisation, and especially leaders of small to medium organisations still seem to know very little about the different leadership styles, let alone which are recommended; as well as the key behavioural attributes and benefits of each.

If was the late Bernard Bass (founding editor of the leadership quarterly journal) who back in 1990 attributed four behavioural characteristics to a transformational leader: charisma, inspirational motivation, intellectual stimulation and individualised consideration. It was only later, in 2003, when John Antonakis, Bruce Avolio and Nagaraj Sivasubramaniam replaced the characteristic of charisma with, what they termed, idealised influence.

Wang and Huang (2009) remind us that “a leader only possesses idealised influence if his or her followers seek to identify with, and want to emulate, him of her. This type of leader is admired, respected and trusted.” Further, “transformational leaders behave in ways that;

1) Motivate and inspire their followers by providing meaningful challenges;
2) Encourage followers to envision attractive future states, which they can ultimately envision for themselves; and
3) Aim to expand their followers efforts in terms of innovativeness and creativity by questioning assumptions, reframing problems and approaching old problems in new ways;” (p.381).

Research has also linked transformational leadership with levels of emotional intelligence. Where, for example, Wang and Huang mention that “emotional intelligence is an emerging topic within psychological, educational and management research, and that it was Daniel Goldman back in 1995 who suggested that the best predictor of who eventually emerges as a leader is based on emotional intelligence (EI), which includes abilities such as;

Self-Awareness;
Self-Management;
Self-Motivation;
Empathy; and
Social Skills;” (p.382).

There appears to be an unfortunate assumption, by some, that once they have ‘made it’ to a leadership level, that they, de facto, must be a good leader. There can be a reluctance to engage in leadership analysis, often due to their own insecure behavioural traits, that tell the ‘leadership incumbent’ to avoid self-analysis, as this could be their downfall. Hence, they often find it easier to denounce years of practical leadership studies and research for perceived self-preservation. Organisations, especially corporate boards and business owners, should take a fresh look at leadership and leadership development; as it is not there to make individuals fail, but to help organisations succeed.

The findings from Wang and Huang’s study “indicate that leaders exhibit more transformational leadership behaviour when they have the ability to perform self-emotional appraisals; others’ emotional appraisals; regulation of emotions and constructive use of emotions. Their findings support the view that emotional intelligence is an important variable for understanding and predicting transformational behaviour. Their results also contribute further evidence that transformational leadership influences not only individual level consequences, but also group level consequences,” (p.389).

In the last few years transformational leadership has become one of the dominant leadership theories and applications for successful organisational development. Occasionally as a leader, it’s worth stepping back and asking; are you a leader who is admired, respected and trusted by your followers and your peers – do people in your organisation strive to be like you? An honest reflection will help you understand the difference between being in a leadership position and being an effective transformational leader.

References

Yung-Shui Wang and Tung-Chun Huang. (2009). The Relationship of Transformational Leadership with Group Cohesiveness and Emotional Intelligence. Social Behavior & Personality: An International Journal; Vol. 37, Issue 3, p.379-392.

Job Satisfaction: A Realistic Expectation or a Utopian Myth?

One of many business topics most talked about in the 21st Century, so far, has been talent management, and how to attract and keep the best talent for your organisation. Attracting talent and keeping talent require two different strategies, but shouldn’t creating job satisfaction be at least part of the focus for talent retention?

Job satisfaction can mean different things to different people, though it is likely to include key elements like, recognition, reward, business environment, being treated with respect, meeting career aspirations, having the support from the organisation (in decision making), business challenges and personal development.

Linking job satisfaction to talent retention will lead to increased motivation and increased personal performance. Job satisfaction should become a strategic goal for the top team or organisation as a whole, ensuring you have a team of highly motivated, highly productive employees. It all seems logical; so is this happening in organisations today? Are today’s leaders interacting with their management teams and key employees to find and respond to their needs when it comes to job satisfaction and talent retention?

Many leaders may not even be aware of the different ‘theories and models’ in measuring job satisfaction. In a 2008 article Timothy Judge, Daniel Heller and Ryan Klinger wrote that “increasingly, (job satisfaction) research has coalesced around three theoretical approaches: positive affectivity (PA)/negative affectivity (NA), the five-factor model of personality (FFM), and, most recently, Judge, Locke, and colleagues’ core self-evaluations (CSE) taxonomy.
Each of these approaches has its merits. The PA/NA framework is advantaged by its affective nature, making it well suited to the affective nature of job satisfaction. The FFM has the advantage of being the most popular and widely investigated personality taxonomy, whose traits have proven their relevance to many criteria in organisational psychology, including job performance, leadership, and work motivation. Although CSE is the newest taxonomy, each of the core traits comprising the taxonomy; self-esteem, locus of control, generalised self-efficacy, and emotional stability have been shown to be conceptually and empirically relevant to job satisfaction. These theoretical frameworks have provided important support for the dispositional source of job satisfaction. At the same time, it is hard to know what to make of the results cumulatively, as researchers who test one framework rarely mention the other, much less formally compare the frameworks”, (p. 362).

But not knowing the current theories and research shouldn’t be an excuse for not being focused on understanding what creates job satisfaction with your employees, especially if your organisation really wants to retain its talent.

There have been numerous journal articles over the last ten years to help organisations understand job satisfaction, and how this has a positive impact on organisational culture, cooperation, motivation and performance - and most importantly how job satisfaction should be an integral part of your talent retention strategy.

These journal articles include titles like; Do What You Love and Love What You Do by William Locander and David Luechauer (Marketing Management, 2010); Linking Empowering Leadership and Employee Creativity: The Influence of Psychological Empowerment, Intrinsic Motivation and Creative Process Engagement by Xiaomeng Zhang and Kathryn Bartol (Academy of Management Journal, 2010); Surviving the Boss from Hell by David Silverman, Gini Scott, Brad Gilbreath and Lauren Sontag, (Harvard Business Review, 2009); Total Quality Management Now Applies to Managing Talent by Howard Stevens, (Journal for Quality and Participation, 2008); The Leadership Advantage: How Best Companies are Developing their Talent to Pave the Way for the Future by Robert Fullmer and Jared Bleak, (Personnel Psychology, 2008); Talent Management in the 21st Century: Help Your Company Find, Develop and Keep its Strongest, (Journal of Quality and Participation, 2006)…to name a few…


So if you really want to retain your talent and take talent management seriously, then spend the time to find out how your employees define job satisfaction. Re-quoting JFK, maybe organisations shouldn’t just be asking ‘what can our employees do for us?’ but also asking ‘what can we do for our employees?’

References

Judge, T.A., Heller, D. and Klinger, R. (2008) The Dispositional Sources of Job Satisfaction: A Comparative Test. Applied Psychology: An International Review; Vol. 57, Issue 3, p361-372.

Focus on Your Customer Not on Your Price

With the effect of the global recession still being felt around the world, organisations may be tempted to look at price cutting strategies to retain their market share, yet some researchers suggest that this may not be the most sensible approach and could lead to an eradication of your future market share. Marco Bertini and Luc Wathieu wrote in the Harvard Business Review, May 2010, that “many, perhaps most, markets today are mature enough to feature intense price-based competition. The constant undercutting to capture customers sometimes spurs efficiency gains, but more often damages brand equity and erodes profit margins. To make matters worse, customers in these markets develop low expectations and grow disengaged: They fixate on price and lose interest in marketing communications and all but the most radical innovations,” (p.85-86).

When developing ‘survival’ strategies, organisations have to look beyond the short-term to see the future ‘state’ they are proposing. A price reduction can always be one of your strategic options, but you need to ‘play’ this scenario out to fully understand the implications it will have on your business, which goes far beyond a reduction in profit margin.

When considering a price reduction strategy to ‘keep’ your existing customer happy, you should consider and analyse the following, which may have significant medium to long-term implications for your organisation;

1) When the market turns the customer can be so fixated on your price that you will find it hard, to impossible, to increase prices back to pre-recession levels. Leading to a significant loss of revenue and brand/image status;

2) If your price reduction attracts new customers do you have the capacity to meet this new demand and what are the implications on the organisation, both short-term and long-term. Increasing capacity now, only to see it eroded when the market turns again can leave the organisation in a further financial crisis;

3) What implications does a short-term price reduction have on perceptions of your organisation and brand in your market?

As Roger Martin (2010) says, “determining what your customer’s value and focusing on always pleasing them is a better optimisation formula. Of course, companies face obvious constraints on customer satisfaction; they’d quickly go bankrupt if they made customers happier by charging ever-lower prices for ever greater value. Rather, companies should seek to maximise customer satisfaction while ensuring that shareholders earn an acceptable risk-adjusted return on their equity,” (p.62).

In a state of reactive ‘panic’ it can sometimes be too easy for organisations to rush the strategic decision making process, and go for the price cutting option. This can seem the easiest option to implement at the time and perceived to give immediate benefit to the organisation, without analysing the medium to long-term effect on the business. The excuse can be that if we don’t so something now, we won’t have a medium to long-term to worry about - but the reverse is just as true, if you make the wrong strategic decisions now, without proper and effective business analysis, at best your organisation will never fully recover and at worst it won’t survive the upturn in the market.

When customers only consider price in their buying decision, they have effectively commoditised the product. Bertini and Wathieu highlight how “research shows that commoditisation is as much a psychological state as a physical one. A commoditised market is one in which the buyers display rampant scepticism, routine behaviour, minimal expectations, and a strong preference for a swift and effortless transactions regardless of product differentiation. The key, therefore, to escaping commodity status is not what you do to your product; it’s what you do to your customer. You must find a way to reengage a buyer who is past caring – and to do that you must make the customer sit up and take notice,” (p.86).

Even in times of crisis it’s worth spending the time to analyse and define the best strategic options to take you forward as an organisation, ensuring sustainable growth, rather than a quick and easy short-term fix - often what seems the easiest option is not the best option.

References

Bertini, M. and Wathieu, L. (2010). How to Stop Customers from Fixating on Price. Harvard Business Review, Vol. 88, Issue 5, p.84-91.

Martin, R. (2010). The Age of Consumer Capitalism. Harvard Business Review., Vol. 88, Issue 1/2, p.58-65.

Leadership: Learning to Give Bad News in a Good Way.

Back in May 2003, over 2,500 people at the British Amulet Group learnt that they'd lost their jobs, when the company fired them by sending a text message. The message said, in part, "you are being made redundant with immediate effect”.

In 2006 a British company defended its decision to sack one of its staff members by SMS, claiming it was keeping in touch with the youth culture. The text message said: "We will not require your services anymore....Thank you for your time with us." In the same year, the US consumer electronics retailer RadioShack laid off 400 employees via email. “The work force reduction notification is currently in progress. Unfortunately your position is one that has been eliminated,” the ominous message supposedly read.

In 2010 Shayne Bolsher, a 39 year-old manager at Leicestershire's Fife Fine Foods, in the UK, was stunned to get his week's notice, in the form of a text message from his boss and employers have also used Facebook to deliver employees the bad news. Chelsea Taylor discovered that she had been 'let go' via a message posted to her Facebook wall by her manager.

Worse than the above is the manager who will avoid giving any form of bad news and will ignore the issue hoping it (or you) will go away. This doesn’t just have to do with being fired, but can be, as simple as, not responding to a request to talk about your future, or a recommendation you would like to make. Rather than explaining why they won’t have the meeting or discussion, they just avoid you and the issue.

This approach, though maybe less stressful for the manager, has a negative impact on the culture, motivation, commitment and respect of the employee or employees involved, (including their fellow colleagues that they share the experience with).

Surprisingly business might be able to learn something about the management and communication of bad news from the medical industry – an area where bad news can be much more serious than being fired, and can involve discussions about personal mortality.

In a 2005 article by Robert Buckman, MD, PhD, entitled, ‘breaking bad news: the SPIKES strategy;’ he describes a basic strategy for communicating bad news and suggests ways to assess the situation as it evolves.

As he explains when giving bad news to a client it’s important to “show empathy, explore the patient’s understanding and acceptance of what he or she has just learned, and validating that patient’s feelings can provide much-needed support to the patient, an essential psychological intervention for managing distress and helping the patient face the treatment decisions ahead. Although breaking bad news will never be easy, having a plan of action and knowing that you can support your patient through a difficult period should help considerably,” (p.138). Maybe these basic principles of communication apply to giving bad news in business, as much as anywhere else?

It’s interesting to note that in 1998, at the annual meeting of the American Society of Clinical Oncology, approximately 400 oncologists attended a session on breaking bad news. The oncologists were polled about various aspects of communication skills and training. Less than 5% of those present stated that they had received any training in breaking bad news. More than 66% indicated that they had to break bad news between 5 and 20 times a month; 74% indicated they did not have a specific approach planned for breaking bad news. More than 90% felt that the most difficult aspect of the communication was handling the emotions that arise during the interview, (Buckman, 2005, p.138). These responses may be just as applicable in business, as very few managers receive training in how to give bad news to employees.

The SPIKES strategy involves six core elements to consider before, during and after giving bad news;

1) Setting – which relates to the environment in which the bad news will be given; and the approach to be used, which would include being attentive and calm;
2) Perception – find out the perception of the person about to receive the ‘bad news’; are they worried, what have they heard already (via another manager or the ‘grapevine’);
3) Invitation – find out whether they want all the detail;
4) Knowledge – warn the employee that bad news is coming;
5) Empathy – sometimes it can be tempting to downplay the situation and withhold information; since this can reduce the stress for you and the employee. But this is not wise as it will only cause problems later, as the employee ‘receives’ more information;
6) Strategy and Summary – in conclusion, make sure that you summarise the bad news and that it is fully understood. Also, when necessary, agree further action and/or communication steps.

The SPIKES approach may not translate directly into a business model for every leader in every industry, but it gives a basic approach that can be modified and adapted for different situations, (especially where no plan or basic steps exist).

Remember the old saying – treat people like you would like to be treated yourself. If you have to give any form of bad news, have the courage and conviction to do it face-to-face, following the guidelines given above.

References

Buckman, R, A. (2005) Breaking bad news: the S-P-I-K-E-S strategy. Community Oncology, March/April, p.138-142.

Is the Customer Always Right?

Leading organisations are now ensuring that customer satisfaction becomes a critical success factor in their corporate strategic plans; where in the past, many executives would simply trust that improving customer satisfaction would lead to improved company performance. Today, executives have access to detailed research studies from 1990 to the present that have shown that higher levels of customer satisfaction lead to greater customer loyalty, which in turn has a positive impact on profitability. Other studies, over the same period, have also shown that satisfied customers also improve organisational growth and profitability by ‘introducing new customers’ through the influence of ‘word of mouth’ in conversation with friends and neighbours, (Homburg, Koschate and Hoyer, 2005, p.84).

Customer satisfaction relates to the comparison of the customer experience and the expectation; where it’s worth noting that there is a difference between focusing on ‘transaction specific satisfaction’ and ‘cumulative satisfaction.’ As Homburg, Koschate and Hoyer (2005) state, “transaction specific satisfaction is a customer’s evaluation of his or her experience with, and reactions to, a particular product transaction, episode, or service encounter; and cumulative satisfaction refers to the customer’s overall evaluation of a product or service provider to date,” (p.85).

Customer’s experience dissatisfaction when their product or service experience falls short of their expectations. This links to ‘disappointment theory’, which states that the greater the disparity between outcome and expectations, the greater the customer’s disappointment or elation.

This theory and the whole concept of customer satisfaction assumes that the customer’s expectations are correct in the first place. But is the customer always right and whose fault is it if the customer is, in fact, wrong? What if the customer’s expectations are incorrect?

99% of the time the organisation is at fault, and it is up to the organisation to ensure two key things; firstly that they interact with their customers to understand their expectations and second, that they are in a position to change those expectations when they are unrealistic. This also highlights the common principle of under promising and over delivering, not on a once-off, but on a continuous basis.

Jay Kandampully highlights that, “customers are becoming increasingly critical of the quality of service they experience. Customer demand and competition are forcing firms to cut loose from the traditional customer satisfaction paradigm, to adopt proactive strategies which will assist them to take the lead in the market place,” (p.431). Also, an organisations growth is highly influenced by its ability, not only to maintain but, to grow a loyal customer base – where one ratio that should be used to measure customer service is an organisations ‘returning customer ratio.’

With this in mind it has become critical for organisations to focus on customer service way beyond the short-term financial goal to the long-term relationship and loyalty value. The relationship value paradigm between; the customer and employee; the customer and the organisation; the employee and their organisation; the organisation and collaborative partnerships; has now become a significant factor in sustainable success.

Your customer’s expectations and perceptions are formed, in most cases, from the interaction the customer has with your front line staff. If these front line staff give the wrong expectations, real or perceived, then you can’t be surprised if your customers are dissatisfied with their experience. As Kandampully highlights “service management literature has repeatedly emphasised the importance of the human element in the delivery of superior service. Moreover the human propensity for the delivery of superior service is greatly enhanced by continuous service innovation,” (p.434).

Customer’s expectations are not only formed at the point of service contact, but also through your marketing strategy as well. Kandampully highlights how “management has failed to understand that the true purpose of marketing is to build and maintain relationships (bridge) between the producer and the customer thus reinforcing the producers promise and, ultimately, the bond between the producer and customer. There has been a change in the focus of marketing: transactional marketing emphasises the individual sale, whereas relationship marketing is designed to affect a long-term, on-going relationship,” (p.437).

In conclusion “the most successful service companies emphasise employees’ personal attention as the pre-eminent factor for service delivery. A firm’s relationship with its customers is instigated and established by the service personnel who interact with the customer day in and day out. It is the service personnel’s commitment to seamless, consistent and superior service that enables the firm to create an emotional, lasting, loyal relationship with the customer in which personal interaction assumes centre stage,” (Kandampully, 1998, p.438).

So is your internal and external customer always right? Yes, they should be and it’s your responsibility to make sure they are, through;

1) Actively listening to your customers needs and expectations;
2) Giving the customer the right message in the first place;
3) Proactively keeping the customer updated with new product and/or service developments; and
4) Where your customer’s expectations are unrealistic, for whatever reason, it is your responsibility to change these expectations through focused dialogue and accurate marketing and public relations.

References:

Homburg, C., Koschate, N. and Hoyer, W.D. (2005) Do Satisfied Customers Really Pay More? A Study of the Relationship Between Customer Satisfaction and Willingness to Pay. Journal of Marketing, Vol. 69, p.84-96.

Kandampully, J. (1998). Service quality to service loyalty: A relationship which goes beyond customer service. Total Quality Management. Vol. 9, No.6, p.431-443.

Learning from the Mistakes other Leaders Make

In an article entitled ‘Ten Fatal Flaws That Derail Leaders’ published in the Harvard Business Review (2009); Jack Zenger and Joseph Folkman, wrote that; “Poor leadership in good times can be hidden, but poor leadership in bad times is a recipe for disaster,” (p.18).

Through analysing two different studies of leadership that covered over 11,000 leaders, including Fortune 500 leaders, Zenger and Folkman compared characteristics of leaders who were fired over a three year period and those leaders that were considered least effective. They identified the 10 most common shortcomings, listed below, where every ‘bad’ leader had at least one of the characteristics, though most had several;

1. Didn’t learn from mistakes
2. Lacked clear vision and direction
3. Failed to develop others
4. Accepted their own mediocre performance
5. Lacked interpersonal skills
6. Resisted new ideas
7. Didn’t collaborate
8. Had poor judgement
9. Didn’t walk the talk
10. Lacked energy and enthusiasm

The list above may seem obvious, and yet Zenger and Folkman found that the leaders they studied weren’t even aware of their shortcomings, and worse still, in most case rated themselves significantly more positively.

As organisations move through and out of the global crisis, will leaders have learnt from their mistakes (and the mistakes of others) – are they willing to focus on accurate self-evaluation of their strengths and weaknesses as a leader; and then prepared to make the personal changes necessary.

Ronald Heifetz, Alexander Grashow and Marty Linsky (2009) highlight that “crisis leadership has two distinct phases. First is that emergency phase, when your task is to stabilise the situation and buy time. Second is the adaptive phase, when you tackle the underlying causes of the crisis and build the capacity to thrive in a new reality,” (p.64).

During a crisis the organisation looks for clear direction and vision from the leadership, even while accepting that the road ahead may be filled with twists and turns. Yet, “getting an organisation to adapt to changes in the environment is not easy. You need to confront loyalty to legacy practices and understand that your desire to change them makes you a target of attack. The art of leadership in today’s world involves orchestrating the inevitable conflict, chaos, and confusion of change so that the disturbance is productive rather than destructive,” (Heifetz, Grashow and Linsky, 2009, p.65-66).

Organisations, when faced with crisis, look for strong, effective, and reliable leadership, to guide them forward successfully. Different people all through the organisation will have different fears and expectations, but will also have different ideas that they would like to share.

Heifetz, Grashow and Linsky mention how; “in a period of turmoil, you must look beyond the merits and issues to understand the interests, fears, aspirations, and loyalties of the factions that have formed around it. In a period of sustained uncertainty, the most difficult topics must be discussed. Dissenters who can provide crucial insights need to be protected from the organisational pressure to remain silent. Executives need to listen to unfamiliar voices and set the tone for candour and risk taking,’ (p.67).

Finally, both during a crisis and the recovery the strategic and organisational leadership needs to involve the whole organisation in the generation of ideas and solutions. This can be achieved by increasing the information flow that allows managers and staff across the organisation to make independent decisions and share the lessons they learn from their innovative efforts. If leadership does not encourage and listen to the widest possible range of life experiences and views, including those of younger employees, they risk both planning and operating without a true picture of the shifting realities facing the business internally and externally,” (Heifetz, Grashow and Linsky, 2009, p.68)

References:

Heifetz, R., Grashow, A. and Linsky, M. (2009). Leadership in a (Permanent) Crisis. Harvard Business Review, Vol. 87, Issue 7/8, p.62-69.

Zenger, J. and Folkman, J. (2009). Ten Fatal Flaws That Derail Leaders. Harvard Business Review, Vol. 87, Issue 6, p.18.

Leader or Follower: What's the Future for the US Economy?

What can we expect to happen in the US after the mid-term elections on 2nd November – and what impact might this have on the Global Business Environment?

In The New York Times, (9th October), David Chen wrote, “with many Americans seized by anxiety about the country’s economic decline, candidates from both political parties have suddenly found a new villain to run against: China. In the past week or so, at least 29 candidates have unveiled advertisements suggesting that their opponents have been too sympathetic to China and, as a result, Americans have suffered”.

Polls show that not only are Americans increasingly worried that the United States will have a lesser role in the years ahead; they are more and more convinced that China will dominate. In a Pew poll conducted in April, 41 percent of Americans said China was the world’s leading economic power, slightly more than those who named the United States.

The Democrats cite studies this year from the Economic Policy Institute, a liberal research organization, that assert three million jobs have been outsourced to China since 2001 because of the growing trade imbalance. But Republicans, backed by some academics, say the number is much smaller. Indeed, Scott Kennedy, director of the Research Center for Chinese Politics and Business at Indiana University, said that most of the jobs that China had added in manufacturing through foreign investment had come from Taiwan, Hong Kong and South Korea, and not from the United States.

This is at the same time when a survey in the US showed the unemployment rate had held at 9.6%, meaning it has now topped 9.5% for 14 straight months, the longest stretch since the 1930s. These closely watched employment reports are the last updates before the November 2nd mid-term elections. On that date US voters will elect members of Congress, and there is a strong belief that voters opinion on whether the economy is recovering or sinking is likely to be a key influencing factor.

If problems with the economy and jobs weren’t enough for the current administration; a draft report by the National Oil Spill Commission appears to suggest the Obama administration was directly involved in controlling the oil spill message. More than 206m gallons (780m litres) of oil leaked into the Gulf before it was finally plugged on July 15. It has become the worst offshore oil leak in US history.

The panel, which was set up by President Barack Obama, found the White House denied an early request by government scientists to inform the public of its worst-case predictions. Carol Browner, the White House's energy and climate change director, said on August 4 "more than three-quarters of the oil is gone". The commission said her comments misrepresented the findings of a federal analysis, which had found the oil had "dissolved" and "dispersed" - but was never "gone".

After what seemed like world jubilation at the election of President Barack Obama, what is the future for politics and the economy in the US? If Fox News is right the Presidency could become a reality show in 2012. On 8th October they reported that Donald Trump may challenge Barack Obama for the presidency; "For the first time in my life, I'm actually thinking about it," Mr Trump, a self-declared Republican, told Fox News.

The businessman did not rule out the possibility of running as a representative of the Tea Party, the conservative movement that is seen as a sub-group of the Republican Part, but which some experts think could emerge as a third party. "I am a Republican but have great respect for what the Tea Party has done because they have brought to light what's going on. I mean, we have trillion-dollar deficits. The country is going bankrupt, let's face it," he added.

Mr Trump said that Barack Obama was ‘having a very hard time’ and that the US could be ‘doing much better with proper leadership’.

Trumps aspirations may not be that far fetched as US politics appears to be as much about ‘wealth’ and ‘media attention’ as anything else. Ms Nancy Pelosi, for example, the current Speaker of the House, has raised $52.3 million, since the beginning of 2009, for Democratic incumbents, candidates and the party’s Congressional campaign committee, (second only to President Obama among Democrats).

When you imagine how much money must have been raised by both parties; you can’t help asking yourself whether these funds are used in the best interests of the nation, at a time when many are still struggling with the recession; or used in the best interests of a few?

Will the mid-term elections in the US, on 2nd November, add further impetus to the US and international economic recovery; or could they be the spark that ignites another global economic crisis?

Is it Time to Develop Your Own Individual Brand?

As organisations fight their way out of the recession, the acquisition and retention of human talent is proving to be a significant competitive advantage. Yet as organisations start looking for managerial and other specialised talent to take them forward into the 21st century, how are you going to ensure that you stand out, as an individual, from the crowd of ‘look-a-like’ talented employees.

Creating a recognised individual image and ‘brand’ has normally been left to the lofty heights of the CEO’s and top entrepreneurs, yet individuals will now have to start ‘developing their image’ much earlier in their careers, maybe even as early as university, to ensure they stand out for the right reasons.

Getting yourself noticed isn’t about shouting the loudest or being the most arrogant or opinionated individual in a group – in fact this is likely to create the wrong image going forward. It’s finding a balance between expressing, sharing, and practically implementing your knowledge; and having the patience and empathy to listen to others opinion. It’s creating a ‘history’ where people want to ask your advice and opinion; and where you accept these questions with grace and without letting the attention go to your head.

Organisations aren’t only going to be looking for individual talent, but talent that is able to work effectively with other talented individuals, in strategic or operational teams - finding the optimal solutions for their organisations, without a need for personal recognition.

In creating your own unique image and brand you should consider the following factors;

1. Develop a skill and talent you enjoy (and never assume that you’ve learnt enough about the subject);

2. Develop a basic understanding of the generic principles that drive a successful business;

3. Learn advanced communication skills, like NLP, that will give you an advantage when communicating with others;

4. Never assume that you are superior to anyone and learn to be humble (people will see your skills for what they are in practice, if you have to sell yourself too hard, maybe you still have a lot to learn);

5. Be aware of your image at all times, and learn to be confident, (but never over confident);

6. Network effectively, as you want people to remember your name for the right reasons;

7. Never burn your bridges (and learn to control your emotions);

8. Learn to be a good leader and a good follower (as you’re likely to have to perform both rolls as your career develops);

9. Become someone who can be trusted and relied on;

10. And when, at last, you have developed your personal ‘brand’ and are successful, never forget the journey, the people who supported you along the way, and don’t turn your back on others starting off on the same journey.

Talent acquisition and retention will become a core strategy for many organisations that have learnt from their mistakes in their journey through the global recession. For those individuals that have ambition, being part of one of these organisations must be your goal. This won’t only be the large multi-national organisations; as all organisations, large and small, whether in a global or niche market, will focus on talent management and development to give them a superior competitive advantage.

It’s time to get yourself noticed for the right reasons, so start developing your personal image, and create those business networks that will mean your name is on employers lips when they are searching for the best in your field. That doesn’t mean being a ‘yes man’ or worse - it means being knowledgeable, reliable and an effective team player, focused on organisational success.

Can Executives Try Too Hard to be 'Liked' in Order to Succeed?

By the time of its collapse, in 2008, Lehman Brothers reportedly had one of the strongest cultures of teamwork and loyalty on Wall Street. Yet Lehman’s board of directors had become too agreeable and too loyal, happy to follow Dick Fuld even when they knew better. This loyalty led Lehman executives to an almost wilful blindness, as nobody wanted to disrupt the peace; (Joni and Beyer, 2009, p.48-49).

Yet there is a fine line between supporting your CEO and challenging the status quo. Marshall Goldsmith (2009) reminds us that “in 1978 many observers considered Ford Motor president Lee Iacocca the obvious candidate for the new CEO position that Henry Ford II would shortly vacate. Iacocca, of course, not only didn’t get the position but was fired. In explaining why he cut Iacocca loose, Ford famously remarked – sometimes you just don’t like somebody,” (p.74).

So how does CEO succession, and even just the thought of it, effect individual performance; and who is responsible for ensuring that the organisations future comes before individual aspirations that may negatively impact board performance and organisational growth.

As Goldsmith (2009) mentions, “much of what has been written about CEO succession ignores the personal drama that unfolds when it’s time to pass the torch of leadership. CEO succession isn’t an entirely rational process. In practice, succession decisions may be influenced as much by stakeholders’ gut feelings and emotions as they are by business logic. Strains in relationships between stakeholders and their heir apparent can emerge and quickly scuttle succession plans, and faulty assumptions can cause decision makers to suddenly change their minds about who should lead the company next,” (p.74).

The stakeholders that influence CEO succession, aren’t just the board of directors and the shareholders, but also include the current CEO, the peers of the potential successor, the direct reports of the potential successor, the organisation’s key customers, and influential external business analysts, (Goldsmith, 2009, 74).

In the end, the most influential decision maker on CEO succession is the board of directors; yet there is often a lack of evidence to prove that the board themselves have the knowledge, skills and experience to make the best decision for the organisations future. That the board members focus solely on the organisations future strategic and operational needs, rather than their personal likes and dislikes. There are mechanisms for boards to measure and evaluate their individual and group effectiveness, yet these business tools are seldom used appropriately (if used at all).

As Kazanjian (2000) notes, “every year the Toronto Stock Exchange requires listed companies to disclose how they stack up against a set of 14 corporate governance ‘best practice’ guidelines. Scores were encouragingly high (80 percent or more) for guidelines dealing with control of board size and participation in strategic planning. Fewer than 20 percent of the respondents had any formal process in place for assessing the effectiveness of the board and even fewer had any process for assessing the contribution of individual directors” (p.46); and it’s worth noting that the New York Stock Exchange also requires board evaluations (Nadler, 2004). “The concept of board evaluation has met with particular resistance; directors remain either unprepared or unconvinced of the benefits gained from evaluation. Potential benefits such as improved leadership and teamwork, clarity of roles and responsibilities, improved accountability, decision making and delegation, and enhanced communication and operations are countered by fears concerning operational disruption, board dysfunction, and individual humiliation and exposure” (Long, 2006, p.551).

Without effective board evaluation how can we be sure that the best decisions are being made for the future of our organisations, especially when it comes to CEO succession?

References

Goldsmith, M. (2009). How not to Lose the Top Job. Harvard Business Review, Vol. 87, Issue 1, p.72-80.

Joni, S.A. and Beyer, D. (2009). How to Pick a Good Fight. Harvard Business Review, Vol. 87, Issue 12, p.48-57.

Kazanjian, J. (2000). Assessing boards and individual directors. Ivey Business Journal, May/June, p.45-50.

Long, T. (2006). This year’s model: Influences on board and director evaluation. Corporate Governance, Vol.14, No.6, p.547-557.

Nadler, D.A. (2004). Building better boards. Harvard Business Review, May, p.102-111.

How to Lead Your Organisation Out of the Recession

In a Harvard Business Review article, March 2010, Donald Sull wrote that, “more than ever, companies need agility – the capability to consistently spot and execute on unexpected opportunities before rivals do.”

“As companies crawl out of the recession,” Sull says, “it’s not enough for leaders to ‘craft’ the perfect strategy, put their heads down, and make it happen, confident that the market will cooperate. Instead, they must set a broad strategic direction but remain open to unexpected opportunities that appear along the way. And make no mistake – for all their risks, volatile markets do produce opportunities. Shifting regulations generate unexpected sources of funding; changing consumer preferences create demand for new products or services; distressed competitors sell off assets cheaply” (p.71).

A downturn in the market often tests how well organisations have applied and implemented core business principles, relevant to their industry; and developed a strong business foundation – those principles that they may have not considered important while the ‘sun was shinning.’ Have they developed a loyal customer base and do they have the channels in place to engage with their customers directly, to find out in ‘real time’ what their expectations are; and to be able to react quickly to changing needs and expectations. Has the organisation attracted and retained the best talent – the talent that sees obstacles as opportunities, and aren’t sitting somewhere, sulking which a calculator, wondering how much their bonus will be cut this year. Has the organisation developed strong collaborative partnerships with key organisations that include their suppliers, advisors and/or custodians of outsourced functions; to ensure that they can work together, through the tough times, to find new opportunities that will benefit all involved?

One of my favourite quotes, states that;
There are three types of organisation,
Those that make things happen,
Those that watch things happen, and
Those that wonder what happened.

In a time of global crisis, organisations must make things happen for themselves – this can be achieved by initially watching the competition and/or market for unique opportunities. However, you cannot afford to ‘sit and watch’ for too long and must be alert and focused to respond quickly to any opportunity that arises for your organisation to grow, either within your existing markets, or through new markets or new products and services. This requires flexibility at all levels of the organisation, a flexible strategic leadership team who are focused on sustainable growth and adaptable to change; and a flexible organisation, that has its ear to the ground picking up customer ‘chatter’, and that have an internal communication process that can feed the relevant information to the decision makers quickly and accurately.

The business environment is unlikely to return to how it was before the recession and hence organisations need to focus on attracting and retaining the best talent for their current and future strategic initiatives. Business success cannot be taken for granted, having the right talent will ensure organisations implement the business principles they need for a solid foundation; and that leads to sustainable business growth and continuous improvement into the future.

The organisations that come out of the recession as the future leaders in their respective industries will ensure that;

1) They attract, develop and retain the best talent, from the strategic leadership to the employee base;
2) They have a culture that embraces innovation and diversification;
3) They thrive on problem solving and flexible responsiveness;
4) They embrace strong values and social responsibility; and
5) They set the standards for other organisations to follow.


References

Sull, D. (2010). Are You Ready to Rebound. Harvard Business Review, Vol. 88, Issue 2, P.70-74.

Innovative Leaders Develop Unique Brands

Developing a strong brand is a key factor for sustainable growth and allows organisations to innovate and diversify new products and services; and take them to market as an extension of their existing brand status. This is a powerful competitive advantage and significantly improves the chances of early market success for these new product or service offerings.

In 1982, with a revenue of $693 million, Nike only produced running, tennis and basketball shoes for male teenagers and adults in the US, this then grew over the next 25 years to a revenue of $18 billion, where Nike produces shoes, clothing and sports equipment for all sports, in countries all over the world. As Kevin Keller and Donald Lehmann (2009) highlight, “the ability of the Nike brand and its brand promise of ‘authentic athletic performance’ to be leveraged across many product categories, market segments and geographical markets has been extremely valuable to the firm” (p.7). It was the ‘Just Do It’ campaign that transformed Nike overnight into the leader in athletic apparel.

Branding has now developed beyond the organisation, its products and services; where today you’ll find political leaders seeking to develop branding concepts around countries and cities; and also where employers seek to develop their own superior brand compared to competitor organisations.

Employer branding, for example, has received specific attention from leaders and organisations over the last few years, as part of their talent acquisition and retention strategies. If you can create a brand image around your organisation you can attract the best talent, and ensure that you retain and motivate this talent pool. As Lara Moroko and Mark Uncles (2009) state, “when a firm undertakes employer branding as a strategic activity, the ‘product’ they are branding is the employment experience that the firm offers, and the ‘customers’ of this brand and product are the prospective and current staff” (p.183). Of course understanding your customer segmentation is just as important with organisational branding (as with product branding), as recent graduates, for example, are likely to have different requirements that will attract them to an organisational brand, compared to other employee segments.

In today’s global competitive marketplace it takes innovative and visionary leadership to build a unique brand and image, and to identify latent market opportunities. As Keller and Lehmann mention, “many brands have latent brand equity that is never realised because of the inability or unwillingness of a firm to consider what the brand could and should become in the broadest sense” (p.7).

Remember a successful brand is associated with an image that resonates a distinctive form of quality with its customer base; where they are attracted to the brand as it meets their needs, exceeds their expectations and gives the customer ‘a feel good factor’.

Growing a brand can relate to the latent brand value that exists to develop new products or services that appeal to new target markets and customers, in the present and the future (Keller and Lehmann, 2009, p.9). The ability to grow the brand is not a guaranteed success as it depends on having the resources, in respect of capital and skills, to transfer the opportunity into a market reality.

Finally Keller and Lehmann mention that, “a good brand vision and positioning strategy has both a foot in the present and a foot in the future. Brand vision needs to be inspirational so that the brand has room to grow and improve in the future. The trick in developing a brand vision is to strike the right balance between what the brand is and what it could become and to define the right series of steps to get it there” (p.8).

So take a moment to ask yourself if you have identified all the potential opportunities for your brand?

References

Keller, K.L. and Lehmann, D.R. (2009). Assessing long-term brand potential. Journal of Brand Management, Vol. 17, Issue 1, p.6-17.

Moroko, L. and Uncles, M.D. (2009). Employer branding and market segmentation. Journal of Brand Management, Vol. 17, Issue 3, p.181-196.

Career Transition: The Key to Success

“Life isn’t a dress rehearsal” though, occasionally, we probably wish that it was. We have to be constantly alert to see the opportunities that exist and grab the ones we want before they pass us by, (Kerry Packer).

In respect of careers, there are two key steps, firstly finding the right opportunity, either within your existing organisation or elsewhere, and then making a successful transition into the new job.

While keeping alert for your next opportunity and when planning the transition, it helps to know yourself first, “knowing whether you tend to be left-brained, the logical arithmetic type who likes formal structured activities, or right-brained who is more intuitive and relies more on the feel and sense of a situation. This all has a good deal to do with the type of organisation you will be more comfortable with,” (Kanter, 2003, p.45)

A 2009 survey found that “87% of the 143 senior HR professionals who responded either agreed or strongly agreed with the statement – ‘transitions into significant new roles are the most challenging times in the professional lives of managers’. Further, 70% agreed or strongly agreed that – ‘success or failure during the transition period is a strong predictor of overall success or failure in the job,” (Watkins, 2009, 47).

Michael Watkins found that “leaders in transition reflexively rely on the skills and strategies that worked for them in the past; after all, their previous successes are what propelled them to the new opportunity,” (p.48) – yet Andrew and Valerie Stewart remind us that the relationship between performance and potential is not a simple one; and that the best performers are not necessarily those of high potential. Promotion solely on the basis of past performance almost inevitably leads to promotion to the person’s level of incompetence.

Transition isn’t just challenging for senior roles, it’s challenging for any job change, where part of the problem in preparing for the transition is finding the time to plan and also knowing what to plan for. Kanter (2003) suggests that you set yourself four to six success criteria that link to your new objectives. But transition isn’t just about performance objectives, it involves getting to know the people, the new teams you’ll be operating with, the expectations from different individuals in the organisation and creating the right first impression – as you don’t get a second chance at a first impression.

There are pros and cons of promotion and transition from within and some may think internal transition is easier than transition from the outside. Yet the problem with internal transition is that your reputation precedes you, which can be good (or not) – especially if the new role requires you to manage personnel that were previously you friends and colleagues. The problem is that the person being promoted, often assumes that since they got on well with their team while they were part of it, the team will automatically accept them as their new boss – which, if not planned as part of your transition, can be your first big mistake (and one that you may not recover from). With internal promotions you must plan a detailed communication strategy as part of your transition to discuss your expectations and those of your team.

Transition into a new role is critical at any level as it set’s the ‘tone’ for your future – a poor transition is likely to lead to a less than optimal future. During your first few weeks you should establish priorities, define strategic intent, engage with your new team, identify your internal suppliers and customers, identify where you can achieve short-term successes in line with your goals and objectives, and meet and greet all your key collaborative partners, inside and outside the organisation (Watkins, 2009).

Don’t take your future career opportunities for granted; and when they come, remember to plan your transition carefully to make sure that your next job is a resounding success.

References

Kanter, J. (2003). Planning and Managing Your Career. Information Strategy: The Executive Journal, Vol. 19, Issue 2, p.43-48.

Watkins, M.D. (2009). Picking the Right Transition Strategy. Harvard Business Review, Vol. 87, Issue 1, p.46-53.

Social Responsibility: Who's Got it Right and Who Hasn't?

Only 3% of 4,238 business executives surveyed by McKinsey believed that their companies were doing a good job of being socially responsible (cited in Glavas and Piderit, 2009, p.54). “There are four domains of corporate social responsibility (CSR): economic, legal, ethical and philanthropic. The basic idea of CSR is that business and society are interwoven rather than distinct entities; therefore, society has certain expectations for appropriate business behaviour and outcomes, (Lee, Fairhurst and Wesley, 2009, p.141-142).

CSR is becoming a ‘hot’ topic of research and debate, yet is there more talk than action - are organisations really trying to become socially responsible or simply playing to their audiences?

Marjorie Kelly and Allen White highlight how some organisations are changing their fundamental design to embrace the effective principles of CSR and site the examples of Novo Nordisk, Organic Valley, and the John Lewis Partnership.

These organisations have evolved to integrate business principles with social responsibility; Novo Nodisk, for example, is a multi-million dollar pharmaceutical company, with a turnover in excess of $7 billion, based in Denmark that is owned by a foundation whose primary aim is to find a cure for diabetes. Organic Valley, in the US, with a turnover in excess of $300 million, has established a co-operative that is owned by the 1,200 farmers who produce the organic products; and the John Lewis Partnership in the UK, with a turnover in excess of $9 billion, is a 100% owned by its employees, and its stated purpose is ‘serving the happiness of its employees,’ (Kelly and White, 2009, p.25).

Yet at the other extreme you have organisations like BHP-Billiton who often rank high in formal CSR surveys (such as the Global Reporting Initiative) but aren’t similarly supported by many environmental/sustainability groups, because of their perceived impact on the environment.

Timothy Devinney (2009) highlights a more complex problem with L’Oreal, a company that engages in limited animal testing, but who owns the Body Shop, which of course actively promotes its animal-friendly orientation. Devinney raises the question; “is society not better off with a schizophrenic L’Oreal rather than no Body Shop at all?” (p.45); yet what does this say about an organisations commitment to CSR and where does it leave the consumer. By supporting the Body Shop, like it or not, the consumer is supporting L’Oreal that engages in animal testing.

At Nike and Proctor & Gamble (P&G), “social and environmental considerations are deeply embedded in decision making; where corporate responsibility is one of Nike’s nine strategic goals. At Nissan North America, 99% of the staff have gone through green training to gain understanding and sustainability awareness, which the company views as integral for acceptance of CSR initiatives”, (Epstein, Buhovac and Yuthas, 2010, p.44-45).

However, what seems to be clear is that most organisations are moving too slowly in embracing the true values of CSR and are now able to blame the current global recession, for their slow progress in this important area.

In a 2009 report, Lee, Fairhurst and Wesley, confirm that many organisations and researchers are confident that “there is a positive relationship between CSR activities and corporate performance citing that often the costs are small while the benefits are potentially high.” They cite research from Waddock and Graves in 1997; Margolis and Walsh in 2001; and Price Waterhouse Coopers in 2004, that confirm that CSR positively influences profitability, through factors including, improved customer loyalty and employee job-satisfaction, (2009, p.144).

So let’s hope more organisations make corporate social responsibility a strategic priority in the months ahead.

References

Devinney, T.M. (2009). Is the Socially Responsible Corporation a Myth? The Good, the Bad, and the Ugly of Corporate Social Responsibility. Academy of Management Perspectives, Vol. 23 Issue 2, p. 44-56.

Epstein, M.J., Buhovac, A.J. and Yuthas, K. (2010). Implementing Sustainability. The Role of Leadership and Organisational Culture. Strategic Finance, Vol. 91, Issue 10, p.41-47.

Glavas, A. and Piderit, S.K. (2009). How Does Doing Good Matter? Effects of Corporate Citizenship on Employees. Journal of Corporate Citizenship, Issue 36, p.51-70.

Kelly, M. and White, A. (2009). From Corporate Responsibility to Corporate Design: Rethinking the Purpose of the Corporation. Journal of Corporate Citizenship, Spring, Issue 33, p.23-27.

Lee, M-Y., Fairhurst, A. and Wesley, S. (2009). Corporate Social Responsibility: A Review of the Top 100 US Retailers. Corporate Reputation Review, Vol. 12, Issue 2, p.140-158.

Service Loyalty Creates Customer Loyalty

An organisation’s “primary focus should not be to merely attract customers, but to obtain their loyalty and, thus, their patronage, not only for the present, but also for the long-term. While organisations attract their customers through their promise, the customer’s decision to purchase is founded on the trust that the firm will fulfil their needs,” (Kandampully, 1998, p.436).

In an era when customer service seems to be something that is sadly lacking for many – there are unique opportunities for organisations to gain market share and create a competitive advantage, through focusing, not only, on offering service but on the creation of customer loyalty as well.

Two of the basic theories in customer satisfaction include disappointment theory and prospect theory. The theories are based on the premise that our reaction to service; which can be described either as, disappointment, neutral or elation; is based on the service we receive in relation to our expectations. Disappointment theory states that, “the greater the disparity between outcome and expectations, the greater is the person’s disappointment or elation;” whereas prospect theory states that “the evaluation of satisfaction will display diminishing sensitivity. That is, marginal values of gains and losses decrease in size with increasing levels of satisfaction and dissatisfaction,” (Homburg et al, 2005, p.87).

Customer service is not just about exceeding your customer expectations on a consistent basis, (rather than a transaction specific event), but also about understanding and meeting their future needs and future expectations. This takes time and effort, and presupposes that your organisation already has the relationship with your customers, where you can engage with them to discuss and understand their future needs. As Kandampully mentions, “the primary objective of the service provider is identical to that of the tangible goods producer, i.e. to develop and provide offerings that satisfy customer needs, thereby ensuring their own economic survival”, (p.432).

Another advantage of offering superior service on a consistent basis is that research has shown that it can lead to the customer being willing to pay more for a product or service. Homburg, Koschate and Hoyer’s, 2005, research supports “the managerial belief that satisfied customers – those receiving higher quality service or who feel better about the product – are, in fact, willing to pay more for it and that the relationship is non-linear. The results suggest that the measurement and enhancement of customer service should focus on cumulative satisfaction rather than on transaction-specific satisfaction,” (p.94).

Focusing on service loyalty to create customer loyalty is either part of your organisations culture or it isn’t. A culture of service loyalty only exists and works in practice, when the whole organisation embraces and owns the principle and it becomes part of their daily routine in all interactions, both tangible and intangible, with existing or potential customers. The principle of service loyalty becomes part of the organisations ‘brand and image culture’ and brings with it a distinct competitive advantage.

As Kandampully states, “a customer’s loyalty and trust is gained by the service personnel’s commitment to seamless, consistent and superior service, which manifests itself, to the customer, as ‘service loyalty’. It is through service loyalty that an organisation achieves customer delight and customers’ honest participation (customer voice) in the relationship – this is, indeed, the key to continuous improvement and sustained superiority,” (1998, p.439)

References

Homburg, C., Koschate, N. and Hoyer, W.D. (2005). Do Satisfied Customers Really Pay More? A Study of the Relationship between Customer Satisfaction and Willingness to Pay. Journal of Marketing, Vol. 69, p.84-96.

Kandampully, J. (1998). Service quality to service loyalty. A relationship that goes beyond customer service. Total Quality Management, Vol. 9, No. 6, p.431-443.

Great Leaders Develop a Shared Vision

James Lucas states that, “we’ve got vision, but we just can’t see. That seems to be the situation in many companies. We can’t live without vision, although organisations do manage to extend their death throes for several years in a visionless state. And very often, we can’t live with vision either – at least not with the concepts that so often masquerade as a guide to the future. The vision statements of many organisations make their readers feel as if they are drowning in warm maple syrup” (1998, p.23).

The vision statement is often used more as a public relations statement than a ‘guiding light’ for the organisation. There is often a common theme amongst many organisations, large and small, that says our vision is to be the best at everything - we’re the best organisation that looks after our people and the community and our stakeholders; and our customers, and our suppliers, and the environment. There is no uniqueness, there is no ‘vision’ that the organisation can embrace and commit to. These are the statements that Lucas compares to ‘warm maple syrup’.

The leadership develops a vision with the organisation, (not in isolation behind boardroom doors). A company vision that creates a unique future state – a future state that all employees; can understand and relate to; get excited about and commit to; and see progress through their daily activities.

As James Kouzes and Barry Posner mention in their 2009 Harvard Business Review article, “the best way to lead people into the future is to connect with them deeply in the present. The only visions that take hold are shared visions – and you will create them only when you listen very, very carefully to others, appreciate their hopes, and attend to their needs. The best leaders are able to bring their people into the future because they engage in the oldest form of research: They observe the human condition” (p.21).

As Lucas points out “the fact is, every company does need a vision if it wants to go somewhere and be able to know when it has arrived. This need may seem less obvious in an autocratic organisation, where people do as they’re told and have very little idea of where the company is headed. But even the autocrat needs a blue print to follow while dictating the company into the future” (p.24).

Lucas highlights five reasons why organisations need a vision;

1) To guide us. A well constructed vision allows the organisation and its employees to prioritise activities and minimises the chances of conflicting agendas.

2) To remind us. The vision statement is there to remind the organisation where it is heading and why.

3) To inspire us. We are inspired by goals that we can relate to and that give purpose to our work - where we can measure our progress during the ‘journey’.

4) To control us. The vision statement not only gives purpose, but creates parameters to keep us on track (so that we don’t wander off the path).

5) To free us. “It’s hard to have a forward looking, high performance organisation when we don’t know who we are or what we want to become. The events of our past push us along with their inertia, to a chorus of ‘this is the way we’ve always done it’ in the past. A living vision pulls us loose from that mire and opens the door to a fresh future,” (Lucas, 1998, p.24).

The vision statement, if developed and communicated correctly, will create; a unique identity that the whole organisation are excited to be part of; a unique focus, on which the corporate strategy, goals and objectives can be built; and a company culture focused on ownership and not compliance

As Lucas concludes, “a vision statement will be worth more than the paper it’s printed on when it becomes a driving force and compels people to do something, change something, or become something. That means it must pass the ‘baloney test’ and get to the heart of the organisation, answering key questions about its competitive strengths. The statement also needs to be a ‘living’ document that incorporates the best of the organisation’s past into an ideal yet feasible view of the future. Only then will people do more that just buy into the image; they’ll actually own it” (p.25).

Maybe it’s time to get that vision statement down from the walls, blow the dust off and re-look at it again – in the process, turning your vision into your real, unique, statement of the future.

References

Kouzes, J.M. and Posner, B.Z. (2009). To Lead, Create a Shared Vision. Harvard Business Review, Vol. 87, Issue 1, p. 20-21.

Lucas, J.R. (1998). Anatomy of a vision statement. Management Review, Vol. 87, Issue 2, p. 22-26.

Should the CEO also be the Chairman? The Duality Debate

CEO duality exists when the CEO is simultaneously the chairman of the board and there are differing views on whether duality or independence is the correct method for strategic leadership. Chen, Kao, Tsao and Wu (2007) identified that “the examination of corporate governance can be divided into two aspects: the ownership structure and the leadership structure – for leadership structure, the main concerns are the board and CEO duality” (p.252).

Various surveys carried out between 1999 and 2005 show that in the United States between 60 and 80 percent of all major corporations have the same person act as both the CEO and chairman, whereas in British, Canadian, and Japanese companies only about 10 to 20 percent combine the role of CEO and chairman.

It’s worth spending a moment reviewing the various theories that exist, where agency theory is the most dominant theoretical framework in corporate governance research. The popularity of this theory is likely due to two factors. First, it is an extremely simple theory, in which large corporations are reduced to two participants – managers and shareholders – and the interests of both are assumed to be both clear and consistent; and, secondly, the notion of human beings as self-interested and generally unwilling to sacrifice personal interests for the interests of others.

Other predominant theories include; the stewardship theory which describes executives and directors as frequently having interests that are exactly the same as those of the shareholders, and where the directors are good stewards of the corporate assets; the organisational life cycle theory states that complexity is the key determinant in respect of governance requirements as the organisation moves through the life cycle; the resource dependence theory, assumes that corporate boards will reflect the environment of the organisation and that the corporate directors, who are external to the organisation, will be chosen to maximise the provision of important resources; the social network theory emphasises the importance of network formation on reputation, trust, reciprocity and mutual independence; and the neo-institutional theory asserts the importance of normative frameworks and rules in guiding, constraining and empowering behaviour, arguing that board composition will be determined largely by prevailing institutional norms in the organisations industry sector.

In respect of the various theories it is worth noting as Lynall, Golden and Hillman (2003) contend, “it is not a matter of choosing one theoretical perspective over another but, rather, of identifying under which conditions each is more applicable” (p.419).

The strongest advocates of the joint duality structure have been the CEO’s themselves who don’t favour a separation of the CEO and chairperson roles. Ruigrok, Peck and Keller (2006) state that, “such clear cut leadership removes any ambiguity of accountability and responsibility for firm processes and outcomes. The advantages of clear leadership might be the most valuable in situations where a company has to overcome a crisis, as this situation requires fast decisions and clear strategic orientation” (p.1208), though this is disputed by other academics and researchers.

For example, Kang and Zardkoohi (2005) noted that “if duality is adopted because a powerful CEO imposes it on a board, then governance decisions are likely to favour self-serving behaviours of top executives rather than maximising shareholder wealth” (p.795); and Daily (1995) stated that “the central concern with the dual leadership structure is the power which this structure grants the CEO. A primary function of the board, monitoring the CEO, is impeded when the chairperson also serves as the CEO” (p.1046).

Epstein and Roy (2004) highlight that “many corporations have tried to improve the independence of their boards through ensuring that the board leadership is independent. This can be done through either a separation of the role of the CEO and chairman or by the appointment of a lead director. In both cases, the goal is to provide a board leader that is independent of all day-to-day corporate activities and is solely devoted to providing oversight and fulfilling a fiduciary duty to the shareholders” (p.9).

Recent major studies by Booze Allen Hamilton and Khaled Elsayed found that “the impact of CEO duality on corporate performance varies with industry context and corporate performance, which provides partial support for agency theory and stewardship theory. Their findings highlight that there is no one optimal board leadership structure and that CEO duality will benefit some firms while separation will be more advantageous for others. The findings also provide support for the conclusion of Finkelstein and D’Aveni (1994) that, when corporate performance is low, the board of directors is more likely to prefer CEO duality as a means of improving corporate performance” (Elsayed, K, 2007, p.2010).

It’s worth noting that current research is looking in more detail at the different variables that impact and influence the CEO-Chairman relationship, including the composition of the Board itself.

References

Brownbill, N. (2008). Exploring the Relationship between Strategic Leadership and Corporate Governance; presented at the 7th International Conference on Studying Leadership, Auckland, December 2008.

Chen, A., Kao, L., Tsao, M., and Wu, C. (2007). Building a corporate governance index from the perspectives of ownership and leadership for firms in Taiwan. Corporate Governance, Vol.15, No.2, p.251-261.

Daily, C.M. (1995). The relationship between board composition and leadership structure and bankruptcy reorganisation outcomes. Journal of Management, Vol.21, No.6, p.1041-1056.

Elsayed, K. (2007). Does CEO Duality Really Affect Corporate Performance? Corporate Governance, Vol.15, No.6, p.1203-1214.


Epstein, M.J., and Roy, M-J. (2004). Improving the performance of corporate boards: Identifying and measuring the key drivers of success. Journal of General Management. Vol.29, No.3, p.1-23.

Kang, E. and Zardkoohi, A. (2005). Board leadership structure and firm performance. Corporate Governance, Vol.13, No.6, p.785-799.

Lynall, M.D., Golden, B.R., and Hillman, A.J. (2003). Board composition from adolescence to maturity: a multitheoretic view. Academy of management review, Vol.28, No.3, p.416-431.

Ruigrok, W., Peck, S.I., and Keller, H. (2006). Board characteristics and involvement in strategic decision making: Evidence from Swiss companies. Journal of Management Studies, 43:5, July, p.1201-1226.

Appraising the Performance Appraisal

Managed well, the performance appraisal can be a highly motivational event, reviewing performance and setting objectives for the period ahead, within a climate of mutual respect and active two-way communication – handled poorly it can be a very de-motivational event, sapping the energy and innovation out of the employee and negatively impacting the corporate culture and organisational performance. Unfortunately, even within the 21st century many highly effective human resource business principles still don’t get the attention they deserve and amongst them is the performance appraisal. Beatrice van der Heijden (2004), states that, “as performance evaluation systems are among the most important and applied human resource components of an organization, it is essential to investigate their qualities critically”, (p.493).

Organisations often forget that the performance appraisal links directly to; their corporate strategy and organisational performance; the development of the human resource at all levels within the organisation (including the link to succession planning); and has a direct impact on motivation and the corporate culture; and “it is important to differentiate between the application as a decision-making instrument and the application as a developmental tool. In the latter case the aim is to provide constructive feedback in a climate in which one's growth is fostered and there is room for improving one's weaknesses without immediate negative consequences”, (van der Hiejden, 2004, p.494).

A well developed appraisal system will always include a self-appraisal element, allowing employees to appraise themselves prior to the formal appraisal interview. This has been proved to be an extremely powerful approach to appraising performance and as Gary Roberts (2003) states “self-appraisals provide employees with the opportunity to systematically assess their performance. Studies indicate that self-appraisal increases employee participation and readiness for the appraisal interview, enhances overall satisfaction, increases perceived appraisal fairness and can reduce defensive behaviour if used for development purposes”, (p. 91).

Some basic guidelines for an effective performance appraisal include;

1) The performance appraisal should focus on agreed objectives for the period being assessed;

2) These objectives link to the strategic objectives of the organisation; and are defined through the employees accountabilities and key performance indicators;

3) Performance appraisals are most effective when there is a process of self-evaluation where; the employee appraises their own performance against their objectives; recommend the objectives to be appraised for the next assessment period; and identify what specific training and development they need to improve their performance for the period ahead;

4) Those conducting appraisals are ‘thoroughly’ trained in the appraisal system and appraisal skills (too many people are allowed to conduct appraisals without understanding the principles and skills required to conduct them fairly);

5) The appraisal system supports training and development; and the succession planning process;

6) Developed and implemented correctly the performance appraisal is a powerful tool for the development of the human resource, at all levels, and through linking performance, to objectives, to the corporate strategy, has a directly impact on the organisations future growth.

The performance appraisal is not a substitute for regular employee feedback and is a formal, well planned, periodic review; where there should be no surprises in respect of performance feedback. Issues around performance (from excellent to poor) must be recognised, managed and communicated to the person when it happens (and not months later).

So, it might be worth spending some time reviewing your current appraisal system and the skills of those involved; to identify areas where you can improve the process and in doing so improve the development and motivation of your human resource; and the performance and growth of your organisation.

References

Roberts, G. E. (2003). Employee Performance Appraisal System Participation: A Technique that Works. Public Personnel Management, Vol. 32, Issue 1, p.89-98.

van der Heijden, B. (2004). The value of subjectivity: problems and prospects for 360-degree appraisal systems. International Journal of Human Resource Management, Vol. 15, Issue 3, p.493-511