How can we measure leadership performance?
How do we know if our top leaders are doing a good job? This is something a lot of companies struggle with.
If a company is public, a simple way is by looking at the financials. We can review the earnings reports and listen to leadership calls. Are they hitting the targets they promised? If so, that’s a sign of accountability.
But behind those numbers, a lot must happen first. The leader’s senior team needs clear, aligned goals that they must achieve. The same for the next level of middle managers. And then the delivery teams must execute. Does that connection work smoothly at your company? Probably not as well as it could.
I have been speaking with peers about this very topic, from different companies, and different industries. It seems most companies are focused on high-performance teams, exploring their essence and the challenges of measuring their success. What is a high-performance team? They are not just groups of individuals; they are engines of productivity, driving toward a shared business goal with passion and precision. They thrive on innovation, problem-solving, and exceeding expectations. But building and measuring such teams is no small feat.
Many companies are focused on measuring things like productivity, experience, engagement, talent development, etc. There’s a huge emphasis on the delivery teams and individual contributors.
But what about that pivotal layer of senior leadership? How are we measuring their performance as the critical link between the vision and execution? Many organizations are missing that completely.
On paper, it looks straightforward — senior leaders set the strategy and goals that cascade down into team objectives. Read those strategy materials and you’ll feel pumped up and ready to dominate! But putting it into practice is a whole different beast.
Let’s say you have 10 senior leaders, each with 5 top priorities. That’s already 50 corporate goals for the year. Now here comes the army of product managers, strategy teams, architects, and operational support to translate it all into specific initiatives and plans. Before you know it, the front-line teams are juggling 100 objectives for the quarter. The leadership team spends all their time jumping from escalation to escalation, instead of seeing the bigger picture.
You could argue “Well, nobody expects 100% of those goals.” Fair point. But are we hitting even 10% of the meaningful outcomes? And how do we know which 10% those are?
The truth is, that most companies still aren’t great at connecting leadership performance to team execution in a meaningful way. We have clear metrics for individual contributors. And public companies have hard numbers to hit.
But that crucial middle layer is a black box.
Think about the work a senior leader signs up for each year. Part of it is protecting and growing the existing business — optimizing current products and operations. Theoretically, this organic growth should be within their full control as long as they prioritize well within their organization. No excuses for dependencies across teams. Seems measurable.
The other part is driving new revenue with innovative products and services. That’s where you get a rat’s nest of cross-functional roadblocks and chaos. No clear ownership or accountability for how it all comes together.
At the delivery level, we pile on more and more granular measurements of tasks and milestones. Maybe that’s necessary for execution. But it doesn’t tell us if we’re building the right things driven by leadership’s strategic vision.
One option is simply trimming the number of corporate goals each year. If every senior leader could commit to just their top 3 outcomes, maybe that’s enough focus and clarity. Not really, then the multiplying effect as you cascade creates just as much chaos further down.
Another path is empowering senior leaders to align and truly prioritize across the entire company’s major objectives together first. Not just operating vertically in their silos. Draw a hard line as a leadership team — these are the maximum number of outcomes we’ll resource and staff. One priority for the company. No multiplier down.
Yes, that’s an incredibly difficult exercise for large organizations. There will always be tensions and tough tradeoffs. But not doing it just pushes all the chaos downstream to be dealt with later anyway. Have you seen leaders try that though? We usually end up with broad objectives that are more of a desire than a real objective. Includes broad key result numbers that not just include their original top three but might add on ten others.
Why not make the Senior leaders accountable for the outcome irrespective of the chaos of cross-company dependency management? We could take away the excuse of the process being the cause of missing goals, leaders must meet the KRs, period.
I have seen that work in smaller companies. However, they do create their own set of intense conflicts and firefighting. Many people get burnt out. But it can force alignment down from strategy to tactics. Not a perfect system by any means, but you knew who truly owned what.
Would this work in larger companies, unlikely. Most respected tech companies face the same brick wall. What’s the solution?
Another idea that is usually applied is single-threaded ownership. This works in the above example where the owner is accountable for the goals, or else. However, if the owner is a product or program manager, who is not ultimately accountable for the KR and does not have the decision power, then it would never work. It is the same army of folks trying to drive these hundreds of initiatives. More people, less outcome.
Let’s not give up hope though. Something does work. Some companies are likely to manage this path better than others. Just need to find the right set of mechanisms with measurements that work for your company.
Here is an approach that I have seen work. The key lies in individual accountability and a focused approach divided into three components:
1. How to get to No-Excuse Results: Determine what portion of the overall results will be achieved that are not dependent on the company-wide portfolio execution challenge. These outcomes must have individuals who are accountable for their delivery. These results may have two parts.
2. The first bucket is Organic Growth: Each senior business leader must be held accountable for goals set before the quarter. These goals are based on existing product capabilities and focus on maintaining and growing customer segments, considering industry and business fluctuations. The portfolio execution chaos should never become a reason to miss these targets.
3. New Growth Opportunities: The second bucket consists of a set number of objectives (e.g.: 5) which are new opportunity areas. The company leader, along with the senior leadership team, selects these objectives, which represent new growth opportunities.
The company leader reviews the new growth opportunities weekly or bi-weekly, diving deep into their progress, challenges, and execution. These goals receive top priority across the organization, with no room for excuses or delays, and no place to hide.
While the senior leadership team is accountable for their respective goals, the company leader is ultimately responsible for the new growth opportunities. These goals allow the company leader to identify areas of opportunity and potential growth drivers. Some ideas may succeed, while others may not, but if organic growth targets are met, the company meets its commitments. If even one new growth opportunity succeeds, the company exceeds expectations.
Any additional achievements by the senior leadership team are celebrated as wins, providing clarity on top performers.
By maintaining this focused approach and fostering individual accountability, organizations can achieve their organic growth targets while actively pursuing new growth opportunities, ultimately driving success and exceeding expectations.
At the end of the day, you need a clear line of sight between the Company leader’s strategic plans and the measurable impact delivered by teams. It can’t just be top numbers and bottom tasks measured in a vacuum. That black box in the middle is where senior leadership performance either shines or goes dark.
Is your company able to measure the critical role of senior leaders? Or are you still struggling to draw that line from vision to value? Let me know your experiences in the comments below.
Until next time, Cheers,
Amit
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