For time and the world do not stand still. Change is the law of life and those who look only to the past and the present are certain to miss the future.
A risk is a chance you take; if it fails you can recover. A gamble is a chance taken; if it fails, recovery is impossible.
Nothing is more difficult, and therefore more precious, than to be able to decide.
There is no-one who cannot vastly improve their leadership through study.
I would define leadership as the projection of personality. It is that combination of persuasion, compulsion and example that makes other people do what you want them to do.
Leadership is the art of achieving more than the science of management says is possible.
We should be doing something even better than you could do for yourself. Otherwise, why hire an advisor?
Think to the Finish
The Five Ninths Panel
Contributors to our articles are:
David, a retired Royal Marines Major General, with extensive practical experience of leading national and multi-national teams and organisations - military and civilian - on politically sensitive and high profile operations and assignments worldwide.
Richard has advised on policy at the highest level of government and currently advises a major, multi-national, innovative business on a wide range of issues
Edward was a senior partner in a major global advisory practice and his experience delivers convincing, knowledgeable and relevant opinion
The Importance of Incentives
In order to ascertain the importance of incentives, the starting point is to consider their core purpose. Given the option, most of us will settle for the status quo rather than seeking change - if it ain't broke...?
But if you are not satisfied with OK, or even good, you are instead looking for the elusive edge, that competitive advantage, the 'game changer'.
How much better could we be if all of our people were aligned and making the best decisions that benefit the organisation? Behaving like a high performance team? This behaviour does not happen by chance, smart organisations set the tone and then shape behaviour by incentivising winning behaviour.
To shape winning behaviour, you need to start with a winning mentality. Much research has been undertaken to look at the characteristics of high performing teams and they can be summarised in 10 short sentences:
- Trust - in each other and the purpose of the team.
- Alignment - to the same goals.
- Clarity - on how to work together and accomplish tasks.
- Expectation - both the individual's and the group's are well understood.
- Friction - is addressed and diffused.
- Engagement - encourage a broad contribution for discussion.
- Disagreement - is good, provided it is orientated to problem solving.
- Decisions - the process is clear when natural agreement is elusive.
- Responsibility - everyone does their shift.
- Respect - no individual is bigger than the team.
With these characteristics at the core, rewarding adherence and correcting deviation will best enable a team to win in their chosen arena. To operate at the peak, these characters have to be a relentlessly consistent theme and in the DNA of each individual.
Once the tone and expectation is set and well understood, how much will it cost to structure incentives that regulate winning behaviour? Surprisingly, maybe, not a penny, as non-financial rewards can be more effective than cash and shares.
Consider the following:
- Flex people's time - suggest someone leaves early one afternoon, allow them to see a show, visit the shops, guilt-free, and they will reward you with productivity that far exceeds the time they were out.
- Recognise success - the boss sends a handwritten note to recognise an outstanding contribution.
- Even when under pressure, say thank you - and mean it.
- Reward staff with responsibility for special assignments
As to financial rewards, there are 3 broad types - a salary for the day to day endeavour, a bonus to recognise exceptional, personal, team or entire company performance and a proprietorial return in the form of dividend or the gain in value of shares.
It is the latter that is least well understood, which attracts the most benign tax treatment for the individual and the most spectacular results for the business. Bringing key staff into equity ownership is the ultimate declaration of trust, as well as delivering alignment to the goal of sustaining and growing shareholder value. The attributes of a high performing team can be effectively tuned by the selective and smart deployment of equity incentives. Equally, the business can achieve this without ceding control or 'hooking' their staff with cash, which ultimately deflates value.
Most smart business leaders have a plan. This will include the 'exit', either for them or for the entire business. Consider this, a business that has a well motivated and aligned team, strong succession management, has eliminated single points of failure, has robust and visible earnings streams, will tend to maximise shareholder value. Whether they sell or not, selling is an option, and it's good to have options. Otherwise, the principal risks being the richest inhabitant of the graveyard!
A purchaser will pay a premium for earning streams that appear robust and have longevity. If there are a broad group of key individuals with shares in the business, a purchaser can incentivise them to remain in the business, helping to ensure the future earnings stream, which reduces their exposure to risk. Less risk means a greater value for a deal.
So, incentivising key staff almost always helps grow value, enables the principal to exit the business and de-risks the acquisition proposition for a purchaser, so further uplifting the price achieved.