Perth Leadership Outcome Model

Perth Leadership Outcome Model

The Perth Leadership Outcome Model is a leadership model that aims to characterize leaders by the financial outcome of their leadership, as distinct from the two traditional leadership models of focusing on either the leader's personality or behavioral skills and business competencies. It was developed by Dr. E. Ted Prince over the period 2002-6.

Traditional Approaches

The traditional leadership models are based on either a personality or a behavioral/competency approach (Bass, 1990). The personality approach is rooted in the "Great Man" theories popular in the early 20th century. Research in this tradition sought to identify the personal qualities that distinguished leaders from followers or effective leaders from ineffective leaders. This tradition is operationalized in the modern era by the plethora of personality tools used in leadership research and practice. Popular examples include the Myers Briggs Type Indicator (MBTI),the Fundamental Interpersonal Relations Orientations-Behavior(FIRO-B), and assessment tools based on the Five-Factor Model of personality like the NEO PI-R or Hogan Personality Inventory (HPI). These personality measures are based on a standard psychological paradigm and were designed to show the level of interpersonal and social functioning of an individual. These instruments were designed by psychologists and were not primarily designed to be business leadership assessments—the business application only gained traction in later years. (An exception is the Hogan Leadership Forecast tools, which were designed to predict psychological functioning in the workplace).

The behavioral/competency approaches, by contrast, were designed specifically for use in business. They are focused on individual managerial competencies such as vision, execution, and perseverance. They usually measure from 60 to over 100 individual competencies. Their intellectual heritage is the intersection of vocational guidance—which aims to show how individuals will perform in a particular job function—and a political backlash to intelligence/ability testing—following former Harvard president and entrepreneur, David McClelland's classic article, "Testing for competence rather than intelligence." Neither of these arenas—guidance counseling, downplaying IQ—were intended for application with senior leaders, although the use of competency models has been extended to this area. Examples include the competency models offered by Lominger [] , , Hay-McBehr, Personnel Decisions International [] , and so on.


Financial Outcome

The Perth Leadership Outcome Model differs from these in that it focuses on what types of business outcome are associated with particular types of individuals and leaders. The model defines “outcome” in strictly financial terms. It links an individual’s inclinations with the type of financial objectives they are likely to pursue and in particular, the type of financial value and valuation outcome most will to occur as a result of their leadership.

This model therefore differs significantly from the traditional models in that it focuses specifically on the financial outcomes of individuals and organizations. The traditional personality and competency models do not have a specific goal of explaining a leader or organization's financial performance, as does the Perth Leadership Outcome Model.

Financial Signature®

The Perth Leadership Outcome Model (PLOM) identifies the concept of the financial traits of an individual, which it calls their “financial signature”. The financial signature describes an innate calculus, possessed by all individuals, that drives their behavior when they make judgments about situations involving risk and reward, cost and benefit. Each individual has a characteristic way of handling such situations. This particular way imposes a systematic but unconscious bias on all decisions which have financial impacts and ramifications. Knowing this the model predicts the types of financial decisions they make and therefore the financial impacts of their decision-making. From this it can predict their impact on financial performance, profitability and ultimately the financial value and market valuation of organizations they run. This analysis can be extended to the team and the organizational levels.

Financial mission

The PLOM states that individuals cannot change their financial signature because it is innate, or at the very least fixed for long periods of time. However they can change their financial mission, that is how they express their financial traits in their actual behavior. The extent to which an individual can change their financial mission compared with their financial signature varies significantly between individuals. Most will be able to change somewhat, while only a few will be able to make dramatic change. However if a critical mass of leaders in an organization change their financial mission even by a small amount, the organization may also change its financial performance and its market value.

Outcome assessments

The financial signature of an individual can be identified and measured using assessment instruments designed by the Perth Leadership Institute including the Financial Outcome Assessment. Other instruments show how a person can improve their financial mission and their leadership outcome (the Executive Outcome Assessment) and the financial signature and mission of an organization (the Corporate Financial Outcome Assessment).

Behavioral finance

PLOM represents a new approach in the areas of behavioral finance and behavioral economics. These two fields and their foundational assumption of economic irrationality are focused mainly on consumers, although the more recent approaches have extended this assumption to a limited class of executives involved in making investment decisions for their corporations. However the PLOM approach is focused mainly on the extension of this assumption of irrationality to all corporate executives and managers, even those who do not have corporate responsibility for financial decision-making.

Historical development

The PLOM model is unique in many ways. However, it is related to two intellectual precursors. The work by the great German sociologist, Max Weber, linked social and economic variables. This is reflected particularly in his seminal work “The Protestant Ethic and the Spirit of Capitalism”. However Weber did not go further to link behavior with economic outcomes at the corporate, as distinct from the social, level.

The other precursor is, again, the Harvard psychologist David McClelland. His work in the 1950s linked entrepreneurial behavior with the emergence of capitalist society. His great work ,“The Achieving Society,” identifies these links in societies from the Greek era to the present. However, although prescient, his work still did not model the structure of entrepreneurial and financial behavior at the level of the individual and does not show its relevance to corporate financial outcomes, again analyzing at the social, not the corporate, level. Although influential in its day, McClelland’s approach has not been extended and it has only been with the emergence of behavioral finance and economics that interest in this area has been revived. The PLOM research reflects this interest.


The work by the [ Perth Leadership Institute] is intriguing and innovative. It demonstrates statistically the link between financial signature and company financial outcome. However definitive validation has yet to be achieved and replicated by other researchers.

References and further reading

The strictly financial component of PLOM is set out in the book “The Three Financial Styles of Very Successful Leaders: Strategic Approaches to Growth Drivers of Every Company” published by McGraw Hill in 2005 by E. Ted Prince.

Other references are set out below.
* [ PLOM and Business Acumen]
*Prince, E. Ted "How to Make Human Resources More Relevant to Corporate Financial Objectives." Human Resource Management International Digest, Vol. 14 No 2, March 2006, pp 3-4.
*Prince, E. Ted The Three Financial Styles of Very Successful Leaders: Strategic Approaches to Identifying the Growth Drivers of Every Company, McGraw Hill, New York, August 2005.
*Prince, E. Ted "The Fiscal Behavior of CEOs" MIT Sloan Management Review, Spring 2005 vol. 46, no. 3, pp. 23-26.
*Kaiser, R, "Review of the Three Financial Styles of Very Successful Leaders", Personnel Psychology, Spring 2006, Volume 59, no. 1, p.233;jsessionid=g6M3cEo1Mmca7OKSjO
*Mihaela Popa Chraif, "Review of the Three Financial Styles of Very Successful Leaders", Europe's Journal of Psychology, February 2006,
*"The 3 Financial Styles of Very Successful Leaders", Business Book Review,
*International Leadership Association Newsletter, September 2005, p. 5. Newsletter/Sept2005Newsletter.pdf
*Harvard Business School Working Knowledge, November 7, 2005
*Bass, B. M. (1990). Bass and Stogdill’s handbook of leadership (3rd ed.) New York: Free Press.
*McCelland, D. C. (1973). Testing for competence rather than for intelligence. American Psychologist, 28, 1–14 .
*McClelland, D. C. (1961) The achieving society. Princeton: Van Nostrand.
*Schacter, H., "'Financial signature' defines a leader",, September 28, 2005 TPBusiness/General
*International Leadership Association, Interview with E. Ted Prince on the Three Financial Styles of Very Successful Leaders, September 28, 2005
* Business Journal, September 28, 2005
*Small, V. "What to Look for in an Effective Leader", Regent Recruitment Newsletter, vol. 6, Winter 2005
*Jacobs, M. "What is Your Financial Signature™". Catalyst Magazine, July, 2005,
*Institute of Executive Development, June 23, 2005, Interview with Dr. E. Ted Prince, "The Three Financial Styles of Very Successful Leaders".

Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Business acumen — is a concept pertaining to a person s knowledge and ability to make profitable business decisions. Originating within corporate learning and development circles, Charan, Ram. [http://www.strategy… …   Wikipedia

  • United Kingdom — a kingdom in NW Europe, consisting of Great Britain and Northern Ireland: formerly comprising Great Britain and Ireland 1801 1922. 58,610,182; 94,242 sq. mi. (244,100 sq. km). Cap.: London. Abbr.: U.K. Official name, United Kingdom of Great… …   Universalium

  • Nobel Prizes — ▪ 2009 Introduction Prize for Peace       The 2008 Nobel Prize for Peace was awarded to Martti Ahtisaari, former president (1994–2000) of Finland, for his work over more than 30 years in settling international disputes, many involving ethnic,… …   Universalium

  • History of the Puritans — The history of the Puritans can be traced back to the Vestments Controversy in the reign of Edward VI ending in a decline in the mid 1700s. Background, to 1559 The English Reformation, begun his reign in the reign of Henry VIII of England, was… …   Wikipedia

  • education — /ej oo kay sheuhn/, n. 1. the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life. 2. the act or process of… …   Universalium

  • Australia — /aw strayl yeuh/, n. 1. a continent SE of Asia, between the Indian and the Pacific oceans. 18,438,824; 2,948,366 sq. mi. (7,636,270 sq. km). 2. Commonwealth of, a member of the Commonwealth of Nations, consisting of the federated states and… …   Universalium

  • ZIONISM — This article is arranged according to the following outline: the word and its meaning forerunners ḤIBBAT ZION ROOTS OF ḤIBBAT ZION background to the emergence of the movement the beginnings of the movement PINSKER S AUTOEMANCIPATION settlement… …   Encyclopedia of Judaism

  • performing arts — arts or skills that require public performance, as acting, singing, or dancing. [1945 50] * * * ▪ 2009 Introduction Music Classical.       The last vestiges of the Cold War seemed to thaw for a moment on Feb. 26, 2008, when the unfamiliar strains …   Universalium

  • EDUCATION, JEWISH — This entry is arranged according to the following outline. Bibliography at the end of a section is indicated by (†). in the biblical period the nature of the sources historical survey the patriarchal period and the settlement the kingdom the… …   Encyclopedia of Judaism

  • cricket — cricket1 cricketlike, adj. /krik it/, n. 1. any of several jumping, orthopterous insects of the family Gryllidae, characterized by long antennae and stridulating organs on the forewings of the male, as one of the species commonly found in… …   Universalium