Know the Numbers: Your path to adding greater value
Can you explain the performance of your company?
“What is the revenue mix?” I curiously asked the Group HR Director who was my manager’s manager many years ago as they updated our team. For the next 5 minutes I watched my Executive leader struggle with trying to bluff their way through a response when they clearly didn’t know the answer.
Fast forward 12years, last month I was working with a top leadership team of a business that is in trouble. To help them regain focus I gave them a simple task – build your Profit and Loss (P&L) statement including what you believe the results were against each element of the P&L for August. To help them with this task I cut out each element of the P&L along with the values from their August management accounts and encouraged to rebuild it in their groups. Unsurprisingly only one group managed to lay out the P&L elements correctly and none of the groups assigned the right values for August to those elements.
Whilst the question I posed to my Group HRD and then the task to the leadership team might seem simple for some, overwhelmingly the work I do with leaders reveals that not enough leaders know the numbers.
Where to start – be curious
Caught up in their day-to-day jobs with very little free headspace to think beyond the tasks on their to-do list, there’s no wonder why many leaders don’t find the time to know the numbers. For some, whilst sitting in a leadership meeting listening to their colleagues they may nod as presentations are made about sales, costs, productivity, or other performance metrics, but too often the truth is that behind the nods they don’t really understand what is being said beyond the headlines.
Learning about the numbers starts with being curious. Although it sounds obvious, and we often encourage people to ask questions, as leaders we fear revealing that we don’t know what others are talking about when we dive into the details of true performance. Being curious however means being honest and searching for answers.
“I did exactly as you suggested Rob,” a leader I was coaching stated. “I have set up a monthly meeting with the Finance Director to help my team understand how the business is performing. It’s already paying dividends in terms of helping us to focus.”
This simple act enabled not just this leader but the whole team to become curious, using the experts to help them ‘know the numbers’.
Although on the surface this lack of knowledge may not seem to impact their performance it is my experience that leaders not knowing the numbers does impact on their ability to accelerate the value they add.
What do I influence?
When we know the numbers, we’re forced to consider what we influence. For some leaders in sales or operations roles, I would hope that their understanding of their influence over the headline performance is obvious. For others in traditional back-office roles, their influence might not be so obvious. Regardless of what role you play as a leader in your business the key is to (1) understand what drives performance in your business including the hierarchy of metrics, and (2) consider how your actions and those of your team influence these metrics. Drawing from my own experience in HR, I know that delays to recruitment and poor onboarding resulting in high new-joiner attrition will have a direct impact on performance.
Through learning about the numbers we can then work with our teams to explore how we can better add value in the business, which not only supports improving performance but also helps people feel more valued.
If you find yourself often sitting there not fully understanding what drives performance in your business, or how your team influences this, then why not show some curiosity and go on a journey to ‘know the numbers’. Not only will this give you a better insight into how your business works, but it will also help you and your team increase the value you add.
Want to find out more? At The Purposeful Leader® we focus on marrying robust commercial insight with deep human insight to help accelerate the creation of value in businesses through unlocking human potential. If you’re seeking to improve the value you and your team add then contact Rob directly via email@example.com