LEADERSHIP & MANAGEMENT.

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Selected by Zeeshan Ahmed Khan

Aug 29 - Sep 04, 2005
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DEFINING CORPORATE PERFORMANCE

"Maximize the wealth-producing capacity of the enterprise."

Ralph Cordiner, CEO of the General Electric Company from 1958 to 1963, asserted that top management in the large, publicly owned corporation was a "trustee". Cordiner argued that senior executives were responsible for managing the enterprise "in the best-balanced interest of shareholders, customers, employees, suppliers, and plant community cities". That is what we now call "stakeholders". Cordiner's answer still required a clear definition of results and of the meaning of "best" with respect to "balance". We no longer need to theorize about how to define performance and results in the large enterprise. We have successful examples.

Both the Germans and the Japanese have highly concentrated institutional ownership. How, then, do the institutional owners of German or Japanese industry define performance and results? Though they manage quite differently, they define them in the same way. Unlike Cordiner, they do not 'balance' anything. They maximize. But they do not attempt to maximize shareholder value or or the short term interest of any one of the enterprise's "stakeholders". Rather, they maximize the wealth-producing capacity of the enterprise. It is this objective that integrates short-term and long-term results and that ties the operational dimensions of business performance- market standing, innovation, productivity, and people and their development- with financial needs and financial results. It is also this objective on which all the constituencies- whether shareholders, customers, or employees- depend for the satisfaction of their expectations and objectives.

ACTION POINT: Check the tradeoff your enterprise is making between long-term performance variables- market standing, innovation, productivity, and people development- and short term profitability. Decide whether these trade-offs are healthy for the enterprise.

A FUNCTIONING SOCIETY.

A SCORECARD FOR MANAGERS

"The things that the proponents of 'magnitude audits' talk about- integrity and creativity, for instance- are better left to the novelist."

The "bottom line" measures business performance rather than management performance. And the performance of a business today is largely a result of the performance of management in years past. Performance in management, therefore, means in large measure doing a good job of preparing today's business for the future. The future of a business is largely formed by present-management performance in four areas:

* Performance in appropriating capital: We need to measure the return on investment against the return expected.

* Performance in people decisions: Neither what is expected of a person's performance when he or she is put into the job, nor how the appointment works out, is "intangible". Both can be fairly easily judged.

* Performance in innovation: Research results can be appraised, and then projected backward on the promises and expectations at the time the research effort was started.

* Strategies versus performance: Did the things that the strategy expected to happen take place? And were the goals set the right goals in light of actual developments? Have they been attained?

ACTION POINT: Perform a management audit of yourself and the people who report directly to you. The criteria should include whether you/they made good people decisions, whether you/they have had any innovative ideas, and whether you/their strategic expectations came to pass.

MANAGING IN TURBULENT TIMES.

BUSINESS WISDOM

"To win without risk is to triumph without glory."

PIERRE CORNEILLE (1606-84), French poet.

"Public service means service to the public, not services the public has to put up with."

JOHN MAJOR, British Statesman

"A man without a smiling face must not open a shop."

CHINESE PROVERB

"He who does not hope to win has already lost."

JOSE JOAQUIN OLMEDO (1780-1847), Ecuadorian statesman and poet.

"Every man who ever created anything was a gambler."

KERRY PACKER, Australian media proprietor.

"He who waits to every man's advice will have a crooked house."

Danish Proverb

"He who has never learned to obey cannot be a good commander."

ARISTOTLE (384-322BC), Greek Philosopher. Politics(4th century BC)

"Leadership is all about taking. Followers take orders, leaders take charge."

ANON

"If you want ten days of happiness, grow grain. If you want ten years of happiness, grow a tree. If you want hundred years of happiness, grow people."

(HARVEY MACKAY, American business executive, CEO of Mackay Envelope company, motivator and author.)

"The workforce today is screaming for flexibility. If you can help employees meet their outside responsibilities, you're going to have a more productive, more turned on, and more energized workforce. Flexibility is a business tool."

ROBERT LAMBERT, Executive vice president of Carter Hawley Stores.