Business Management – Elevator Pitch Transcript w/Citations – Due Fri 11/5

Strategy

Financial Targets Don’t Motivate Employees by Lisa Earle McLeod and Elizabeth Lotardo

February 26, 2021

Summary.   

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It’s natural for leaders to emphasize the importance of hitting financial

targets, but making numbers the centerpiece of your leadership narrative is a

costly mistake. Financial results are an outcome, they’re not a root driver for

employee performance, and a growing body of evidence tells us that

overemphasizing financial targets erodes morale and undermines long-term

strategy. Leaders looking to motivate employees must instead use their time with

their teams to build belief in the organizational purpose, the intrinsic value of the

employees’ work, and the impact they have on customers, and each other. To do so,

the authors recommend three tactics: 1) Reevaluate how you use your leadership

airtime; 2) Discuss your customers with specificity and emotion; and 3) Resist the

urge to widely share every measure of financial performance.

Would you be excited if your boss started a meeting saying: “I

want to remind you that you’re a cog in a machine whose primary

purpose is to hit our financial targets”?

It’s hard to imagine that you would feel much joy or pride of

ownership in your work if your contribution was reduced to your

financial output. While this specific wording may be a bit

exaggerated, it’s not a far departure from the message that many

employees hear on a daily basis.

As we move into what (we hope) will be a growth period, it’s

natural for leaders to emphasize the importance of hitting

financial targets. Financial performance is crucial, of course. But

making numbers the centerpiece of your leadership narrative is a

costly mistake.

Financial results are an outcome, not a root driver for employee

performance. A growing body of evidence tells us that

overemphasizing financial targets erodes morale and undermines

long-term strategy. When a leader spends the majority of their

airtime on a “make the numbers” narrative, it creates a

transactional relationship with their employees, making them

more likely to create transactional relationships with their

teammates and customers.

close

The events of 2020 remind us: Employee engagement is the

lifeblood of an organization. What your team thinks, feels, and

believes about your organization, and their own work, drives their

behavior — and their behavior is what determines your success or

failure.

Leaders seeking to ignite creativity and drive exponential effort

must go upstream, using their time with their teams to build

belief in the organizational purpose, the intrinsic value of the

employees’ work, and the impact the teams have on customers,

and each other. Here are three ways to do that:

1. Evaluate your leadership “airtime.”

When Mike Gianoni took over as the CEO of SaaS firm Blackbaud,

he flipped the way they conduct town halls. Previous leaders

spent the majority of their airtime sharing financial results.

Gianoni took a different approach. He began using his time to

discuss the impact Blackbaud was having on customers, and he

directed his leaders to do the same. “Shifting our airtime from

internal metrics to customer outcomes jump-started the next

level of customer empathy and value,” explains Blackbaud

President and GM Patrick Hodges. “Over time, your attrition goes

down. When people feel good about what they do and they’re

more successful, they’re not going to look for another job.”

We recommend leaders aim for a 50/50 split, spending at least

half their leadership airtime building belief in the meaning and

external impact of the work, and half on internal metrics and

deliverables. It’s not without coincidence that six months after

Blackbaud adjusted their leadership airtime, they had an

innovation breakthrough, employee engagement rose

dramatically, market share increased, and revenue grew

exponentially.

2. Discuss individual customers with emotion and specificity.

The more clearly an employee understands their direct impact,

the more likely they are to go the extra mile; they also experience

greater fulfillment in doing so.

Consider this research from organizational psychologist Adam

Grant, who studied paid employees at a public university call

center who were hired to solicit donations to the school from

alumni. He divided the team into two groups. One group went

about their day as usual, phoning potential donors. The other

group, before jumping on the phones, had a short conversation

with a scholarship student, someone who was able to get an

education because of donations that the call center produced.

After a month, callers who had spoken with the scholarship

recipient spent more than two times as many minutes on the

phone, and brought in vastly more money: a weekly average of

$503.22, up from $185.94.

The same findings have been echoed in studies of lifeguards,

hospital workers, and sales teams. When we know our work

matters to an individual person, we rise to the occasion.

Discussing customers in the aggregate does not create the same

emotional pull. Instead, when you speak about customers, even if

your team does not interact with them directly, use their real

names, talk about the businesses they have, and show your team

that real people are counting on them.

3. Resist the pull of the “FYI.” 

In our consulting practice we routinely observe well-intended

leaders who in an effort “to keep their team informed” pass along

everything that pertains to financial performance. It’s natural,

because the gravitational pull of most organizations leans towards

the numbers; it’s what gets reported and thus it’s routinely

forwarded down.

But when a leader send their team decks filled with financial

targets employees are often left to their own devices to figure out

how to translate broader financial goals into their daily behavior.

It’s confusing at best, dispiriting at worst.

Emotional intelligence expert Daniel Goleman says, “A primary

task of leadership is to direct attention. To do so, leaders must

learn to focus their own attention.” Instead of routinely hitting

forward on every financial report, think about where you want to

direct the attention of your team.

You can decide what to share and what not to share by asking

yourself questions like: What does my team need to be thinking

about on a daily basis to accomplish these goals? How do I want

them to behave with customers and each other? Filter out the

noise coming from other places in the organization and focus

your language on the two things that are 100% within the control

of your team: their mindset and their behavior.

The research is telling us what we already knew in our hearts to be

true: You cannot spreadsheet your way to passion. With ambitious

goals on the horizon, it’s tempting to double-down on financial

metrics. But hitting financial targets requires employees who are

excited and care about their work.

As we face a future of potential uncertainty and unrest, it’s crucial

for leaders to help their teams stay engaged. You can improve

your team’s performance (and their emotional well-being) by

making sure your airtime, your metrics, and your language

communicate one simple message: Your work matters.

Lisa Earle McLeod is a sales strategist and professional speaker whose clients include Salesforce, Kraft Heinz, and Roche. She is the author of Selling with Noble Purpose and an expert in sales transformation. Learn more about Lisa’s work here.

Elizabeth Lotardo is a researcher and consultant who helps organizations drive revenue and engagement. She is the co-author of Selling with Noble Purpose and holds a master’s degree in Industrial and Organizational Psychology. Connect with Elizabeth here.