Smart Leaders Get More Out of the Employees They Have

By Liz Wiseman

This is an excerpt from VitalSmarts online magazine “Trainer Talk.

Where do you turn for the resources you need to fuel growth? Do you hire new talent, or ask for more from your existing employees?

In growing companies, the temptation to fuel growth by hiring new talent is almost irresistible. The hiring path is especially compelling for hot growth companies; they are inherently attractive employers and can afford new resources. But before calling the recruiter, perhaps you should consider how completely you are using the resources already inside of your organization. You probably know how productively your company is using your physical assets, but do you know how deeply you are using the intelligence and capability of your people?

Let’s look at an example from the heart of high-growth Silicon Valley. At Salesforce.com, Rajani Ramanathan is the chief operating officer across the products and technology division. As might be expected of a savvy engineering leader, Rajani began measuring how deeply her managers were tapping into the intelligence and capability of their teams. She then challenged her management team to raise this metric by 10 percent, with hopes to grow the business while also growing the people on her team. One year later, they re-measured and discovered that the subset of her management team that participated in the study collectively raised their score from 70 percent to 78 percent. Their eight-point gain is the rough equivalent of a headcount increase of twenty-five people.

Most companies are adept at bringing in smart, talented people but few companies put as much discipline into understanding how fully they are using the talent they’ve acquired. Many managers are so focused on their own ideas and capability that they shut down intelligence around them. I call these leaders “diminishers.” Yet other leaders seem to amplify the intelligence around them. These leaders are “multipliers.”

To determine the impact of these two types of leaders, my colleagues and I studied 150 leaders across four continents, asking their subordinates to quantify how much of their intelligence the leader was getting access to. We found that, on average, these diminishing leaders used only 48 percent of people’s intellectual capability. Multipliers used 95 percent, or twice that of the diminishing leaders. Now, two years after publishing this research and assessing hundreds of additional executives, we find that, on average, managers are utilizing just 66 percent of their people’s capability. In other words, the managers in our analysis pay a dollar for their resources but only extract 66 cents in capability — a 34 percent waste. (To be concluded in Trainer Talk.)

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To read the rest of the article in it’s entirety, please visit VitalSmarts online magazine “Trainer Talk.

Liz Wiseman will be sharing more insights on this topic at REACH, July 29th-31st 2014.

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