8 Things Every Leader Should Know By Heart
Below are 8 fundamental categories that every general manager, president or CEO needs to fully understand in order to lead and succeed. I call them the 8 Ps.
How many employees do you have? Who are your top performing employees and how do you identify them? What are the strengths and weaknesses of your executives? Really great leaders also know their employees on a personal level. The more you know about your employees the better equipped you’ll be when making decisions that affect each of them.
How much do you compensate your employees for the work they do? From the factory floor to the front office, the CEO must know who is paid how much and why. Furthermore, they must understand the market rate for each of their employees’ job roles so they do not under or over pay. Compensation is a matter of organizational prudence and justice: prudence because you want to make correct judgments about who to value more or less, and justice because the principle of equity demands that we pay people according to what they earn.
What are customers charged for the value your company delivers? How do your prices compare with competitors’? Ultimately, the CEO sets the price for the product or service sold and CEOs must understand the effects of their company’s pricing model on their target market economy.
What are your most profitable goods and services? What are your costs of good sold? Set up a contract file and conduct an annual review of the purchasing obligations binding your business. Do not simply renew major supplier contracts, but take the time to search out competing bids to make sure you are getting the best value.
How does your company appear to others, especially to employees, customers, shareholders and the community? Take an inventory of the communication media used to present the company such as website, voicemail, articles, Twitter, etc. Effective CEOs want to see what these stakeholder groups are seeing. They call the company phone number to see how customer service presents itself to customers. They click around the website and subscribe to their own social media accounts to see how their company looks from the outside.
Your brand embodies your reputation with employees, customers, competitors, etc. Ask people how they view the company. Is the company trusted by customers, suppliers and investors? What is the word on the street about doing business with your company? You might be surprised at what you learn. Sites like Google, Yelp and Glassdoor are the easiest resources to monitor. And don’t forget about recruiters! They know more than you might think.
Survey your employees to see what they believe are the current priorities of the business. Make note of any disparity between groups within your organization and diagnose now these differences came to be. Based on what you learn, have leadership build and communicate a common set of priorities across the entire organization.
Understand how your performance numbers are calculated and require your team to show you where the source data for the performance measures comes from. Be prepared for the anxiety that comes with learning the underlying data is less stable than you originally thought.
More and more frequently companies are choosing to enlist the help of professional consulting companies in order to provide them with an unbiased, external analysis of their organization. Spend the time and resources to deepen your understanding of the 8 Ps of Personnel, Pay, Price, Profit, Presentation, Perception, Priorities and Performance. You cannot successfully lead and organization you do not fully understand.