The Value of You We all like to see results. Whether it is in the work we do, our bank account, or other personal activities, results make us feel good. The life of Warren Buffett is a great story about leadership that gets results. He spent decades mastering the financial industry and understanding how to get results. Regardless of how you feel about his approach, philosophy, or business style you cannot argue with the effectiveness and success he and his organization has had. In 2008 Warren Buffets net worth was estimated at $62 billion dollars. Those results were achieve by a lot of focus on the bottom line.
So how does Warren Buffett’s success apply to you? In November 2009, Warren Buffett and Bill Gates participated in a Town Hall meeting at Columbia University. During this event the following question was posed by a student:
Student Question: “Mr. Buffett, Mr. Gates, thank you for being here today. My name is Justin, I’m a second-year MBA, as I get ready to graduate, I was wondering, what’s the one thing that your MBA didn’t prepare you for when you got out into the real world?”
Warren Buffett Response: “Well, I was — it prepared me very well, not the whole degree, but specific professors prepared me very well for what I wanted to go into. I knew I was interested in investing, like I say, from the time I was six or seven years of age. So I was lucky that I found what turned me on early on. And I had these two marvelous professors here at Columbia that just being around — I had read all the stuff they had written. So it wasn’t I was acquiring lots of incremental knowledge but I was getting inspired. They were terrific for me. They treated me like a son. They would take me out to dinner. Ben Graham did the same thing for me. So it gave me confidence in myself. It just propelled me into a field I already love with a terrific tailwind from these professors that believed in me. [APPLAUSE] But let me add one point because — to the MBA situation. Right now, I would pay $100,000 for 10% of the future earnings of any of you. So anybody that wants to see me after this is over — [LAUGHTER] [APPLAUSE] If that’s true, you are a million-dollar asset right now, right, if 10% of you is worth 100,000? You could improve — many of you, and I certainly could have when I got out, just in terms of learning communication skills. You know, it’s not something that is taught. I actually went to a Dale Carnegie course later on in terms of public speaking. But if you improve your value 50% by having better communication skills, that’s another $500,000 in terms of capital value. See me after the class and I’ll pay you 150-thousand.”
Monetary Value of Learning and Communication
This matters because it illustrates the importance of learning and effective communication. As individuals, it is important to develop ourselves. Whether you get an industry trade degree, look at going through a mini MBA program, or complete a Masters Degree at Columbia University, ongoing development of yourself is important to you, your future success, and ultimately your net worth. Investment in learning will pay huge dividends. If good communication skills are worth an additional $50,000 to Warren Buffet, it’s worth far more to you individually.
Heavily Invested
Ask yourself this question. What would an investor ask you at the annual shareholders of YOU meeting? At a high level, you might hear questions such as:
- Do you understand what it takes for you (and your organization) to win today?
- Do you understand where and how we can increase profit margins?
- Are you cutting operational expense to increase profit margins?
- How can you create distance or differentiation from the competition?
- Is the organization focusing on what matters?
If you can answer those questions, you are doing great. If not, look to refocus your efforts. Educate or develop yourself to the point where you can answer them. You are heavily invested in yourself so what do you want your future earnings look like? Are you a million-dollar person? It’s hard to argue against hard results.
It has been interesting, if not disheartening, to watch businesses close, thousands of people losing jobs, and bailouts to keep some companies upright. As a survivor of one such company, I can relate to the frustration, fear, and fury many of these people are feeling. At the time I experienced this, I was with a company that had been in business for over 80 years. I really thought that if I did my job well, my position was secure. Nevertheless, the company went through some tough times and finally was forced to file bankruptcy. It was devastating to the 30,000 employees nationwide who were terminated and worst yet those who put all of their 401k monies into the stock of that company.
Reminiscing, I can think of five areas, other than financial ethical practices, I feel had a major effect on this company’s failure. Consider these points, as they might help salvage your department, team, or organization.
1. View all employees as having a stake in the future of the company. This seems elementary, but you would be surprised at how many managers look at their people as simply a resource, commodity if you will. However, a successful leader knows that each team member can contribute greatly to the success of the team. When a team is working at 100%, processes are streamlined, costs are reduced, and creative solutions are the norm.
2. Keep the communication lines open. I don’t know how many times a boss has told me, “I have an open door policy” and then been surprised later by something that affects my tasks or position. People will be more receptive to change and will respond more positively if they know of an impending opportunity or crises. Realize that most people already have an acute sense of the organization climate and will know when you are keeping things from them. This creates fear.
3. Hold yourself and others on your team accountable for their commitments. You will accomplish two things by sticking to this concept. First by being an example, your team will know they can count on you and in return you will be able to count on them to be committed to the task or goal. Second, it sets the parameters for excellence. The title of the book by Dr. Steven Stowell and Stephanie Mead says it all, With Teamwork Anything is Possible.
4. Set policies that everyone adheres to – not just certain groups. For example, if a policy is that no one accepts gifts from vendors, the President or Chief Financial Officer should also adhere to that rule. Simply put, leadership should walk the talk.
5. Finally, be open to the other people’s opinions and accept that they may not carry-out the task the way you would do it. If you do allow others to take the ball, don’t undermine their efforts. Give them room to excel. People are going to make mistakes, but don’t bully them or attack their character. Coach, rather than chastise. People become defensive when they feel attacked, creating resentment and lower performance. Coaching more often creates a willingness to change for the betterment of the group. General George Patton was correct when he said, “Never tell people how to do things. Tell them what to do and they will surprise you with their ingenuity.”
These may seem basic and you may be committed to practicing these already. Just remember, under the increasing pressures of daily tasks, and especially in a crisis, it is very easy to forget these areas. Unfortunately your employees won’t and some may become hurt or even angry. Either way, productivity will go down.
Luckily, I have discovered that when these points are followed, people will support you and your organization in ways you would never imagine.
In a previous a previous post, Developing Leaders for Tought Times – Part 1, I wrote about an article on a study conducted by Development Dimensions International. It was so intriguing to me that I tracked down the entire study and have been looking at it in greater detail. Naturally, I have a particular interest in the topic of leadership as I have built a career on it. I have discovered over the years that not everyone agrees with me about the importance of developing today’s and tomorrow’s leaders. But the evidence in this study is compelling: 37% of leaders fail (42% in Asia and 28% in Western Europe) and if you look further into the sources of a leader’s downfall, Leadership/Interpersonal Skills and Strategic (or Visionary) Skills are at the top of the list of reasons.
From my perspective, this is good news because these are leadership competencies that can be developed through sustained training and development initiatives such as coaching, teamwork, strategic thinking, change management, and fundamental leadership qualities. Despite the economic constraints facing many organizations, my hope is that more businesses begin to recognize that a greater number of leaders can be successful and contribute to a company’s bottom line performance when they have well-developed, and sustained interpersonal and strategic skills.
I recently read a newspaper article that had really caught my attention. The article was about a report by Development Dimensions International indicating that many leaders in today’s organization are failing; yet, companies are still shifting their attention away from developing its leadership. In fact, 75% of International Executives surveyed believe that improving or leveraging talent is a top business priority. Unfortunately, it appears that this critical business imperative may not be receiving the attention and effort that is needed to truly produce results, despite being directly linked to many company’s strategic business goals.
Also cited in this study is the decline in human resource professionals’ confidence in leadership over the past eight years (from 47% to 35%). These professionals believe that 37% of leaders fail. That is a staggering loss for companies especially in today’s competitive environment.
I found this fascinating because during difficult economic times and as businesses are under increased scrutiny, it seems natural that this would be the time for companies to invest in the development of their current leaders and high-potential future leaders. The key word is investment. When the economic pressures are on, leadership development is not always seen for what it is – and investment or an insurance policy for the future. More than ever we need competent leaders at the helm of our organizations and leadership competence is achieved through development on an ongoing basis.
I believe that during turbulent times, businesses cannot avoid managing their talent and equipping leaders for the future by investing in development initiatives that are directly linked to profitability and the organization’s strategic goals. Click here to read part two of Developing Leaders During Tought Times.
We are all aware of the economic challenges in the global economy. In fact, it seems that you can’t even turn the TV or radio on without hearing about it. Staying profitable in these difficult times is obviously a top priority for leaders, including in my organization. But despite the media coverage of businesses going under every day, I have been surprised at how many employees in my organization and others I work with are not concerned about the business’ profitability. It appears to me that the attitude is as long as they have a job, getting a paycheck, and can generally make ends meet, they aren’t as concerned about bottom line performance as they probably should be. Yet, when business are not profitable or can’t make it, look at the indirect trickle down affects on job loss, charitable contributions, the viability of communities, and the lifestyle we have all grown accustomed to.
Ironically, employees are the life blood of our business, and in fact, have a tremendous impact on bottom line performance. In many cases, I don’t think employees completely understand how they contribute to or influence revenue streams, cash flow, expenses, or other factors that have an impact on profitability and in turn how to make adjustments in their performance in a way that will benefit them and the organization as a whole. With supporting metrics and leader feedback about their performance in key areas, I believe we can keep even the employees engaged in contributing to the success of our organization. So as leaders, let us recommit to helping our team members see how they directly influence the bottom line and motivate them to perform at higher levels during these challenging times.
We are in a recession! For months now “that word” has been the big elephant in the room that few people would acknowledge. It is here now and there is all kinds of evidence to prove it. Have you looked at your 401k lately? How is your stock portfolio? Does your bank account have more money or less money in it these days? Are you feeling the pinch? Many people around the world are. Hey, at least gasoline isn’t outrageous anymore.
Like many of you, I have been intrigued by the bailout programs that have been offered to many of America’s largest companies. “The Big Three” stood in front of Congress in mid- November and pleaded for $24 Billion in loans. I guess the “poor house” for the Automakers is coming even sooner than they thought. Just two weeks after Automaker CEO’s botched their first meeting with Congress, they have the courage to ask for 10 billion more and increase the total bailout request figure to 34 Billion in low interest loans.
Even large cities across the U.S. like Phoenix, Atlanta, and Philadelphia are crying poor. Governor Schwarzenegger says the State of California needs more than 11 Billion to keep the State from bankruptcy. We just haven’t seen anything like this since the 1930’s, and frankly it is a little scary that the world economy is in such poor shape.
Many of you working in sales likely have heard from your customers that they are cutting back, spending less, being cautious, and looking for ways to be more profitable. I have asked myself how can my organization help companies cut back, spend less, be cautious, and most importantly be more profitable?
Perhaps there is a way for organizations to be more profitable right now. Could there be a process that helps organizations measure performance that ties directly to the bottom line? A process, in which all leaders give appropriate feedback and coach members of the organization about their performance, that leads to dollars added to their bottom line. Keeping score is nothing new. Those of you who play games or play sports know exactly who the winner is and who the loser is by keeping score. This same scorekeeping principle is easily applied in business as well. Many organizations have embraced the concept of keeping score. By helping each employee understand when they are winning or losing, organizations have the ability to create an environment of accountability, responsibility, and focus. Additionally, it is not enough for leaders and employees alike to know if they are winning, losing, or stagnant. Leaders in organizations must assist all employees to win, to make a contribution to profit, and to improve bottom line results by frequently talking to people about performance. Yes, you read this right. Leaders must engage their employees not just once a year in a performance review, but regularly about winning and losing.
A combination of leadership principles coupled with scorekeeping does provide an internally generated bottom line “bailout” created by the employees and leaders working together for bottom line results.
It has been interesting, if not disheartening, to watch businesses close, thousands of people losing jobs, and bailouts to keep some companies upright. As a survivor of one such company, I can relate to the frustration, fear, and fury many of these people are feeling. At the time I experienced this, I was with a company that had been in business for over 80 years. I really thought that if I did my job well, my position was secure. Nevertheless, the company went through some tough times and finally was forced to file bankruptcy. It was devastating to the 30,000 employees nationwide who were terminated and worst yet those who put all of their 401k monies into the stock of that company.
I found this fascinating because during difficult economic times and as businesses are under increased scrutiny, it seems natural that this would be the time for companies to invest in the development of their current leaders and high-potential future leaders. The key word is investment. When the economic pressures are on, 
Ironically, employees are the life blood of our business, and in fact, have a tremendous impact on bottom line performance. In many cases, I don’t think employees completely understand how they contribute to or influence revenue streams, cash flow, expenses, or other factors that have an impact on profitability and in turn how to make adjustments in their performance in a way that will benefit them and the organization as a whole. With supporting metrics and leader feedback about their performance in key areas, I believe we can keep even the employees engaged in contributing to the success of our organization. So as leaders, let us recommit to helping our team members see how they directly influence the bottom line and motivate them to perform at higher levels during these challenging times.
Like many of you, I have been intrigued by the bailout programs that have been offered to many of America’s largest companies. “The Big Three” stood in front of Congress in mid- November and pleaded for $24 Billion in loans. I guess the “poor house” for the Automakers is coming even sooner than they thought. Just two weeks after Automaker CEO’s botched their first meeting with Congress, they have the courage to ask for 10 billion more and increase the total bailout request figure to 34 Billion in low interest loans.
