Leaders pay a price for informed decision making. That price is the consequence of mixing transparency with accountability. Transparent information about how the organisation is really performing, coupled with being held accountable for the organisation's performance, puts leaders in a tight spot.
How can leaders make the right decisions without knowing what performance really is? And how can they make the right decisions when stakeholders blame them for less than perfect results?
It’s a price that appears too high for many leaders. Instead of informed decision making, they steer by gut feel, give too much credence to hearsay and anecdote, and rely too heavily on biased and unreliable data. But what these leaders might not realise is that the price of transparency and accountability is still lower than the price of its opposite: ignorance.
Authors of Hard Facts, Dangerous Half-Truths and Total Nonsense, Jeffrey Pfeffer and Robert Sutton, say it this way:
“... leaders need to make a fundamental decision: do they want to be told they are always right, or do they want to lead organisations that actually perform well?”
One of my earliest teachers in organisational performance was the safety manager in a transport organisation. He invited me to help him improve safety performance reporting, and one of my suggestions was to display the safety performance measures in line charts with about two years of history. This was so we could see how performance changed over time, track the impact of our improvement initiatives and see the potential for further improvement.
This was what I assumed the safety manager was trying to do. But I was wrong. He wanted to know that what he was doing was working. Not if, but that it was working. The improved graphs I showed him told a different story: they showed that nothing had changed over the past two years. Performance was not improving under his leadership.
The safety manager had taken Pfeffer and Sutton’s first option in their fundamental decision: to be told he was always right. And the price he paid was impotence: the lack of any effect at all on safety performance. And, of course, that was the price his organisation also had to pay.
In contrast, Jon, the CEO of a timber products company (and one of my favourite clients), took Pfeffer and Sutton’s second option: to lead his organisation to actually perform well. He was frustrated that he couldn’t see any bottom-line impact from all the investments the company was making in improving processes. Rather than hiding this from his Board, making excuses or looking for data that would paint a positive picture, Jon took ownership of the reality.
He and his senior leadership team spent the time to learn how to measure the company’s strategic direction, over and above profit. They aligned each operational team with that strategic direction and helped them learn how to measure the operational results that were drivers of the strategic results. They used the measures as a cornerstone in their evidence-based management. And it became easier to align their process improvement projects to the strategic results, and the bottom line.
Evidence-based leadership for success
Transparency and accountability are demanded of organisations now. And, of course, accountability means that the organisation’s leaders will take responsibility for actual performance if it’s below expectation. This is evidence-based leadership - systematising Pfeffer and Sutton’s second option in their fundamental decision, into the entire organisation.
Evidence-based leadership is not about how to lead. It’s about what to give our attention to as we lead. It’s not about how to communicate or how to inspire or how to direct or how to engage. It’s about how to apply all these attributes to create a high-performance organisation.
To lead an organisation to high performance, a strong emphasis must be given to the role of evidence. Evidence-based leaders pursue high performance by speeding up the cycle of closing performance gaps - the gaps between where the organisation’s performance is right now, and where they want it to be. This is why evidence-based leaders give a lot of attention to results-based performance measures.
Specifically, evidence-based leaders give their attention to three things as a priority:
- The results that matter most, so they can fulfil the organisation’s mission and realise its vision
- Objective and relevant measures that tell them how those results are tracking, so they can know the next performance gaps to close
- The alignment of their organisation’s policies, processes and systems to produce the results that matter most, so their finite resources are leveraged to get the biggest performance improvements
Evidence-based leadership is more than informed decision making. It’s about holding the space for the whole organisation to routinely practise the behaviours of high performance, leading by example. You, as a leader, hold the space for high performance to happen. When you start, they will follow.