Vivid Management and Productivity June 2004

MANAGEMENT AND PRODUCTIVITY
Doing the right thing is more important than doing things right

by Basil Carter
June 2004

This is a very important distinction between actions and is not just a play on words. Take a moment and consider the reverse situation where a company is doing things right, but working on the wrong things. Doing things right will keep staff busy but may not necessarily achieve the goals of the company. It is the selection of doing the right thing that will advance the profitability at the company.

At all companies, resources are in short supply and must be allocated carefully. It is the allocation of resources, applied to the correct actions, that differentiates a winning company from a losing company. There exists a simple decision tree to assist with complex decision making. Given the option between doing nothing and doing something, all companies should be doing something. The challenge is selecting the correct things to do.

This is the reason that successful senior executives must be well compensated for their labour. Choosing the right action is a difficult and complex process. Many times the choices made by executives have led to folly. Executives that make the correct decisions are few, in short supply, and well paid. This compensation theory presupposes that unsuccessful senior executives should not be generously rewarded. However, for reasons that elude me, currently senior executives are generously rewarded for merely getting their asses out of bed. The well-established idea of compensation for performance no longer exists. There are many examples of unrealistic and poor decision making today. Decisions made on impulse and based on fads seem to be normal. Yet after making such foolish decisions the executives who acted with such ignorance still receive million dollar compensation.

It is the responsibility of the CEO at a company to make the decisions necessary to steer the company. In nautical terms, the captain of the ship sets the course of the ship. The captain does not run the engine room nor direct the painting of the vessel. There are officers responsible to ensure that these requirements are met. The job of the captain is to set the course while supervising other officers to ensure that all the goals are achieved. This concept is simple for a Western executive to understand, but often difficult for a Romanian executive to accept.

This is more than a simple argument on style; rather, it is the basis by which productivity improvements will be implemented in Romania. It defines the role of leadership in any company. The leader is the person who must choose the course of action at a company. The buck stops at the desk of the CEO. The CEO can ask for all the opinions and all of the information that he requires but in the end, it is the CEO who makes the decisions. This is the most difficult challenge for any executive and it is an exhausting process. A difficult, thankless, and stressful task, which is too often ignored.

Effective leaders should not delegate all of the problems. Frequently it has been the practice to engage consultants to develop the new strategy at companies as a substitute for leadership. In too many other cases, management avoids decisions by travelling and staying in motion. There is much to do at all corporations today so the leadership team should be busy, but little change is being achieved. It may be that some leadership is substituting original thought, and avoiding necessary change, while hiding behind the disguise of being in motion.

Being in motion is very comforting and makes the participant feel important. Holding and attending many meetings is part of being in motion. Visiting all or many of the locations of any company is being in motion. Being outside the office frequently for a variety of reasons is being in motion. Socialising is being in motion. All of this motion consumes time and gives the appearance of immediate and decisive action while allowing the person moving to feel important. However, there may be nothing new occurring, just the same old steps, at a time when new ideas and actions are vital but the CEO is in motion. This may be a good performance, good theatre, but may do little to assist a company that needs strong leadership to find a new direction. Leadership is not making public announcements and delivering the current company spin and propaganda. This is marketing; not leadership. This style may have worked well in the past but not now. It is a time when some executives believe that appearances have become more valuable than substance, which is a mistake. The most valuable leadership activity necessary today at most companies is engaging in many hours of analysis and the creating of multiple plans for the future direction of a company. This is demanding, and often mind dulling work that in the past, particularly in strong economic times, has been delegated to more junior levels. . Now at this time, in this economic climate, senior management must develop such plans.

Senior management must seek and discuss alternatives, some of which should be radical, almost endlessly to develop options for their company. Multiple plans must be developed that cover the range from deteriorating economic conditions to a sudden high demand for the products or services at their company. Then the CEO must earn his money and choose the right thing to do.

Just being busy, and being seen to be busy, will not be as effective today as it has been in the past. Socialising on the company's expense account is stylish but this is the style adopted by executives seeking flattery and the shareholders fund the socialising. The effective corporate leader of today must be a thorough, detailed, organised and conscientious manager, working hard, without executive trappings, while developing plans to improve the profitability of his company. This is the sole responsibility of the CEO. This process takes time, is very hard work, but it sets the example for the entire company. Setting an example is a major element of leadership and it is one of the right things to do.

The leader at a company must establish the goals, and then re-establish new goals in the face of changing circumstances, to ensure the viability and profitability of his company in the new economy and not the past economy. These goals must be defined in detail and must not be merely mission statements. The leader at a company must establish the goals and then the management team must implement the changes necessary to achieve the goals.

Basil Carter is an author, CEO and specialist in the economies of Eastern Europe ( bcarter@productivitynetwork.com )