I often work with companies who want to measure the effectiveness of their leaders but don't have a plan that they are confident in for how to do that. Too often we resort to downstream results, such as sales numbers, as our only way of determining if our people are good leaders or not. The problem with only using the bottom line to measure leader effectiveness is that leaders are responsible for not just the what, but the how. It also doesn't give us any indication of how new leaders that have only been in their role for a short period of time, are impacting the bottom line. As a result, if sales, profit, or growth are our only measurement of how leaders perform in our business, we don't really have a measurement. We've probably all seen situations where leaders can get a team to hit numbers for a while, and even drive short-term growth, but down the road we learn that they used management techniques that cost us more in terms of retention, employee satisfaction, or HR issues than they could ever make up for in dollars. Those things affect our culture and our future, and if we put a price on those things, I’m confident the bad managers would cost a company far more than they generate. If you doubt this is true, take a look at this infographic from INC. Magazine.
Just one stat from the research shows that 33 percent of employees admit to doing less than their best for a bad boss. Admit might also be a key word here. But how do we determine how good the leaders in our organization are? Is it a gut feeling? And yes, I've heard that answer when I pose the question. Is it how well their own boss likes them? What others say? If we can't measure them well, how do we identify leaders for promotions, succession planning, or even development?
Here are some other tools to consider as you think about determining who the best leaders are in your organization.