What’s the true hallmark of leadership and can you measure it?

Stephanie: Welcome to TEC Live. Stephanie Christopher here, CEO of The Executive Connection. We connect leaders with a trusted network of people who help them succeed.

Leah: If I’m great talent, Stephanie, are you going to hire me right this second?

Stephanie: Do you know, Leah? I’ve always thought you’re great talent.

Leah: Thank you.

Stephanie: Sure, like Oprah offered that woman in the audience a job once. So sure, we’ll talk.

Leah: Okay, fantastic.

Stephanie: We’ll talk.

Leah: Thank you.

Stephanie: However, today, I’m talking to serious talent in Dave Munro, who is the CEO of Executive Performance Partners. Dave is passionate about lifelong learning, business, and the science of people performance at work. Dave has over 20 years of executive and business psychology supporting leaders to go from good to great. Dave Munro, welcome to TEC Live.

Dave: Thank you so much for having me, Stephanie.

Stephanie: It’s great to have you here. I love that bit about the science. Tell me about the science of people performing their best at work.

Dave: Yeah, it’s a great question. One of the things that we’re finding out there at the moment is there’s a lot of people talking about leadership, not necessarily thinking through what it actually means in terms of delivering performance. So, part of our thinking behind Executive Performance Partners is how do we link those habits that we know really great leaders have and how do we link that to end outcomes that the business cares about, be that revenue, be that customer engagement, be that team engagement particularly at the moment. What we’re finding is by linking that through clear science and actually being able to show measurable outcomes, we’re starting to see clients really starting to invest in that thinking.

Stephanie: I really like that. I can’t remember who it was I heard the other day, ‘I was a sports person. Therefore, now, I’m a leadership expert.’

Dave: Oh, absolutely. The comment I heard when I started EPP is, ‘Everyone’s a coach nowadays. What’s going to make you different?’ I think for us, we’ve got a reasonably controversial view that we think executive coaching was a well-intended concept, but is really lacked on the execution and it’s really easy to hang that shingle up and say that, ‘I’m a coach.’ We’re really passionate about saying, ‘Well, where’s the link to performance?’ As a business owner and know your community is full of business owners, if we’re going to invest in something, how do we actually demonstrate that true return on investment? Whether you are the CEO or the business owner, that link is fundamentally been missing in the market and something that we’re really passionate about demonstrating.

Stephanie: That’s really powerful. I really like it. Okay, so now going back to your background, can you objectively measure leadership?

Dave: My belief is not only can you measure it, you can optimise it. So, measurement for me is really about base-lining where people are at, and we talk about the good to great journey that you referred to before. It’s really good to be able to measure that baseline of where people are at and then you can measure the great outcomes that they’re delivering. My fundamental belief is you can measure it through a whole range of constructs, psych testing, 360, all the stuff that we’ve done. But ultimately nowadays, the benchmark has increased. We have to be able to measure it in terms of true outcomes, be that revenue, be it growth, be it customer engagement. To me, that’s a true hallmark of leadership. All well and good for it to come from a theoretical textbook, harder to demonstrate in terms of the bottom line for businesses.

Stephanie: I used to work with a wonderful professor, Dave Bartram, a long time ago and he used to talk about that, that leadership is simply how effective someone is at achieving the outcomes.

Dave: Absolutely. So, there’s plenty of leadership theorists that we all know who post regularly on LinkedIn on what everyone as a leader should be doing. To me, they lack a little bit of credibility until you can actually demonstrate that in the real world. While I’m a psychologist and I’ve spent 20 years in the field of psychology, I think that psychology in terms of that science can really demonstrate it in a measure or a metric the business really cares about. It’s got to deliver on that bottom line for businesses. Sure, it has to deliver all those lovely, soft intangibles in terms of engagement and customer connection, but if it’s not creating a more sustainably profitable business, ultimately it’s just going to be a short-term fix.

Stephanie: Really good, very interesting. With EPP, what level are you working in, in organisations?

Dave: Our team are typically coming from either a very strong organisational psychology or an executive background themselves. For us, we have a fundamental belief that if you’re not impacting at the top of an organisation, it’s going to be a project and we don’t really have any interest in projects. The word partnership is absolutely intentional in terms of our vision. So, our vision is to create a community of great and connected leaders. For me, leadership has to start at the top.

Stephanie: Start at the top.

Dave: So, we talk about CEOs and CEO direct reports, because that’s how we can get the biggest amount of impact in the smallest amount of time.

Stephanie: What size businesses are you working with?

Dave: Our smallest business has a headcount of 15, and our largest business has a headcount of 175,000 employees.

Stephanie: Right, okay.

Dave: That doesn’t sound like great customer segmentation, but what we’ve found is fast growth organisations are absolutely key. In this economy at the moment, there’s plenty of opportunities for fast growth, but a lot of that growth can be unsustainable if it’s not managed well. So, for us, it’s really about how do we help organisations to go from good to great, but not just in a three month sprint, but really measuring… If you think of that Jim Collins perspective, it was great over 15 years.

Stephanie: Yeah, that’s right.

Dave: That’s absolutely our vision is, how do we create organisations that are great for not just the next three months, but for the next five years, 10 years, or whatever the case may be in terms of their vision?

Stephanie: Really good. Okay, so setting the scene of what all CEOs and business owners are facing right now… Well, tons of stuff. What issues are really keeping your C-suite executives awake at night?

Dave: I think the big one is the fundamental understanding that all CEOs get which is, ‘What got me here won’t get me there.’ That view of reinvention, change has never been faster, the economy has been good, but I suspect it’s going to get a bit tougher. As organisations, we’re going to have to be really smart around continuing to evolve as leaders, so that we can stay ahead of the market. Continuing to do the same tricks is no longer going to work in our belief to help organisations continue to grow. So, it’s this concept of reinvention, realising that, ‘I’ve been doing the same things for a long time and it’s got me to 10 widgets in terms of my business, but if I want to get to 20 widgets, I’m going to have to change the game up.’

Stephanie: I really like that and it’s such a truism, what got you here won’t get you where you want to go.

Dave: Yes.

Stephanie: What are some of the specific things in reinvention that leaders have to really consider and thrive?

Dave: For us, there’s three. So, the first one is how do we actually measure what performance is? No longer is the concept of just measuring revenue or profit enough for organisations. So, what are our predictors of what is a very critical outcome? Measuring CEO direct performance, while we would assume that, that’s a really easy thing to do, in most organisations I find setting what we call that scorecard per success has fundamentally been missing. That’s the first part of the equation.

Stephanie: You would do that at the C-suite?

Dave: Oh, absolutely. We won’t engage with the client unless we understand what success looks like. One of our differentiators is providing that performance guarantee. We’re essentially taking on the risk with our clients in that partnership. So, if we don’t understand what good is right now and what great would be measured through true business metrics, we can’t fundamentally take that risk on with them. So, I think measurement’s the first part. The second part is understanding this concept of leadership habits.

Leadership habits is something that we’re starting to see the theorists talk about, but for us, it’s really about what are those one or two habits that are holding you back as a leader and how do we not just stop doing those things, but replace them with highly functional habits? So, if I’m a procrastinator, how do I get to being a really effective time manager not only for myself, but for others? If I’m someone who’s essentially been a manager, how do I replace that management with leadership as a habit? And then for me, it’s really about that retention of top talent. So, those are the top three things, measuring success-

Stephanie: Habits.

Dave: Identifying the key habits, and then being able to link that back to cascading it to top talent.

Stephanie: Let’s get just to the middle one there, about the habits. So, can people change, Dave? Can people really change?

Dave: Their behaviour? Yes. Their DNA? No.

Stephanie: Right.

Dave: For us, behavioural change and understanding the science behind habit change is absolutely critical. If any of us wake up one day and decide we’re going to go on a fad diet, we all know how that works, that doesn’t lead to long-term behaviour change. But there is a huge amount of science in terms of what leads to sustainable behaviour change or what we call habit change. It’s really in this world around leadership, knowledge became very easy when Google came in. We can all go on Google, ‘What makes a good leader?’ Putting that into practice is harder, but some organisations have done that reasonably well. But embedding it to the point where it becomes an unconscious habit, that’s truly what unleashes sustainable performance in our experience.

Stephanie: So, where does that start? It must start with some insight from the leader then about, ‘Here’s my preference. This is where I’m always going to go to, especially if I’m under pressure. So, where do I really want to be and what work will I have to do?’ I guess, that insight comes from, you were saying, 360s or even assessment or what have you.

Dave: Yeah. Look, that concept of self-awareness has been something that we’ve known for a long time. Going back to my earlier comments, I think it’s been largely a theoretical construct. I think back to earlier in my career and thinking that I was measuring leadership just purely by measuring things like psychometrics and 360s. While they’re useful inputs, in my experience, they don’t tell the true story. So, we spend a lot of time talking to the people around, the leaders that we’re working with, of what’s their intention versus what’s their impact. Fundamentally, we see a big gap there of leaders, in my experience, rarely go into interactions wanting to have a bad impact.

Stephanie: Oh, totally.

Dave: Right?

Stephanie: ‘I want to turn off and demotivate my whole team.’

Dave: But we see them doing it all the time. And so, that gap between what they’re meaning to happen and what’s actually happening in the business. If we could close one thing for leaders across Australia right now, it would be closing what we call the intention, impact loop.

Stephanie: I really like that, and I like what you’re saying. So, let’s do a little sidebar here on assessments.

Dave: Yes.

Stephanie: There’s a world of assessments come out now that say, ‘You are this,’ and, ‘You are that,’ and, ‘Maybe you are this and that, but you don’t like this.’

Dave: Yes.

Stephanie: I always bristle at it because I say, ‘Well, you’re telling someone that they’re a type.’

Dave: Yes.

Stephanie: Rather than this intention, impact is really interesting. What’s your view of this stuff?

Dave: I’m also a big believer that the typology reports have some use if managed well, but also often I hear people say, ‘I’m a D,’ or, ‘I’m an E,’ or-

Stephanie: Or a pink.

Dave: Or a pink, whatever the case may be. I’m not anti any framework out there, but when it starts to become an excuse for one’s behaviour as opposed to a starting point of a preference, that’s when I see leaders starting to derail of, ‘I’m naturally introverted. So, people have to come and talk to me.’ Well, no, as a leader, that’s your preference to be introverted, but your behaviour becomes a choice. I’m a big fan of Victor Frankl’s Man’s Search for Meaning and ultimately knowing as a leader that you have the choice, no matter how tough the circumstances around you, is a fundamental mindset piece that I think as leaders, we need to embrace.

The world’s going to continue to change faster and faster. If we stay still, we’re going to become relatively redundant by what is a bright, smart next generation coming through. We talk about all of their downsides. They’re an incredibly smart bunch. They’re naturally what I would call change natives. They’re used to a world that changes. For those of us who are 40 plus and looking at the world, we’re going to have to learn to evolve faster and that’s ultimately coming down to self-awareness and then a focus on what’s working versus what’s not.

Stephanie: I really like it, and I think you just touched on something that I’m seeing. It’s speed and it’s people actually have a greater capacity for moving at pace than I think traditionally organisations give them credit for.

Dave: Absolutely. Early on in my career, when we were doing things like executive coaching, you might talk to your coach once a month and ask how their kids’ soccer game went and check in. It became what one of my clients beautifully phrased corporate sponsored counseling.

Stephanie: Yes.

Dave: What we’re seeing now is the leaders that we work with, we’re not just talking in the monthly. We’re not even talking fortnightly. There’s a minimum once a week touchpoint, and actually our clients are engaging in a conversation around their development. They’re checking in. We’re big believers in the Marshall Goldsmith Leadership is a Contact Sport, which tells us five hours of development essentially has the same amount of impact on our development as a leader as five minutes. It’s the frequency of the touch points that matter more than the duration. And so we’re talking about just-in-time, short, sharp conversations of, ‘The board has dropped this on my table and I have no idea what to do,’ or, ‘I have this challenge with a direct report,’ or, ‘I have this challenge with a client.’ You can’t wait a month for that conversation to happen.

Stephanie: No.

Dave: So, it’s ultimately having someone in your back corner who you can seek advice from and act in the moment, as opposed to storing up some library of development conversations for three weeks from now.

Stephanie: Yeah, interesting. So, let’s talk about retention of team right now.

Dave: Yes.

Stephanie: The great resignation, which we’ve spoken about on TEC Live, that landscape shifting as well, because some of the big tech giants have freezers on right now.

Dave: 100%.

Stephanie: And so even thinking about for my team, that idea of, ‘Well, I could always go there and get the big bucks and have the big career,’ that’s not an option right now.

Dave: Absolutely. We’re seeing the economy changing. Around now, we’re talking about rate rises, we’re talking about inflation. Certainly, business is going to get harder, and I have a fundamental belief that the great resignation is an opportunity for the right brands. Talent has never been more fluid. It’s never been more attractive to great employers. And so, I’m definitely seeing some organisations struggle during this great resignation and I’m seeing emerging brands picking up talent that otherwise they couldn’t compete with because of that sense of connection with the individual. It is getting increasingly tough for big brands to pick up that top talent because of that sense of connection, what we would call emerging fast growth businesses really have an opportunity to do. However, there’s a science behind it, and it’s not just go out and talk about what you can offer them as an employer. It’s genuinely connecting with that individual’s career and how you as a leader can help them accelerate their ambitions within the context of your growing organisation.

Stephanie: I like that. We had someone, Didier Danzinger, years ago who on an employee’s first day, he would sit them down and say, ‘How can I get you to your next career move?’

Dave: Absolutely. One of the best pieces of research I’m seeing around this will actually show that turnover is relatively predictable. To your listenership, Steph, I would ask them to think, ‘When was the last time I had a truly great career conversation?’ Not job, not performance, career conversation with my direct reports. I’m sorry to say, but if that’s more than three months ago, it’s likely that you’re missing a great opportunity. As leaders, we need to be constantly involved in the careers of our top talent, knowing that that may not always be with us, but knowing that if we’re not brave enough to have that conversation, they’ll essentially wake up one day and decide they’re going down the road. As leaders, and I talk to CEOs and business owners every day, we’re encouraging them to be brave enough to have that conversation around, ‘What’s working well in your career right now? Where are you heading and how can I help you get there?’ That is the new loyalty. We’re no longer loyal to a brand. We’re loyal to leaders who help me grow my career.

Stephanie: And so naturally, by having that conversation, you may be able to add more value to their career path and keep them there for longer.

Dave: Absolutely. Again, I’m seeing in the brands that we’re working with increasing retention despite the great resignation. When we’re looking at those who they weren’t able to retain, invariably, there was a gap between our understanding of what that person wanted from their career and what they actually wanted. Closing that gap is absolutely critical. Even if that means that at some point that person is going to leave our brand, it is far more likely that they will A, return, and B, have a positive thing to say about a brand if we’re brave enough to lean into that career conversation with your top talent.

Stephanie: Really good. So, something I’m seeing CEOs and business owners struggle with right now is salaries.

Dave: Yes.

Stephanie: And a reminder for most people that they’re not hiring people on the minimum wage. But with the noise around and politics and prices, how are you finding that your best leaders are dealing with this situation right now?

Dave: They’re not competing on salary.

Stephanie: Right.

Dave: I would say that the best leaders are recognising that salary is a hygiene factor, but ultimately, they’re getting to that individual and saying what is important to them. So, longstanding company policies of, ‘Here’s how we manage rem,’ to me are failing. It’s a conversation that we need to be able to be brave enough to have with those individuals, particularly for CEOs and business owners with their top talent, and actually going, ‘What is more important to you?’ Is having Thursday afternoon off to go to your children’s gymnastics event more important than a salary increase? Is some long-term development more important to that individual? Ultimately, for me, salary is something that gets us over the line, but it’s not a retention strategy.

Stephanie: No.

Dave: It’s truly just a hygiene factor.

Stephanie: I mean, that’s reassuring, isn’t it, for businesses if they’re being successful in that way?

Dave: Absolutely. I can think of a number of stories in the last couple of weeks where top talent has been tapped on the shoulder, and if you think your people aren’t being tapped on the shoulder as leaders, I’m sorry to say-

Stephanie: Someone tapped me last night actually-

Dave: There we go.

Stephanie: But I can’t even be bothered replying.

Dave: There we go. Did you say yes?

Stephanie: No. You’re hearing it here first, Dave.

Dave: There we go.

Stephanie: I ignored it.

Dave: Good. What we’re seeing though is the ability to lean into a conversation. It sounds for a scientist quite a controversial thing to say, but the art of conversation as a leader with our people, to me, that’s the one thing that’s going to differentiate us from a big brand. We’re seeing all across town people turning down big offers to stay if they’re feeling connected to their leader. I’m big fan of saying that people join brands, but leave leaders. If they’re leaving and they’re saying that it’s just money, to me, if that’s coming as a surprise to us, then we’ve let ourselves down as leaders. We need to understand what truly is a recipe. Sometimes, we’re not going to be able to retain them, but we shouldn’t be surprised when someone leaves, if that’s the case.

Stephanie: If that’s the case. Those conversations, if it’s a bigger organisation, more than 15, so then it’s important that the C-Suite can empower the managers to have those conversations, or would you say skip conversations and have the C-suite having those discussions?

Dave: Where possible, I would believe it would be both. So, it would be sitting down with the individual as a leader saying, ‘What is important to you and your career?’ Coming together almost with a business proposition for the C-suite of, ‘If we want to retain this top talent person, these are the things that are important to them individually.’ So, we talk about salient. What matters to that individual is far more effective than rolling out a wellness program for everyone, because for some people that will be incredibly important-

Stephanie: And some it’ll be hell on earth.

Dave: And for some people, it’ll actually be disengaging.

Stephanie: Yeah. ‘Are you going to really make me do that Pilates?’

Dave: Yes. Yoga and spandex is not always everyone’s best friend, but the one individual, that will be critical for retaining them, particularly bright young talent coming through. Wellness is even more important than it’s ever been, but offering that same thing to someone who just wants to be able to work from home on a Thursday, my view is that you can actually have a far more customised model than a one size fits all.

Stephanie: I like it. How are CEOs, and this isn’t counseling right here, Dave, we’re not talking about me one bit, keeping themselves motivated and driven coming off the back of two rotten years and heading into some serious headwinds?

Dave: Absolutely. It’s going to get tougher out there. For us, performance is most effective when it’s seen as a series of sprints. For someone who is having a good IT day, when his laptop is not on fire, I actually believe that IT got this right that we can’t plan out performance over the next two years. No one has a crystal ball of what the world looks like in two years from now, but being able to break down a vision into a series of three months sprints is where we’re seeing leaders really engage their people. Anything less than three months and it feels exhausting. We’re back to that planning cycle again. But anything more than three months, the reality is the world’s moving so fast, we couldn’t possibly know what true performance factor is going to be there in 12 months from now.

Stephanie: Yeah. I mean, that model’s becoming far more popular, isn’t it? That really agile approach.

Dave: Yup.

Stephanie: What are the biggest mistakes that leaders are making right now?

Dave: More is not more.

Stephanie: Oh.

Dave: When it comes to performance, it’s being brave enough to boil it down to, what are the top three focus areas for that individual? We know as humans, and again, with that psychology background, it becomes a diminishing rate of return. I’ll walk into large organisations and ask them what their strategic priorities are, and without naming them, one organisation a couple of months ago told me they had 127 strategic priorities. When I asked how many of them had been completed in the last six months, the answer was shockingly low.

Being able to break that down to what are the top three right here, right now for each individual to execute, the stats are pretty clear. If we can keep it to three or lower compared to more is about an 84% chance that we’ll improve completion of those strategic projects. So, while we think that we’re being smart by loading people up, I’m seeing organisations really see that churning or spinning of the wheel as opposed to true execution. For me, it’s really about helping organisations to execute and then reprioritise, execute and reprioritise.

Stephanie: That’s nice.

Dave: As a leader, we have to be brave to go, ‘Yes, that strategic priority is important, but it’s not possible right now. Let’s review in three months if it comes into our top three.’

Stephanie: Yeah, I think that’s good. Can you give me an example of a leader who’s gone from intention to outcome really effectively?

Dave: Yeah, absolutely. So, I can think of a CEO of a large childcare organisation that we work with who prior to working with us, had been working with an executive coach, one I respect immensely, for nine years. What we found walking in there was his intent versus impact could not have been more different. He thought he was bringing the team together. What we found was that we were actually seeing that team fracture in terms of some internal dynamics.

Within three months, that leader has turned that team completely around to be what I think is one of the highest performing executive teams potentially that I’ve worked with and it all came down to him recognising that his people were not the immediate answer. He needed to demonstrate a change in his own behaviour to allow the team to actually go, ‘It’s okay to accept that what we’re doing right now is not working.’ We’ve seen a huge amount of behavioural shift individually and collectively by recognising what got us to this point was no longer working for us and that we needed to take on a whole new array of behaviours and then measure what was working versus what wasn’t working from a behavioural perspective.

Stephanie: Really interesting. Great conversation. So, I’ve heard intent to impact.

Dave: Absolutely.

Stephanie: Habits…

Dave: Yes.

Stephanie: And retention of your people, and that’s about the conversations that you’re having, the career conversations that senior people are having with individuals, and that can really shift the dial.

Dave: Absolutely. I think going back to that point, it’s very much about measuring outcomes. As organisations, we’ve become obsessed with measuring inputs and I think particularly in this hybrid world of work where we can’t peer over someone’s shoulder and see what they’re doing, the truly great leaders that we’re seeing out there are shifting to a world of work where like leaders, the outcome is important, the input becomes less of a factor. But that takes some bravery. As a leader, it takes that ability to say, ‘You know what? I trust you to deliver on these outcomes,’ as opposed to micromanaging all of those lead indicators.

Stephanie: Boy, that’s a big call, that’s a bit contentious, because there’s a lot of thought leaders out right now saying, ‘It’s all about the lead indicator.’

Dave: Oh, absolutely. I would agree with that, but those lead indicators are outcomes to be ultimately …

Stephanie: Ah. Right, okay.

Dave: Which might be profitability.

Stephanie: Right.

Dave: If we go from a sales environment, the old measure of you need to make 27 phone calls per hour to be an effective sales person ultimately drives the wrong behaviours. We’re seeing organisations with their sales forces working from home who are seeing activity that they’ve never seen before elevated, but not translating through to outcomes. In a world where we can’t listen in on that person’s phone call, where we can’t check that that customer interaction is ideal, we’re sacrificing quality for quantity. But what we’re seeing is the best organisations are measuring the link between those inputs, activity, and the outcomes and where that link is not working, they’re diving in by exception to understand how do we lift quality in those environments.

Stephanie: There’s some real gold here. There’s some really interesting things. I think the biggest takeaway is it’s about outcomes, and brave and successful leaders are really focusing on the outcome and working back from there with their team in an agile, fast-paced, contemporary way.

Dave: Absolutely.

Stephanie: That was great. Dave Monroe, thanks for joining us.

Dave: Thanks so much for having us. Cheers.

Stephanie: Discover more about TEC at www.vistage.com.au.