At SaaSiest 2023, Ellen Marie Nyhus, CEO of Verdane Elevate, gave an insightful presentation on the key role of leadership, culture, and people in driving growth for B2B SaaS companies. She shared perspectives on the choices leaders must make, activities to pursue, and behaviors to role model to optimize their organizations’ most vital assets: their people.
- Look beyond just hard skills and cognitive intelligence in leadership selection. Prioritize motivation and emotional intelligence.
- Invest in developing extraordinary leaders, which will pay exponential dividends.
- Recognize and celebrate your employees to make them feel valued.
- Create an atmosphere of psychological safety by showing vulnerability and responding generously to others.
- View your people as an investment, not just a cost.
- Culture cannot be copied. In times of flux, people, and culture become the competitive advantage.
The secret sauce is inside your organization
There are three important factors that influence business outcomes. One is an important choice you can make. The second is an activity you can pursue, and the third is one behavior you can role model.
Ellen began her talk by recalling experimental trainings she conducted with numerous management teams across industries. She would spend a full-day workshop focused on HR and people issues, but without defining an agenda upfront. Instead, she asked leaders what topics would add the most value based on their specific challenges.
Surprisingly, the same issues emerged as top priorities in every session: dealing with low performers, addressing conflict, reducing absenteeism, and improving low morale.
While these reactive tasks consumed a great deal of leadership time, they focused on the wrong activities. The opportunity cost was not facilitating growth and potential through proper coaching, guidance, and development of talents.
In unpredictable times, one thing remains constant – the quality of leadership has an outsized impact on business outcomes. With people costs being 50-80% of total expenses, how leaders invest their time and resources into this asset is critical.
Extraordinary leadership is the key
Research by Dr. Jack Zenger and Dr. Joseph Folkman shows that only 10% of leaders can be considered “extraordinary” with 80% being merely average. Employees reporting to extraordinary leaders are more engaged, make extra effort, and have a higher degree of intrinsic motivation. This results in significantly better business outcomes.
Looking at the overall results of these leaders, the extraordinary leaders more than doubled profits compared to the rest of the 90%. Also, if the cost base was 50% and you just had a productivity improvement of 10%, you would actually see a profit increase of 100%. There is a huge business potential here, and the secret sauce lies in our ability to move as many leaders as possible from the 80% to become extraordinary.
The two key capabilities of extraordinary leaders are:
- Result orientation: Comes from strong expertise, high cognitive skills, and a proven track record that generates respect
- Interpersonal effectiveness: Ability to interact well with others through empathy, compassion, and soft skills
Many leaders excel at result orientation but lack interpersonal skills. We must redefine what it means to be smart to prioritize social and emotional intelligence in addition to purely cognitive abilities.
Your first choice: Choose the right leaders
Be highly selective about granting personnel responsibilities. Leaders need to be motivated and passionate about helping others realize their potential, and they need to have the right interpersonal skill sets. If skills are lacking but they are motivated, give them the toolset to help them grow.
Recognition is a huge business opportunity
Employees want to feel important at work and like their work matters. Indeed, employees who feel recognized are twice as likely to stay. Yet recognition is sorely lacking despite the fact that it costs nothing and takes very little time. Leaders should actively look out for and celebrate accomplishments and behaviors that align with desired culture and outcomes. This makes people feel valued.
Your activity: Make people feel valued
Recognize and celebrate the accomplishments of your employees and make them feel important.
Create an atmosphere of psychological safety to achieve emotional engagement
The environment we work in has a huge impact on us. We all operate in a knowledge industry where individual and collective knowledge is key to success. Knowing it all is impossible in today’s market. In today’s world, a great leader creates an environment where everybody feels safe to state their opinion, voice their concern, share information, and share mistakes and learn from them without being afraid of being punished. The leader acknowledging “I don’t know” and openly sharing about themselves models vulnerability and courage and enables inclusion, creating an atmosphere of psychological safety.
Your behavior: Show vulnerability and generosity
Recognize and celebrate the accomplishments of your employees and make them feel important. Role model vulnerability and respond with generosity when others show vulnerability. This removes fear and shame, enabling psychological safety.
Lead through the changes ahead
With 50-80% of costs being people, view them as investments, not expenses. Strategically devote time and resources to develop great leadership and culture that unlocks growth.
Massive technological changes are on the horizon that will transform how we live and work. But technology itself does not drive change – people do. While the future is uncertain, one certainty is that culture and people will matter more than ever for success. Technologies and strategies can be copied, but culture cannot. In times of flux, people, and culture become the competitive advantage.
By making the right choices on leadership, pursuing high-impact cultural activities, and role modeling the right behaviors, founders and executives have an opportunity to unleash the potential of their people to drive growth. That ability to inspire human assets is the ultimate “secret sauce” leaders should focus on.
See Ellen’s presentation and hear captivating stories that illustrate each of these insights on SaaSiest TV.