To most people, financial reports are just numbers on a page. Hopefully, my recent blog posts have convinced you that those numbers also tell a story of your business and show the hidden power behind your data.
I confess that I am a “get it done” person. My preferred course of action is to put my head down and crank out the work. While that approach can be effective in the short term and in crisis situations, it is not a characteristic that will help build a powerful, valuable and enduring business.
I also make a second mistake. I assume that everyone is just like me – they know what I know and they just like to get it done.
Having learned the hard way, I hope that you will take advantage of my lessons learned – without having to repeat them. There is a better, easier and more efficient way. This plan relies on using the hidden power of information found in your financial reports and is based on three truths from psychology. Using these truths will help free you from day-to-day operating details so that you can be a more effective leader.
The first truth to consider:
Most people hate losing. Most people want to win.
Business in the United States and many other places in the world is highly competitive. You compete with similar businesses to get new customers. You enjoy the thrill of winning a big project or a big order. You suffer the agony of losing a big proposal for which you worked many hours to win. Most of us prefer to win.
In the United States, many of us grew up playing sports. Certainly, our parents and coaches taught us that winning isn’t everything. However, we also learned that winning was far more fun than losing.
Here are a few questions for you to ponder about winning and losing:
Do your financial reports help your team know when the team is winning and losing?
Do your financial reports show which of your individual employees are winning and losing—thus encouraging friendly competition among your team members?
Do your key executives and managers celebrate wins regularly?
Do your key executives and managers take time to encourage people who are losing?
The second truth:
Most people think they do a good job.
I adapted this truth from a story I read in Dale Carnegie’s great book, How to Win Friends and Influence People. I see this truth in others. Closer to home, I see my tendency to think the same way about my performance.
Here’s how Carnegie illustrated our failure to be honest about ourselves.
“I have spent the best years of my life giving people the lighter pleasures, helping them have a good time, and all I get is abuse, the existence of a hunted man.”
That’s Al Capone speaking! Yes, America’s most notorious Public Enemy — the most sinister gang leader who ever shot up Chicago. Capone didn’t condemn himself. He actually regarded himself as a public benefactor — an unappreciated and misunderstood public benefactor, and a generally good guy.
Great financial reports shine a bright light on areas where performance is poor or below expectations. It causes the team and individuals to confront the reality of poor performance. In truth, most people do parts of their job very well, but there are other parts of the job that they do not do as well.
Jim Collins in his best-selling book, Good to Great, says that people in great companies “confront the brutal reality of their situations.” This brutal reality is often revealed in great financial reports. Great management teams overcome the human tendency to deny and make excuses for poor performance.
To be clear, Collins said that the people in these great companies must also have great faith that they will ultimately succeed and overcome the brutal reality of their current situation. He called this principle the “Stockdale Paradox,” after Admiral Jim Stockdale described how he and others survived long years in Vietnamese prisoner of war camps.
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Here are two questions for you to ponder about people’s reactions to evidence of poor performance:
- What brutal reality have your financial reports revealed in the past few months?
- How did your people react to poor performance?
And finally, the third truth to consider:
You will get more of what you celebrate.
If you want more wins and fewer losses—and if you want below average performers to increase their performance—be sure to recognize individual performance publicly and celebrate victories with your team. Individual recognition and celebrations reinforce what is important to you as a leader. These events represent another method for leaders to communicate with their team. They acknowledge the significant role played by employees in the success of a company. If you want to know more about the value of individual recognition and celebrations, read The Leadership Challenge by Kouzes and Posner.
Ask yourself the following questions:
- Do you have clear goals that can be measured by reports?
- Does your team review these reports regularly?
- Do you have scheduled celebrations as an important part of your company’s calendar?
A final thought
For these truths to expose the hidden power of great financial reports, the reports must be reviewed in regularly scheduled meetings. Reviewing the reports must become a habit and ultimately part of the culture of your company. You will know that you have succeeded when people are eager to see the new financial reports. They are eager to see the wins and the losses. They are eager to confront the brutal reality. They are eager to celebrate.