The Secret Within: Driving Strategy and Growth in 2008

By Theresa Welbourne

(Back to article)

As you work to help your leadership team get ready for 2008, data about the areas within your organization that may have hidden potential for growth should be uncovered. What I learned in the latest leadership pulse study is that what leaders say is important may not be what really drives growth.

This presents a problem that information officers can solve if you help your organizations by presenting them with the right mix of data.

The study that spurs this article comes from the Leadership Pulse data, which is provided by a sample of senior leaders who respond to short pulse surveys every two months. In the summer 2007 study, 305 executives (or about 10% of our overall sample) shared their thoughts on growth potential for the future. Respondents rated their level of confidence in six different departments’ ability to drive growth. They also scored the current performance level of the same six departments. The following definitions were presented to leaders in the study:

Sales and sales support:
This team brings in revenue; it may be the sales team, sales and marketing, senior partners, or a fund raising group.

Manufacturing and delivery of your product:
The group manufactures or produces products and/or delivers them to end users; consider the entire production to end user process when thinking about this team.

Human resource management:
This department is responsible for hiring, recruitment, compensation, training and culture management. In larger organizations it’s the human resource management department; in smaller organizations, the job may go to the administrative team or the high ranking executives.

Finance and accounting:
The team is in charge of the finance and accounting department.

Technology, research and development, new product development:
The group is creating new products for your organization.

Customer service:
These people are responsible for working with your customer after initial delivery. This is the group that monitors client use, handles service problems, and takes care of requests.

The anchors for the future confidence scale are 1 = Not at all confident to 5 = Very confident, and the anchors for current performance are 1 = Not delivering at all to 5 = Exceeding all expectations.

Growth Opportunity Results

The values below are the percent responding with either a 4 or 5 on the five-point scale assessing 1) current level of ability to promote organizational growth and 2) confidence in the areas ability to increase firm growth over the next 12-months).

Figure 1. Potential and Performance Summary

theresa m. welbourne

The highest confidence score went to Manufacturing and Delivery with 71% of leaders saying they were confident this group could contribute to growth in the next 12-months. However, when we asked the degree to which this group is currently delivering, the percent rating this groups’ performance as positive drops to 31%. There is a 40-percent gap between confidence in what they 'can do' vs. today's performance.

People and culture management came in last place when leaders think about future business growth. Only 55% of leaders were confident that the resources within their organization that manage employees and the overall organizational culture could help drive growth in the next 12-months. Additionally, the percentage of leaders who rated the people and culture management team as currently performing at a 4 or 5 was 26%. There is a 29% gap between confidence that the people and culture management team can help drive growth in 12 months and their performance today.

Overall, leaders see the greatest opportunities in manufacturing and delivery and revenue generation (i.e., sales), and the least opportunity for growth through HRM. There are differences by industry, but generally speaking, no matter where you look HRM is at the bottom of the list when it comes to confidence in future growth or potential.

Continued: the HR Paradox HR Paradox

We also asked respondents to reflect on the growth questions and tell us more about which groups had the greatest potential to impact growth and what their organizations should do to start supporting that growth. A total of 133 comments were received in response to this question (note that some people said “I don’t know”).

Of those, a total of 100 comments, or 75%, of the comments directly focused on people or human resource management issues.

Respondents talked about hiring new people, replacing people, getting rid of certain people, providing training to employees, getting help for leaders so they can be better prepared to lead, aligning employee behaviors with strategies, adjusting compensation, setting more difficult goals, demanding skills such as listening to the customers, teaching employees about quality, listening to employees to get more information about opportunities, changing the way teams work together, and more.

Lastly, I ran a regression analysis, using the respondent’s self reports of their organization’s overall financial performance (when compared to other firms in their industry of the same size). In this analysis, I found that the only significant variable in predicting performance is the human resource factor, with firms that have the greatest gap between future potential and current performance being the ones those that have the lowest performance.

Although self rating is not the best “scientific” data point, combining the regression equation with the comment data suggests that there may be secret potential for growth in the “people factor.”

However, the question these analyses beg is:

If 75% of leaders’ suggestions on how to jump start growth deal with people management issues and the predictive analyses show people management may be the key to success, then why are the HRM department scores so low on both growth potential and performance?

When I do survey work, I teach that we should be in “search of deviation.” That means we should look for things that don’t make sense at first glance and then use that data to create a dialogue so that you can dig into details and find opportunities for improvement.