The Missing Link: Demonstrating Business Impacts

A blank stare or a period of thundering silence. These are the likely reactions I often receive when talking about a key theme of my books and writings over the past decade—the criticality of demonstrating business impact. I have come to realize that many skilled professionals are good at what they do but are not able to answer the “so what” question that gives meaning to their jobs and daily activities. These specialists may have functional expertise, but do not have a broader business and strategic perspective. I clearly have not done a particularly good job convincing people of the importance of these qualities.

This lack of range and perspective might be ok in less demanding times, but in today’s world characterized by constant change, increasing global interconnectedness and uncertain next prospects, it is a dangerous shortcoming.  Instead, we need leaders at all levels who are data-driven, see the bigger picture, promote collaboration and openness for all, and are business fluent. And by “business fluent” I do not mean taking a class or two, I mean being extremely familiar with the value propositions, competitive positioning, future possibilities, financial position, and risk profile of the business. When leaders who focus on talent, culture and organization can speak this language substantively and effortlessly, they will achieve new levels of credibility with their peers. 

There are at least six ways in which talent and organizational practices can drive business results. These levers can be adjusted and pushed to create the context in which people can flourish, excel, and take the organization to new levels of accomplishment. (note: all examples of monetized indicators cited below are from “Fearless Talent Choices,” 2020).

1.     Strategic Alignment. Time and resources are limited, and it is easy for organizations to think they are working on mission-critical projects and initiatives. But often they are not. When a car is out of alignment, it wanders all over the road. When an organization is, tremendous amounts of resources, talent and energy are wasted.  It is not about “doing things right,” it is more about doing the right things in times of scarce and limited resources. Use “line of sight” tools and techniques to ensure a close linkage to strategy and competitive positioning and to remove barriers that impact performance.   Focus on the consequential few priorities, as opposed to the inconsequential many. Be able to answer the question: What will we stop doing to achieve better alignment?  Monetized Indicator: 40% of employees time is spent in non-productive activities such as meetings and monitoring mobile devices. Taking proactive measure to decrease these time wasters by half can save an organization $30,000 per employee.

2.     Optimizing Talent. Jim Collins introduced the notion that people are not your most valuable asset, the right people are. This has been extended to the 6Rs: Are the right people in the right job with the right skills---for the right cost, in the right place at the right time? Another way to operationalize this lever is to ask: Are our best people working on the most important projects?  This parameter should be true wherever talent is expected to perform, whether on athletic teams, dramatic productions, orchestras or even business endeavors.  There needs to be an extraordinarily strong fit between what is required for success and the talent deployed. If not, both individuals and organizations lose. Monetized Indicators:  The cost of losing (not optimizing) a valued employee is 1.5 times the fully burdened yearly salary of the individual. For an individual earning $100,000 fully burdened, this equates to a $150,000 cost to the organization for lost productivity, extended timeframes, and more out-of-pocket costs. If the employee who leaves is a high performer (not just a capable employee), then this cost skyrockets by a factor of five to $750,000.

3.     Cost Savings.  It is important to streamline processes so that waste, inefficiencies, old practices, and extra costs are identified and eliminated.  Since cost savings hit the bottom line quickly, they are spotlighted by executives. Cost savings are, in fact, usually the easiest business impact to identify. Among possible examples: Reduced participant travel and expenses, smaller footprint (location costs), fewer recurring costs (e.g., room rental and instructor fees), changing delivery platforms, less people, and restructured benefit programs. Monetized Indicators: For global organizations, a huge cost saving can be realized by replacing expert global staff from headquarters (expatriates) with qualified local talent (if and when it exists). A fully burdened expatriate compensation package can be 20 times more than the cost of capable local talent.

4.     Productivity Improvements.  Productivity pertains to doing the same or better work, faster. It is an efficiency measure that can be impacted by automation, intelligent technology, smarter and more committed employees, informed practices and better methods. A key workforce factor is how quickly employees can become proficient, especially in such a rapidly changing world. One surprising lever is to have an open talent marketplace and hire more internally. Why is this the case? Because internal hires get up to speed faster and more efficiently than external hires. They become “ready” 33% to 50% faster than their external colleagues. Monetized Indicator: The most meaningful leading indicator of productivity improvement is engagement. Since Gallup’s pioneering work decades ago, findings have been remarkable consistent: productivity varies by level of engagement. On a four point engagement scale in which being engaged is level 3, productivity increases or decreases by at least 20% per level. When this finding is monetized over the entire workforce, the impact of poor engagement in one organization can be in the millions of dollars.

5.     Better Outcomes. This lever improves business performance results such as revenues, profits, innovative new products, product quality, brand credibility, supply chain effectiveness, quality of new customers, and faster time to market. These outcomes are hugely important to all stakeholders and business leaders, and one of the first activities any leader should perform is to list the business outcomes that are most meaningful to that organization and to seek consensus among key players. This lever is closely related to Strategic Alignment which also focuses on the critical priorities of the business.   Monetized Indicator:  While not all organizations get involved in a merger or acquisition, this lever is an example of the huge impact that talent and organizational practices can have on business results. In 2018, over $4 trillion dollars in M&A activity was reported.  Interestingly, many (70%) of these transactions fail to achieve their intended results, and a primary reason for this failure is poor human factor integration. Fully 30% of M&As failures can be ascribed to this purpose, which translates to a $1 trillion loss for businesses. That’s trillion with a T, woosh!

6.     Leveraging Communities, Resources and Each Other. One of the great frustrations of business leaders is that organizations rarely learn from past mistakes and are less than the sum of their very capable parts. They yearn for a company where:  the genius happens among people, we continue learn from each other, and social capital (and working together) becomes a vital competitive advantage. Monetized Indicator: When connections and collaboration occur, the power of professional networks and connections become apparent. People with robust and extensive professional networks are 25% more productive than people who do not have these connections. This makes sense:  If you do not know the answer to a simple question, you Google it. If you need more nuance, thoughtfulness, and wisdom; you talk to people you trust. The network boost of 25% is a huge multiplier that not enough people embrace and utilize. As the great Satchel Paige has said: “Ain’t none of us as smart as all of us.”.

The Missing Link does not have to be. We can all be better businesspeople if we broader our lens, become business fluent, and ask the “so what” question.  When this happens, the “missing link”—business outcomes-- becomes the most important connection to organizational performance and success.