Evaluating the Performance of Your Leaders

Leadership isn't one voice — it's a full symphony. Strategy, empathy, execution, grit, and humility must all play in tune.

— Ben Cashion

One of the most important, and most difficult, responsibilities of a CEO is evaluating the effectiveness of the key leaders in their organization. It's not just about revenue numbers (though that's indeed still part of it); true leadership has to show up across four key areas.

"How do I evaluate the performance of my direct reports and key leaders in the organization?" I get asked this question all the time by CEOs and business owners. They're not asking for feedback tools, though. What they're really trying to answer is, "What does great functional leadership or business unit leadership look like?"

Here are the four key areas that every functional leader needs to get right in order to succeed over the long haul.

1) Strategy

Leaders have to be able to set a functional strategy that aligns well with corporate strategy. They must be able to work through the question, "What is the best strategy for my part of the business independently and in conjunction with the larger strategy of the organization?" Both vertical and horizontal organizational thinking are required.

2) Execution

An effective leader must be able to get the team organized to get the work done on a daily basis. Leadership is not just about strategy; the person at the top has to know what to do day in and day out when the rubber meets the road just as much as anyone else in the organization. That's the only way to truly evaluate a team's execution and diagnose it when something is awry.

3) People

A leader has to nail the "people" aspect of their business unit and team. This comes down to managing those people as well as creating culture. When it comes to managing, that means holding the team accountable, casting vision, understanding their needs and how they work — all the things that come along with managing people. And you can't neglect the culture piece. Are the values, the day-to-day interactions, and the relationships forming the kind of culture that aligns with your company's overall vision and mission?

4) P&L

Results matter. At the end of the day, every functional leader needs to have their eye on the right KPIs and the results that propel the organization forward. You can have all the strategy, execution, and people chops you want, but it's got to show up on the scoreboard eventually.

Final Thought

There is no greater or higher ROI task for a CEO or business owner than to build the right team. A leader who hasn't nailed their direct reports will be miserable for a long time coming. On the other hand, a CEO who has hired well will be enjoying success and finding time to think about the future.

Application: Conduct a quick evaluation of your functional leaders or business unit leaders. What grade do you give them in each of the four areas? Is there a specific area you need to create a development plan for them?

What I'm Reading

Radical Stewardship by Dr. Stephen R. Graves. My business partner Steve just released a new book on partnering with God in your work and life. Thirty years of Steve's coaching wisdom is poured into this incredible resource.