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Org Results: What Comes First?

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Tue Jul 30 2013

Org Results: What Comes First?
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An organization is, by definition, a group of people working together for a common purpose. Results stemming from this collective effort fall into three buckets: employee results, customer results, and investor results. Rising awareness of social responsibility suggests a fourth bucket: community results.

However, I like to use the three-legged stool analogy, and it loses something when you add another leg. We shall see if we can't account for community results as a byproduct of the other three. In any case, the whole point of the three legged stool is that one or two short legs make for an unstable seat, and stability of the stool represents sustainability of the enterprise. Routinely coming up short on any one of the three buckets will jeopardize the viability of the organization.

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Investor results

Shareholder primacy is a notion that has driven a great deal of corporate decision making. The basic idea is that stockholder interests trump all others, so the company must be responsive to Wall Street and financial analysts. This philosophy shows up prominently in the attention paid to publicly reported quarterly earnings. Most publicly traded companies will try to guide analysts to estimate earnings conservatively, then strive to beat the estimates with the actuals—and bask in the hero worship that accompanies a rising stock price. In the unfortunate circumstance that earnings come in below estimates, the company will be punished with a swift and terrible decline in its market value. The horror of such a prospect drives the oft-criticized short-term thinking in the C-suite.

Customer results

Money is the marker of corporate value/investor results, and in the for-profit world there is ultimately only one source of money: customers. Because customers are generally free to choose where they make their purchases, organizations must win their business and earn their money. The competition generally has its eye on that same revenue source, and in this burgeoning Information Age, those customers are becoming increasingly hard to fool when it comes to the value they receive for their money. Customer results, therefore, depend on the customer experience. Any attempt by the organization to enhance investor results at the expense of customer results is, in the long run, doomed—doomed, I tell you!

Employee results

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The customer experience, upon which the customer appraises value received, is largely (if not entirely) in the hands of the employees of the company. For those inclined to think the stool will probably work ok with a short employee-results leg, I'd like to invite you to reconsider. As the book Results-Based Leadership reminds us, two things will make or break an employee's ability to deliver the desired customer experience: competence and commitment. The organization is in a wonderful position to influence both competence and commitment as long as there is an awareness of the critical need for investing in talent management as the enabler of all three buckets of organizational results.

Community results

All of which brings us to community results. If we are building a sustainable enterprise that is going provide good jobs for the long haul, that is certainly a plus for the community. If people are engaged in their work and at their workplace, there will likely be a collective consciousness of the need to avoid waste and become ever better stewards of the environment. If people are being developed to their full potential and motivated to deliver outstanding customer results, the business is likely to succeed and grow—creating more jobs in the process. This is not to say there is no place for other sources of increasing community awareness in the workplace, but attending to the core issues of building a sustainable enterprise is where the company really has leverage in benefitting the community.

Paying attention to the building of a sustainably successful enterprise requires a mindset of investing in talent rather than controlling the typically largest item on the expense ledger: costs of employment. Surely, there can be no greater waste of resources than expending payroll on a staff that may (or may not) be competent in their assigned roles, but who definitely do not really care about the customer experience or organizational results.

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