Leadership hurdle rate

What is your Leadership Hurdle Rate?

Some client firms engage me to provide executive coaching for the CEO and/or members of senior leadership teams. One-to-one coaching is not a service I promote publicly. As a consultant, one of my key metrics is “revenue per available consulting hour”, so my goal is to optimize my time with high-leverage one-to-many engagements.

That said, I’ve learned to appreciate the value of working with a select group of clients on a deeper, more intimate level, and influencing company outcomes by enhancing the effectiveness of the business leader.

Just as my goal is to optimize the use of my consulting time, I urge my client leaders to do the same with their leadership time.

I often start engagements by asking clients to track their time for 4 weeks to determine which tasks are high-value, high-leverage activities, and which tasks need to be delegated or de-emphasized.

Some of the filtering questions I use to determine the value of a task include:
– Is this a task that only someone in your role can perform?
– Is this a task that will increase the output of your team?

If not, the task should probably be delegated.

Another filter I’ve developed is what I call my “leadership hurdle rate”. Here is how I explain the concept:

Imagine you are the CEO of a company with current annual revenue of $10M. Look at each task and ask:
– Is this a $100K plus activity?

By that I mean, does this activity have a potential gain (or loss) of $100k+ associated with it?

If not, you probably should say, “No” to these tasks.

My goal as a consultant is to maximize the value of each available consulting hour. Your goal as a leader is to maximize the value of each available leadership hour.

What is your leadership hurdle rate? You’ll need to determine your own dollar amount. e.g if you lead a $100M revenue business, you may not want to touch any task that does not have a $1M gain or loss associated with it. And if you are being ruthlessly effective, you might set your hurdle rate even higher than my examples.

What sort of activities qualify? That’s for you to justify. When coaching CEOs, I go through their task list line by line, and challenge them to justify why they should be spending time on each activity.

It’s a confronting exercise, but profound in its long-term implications.

Until next time…
Stephen