Wednesday, July 22, 2009

Driving Success During a Recession

Want to learn more about this topic? Join a special, web-based executive development learning event hosted by the Center for Effective Organizations, Marshall School of Business, USC. To learn more click here.

In the summer (July), 2009 leadership pulse we examined business drivers. These are sources of capital that affect organizational performance. In all, we asked our members to rate 20 different drivers. A total of 579 people responded to this leadership pulse survey. The rating scale ranged from -5 to 0 to +5. Negative numbers indicate that driver having a negative effect and a higher value (5) means that the driver was negative and relatively strong in affecting performance, while 0 represents no effect at all and positive numbers indicate the driver was positive with higher numbers meaning positive and stronger. For example, if a business driver is rated -5, it means it was important to our firm's performance during the last 9 months and it had a negative effect on our performance. If it was +5, the driver was important and helped our organization.

Based on the overall mean (average) for the overall sample, the top 5 business drivers (the sources of capital that respondents say have been most important in driving their firm's performance during the last 9 months) were:

#1: Brand and reputation
#2: Quality of our offering
#3: Quality of client relationships
#4: Level of customer service
#5: Skills and knowledge of our employees

At the bottom of the list (or the bottom 5) are the following:

#16: Internal technology solutions
#17: Cost of our product
#18: Ability to manage cash flow
#19: Ability to manage profitability
#20: Internal HR strategy (how we hire, develop and reward employees)

To obtain the full ranking list, you an go to http://www.energizeengage.com/ and download the early insights report.

What do the ranking data tell us?

The top drivers are sources of capital that take years to develop; they are not focused on short-term decisions (layoffs, managing costs, etc.). That is my observation. Brand, relationships, skills of employees, and service levels are not magically changed in the short term. At the same time, the lowest ranking items seem to focus on tactical issues such as managing cash flow and technology.

At the bottom of the list is internal HR strategy, and we had in parentheses, the way we select, develop and reward employees. In an environment where employees are being laid off, not given salary increases, and being told to work more hours, I'm not surprised that HR strategy made it to the bottom of the list. However, note that skills and knowledge of employees (which is a function of real HR strategy) is in the top 5. The "people" story is actually a lot more complicated.

I've done some more sophisticated analysis of these data already, looking at the gaps between what higher performing and low performing firms report. These data help us understand what's really going on with the business drivers, and the more rigorous analysis provides better learning about what an organization can do to help improve its performance during tough economic times.

The bigger report will be made available in the next few weeks. Also, we will be hosting two web learning events, going over the findings and discussing the implications for member organizations. If you would like to be part of the web-based learning event, you need to sign up (click here to register and learn more). To learn more about the Leadership Pulse, go to http://www.leadershippulse.com/.

Theresa M. Welbourne

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