NVA and Leaders

‘In a company, the estimated loss of potential in performance ranges from 30-50% due to inter-human problems, unsettled conflicts, inhibitions, troubled relations, insufficient freedom and a lack of opportunities for development. I think this estimate is cautious.’ Robert Staubli, past President of Swissair, 1982-1988.

There are three immediate points on the observations of Robert Staubli that are as relevant today as they were some thirty years ago.

Firstly, his estimate of the loss of potential in the performance of 30-50% he thinks is ‘cautious’. Secondly, the issues he highlights are all ‘people’ related and therefore avoidable. Thirdly, these are the outcome of poor leadership.

What Staubli is talking about are the things that the leadership in organisations should consciously manage but unconsciously let happen that erodes both performance and costs their organisations money. These are non-value added activities - NVA - or what many simply refer to as ‘waste’.

The average level of NVA in organisations in the UK is estimated to account for some 30% of earnings meaning that in a business with top-line revenues of £10million some £3million of this often hard-won income ‘vanishes’ in activities - things that people do - that add no value to the business that subsequently reduces profits.

With UK productivity levels declining and dragging along the bottom of the G7 league where ‘the average French worker produces more by the end of Thursday than their UK counterpart can in a full week’[1], leaders need to wake up, for they are sitting on top of a pernicious and costly cocktail of low productivity and NVA.

Leaders are too often the seeds of the problem of NVA – they are unaware that they often generate it, so with awareness could easily do something about it. Firstly, they need to understand it.

Time is the common factor. Productivity is a measure of how much work is done in a given amount of time whilst NVA is the cost of wasted time. Time is a unique commodity - once gone it cannot be replaced.

Recent research by Michael Porter, Professor at Harvard Business School, into how CEOs spend their time found that 72% of their time was spent in meetings hence the view commonly expressed by employees that ‘they are always in meetings.’[2]

Before we go further, let’s make it clear that there is nothing wrong with meetings that have a clear purpose with an objective or clear goals; are succinct; and conclude with a set of outcomes or actions that are related to achieving the organisation’s mission. On the other hand, meetings that do not meet these simple criteria are unproductive and contribute to NVA. Hour in and hour out, every day, many organisations are full of such meetings with 72% of professionals in the UK reporting that they regularly lose time to poorly organised meetings.[3]

CEOs are not alone in the amount of time they spend in meetings for meeting length shows a correlation to an individual’s seniority.[4] This is concerning as Porter reports: CEOs spend most of their time with their senior team and senior managers and just 5% of their time with their employees.[5]

Leaders need to 'get out', meet and mix with their people if they are to understand what is happening in their organisation and the world, for as George Smiley advises: ‘A desk is a dangerous place to view the world from.’ [6] Smiley’s world of spying may seem far removed from that of organisational leadership, yet the concept of getting out and gaining first-hand information without the interpretation of others and any potential time delay is simply common sense for leadership, like spying, is about interacting with people.

It is only by speaking and interacting with people that a leader can learn and do something about the ‘people issues’ that Staubli identifies. Poor leadership has been revealed through Employee Engagement figures that have been shocking for some years with research that shows that the ‘psychologically engaged’ in 2018 account for just 11% of British employees[7]. The ‘currently non-engaged of 89%’ are no doubt a contributing factor to the reported rising issue of poor Wellbeing - a further sad indictment of poor leadership[8].

Leaders need to get to grips with themselves if they are to get to grips with NVA, for until they do NVA in their organisations will continue to thrive and erode productivity, performance, and financial resources whether those are earnings in businesses; tax-payers money in public organisations; or grants and donations for not-for-profit concerns.

Swissair went bust in April 2002, following years of being unable to wrestle with a controversial expansion programme in the 1990s devised by a major consulting firm, a convoluted corporate structure, and bloated costs in a fast-changing and highly competitive market. Did Staubli speak loud enough?

Unfortunately not it would seem, for the rising levels of NVA that this combination created was driving them like a ship out of control onto the rocks of failure.

To find out more about NVA and how you can start to reduce it please contact Howard Betts at [email protected]

 #leadership #NVA 

[1] Giles, Chris (2018) ‘Britain’s Productivity Crisis in Eight Charts’ Financial Times, London, 13th August, 2018

[2] Porter, M.E. (2018) ‘How Do CEOs Manage Time?’ Harvard Business Review, Boston, July-August, 2018

[3] Doodle (2019) ‘The State of Meetings Report2019’ www.doodle.com

[4] Ibid

[5] Porter (2018)

[6] le Carre, J. (1974) ‘Tinker Tailor Soldier Spy’ Hodder & Stoughton, London.

[7] Crabtree, S. (2018) ‘How to be an Effective Leader in Times of Change’ www.gallup.com

[8] Executive Development (2018) ‘Leadership – The Route to Wellbeing’ Blog, January 2018 www.execdevelop.com