Recognize this curve?
It illustrates one of the most fundamental concepts in finance - compound interest. This is when interest on the principal sum of a loan or deposit is reinvested. As a result, in the next period, you earn interest on the principal plus the previously accumulated interest.
As it turns out, compound interest isn’t an idea made exclusively for the economic world: It applies quite well to leadership too.
When we gain experience for ourselves, what we’ve previously learned doesn’t just evaporate in favor of what we’re learning today – it builds upon the foundation, further growing our competency. From a leadership perspective, when we invest in the development of our people, better processes, a stronger culture of collaboration, etc., it continues to pay off over time.
Here are 5 powerful ways that C-level executives and emerging leaders can apply the concept of compound interest, paving the way for you to become a true Leader With Courage in the process:
1. Investing In Relationships
This is where most work gets done – effective, trusted relationships. But what happens if you don’t keep investing in relationships? It doesn’t take much to erode the progress you’ve made if you routinely fail to deliver on commitments and promises.
Think about the cumulative effect of behaviors that break trust by imagining an employee who doesn’t tell you about the mistakes he’s made on a project you’re leading. Ouch. Then he’s absent at a meeting he agreed to attend. What happened there? Now you’ve left him three messages and he can’t find the courtesy to respond to one.
It’s almost impossible to come back from that, isn’t it?
Such a series of events compounds in the opposite direction, irreparably damaging the relationship. Therefore, you must view every request, every piece of communication and every promise to be kept as an opportunity to build upon the investment of the relationship.
2. Investing In Networking
When is the best time to be networking? All the time.
When you need it. When you don’t really need it. Everything in between. The investment you make in networking is one that you’re making for the long-term, which includes the unforeseen.
For example, let’s say you suddenly find yourself at a career crossroads in a couple years between taking another job in a similar field or exploring a new industry. If you only started networking at that point, you’ve got a lot of work to do in order to build awareness and trust.
However, if you’ve been investing in regular attendance at events filled with people who know you, what you’ve been doing and what your goals are, you don’t have to educate quite as many people on where you want to go from here. On this note, not nearly enough people invest in the follow-up phase after events that entail meeting one-on-one, which can maximize the investment of the event you attended.
3. Investing In 360 Feedback
So you put out a survey to your employees and got it back. Hmm. Some enlightening things here and there, food for thought and…into the desk drawer it goes for when you can have more time to review and put the feedback into deeper learning, better initiatives, etc. (which, by the way, will never happen).
True Leaders With Courage recognize that 360 feedback is merely the beginning for what’s necessary to grow and develop our effectiveness as leaders and managers. It’s not a one-time thing. It’s a consistent, learning-is-always-on thing that becomes a fabric of the culture from management on down. The earlier and more often that we can learn about our blind spots and developmental needs, as perceived by others, the more opportunity we will have to continually invest in strengthening them and reducing the likelihood they become liabilities.
4. Investing In Succession Planning
You like Dave. Dave is one of those rare gems who seems like a real up-and-coming future leader of the organization. You had a meeting with him six months ago and even expressed as much. Wait – Dave left for another job? Since when?
Succession planning isn’t a now-and-then endeavor nor is it an initiative with the frequency of an annual review. It must be committed to regularly. If you think about some of the best major league baseball teams, you’ll find that their sustained success doesn’t come from one huge free agent signing but rather a deep farm system of talent that’s been nurtured and developed. When that talent gets called up to the big leagues, they’re much more prepared to perform at that level. The result of this continuous investment is a pipeline of great talent that succeeds more often than not because there’s a template of development in place.
Think about this in relationship to your own bench strength that’s going to be needed to fill key roles in the future. The sooner you can identify and grow the next generation of emerging leadership, the less likely you’ll avoid scrambling to find the “best available” instead of “the best.”
5. Investing In Executive Coaching
Emerging leaders aren’t propelled from being really good to becoming great in one coaching session. It takes a cumulative effort over time in which both coach and high potential leader come to know and trust each other so that the coaching relationship becomes a safe place to express concerns, test ideas and get honest feedback. In doing so, the rapport can translate very well into accelerated performance and successful results.
You’ve Got To Start Sometime. As In Right Now.
The sooner you identify your blind spots, misperceptions and areas that need attention, the more time you have to avoid or minimize the impact they’ll have on you both personally and in your professional life. You’ll also be more likely to remain relevant and more agile at adapting to change.