Driving Team Performance with E=MC²
In this episode of A Look Into the Future, Paul Latham from Hayden Rock Solutions discusses a simple formula to improve team performance in accounting firms: E=MC². By focusing on engagement, mission, communication, and compensation, Paul provides a framework that firms can implement to boost productivity and create a cohesive, motivated team.
E=MC²: A Formula for Team Engagement
Paul begins by explaining that E=MC² serves as a foundation for team performance, where “E” represents engagement, and “M” and “C²” represent mission, communication, and compensation. This formula addresses common challenges faced by firms, especially those struggling to align team members with firm goals.
Engagement as the Core of Team Performance
Engagement is crucial, as it directly impacts productivity. Studies show that most businesses operate with teams that are only about 66% effective, whereas world-class firms achieve around 80% effectiveness. This 14% difference may seem small, but it can equate to significant lost profits, roughly $130,000 per million of payroll. By focusing on engagement, firms can close this gap and improve financial outcomes.
Mission: Creating Purpose and Shared Values
Paul explains that having a clear mission or purpose gives team members a sense of belonging and motivation. The mission should resonate with employees and reinforce the firm’s values. He shares an example from Hayden Rock, where the mission is to help members maximize their potential as proactive advisors. A shared purpose across the organization strengthens team commitment.
To keep the mission alive, it must be reinforced regularly—not just written down once and forgotten. Paul suggests structural reinforcement through regular updates and activities that remind the team of their purpose, such as “States of the Nation” meetings held three times a year.
Examples of Reinforcing Mission
- States of the Nation Updates – Regular updates for team members, where leadership shares achievements, challenges, and new initiatives in small group settings.
- Ringing the Bell – Celebrating wins by “ringing the bell” whenever a new, ideal client is signed or a challenging client is removed.
- Opportunities for Improvements (OFI) – An open suggestion system where team members can contribute ideas for improvement, promoting a culture of continuous development.
Compensation: Building a Reward Structure
Compensation is essential but not the sole motivator. Paul emphasizes the need for a structured rewards system that addresses different levels of ambition within the team. There are three types of team members:
- Job Seekers – Employees who want fair compensation for a fair day’s work.
- Career Climbers – Ambitious employees seeking advancement and growth.
- Owners – Highly committed individuals willing to take risks for greater rewards, often aiming to become business owners or partners.
A structured approach to rewards acknowledges these differences and motivates each team member according to their career goals.
Communication: The Power of Cheering
Paul refers to communication as “cheering,” emphasizing its role in team morale. He compares it to fans cheering at a sports game—effective communication should be constant, not reserved for big wins. Regular communication, such as one-on-one feedback and team meetings, helps avoid the “vacuum” effect where employees feel disconnected.
Levels of Leadership and Team Accountability
In fostering team communication, Paul highlights the importance of cultivating level three leadership across the firm, where team members not only identify problems but also bring solutions. This culture of accountability empowers employees and strengthens team cohesion.
Conclusion: Building a High-Performance Team with E=MC²
By implementing the E=MC² framework—engagement, mission, communication, and compensation—firms can build a more productive, engaged team. Through structured rewards, purpose-driven missions, and constant communication, accounting firms can create a work environment that motivates and retains talent, setting the stage for long-term success.
