does leadership matter for performance 29072015
TRANSCRIPT
Does Leadership Matter for Performance?John Colvin
July 2015
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Contents
• John Colvin background
• Data on link between performance and leadership
• What are the key ingredients of leadership?
• The turbo charging effect of culture
• How do you assess these leadership and cultural qualities?
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Central Theme
Poor leaders lose money
Good leaders make profit
Extraordinary leaders double profit
Extraordinary leaders build great cultures
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Central Theme
PE firms generate great financial data on most deals
How good is the data on the most important asset of any firm?
Leadership quality and culture
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Central Theme
Can PE firms do a better job on assessing leadership and culture?
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Central Theme
Can PE firms do a better job on assessing leadership and culture?
Everybody can
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John Colvin Background
• 25 years management consulting – CEO APAC of PA, and on the international board for 10 years• Built highest profit business in PA global firm• Spent 15 years working on large scale transformation assignments for major global banks• LEK was part of PA – brought Tim Sims to Australia in 1987 – sold first 4 major jobs
• 7 years as CEO of Blake Dawson Waldron• Tripled revenues• Tripled PEP
• 5 years partner at Heidrick & Struggles• Now in own business - practice mix for past 10 years
• 50% CEO & board practice• 15% strategy & board consulting• 35% working with three major relationships • M&A work in PS markets
• Team of 4 – plus collaborate with another dozen people
Data on Link Between Performance and Leadership
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Every 5% points of Employee Sat Delivers .5% Increase in Revenue
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Analysts can see the Impact of Leadership on Share Price
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Average premium and discount placed on effective/ ineffective leadership
Leadership Competencies
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Leadership Competencies
1 strength = 60th percentile
3 strengths = 80th percentile
4 to 5 strengths = 90th percentile
One competency has the greatest impact on getting into 90th percentile
Inspires and motivates others to high performance
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The Turbo Charging Effect of Culture
• It is possible to have great individual leaders in the top team who totally underperform as a team
• The organization is dysfunctional – despite good people everywhere
• Lots of reasons
• Poor leadership skills of CEO
• Rem system not aligned to desired cultural values
• Measures not appropriate
• Badly designed structure
• Lots of politics – people fighting each other
• What a difference you get with a great CEO getting everybody on the same page – all the arrows
are pointing north – all the energy is focused on delivering against agreed client needs
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The Turbo Charging Effect of Culture
• I’m convinced that the greatest predictor of a company’s future is its culture
• The best firms have a strong culture that endure through different leadership eras
• The best firms endure through major market upheavals
• Why do some firms get things done, where other firms just can’t
• The “Jaws of Culture” chew up most initiatives – over 80% of major change programs fail
• The single biggest factor in successful cultures is the CEO
• The board has a key role to play in sustaining healthy cultures
• Succession planning
• Adapting the culture to changed market conditions
• The impact of disruptive technology on business models
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How Do You Assess These Leadership and Cultural Qualities?
• Surprisingly easy
• Talk to lots of people
• In a structured way
• That’s relevant to the needs of the business
• Talk to lots of people
• Bosses – peers – subordinates – secretaries – customers – major suppliers - analysts
• In the work we do – we talk to around 12 referees for about an hour – using a very structured
questionnaire focused on the very specific needs of the job
• Plus very in-depth interviewing of candidates – spend up to 15 hours with CEO candidates
• There are no short cuts in really getting to know what makes people tick
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How do you assess these leadership and cultural qualities?
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• The end result is incredible data on each candidate to allow decisions to be made with precision
• This data is as rigorous as any financial analysis that you would do routinely
Contact Details
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John ColvinPrincipalE: [email protected]: +61 409 183 174S: +61 2 8823 3485Level 36, Governor Phillip Tower1 Farrer Place, Sydney NSW 2000, Australia
Sian O’ShaughnessyResearch AnalystE: [email protected]: +61 2 8823 3485 Level 36, Governor Phillip Tower1 Farrer Place, Sydney NSW 2000, Australia
Sandra HeinigSenior AssociateE: [email protected]: +61 416 731 897S: +61 2 8823 3485D: +61 2 8823 3487Level 36, Governor Phillip Tower1 Farrer Place, Sydney NSW 2000, Australia