Author Archives: Julian Rawel

About Julian Rawel

Julian Rawel is Director of Executive Education at the School of Management. He has previously held positions of Groups Sales and Marketing Director, Eurocamp plc and Marketing Director, Royal Armouries Museum. Julian has been a non executive director of travel industry bodies ABTA and AITO. He has a BA in Geography from Leicester University and an MSc in Tourism Management from Manchester Metropolitan University. Julian is a Fellow of the Chartered Institute of Marketing and a Chartered Marketer.

Specialties:  Consumer and business marketing, Branding, General management, Management development

MBA fees and finances – what is the real cost of an MBA?

Image courtesy of ddpavumba /

Image courtesy of ddpavumba /

Earlier this month the FT debated the short-term focus of MBA teaching in top management schools and the move towards less emphasis on shareholder value as the only thing that matters.

It struck me that too often MBA students have a very short-term focus when looking at the cost of an MBA and the lifetime return.

Doing an MBA is about investing in your future career – for many of our alumni it pays off in both salary and career progression in the long term.  This is particularly the case for those who have hit a ceiling in their current specialism, sector or company.  Not only does the MBA widen their own horizons but it opens up a much wider breadth of career opportunities.

1. Up-front investment in your career

You should think of your career as a high growth, ambitious business.  In business you identify growth opportunities, put a plan together and raise the finances to deliver the plan. As an individual you need to be clear about how you see your long term career and then make some up-front investment to reach your goals.

2. Mitigating financial risks

Raising finances comes with risks.  For some, getting into significant debt to do their MBA is a risk too far.

Our suggestion for students in the UK?  The Executive MBA allows working professionals to fast track their career and mitigate the financial risk by continuing working full time.  They can pay for their weekend block teaching in interest free instalments.  Typically the UK Executive MBA is completed within two years and four months, so the cost becomes less of an outlay over this period.

Image courtesy of Teerapun /

Image courtesy of Teerapun /

3. The best interest free loan you can find?

In terms of what an MBA can do for your career, it is probably the best interest free loan deal you could possibly get in the current climate!

The UK Executive MBA is now just £17,000 (the same price as a new car, which depreciates in value as soon as you drive it off the forecourt).  For those funding themselves, this fee is paid as a £2,000 deposit followed by 20 interest free instalments of £750.  Those who are sponsored by their company pay in two 50% instalments.

You certainly can’t get a car lease deal as good as that!

In fact the website TopMBA says an MBA is not like buying a motor car at all:  “When you buy a car you use it until, if you’re lucky, you can sell it in a few years’ time at a depreciated faction of the amount you paid for it. An MBA is the opposite. It appreciates in value over time.”

4. Further discounts

There are further discounts to be had – paying in full at enrolment gives a 5% discount but if you pay the deposit early enough you can receive a further discount of £500. Although, the deadline has passed for this year, it will be available for 2014/2015.

5. Shift change in career direction

paul millerCompleting an MBA at Bradford University School of Management enabled Paul Miller to change his career path from sales to marketing.

Paul, aged 37, took the UK Executive MBA programme, and is now Marketing Manager for BP lubricants UK and Ireland – managing the marketing mix for brands such as Castrol, Duckams and BP lubricants.

Paul says: “I had reached a ceiling in my sales career and knew trying to switch without an appropriate qualification would probably mean going backwards in career and salary terms.”

“The MBA allowed me to manage a career change into marketing and accelerated my progression through the company with significant financial benefits for me.”

6. The financial equation

So how long does it take to accelerate your career?  Last year, the FT rankings showed that Bradford University School of Management ranked third in the UK for achieving the highest MBA salary increases and tenth in the world for value for money of its programme, against the quality of its teaching. Three years after graduation, Bradford MBA students are paid 110% more than before they took their MBA.

For most students at this rate, they will have recovered their investment in their first year of working.

So how do you evaluate the financial equation of doing an MBA?  How quickly did you get a return on your investment?

What can top business leaders learn from top sports stars?

Chris Hoy

Image courtesy of

When should business leaders step down? I discussed this very topic recently in an interview with Chris Bond for the Yorkshire Post, following Chris Hoy’s announcement of his decision to retire from cycling.

Six-time Olympic Gold medallist and general all-round cycling legend, Sir Chris Hoy, announced his retirement from cycling at a news conference in Edinburgh last month. His incredible 19-year career saw him win 11 world titles, including a sixth Olympic gold medal at London 2012, making him Britain’s most decorated Olympian.

The art of stepping down gracefully: lessons from Chris Hoy

Chris said: “It is not a decision I took easily or lightly but I know it is the right decision … To go on for another year would be one year too far … I’m happy, I’m satisfied. There is no lingering doubt. I’ve done everything I can.”

All good things must come to an end, and Hoy exemplifies how to recognise when the time is right. Rather than continuing on past his prime, Chris has chosen to leave the sport on a high while at the top of his game. He has moved aside gracefully to allow the new generation of cyclists the chance to step up and take the baton.

As I told the YP, I believe there is a real art to stepping down gracefully – both in the timing and the manner in which you do so. And it’s a lesson that many executives could learn.


Steve Redgrave

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Sir Steve Redgrave famously found it difficult to leave rowing, saying “anyone who catches me in a boat again has permission to shoot me” but then couldn’t resist going back for another Olympic Games. The gamble worked out well for him, as his return Olympics in Sydney yielded a record breaking fifth gold medal, but now he has finally retired he’s become a great sporting ambassador. I imagine that Chris Hoy will do an excellent job in a similar role. That Hoy has chosen to retire while still basking in the glow of Olympic victory means that he will be remembered fondly and by his achievements. He will be remembered as the number one. Sadly, many sporting stars miss this opportunity and stay in the game much longer than they should, passing their peak and being remembered instead for their late career losses. Former boxing world champion Ricky Hatton and footballer Paul Gascoigne are perfect examples of this.

Margaret Thatcher

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And this is a great lesson that business leaders can learn from sports stars. There are obvious dangers and pitfalls in staying on too long, whether you’re a footballer or a prime minister. In business, chief executives are moved on when it’s felt they’ve stayed too long and it’s a similar situation in politics. Margaret Thatcher should have perhaps done what Tony Blair did and gone at a time of her choosing. We remember her now for many different things but the last memory is of her being told to leave.

“Sticky senior executives” – when leaders don’t know when to be leavers

Knowing when to step down is an art in itself. But even for those leaders who identify the right time, actually making the move can be really difficult. If you have dedicated your career to business management at your organisation, or are a person who thrives on the challenges and rewards of success and leadership, giving this up can be a real wrench.

Relinquishing the power and wealth associated with being at the top can be extremely difficult. If an executive has been in their position for a very long time, it can become part of them, and be psychologically difficult to step away from. If you have lived and breathed your organisation for a very long time, there may also be fear in knowing what else to do.

Image courtesy of

Image courtesy of

But clinging on to power or refusing to step down at the right time can have wider implications and leave those you lead with a difficult legacy. It was announced earlier this week that Alfredo Saenz, chief executive of Santander, stepped down on Monday ahead of a decision that could have banned him from banking because of a criminal conviction. He was arguably skating rather close to the line here, and may not have stepped down, had he not been pushed. But by being nudged out for bad behaviour, Saenz has left his successor in choppy waters, and the organisation may suffer as a result.

Sometimes in business management you need to leave for yourself, and sometimes you have to go for the good of your own organisation. If you stay too long it can cause difficulties and the more invincible you think you are, the harder you are to replace. The trick is in knowing when to leave on a high but after you’ve secured a steady path for your successor to take the reins, with enough flexibility to make their own mark and take things forward.

Senior executives should consider and plan their departure well in advance, and certainly before they lose sight of what is important to their organisation’s key clients and target market, who may be much younger than them.

4 steps to stepping down gracefully for senior executives

(1)    Know when to go – before you get pushed and while you are still at the top of your game

(2)    Go gracefully and without resentment – passing the reins on to your successor while times are good to give them the best chance of success

(3)    Have something to move on to – moving on gracefully is about planning ahead and having something to move on to. It may be about giving something back, educating the next generation

(4)    If you are moving, for example, from ceo to chairman, be aware of the change in nature and responsibility that is required. Great advice and example of this by Robert Sutton in Harvard Business Review.

Moving on gracefully is often simply a case of accepting that it is time to move into another stage of your life, and one that can be just as rewarding – if not more so – than the one before. If sportsmen and women can do this gracefully in the prime of their life, then senior execs can too.

When do you think is the right time to go? Would you find it difficult to hand over the reins? Is your ceo getting a little bit “sticky”? How do you deal with this? What other lessons can business leaders learn from sports stars?

Is the death of Comet the death of the high street – or the trigger for a new shopping model?

cometAmazon has been one of the stratospheric success stories of the last century, never mind decade.   Can you believe it only started in 1993?  But with every revolution there are casualties.   And last week in the UK we saw one of these, with the electronics retail chain, Comet, going into administration.

As any marketing analyst would ask, the critical question that Comet should have been asking was ‘what was its purpose?’.

1. Comet’s competitive pressures

For some years now it has been quicker, easier and cheaper to buy electronic and white goods online.

Why would you go to a high street store where you have to drive, pay petrol, find a parking space and pay a parking fee (and maybe a parking fine)?   And then lug it home, rather than have it delivered to your door.

Like Clinton Cards and JJB Sports, these shops had not found their niche and purpose in this new world.  Against this, compare WH Smith which Kate Swann – our advisory board member-  has turned around by focusing on the customer.

She said: “At the strategic level, we face competition from supermarkets, the internet and specialist retailers. The threat of the supermarkets’ move into non-food is clearly real. However, in many of our categories, there are high-street specialists succeeding. The lesson is that success is driven by creating a strong customer offer.”

2. Service driven culture for businesses

What should Comet have done?  And all the other high street stores struggling behind Comet?

People do still go into towns – it seems as much to meet each other for a coffee than to shop, but that is the opportunity for stores.  They have to entice those coffee drinkers into their shops while passing.  And then get them to spend.

How often do you hear retailers complain that customers go to their shops to research, try out and find the best product. Then go home and buy it more cheaply on the internet.  Instead of complaining, what could they have done to make that shopping experience so fantastic that you don’t mind spending a bit more to buy it on the spot?

When did you last buy a laptop or game console?  Unless you are a techy, it is a pretty painful experience for most people.

"Image courtesy of vectorolie /".

“Image courtesy of vectorolie /”.

Why didn’t Comet turn this to their advantage?  Have sofas – and coffee! – and people who could talk English?  Learn from B&Q who have employed older people with practical skills such as decorating and gardening and can talk knowledgeably to customers about their needs and their products.

Who wouldn’t have liked to have their laptop set up for them at home or even in store, as part of the price?

3. The future of shopping

I did a Radio Leeds interview about Comet and took part in a phone-in.  Interestingly one caller pointed out that ten years ago, Comet had been responsible for killing off the many independent electronics retailers up and down the country – now they were getting a taste of their own medicine.

No doubt our business and management students would have many other such examples.

So we have to accept that change is inevitable – but how do we spot the new opportunities?  Mary Portas has already started looking at this for the UK government and yes, she is talking about service, being niche, making shopping fun – and make parking free.

What is going to be the winning strategy for the future?  Are there models for the UK to learn from around the world?  What would you do for our high streets?

Too busy to think? What can SMEs learn from big business?

I recently spoke at the Bradford Business Conference about whether SMEs could learn from their big business brothers.  I think they can – and here are the key themes for this.

Theme 1 – I’m simply too busy to think about strategic planning


Why? Because SMEs are more likely to be highly focused on today’s work, coping with crises and reacting to the competition.  But actually some structured thinking will help reduce the fire fighting. At Bradford University School of Management we demonstrate planning models to SME owners and they find them liberating rather than restricting.

A model I frequently teach is ServQual.  This is all about gap analysis – the difference between management expectation of customer needs and customers’ expectations, how this translates into perception and service delivery gaps. Using models to identify the gaps can make all the difference to customer (and therefore owner) satisfaction.

Theme 2 – Standardizing and sharing activity

Big businesses are big on documentation and the documentation is not just bureaucracy.  Information shared can be replicated across locations.  One of the problems with small businesses is that the key information stays with the owner – “we know our business”.  But what happens when the owner is taken ill or is away for a lengthy period?

Theme 3 – Structure

"Image courtesy of photostock/".

“Image courtesy of photostock/”.

Think about young children playing football – all of them chasing the ball. Compare this to an old football hero Bobby Moore, who rarely had players crowding him out and knew exactly what to do with the ball.  Too often SMEs have less defined roles (the football analogy), relatively poor feedback and resulting higher staff turnover. In big businesses team members know their roles, career path and receive formal feedback.

Theme 4 – Think succession

Big business boards constantly focus on succession, even if it’s years in the future. In SMEs the succession issue can be very different.  Too often the children of the manufacturing company owner might not want to follow a career in the business, preferring the lure of financial or legal services or even consultancy (I’ll comment on this in another blog!)  Or, the owner simply doesn’t want to give up.  But actually succession planning is really important.  Developing family teams can often be a really effective way through this – moving from the big businesses idea of long term management planning to a more localized division of responsibilities amongst different people in an owner’s family (not simply the eldest son).

Theme 5 – Delivering profit through lean

Lean - Courtesy of theleanmachineLarge businesses can outsource their process development to consultants.  Small businesses are unlikely to be able to afford consultants.  But there is an awful lot of help out there for small businesses.  Lean can lead to improved purchasing, reduced lead times, reduced inventory, reduced error rates, improved retention and improved profitability.  Just because you can’t afford a consultant doesn’t mean there isn’t a readymade solution waiting.

Theme 6 – Think about outsourcing

Just as large businesses outsource problems to consultants, so small businesses often need to understand that they can do so as well.  SMEs will often equate external advice as a cost not a benefit but then they find they have missed the opportunity.  Understanding the power of cost effective outsourcing is vital to small businesses if they want to remain competitive.

Theme 7 – Marketing goes beyond advertising

social media treeBig businesses have all sorts of marketing structures, help and support.  Small businesses often think that marketing is too expensive a way to bring in business.  But with social media there are all sorts of cost effective ways to improve the reach of the message.  Using a website or Facebook to highlight successes and awards.  Making a low cost video which can be uploaded on to Youtube.  Spending time just communicating with key customers.

And finally, theme 8 – Try and understand Generation Y

Big businesses are investing in just that.  Generation Y, or the Y? Generation.  The future workforce will have all sorts of different needs and aspirations.  Failure to understand and nurture this group will result in failure to leverage the best talent going forward.

So what do you do as a small business?  Think about some of these issues.  Set time aside to work on the business, not just in the business.  Don’t get angry about best business practices but think about how you can learn from them.  Listen to those around you in the company.  And finally, play around with the sorts of things I have been talking about.  There is no hard and fast rule. It’s just trying to find the best way of developing the business.

Big business can learn from SMEs too

But don’t get too down if you are an SME because big businesses can learn from you as well.  Here are five examples

1         SMEs practice customer focus whereas large businesses often just preach it.

2          Have fewer meetings.  There is a whole meetings industry in many large businesses.  Small businesses show you can get an awful lot done in a smaller amount of time.

3          Understand where true innovation comes from. It’s mainly from SMEs because of their flatter structures and closer links to the customers

4          Lead by example – the owner of an SME has to lead, deliver great service and demonstrate the right way in front of the customer.  The leaders of large organizations frequently never meet their customers.

5          Small businesses retain the monkey!  They have nowhere to hide.  If they have a problem they sort it out.  Large businesses too frequently pass on their problems to their next level of management and hope they’ll sort it out.

Well these are some of my personal views. If you belong to an S, M or L, who do you think has the most to learn – and who should they learn it from?!

How to manage new challenges for businesses in a challenging economy

What are the key challenges for business in this economy? And what does that mean for managers and the skills they need to acquire and focus on?

This was the topic at an event that Bradford University School of Management held recently to launch our re-engineered Bradford executive MBA with guest speaker Keith Williams, chief executive of British Airways.

Here were the themes I looked at – and it would be interesting to know if you think we have these right and anything that is missing here?

1. Managing complexity and uncertainty

Whatever the economic climate, complexity is here and to stay. The new Boeing Dreamliner has more than 250 contractors, each making their own contribution. Boeing is unlikely to be the expert in every aspect of the supply chain – but it knows who is. Today’s managers must recognise that complexity means that there is no weakness in not knowing every answer (or even question). The weakness is not knowing who to ask. Take a look at – remote pick and mix solutions.

What is certain about the current economic climate is that we are all uncertain! Most of us grew up in times when you could plan ahead for five years and feel confident, with a bit of tweaking, that you could and would deliver most of your plans.  Now, the managers I meet say that they struggle to produce meaningful plans for six months or a year ahead because markets are changing so quickly.

This is not always a bad thing – managers are more flexible than ever (or need to be) and this means they can spot and maximise opportunities very quickly. But the key is, can they do so more quickly than the competition?

One of the toughest parts is working with staff in times of uncertainty. Redundancies can create guilt, rather than empowerment, among those still employed and mean they just keep their heads down and do not innovate – just keep their job.  Often the energy has gone from those left behind, they don’t believe platitudes from managers.

Managers need to communicate better than ever.  Rebuild confidence and energy in their teams, be very open and genuine about problems and involve employees in problem solving together.

2. Leaving the silos

It is an essential skill to be able to work across a whole business and understand the impact that will happen from a decision made in one part of the business on another very different area. But silos are the norm, not the exception. And many managers run silos within silos!

Here’s a good example. Supermarkets have introduced self-serve stations, which to one part of the business must have seemed entirely logical. They will reduce the need for staff, queues will move quicker, customers will be happy.

The reality has been very different – and you wonder the extent that front-line staff were involved in the decision and implementation of these. What actually happens is that customers can’t get the till to register the bar-code, when finally they do they put it in the bag and then the machine says something like ‘unexpected item in the bagging area’ making the customer feel like a criminal or stupid. How many times have you tried one of these machines and left feeling deflated or a failure? It’s not a great customer experience! It is a silo created one!

3. Risk-taking

Picture4Risk-taking is perhaps the most difficult at the moment. When do you need to be rational and when should you trust your instinct? There is interesting research in the School on this subject and it’s created heated discussions among our Bradford executive MBAs!

The big issue is the balance between making a ‘perfect’ decision, say over 12 months – by which time your competitors have leapt in and taken the market – or following your hunch, even if you launch something that will need refining over time, or might even fail.

Managers need to create an environment where there is freedom to follow your hunch – and empty your mind of everything that is stopping you from doing this because the biggest restriction to innovation is when someone says ‘prove it’.

How many times have you wished you’d followed that hunch?

If you can achieve a track record of two out of three hunches being right, that’s a pretty good achievement?

4. International empathy

Picture2Someone recently said to me that the UK is flat for the next five years. That being the case, every organisation needs to be comfortable with internationalisation – even if not selling overseas, almost certainly they will be buying and outsourcing abroad. And if they aren’t – they probably need to look seriously at their business activities.

The obvious international opportunities are still in BRIC countries but Africa is rapidly opening up. But Africa, or at least parts, is out of the comfort zone of many UK managers. But it’s not with those from many other “developed” countries. Managers need to ensure they get out of their comfort zone when prospecting for business and bring out the best from multi-cultural workforces.

5. Information age

Picture5Our digital age is bringing new ways of doing business and using information. It is also bringing new challenges in terms of protecting that information. The BBC and other media organisations are struggling to protect the information that they put out.

So managers need to work more creatively. Rock musicians accept they make little money from producing DVDs – but touring is bigger business than ever. Nothing can replace the buzz and atmosphere of live music.

6. Influencing and generation Y

Picture6Generation Y were born in the 1990s, are connected 24/7, are literate, technical, tend to have a strong moral stance and are pretty sceptical about those who got the world into such a financial mess. They are loyal to themselves rather than their employer and work-life balance may be more important than salary alone.

Managers can no longer shrug it all off. The Y Generation is the future – employees as well as consumers. Managers need to get into their zone. Employ strong motivational skills, involve and interest, give regular praise and understand that a great pension offer (if one exists!) at 22 is unlikely to be seen as any incentive.

Which of these challenges do you think are the hardest to manage – and have we missed any that you think are more critical?

Whatever the economic climate, complexity is here and to stay. The new Boeing Dreamliner has more than 250 contractors, each making their own contribution. Boeing is unlikely to be the expert in every aspect of the supply chain – but it knows who is. Today’s managers must recognise that complexity means that there is no weakness in not knowing every answer (or even question). The weakness is not knowing who to ask. Take a look at – remote pick and mix solutions.

What is certain about the current economic climate is that we are all uncertain! Most of us grew up in times when you could plan ahead for five years and feel confident, with a bit of tweaking, that you could and would deliver most of your plans.Now, the managers I meet say that they struggle to produce meaningful plans for six months or a year ahead because markets are changing so quickly.

This is not always a bad thing – managers are more flexible than ever (or need to be) and this means they can spot and maximise opportunities very quickly. But the key is, can they do so more quickly than the competition?

One of the toughest parts is working with staff in times of uncertainty.Redundancies can create guilt, rather than empowerment, among those still employed and mean they just keep their heads down and do not innovate – just keep their job.Often the energy has gone from those left behind, they don’t believe platitudes from managers.

Managers need to communicate better than ever.Rebuild confidence and energy in their teams, be very open and genuine about problems and involve employees in problem solving together.

1.Leaving the silos

In-company degrees: Business embraces education

morrisonsStanding in a queue for tickets at the Edinburgh Festival last week, my mobile kept on ringing.  Waiting to go in to see Jonathan Agnew at the Edinburgh Book Festival, the same happened.  What were both journalists and our PR agency continually calling me for?

Comments on how Bradford University School of Management has been instrumental in developing forward thinking educational tie-ups with a UK leading business.

Now this would appear to be nothing new so why the interest?

Business and universities have worked together for years.  Indeed our own Executive Education offering has seen decades of successful collaborations.  What is new is how we are working with business to both capture and nurture good future talent at an early age.

We all know what’s happening in the world of higher education at the moment in terms of increased fees, potential job insecurity and question marks over the quality of today’s graduates.  At the School of Management we have a proud record of turning out exceptionally good business focused graduates but this is not necessarily the norm everywhere and employers are now starting to focus on getting the talent in prior to University.

Now, whilst all this is pertinent to today’s climate/environment, when I first started to think about the opportunities the credit crunch, let alone the recession, hadn’t even started. Yet, even in those good old days of financial security and growth what was really starting to occupy the minds of talent spotters in major organisations was that so many high potential graduates seemed to be focused on a career in financial services or consultancy, ignoring some of the traditional sectors which were, traditionally, and now could become again the bedrock of our economy.

So I developed an in-company degree. This was something different from traditional sandwich courses.  The degree would take three years, there would be a blend of in class, distance and work based learning, the degree could be achieved in around three years whilst the students also worked for the sponsoring organisation.  How could we do all this in three years? Not easy but doable. Scrap a couple of long summer vacations and suddenly whole blocks of time start to come free.  And this could become quite normal as education providers look to the possibilities of delivering a degree in two rather than three years.  So a BSc in Management and Business was developed and along came a forward thinking employer – Morrisons.  One of our big four supermarket chains, Morrisons has great plans for expansion. Unlike its competitors it is not only a retailer but Britain’s second largest food manufacturer as well.

Our degree is shortly to go into a second cohort and will hopefully has a long life ahead of it.  Students get the opportunity to earn while they learn with a guarantee of employment at the end.  In some ways it’s the best of both worlds but it requires hard work and application – something that itself is at the bedrock of the philosophy of Morrisons.

Is this the way forward in the future?  Yes and no.  Yes, more and more employers are going to look at getting the right talent early.  Also, the days of the promiscuous student (employment wise!) are past.  Careers for life might not be coming back but long term careers will be.  Those great opportunities of a year here and then a year there until when I decide what I want to do are no longer serious options.

So it’s very much a win win. But it’s not for everyone. Despite the increase in fees undergraduate demand will remain strong but not for everyone.  What we have done is something of a hybrid – appealing to people with an entrepreneurial and go getting spirit who also see the value of getting a degree and carving out a career in a major corporation.

Of course this isn’t very new at all.  Fellow students of mine were doing something similar with the services back in the 70s when I was at University.  Private organisations have taking somewhat longer to embrace the concept, but embracing it they most definitely are.

How do you measure the long term success of an MD?

PMThis post also appears as a guest article on the Chartered Management Institute’s blog.

I was recently asked by a potential client to provide some recommendations for the performance measurement by main board members of a newly appointed operating unit managing director.  It would be fairly simple, one would think, just get hold of some tough, hard-nosed measurement metrics and let the MD survive or fail accordingly!

However, as I looked back at my own board experience and further researched this whole subject area, it occurred to me that, whilst very important, the ‘tough’ metrics tell just part of the story.  If MD success is about developing sustainable rather than short term business performance, then there are many other ways to measure their success or potential.

Here are what I think are the four key types of measurement of MD performance and potential.

1. ‘Hard’ measurements of MD performance and potential

Let’s start with some of those ‘hard’ measurements- beloved by many board members, especially those with a typical FD background.  Here we can look at

–          typical measures such as return on capital invested, revenue and profit – often by product, service, employee, project, client or sector

–          service measures such as on time delivery and returns

These are fundamental but only tell part of the story. The increase or decrease in ‘hard’ metrics is likely to be in part down to the result of the management style of the MD.

2. ‘Soft’ measurements of MD performance and potential

With ‘soft’ measurements, we can start to understand the views of stakeholders. How do employees work as a team?  If they don’t, then success (if it exists) will be by its very nature short term.  A good MD will have satisfied employees so we need to look at labour turnover and absentee levels.  If both are high then again whatever the profitability, the long term prognosis will not be great.  And then what about the profile of the business?  Industry or service awards can be a good benchmark as is the reputation of the business within both the sector and the relevant community.

3. ‘Personal’ measurements of MD performance and potential

Just what sort of a leader is our MD (here we need to differentiate between leadership and management)?  How willing is the MD to develop his/her performance and, from the board’s perspective, is he or she following the personal development action plan – providing one has actually been laid down by the board in the first place?  Very importantly, is the MD’s relationship with the main board positive?  Is reporting clear and on time?  Does the MD’s style lend itself to the expectations of the main board?

4. ‘Strategic’ measurements of MD performance and potential

How has the MD delivered against strategic and operating plans developed and presented to the board?  How have these been represented in front of customers? Without customer satisfaction/retention the business is unlikely to go far.  This is where it’s not just a matter of making good profits – it’s a matter of making good profits though treating customers properly.  We also need to look at where the business is going in the future.  Is the MD performing well through constantly taking costs out of the business?  Or is the MD actively looking at innovating into new markets or with new products?  Does the MD encourage working with the future in mind?  And finally, does our MD actively contribute to the overall future direction of the company as well as his/her operating unit?

The trick is to bring all these measurements together in a coherent manner. There are helpful tools such as Kaplan and Norton’s Balanced Scorecard which links together financial performance, internal processes, customer satisfaction and learning and innovation.  It is also worth benchmarking against industry standards.  Within “our” industry what are the key standards we would expect from, for example, competitive MDs?  And how does our MD stand up against these?

So measuring performance of the MD is no simple matter.  Stick purely to the ‘hard’ metrics and the MD could become yet another top flight football manager – lauded because of good short term results but not really respected because the supporters were always bored watching defensive play and competitors can easily understand how to out flank the strategy.  One slip up and he has gone!  That is not what we want with our MD.