Top Executives are Masters of Leadership and Complexity Management
The staffing of executive-level positions is the most important decision for a company.
Successful entrepreneurs and managers know that personnel decisions are the most significant decisions in the day-to-day business of leadership. Nothing determines the success or failure of an organization as much as the right person in the right place.
The question of who should work in a company is important. The question of who should take on leadership responsibilities in a company is vital, because the impact of leadership performance on the success of a company cannot be compensated for by anything else.
Leadership is about guiding people towards efficiency, commitment and performance. This requires working on clearly defined factors of success.
Leaders must:
- create an organization and a culture that encourages value-adding activities and top performance.
- utilize and develop employee potential in ways that enable individuals to achieve extraordinary accomplishments and results.
- interconnect all elements of a company into a value-creating unit
- develop individuals, organizations, structures and strategies in a way that ensures the survival and future success of a company.
The flawless execution of this portfolio of tasks aligns all resources to a company’s present and future goal achievements and encourages maximum value creation.
Leadership in a complex environment requires a clear division of tasks between employees and supervisors
By reducing complexity to an appropriate level, leaders create the framework for employees in which they can successfully create added value.
Employees can fully concentrate on value-adding activities. They need an environment that minimizes waste and idle power while maximizing a company’s productivity.
It is like in sports. The coach selects the team, determines strategies and tactics and positions for each individual player. Winning the game is the team’s task.
Top executives are masters of leadership and complexity management, not “high-performance clerks.”
A company’s performance starts at the upper management level
At the upper management level, the orientation framework for the organization is created. Complexity must be reduced to a degree that is manageable for the organization. To achieve this goal, upper management executives must answer some key questions:
- What will the tasks of the company be for a defined period of time?
- What factors are negligible?
- What factors must be focused on?
- What are the main priorities?
Top performance is brought about by focus. Human beings have only a limited capacity to absorb information and can only process one task at a time. Overload impairs performance as much as conflicting goals. These issues result in a dissipation of energy and interfere with value-adding activities.
With every decision, upper management must assess the impact on the company’s complexity and the effect on the portfolio of tasks of the involved employees.
Out-of-control complexity causes substantial losses
All tasks and projects that an organization has to handle in addition to daily business are in need of critical assessment:
- Are there any free resources?
- What resources can be created?
- Is the resulting portfolio of tasks manageable for the persons in charge of it?
- Does the organization have the necessary knowledge and capacity to complete the task successfully?
Many managers underestimate the complexity of the tasks they are responsible for.
The list of failures is long:
- mergers and acquisitions turn into disasters because the management, employees and structures are not capable of taking on such a gigantic task
- projects fail because they receive insufficient management and employee capacity
- products are recalled at high cost because the complexity of the process chain was out of control.
- employee commitment is horrible, sick days and staff turnover reach alarming levels because employees are overwhelmed and frustrated.
The complexity of an individual area of responsibility must be manageable for each employee of a company. This also, and particularly, applies to the management level.
A company that demands top performance must enable top performance. This is the responsibility of upper management.
Dedicated, discerning and competent employees are the most powerful lever for company success
Employees have an extraordinary impact on the success of a company. Human beings recognize problems, see room for improvement and need for action. In addition, they have the ability to think for themselves. This ability can be used by employees to a company’s benefit or detriment.
Employees should act in the interests of the company and take on responsibility. To this end, managers must intensely interact with employees and create the necessary mental framework and desired attitude in their mindset.
Whoever wants to act in the interest of a company and take on responsibility must be able to make critical assessments.
To do this, employees need a clear framework of orientation. They must understand:
• what the company goals are, and why
• what contribution (performance and conduct) they have to make to achieve these goals in the best possible way
• what contribution they make to the big picture
• what philosophies (quality, clients, environment) are pursued in the company
• what priorities are set
• where they can get information, decisions and support.
In addition, they must be embedded in a culture that fosters employees’ ability to perform and that matches the company goals.
Employees and employers have fundamentally different interests. An employer wants a company to survive, to be profitable and to increase its profitability, if possible. The employer demands results and functionality of employees. The employees, on the other hand, are looking for a way to make their livelihood, and have job security, participation and recognition.
A culture of performance fosters and balances these divergent expectations. Only in this way will a company achieve employee engagement, which boosts performance and profitability more so than any other factor.
However, the reality for companies often is different. For more than twenty years, the renowned consulting company Gallup has studied the effects of leadership performance on the profitability of companies. The results of the engagement studies are thought-provoking. Gallup estimates that 70% of employees in the US are not engaged in their work, and a remarkable 20% of employees are actually actively harming their employer. They steal, sabotage and take an excessive amount of sick days.
The cause for these dismal results is clear: poor leadership. Employees lack leadership, appreciation, perspectives and recognition of their needs. All this is in addition to organizations and structures that impede, rather that support, employees in their value-adding activities.
In another study, Gallup showed that companies with a high level of employee engagement significantly outperform their competitors in terms of profitability. For comparison, Gallup used the parameter of “earnings per share.” For companies with high levels of engagement, this parameter is 147% higher than for competitors that show lower levels of engagement.
Top companies staff their executive positions with leaders who like people and create a structural and cultural framework that enables employees to produce top results. Such companies understand that the staffing of executive positions is the most important decision for a company.