Patrick Lencioni

Every responsible CEO looks for indicators that will help identify potential problems in his or her business. Most prefer data-driven metrics because they provide objective evidence of a coming trend or poten­tial problem. A spike in inventory is a reliable indicator of an imminent sales decline. A drop in Net Promoter Score signals trouble with customer loyalty. As reliable as those metrics are, by the time they appear in a CEO’s dash­board, the problem may be too far along to prevent. The best indicators are those that provide the earliest warnings possible. For instance, one of the best early predictors of a finan­cial downturn is employee morale. One company I’ve worked with is famous for industry-leading financial results and employee satisfaction. During a semi-annual employee survey, they noticed a slight dip in a particular area of the survey. Employee con­fidence dropped from “extraordinarily high” to “not-quite-as-extraordinary-but-still-light-years-ahead-of-most-competitors,” which would have left most executives resting easy or even continuing to boast about the result. The executives at this company mildly freaked out. They looked under the covers and discovered some serious and looming trends that were about to impact customers. They are now taking steps to address them, hoping that the problems haven’t already taken root in the culture. Had they dismissed the barely pink flags in the employee survey, those problems would be growing still. This all begs the question, what is the best leading indicator for a CEO who wants to identify problems as early as possible? The answer is as esoteric as it is hard to measure: joy. When employees begin to lose their sense of joy in the work they do, trouble is coming even if that trouble seems far off on the hori­zon. But what exactly is joy? Joy is the root word of enjoyment, which is a little more tangible and observable than joy itself. When people enjoy their work, not the idea of that work but the day-to-day experi­ence of doing it, the likelihood of success is exponentially higher. It is no surprise that the airline and the fast-food chain with the most enthusiastic and joyful employees have the best financial performance in their industries. Those employees aren’t joyful because their company is making more money; their companies make more money because their employees are joyful. As it turns out, most customers want to work with people who are glad to be doing their jobs. So it is reasonable to assume that a decrease in enjoyment would signal a coming decline in performance. So, how can a CEO assess the joy within an organization? I wish there was a reliable metric, but there’s not. Yes, there are employee surveys. But by the time data comes in, the problem may be so far along that it requires invasive surgery rather than preventive care. What CEOs can do is observe and interact with good people at all levels of the organiza­tion, looking for early signs of frustration or resignation. One CEO I recently met runs an international, well-respected medical com­plex. He likes to go to his hospitals, often in the middle of the night during swing shifts, to interact with employees who won’t recognize him, to see their day-to-day experiences. At my firm, The Table Group, I try to sit back and observe my colleagues to see if they are smiling and laughing while doing the most ordinary parts of their jobs, or whether they seem to be dreading them. It’s not scientific, I know, but neither is it disconnected from reality. The best CEOs trust that they can do this. They’ve seen the early signs of morale problems in the past and regretted not acting on their hunches that something was wrong. It’s not that they will stop doing employee surveys and other data-driven indicators to rely completely on intuition. That would be ridiculous—but they understand that the job of a CEO is to tap into his or her intuition and experience to identify problems before any meter on their dashboard turns red. And the best CEOs will actually find joy in doing that.

There is only one place you can effectively evaluate a CEO, says Patrick Lencioni: In a conference room having a meeting with his or her executive team.

A deep dive into the sausage-making at any company reveals a fundamental truth: human behavior is as critical to success as smart strategy.

There are three biases, mental blocks, that prevent leaders from taking advantage of revolutionary opportunities that are readily available.