This White Paper shows that current leadership assessment approaches have not kept pace with modern theories of the firm and modern financial approaches. It argues that any leadership assessment approach that does not directly show how an executive's or manager's behavior is linked to the creation and enhancement of shareholder value is largely unrelated to the needs of practicing executives and managers.
The paper argues that any leadership theory must be based on a model of financial outcome for it to be successful and relevant. The theory must link leader manager financial impact and company outcome with standard company financial metrics. In particular the theory must link directly with valuation outcomes for the company. Only by so doing can it be relevant to a company which has as its aim the creation and enhancement of shareholder value.
The Perth Leadership Outcome Model is a financial outcome-based leadership model that integrates all of the elements outlined above. It is capable of predicting company financial outcomes and valuation trajectories from an understanding of the innate financial traits of managers and management teams. The model shows the strategies that managers need to implement to improve their own financial performance and valuation impact. It shows how managers and leaders need to change so as to improve shareholder value. It thus provides guidance that is of practical relevance to a manager or senior executive in running an organization.