The People-impact Balance Sheet

There is currently a lot of focus from businesses looking at their finances and working out how the rest of the year will unfold. Do they have enough cashflow to carry them to 2021, where hopefully they will be able to have a better year? If they don’t, how do they manage their rapidly reducing cashflow to last to the end of the year? And of course, what can they do with the rest of the year to set them up for a better 2021. It is all balance sheets and income statements.

An interesting perspective to this for me is that while everyone is focused on running the numbers, they overlook the largest contributor to both success or failure in their organization, and that is their team members. I love doing the following exercise at the start of workshops. I ask participants (normally business owners) to complete the following exercise:

  • What are your top three business problems?
 
 
 
  • What is your business’s annual revenue?
 
  • What percentage of the annual revenue depends on your team members?
 
  • What impact can your team members have, both positively and negatively, on the three problems above?
 
 
 
  • What does your lack of attention to team members cost you?
 
 
 

As with any income statement there are two ways to approach understanding our people-impact. The first is the revenue section. Here, instead of asking how much revenue we have brought in, we should be asking how much engagement we have extracted from our team members.  How do we do this?

  • We know that training and development is a big motivator for team members.
  • Creating a welcoming and collaborative working environment has a positive effect on productivity.
  • Allowing for role-appropriate autonomy and some self-determination in completing tasks go a long way to motivation teams.

This form of engagement is good for team members as it increases productivity, performance and leverages intrinsic motivation. It is also good for business as it increases revenue and profits while reducing management overheads.

The second part of our people impact balance sheet is that of expenses. And this speaks to where we are spending our energy as leaders. Are we spending it on:

  1. Micromanaging teams and reducing their motivation to excel?
  2. Fighting fires and being reactive?
  3. Doing the work that team members are meant to do “so that it gets done right the first time”?
  4. Avoiding difficult discussions … again.
  5. Doing routine work that can be delegated or automated?
  6. Using remote work as an excuse for a lack of connection with team members.

If the expenses part of our people-impact balance sheet is not in the form of investments that are meant to increase our revenues section then we are failing the business, the team members and ourselves. We all know what the cost is of wasteful expenditure on a regular balance sheet.

As we head into roughly the three last months of 2020, I would like to ask you to evaluate your people-impact balance sheet and see where you can improve your return on investment by using your leadership skills.