Organizational Alignment

Organizing for execution

The most important success factor is the management team cohesiveness. Senior managers have to, not only appear to be, but actually be a seamless unit, where trust is implicit. The smallest fracture in communications, the tiniest hole in the story, and the most minuscule derogatory comment amongst senior managers will be perceived as a rift, an abyss, and a political war by employees, and will give serious hold to the passive resistance. Casts in this light, Collin’s “First who, then what” takes it full meaning.

In addition to the management team cohesiveness, it is important to reemphasize that strategy execution is doomed to failure if the organizational power and influence structure are not aligned with the strategies. The second step in Kotter’s model⁽¹⁰⁾ is the creation of a Guiding Coalition. We find the term weak. We favor the creation of Change Coalition where change agents, at all levels of the organization, are active in making change happens and institutionalized. In addition, clear responsibility and accountability must exist for each key strategy. As basic as it sounds, managers need to know, not only what they are supposed to do, but also who else is responsible for portions of the strategies. For example, if one of your key strategies is to leverage alliances to achieve success, then there should a senior officer responsible for alliances, with clear execution metrics that align both with the long-term vision’s strategic elements, we discussed earlier, and with the annual business plans. All other managers need to understand the role of the Alliance Executive so to derive clarity on who is supposed to do what, by when.

Executives and managers depend on one another for the whole picture to come together, if one fails to deliver, all will be impacted. Holding colleagues accountable requires the right kind of alignment across a whole spectrum of relationships, inside and outside the organization. The magic occurs when an organization has been able to build a strong, cohesive management team with a culture of mutual accountability. The mixture of cohesiveness and accountability will ensure that problems will surface and the team will be in a position to refocus their efforts in order to assist a part of the organization that is dragging down the team.

Execution through Performance management

A performance system must reinforce strategic and short-term objectives. Individual and group rewards are an important aspect of strategy execution because they control performance with respect to the desired strategic and short-term outcomes. Therefore, conscious efforts is needed, in building the compensation and incentive systems, in order to create the so important alignment between executives, managers and employees; with the right mix of personal and corporate goals and incentives; ensuring that all will prioritize the better good of the organization over their own. The mix will vary depending on the development stage of the organization.

A proper performance system helps employees understand what is important, how tasks are to be measured, and how those tasks affect the overall business performance. It is an effective tool for aligning management and employees as they seek to attain targeted goals. It should help management go from strategies to execution, to day-to-day actions. It should make the organization’s strategies very visible throughout the whole organization. In order to do all of that, the performance management system should be simple, transparent, uniform, coherent and consistent.

Although it is true that if you have the right executive on the bus, they will spend all their energy doing the right things, regardless of their compensation, non-the-less the compensation or incentive system is there to reward doers, achievers. The purpose of the compensation system is not to get the proper behavior from the wrong people, but to get and keep the right people on the bus.

In addition, incentive plans well aligned with long-term strategic elements, and short-term annual plans are a key component of accountability. The reward system should be highly swayed towards achieving performance, particularly good money performance, linked to long-term strategic goals and short-term annual plan objectives.

Incentives and control go hand-in-hand; they are the two sides of the same coin. An organization cannot promise incentives if it cannot measure achievements against certain defined metrics. By implementing metrics to measure achievements, you are:

Providing feedback or information about performance against execution objectives;
Reinforcing execution methods and decisions;
Providing a corrective mechanism to keep the execution process on track; and
Allowing organizational learning to facilitate change and organizational adoption.

Many tools can be used to create the alignment between the long-term and short-term goals and compensation: Management-by-objectives programs, Balanced score card or Enterprise management systems. In all cases, objectives have to carry some specific characteristics. A simple acronym used to set objectives is called SMART objectives. SMART stands for:

Specific – The objectives should specify in a language that is clear, simple and unequivocal what is to be achieved.
Measurable – The objective is to be measurable and the metrics to measure the objective have to be collectable by the organization.
Achievable – The objective musty be achievable and attainable.
Realistic – Although objectives can be stretch goals, they must be possible with the resources at hand and without dependency on luck.
Time bound – The objective has to be met in a particular time window.

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:

The Learning and Growth Perspective;
The Business Process Perspective;
The Customer Perspective; and
The Financial Perspective.

Some functions are more difficult to measure than others are, but even at that, one as to question why the functions exist. So ask three questions. What would happen if this function would not exist? How would you compare two identical departments and tell which is better? How would your customers (internal or external) evaluate the services? The answers to these questions will help document the metrics by which the function can be measured.

You should not solely focus on individual performance management, but pay equal attention to and reward team performance and cooperation performance. Although this sounds evident, it is far from easy to accomplish. A great deal of time and care must be allocated to defining the performance system and the associated reward system.

Performance Appraisal, and the feedback it provides, is critical aspect of execution. Yet, it is one of the most dreaded organizational processes, as it is generally painted with negative outcomes. It is far more effective to replace the traditional performance appraisal process with a personnel development planning process. Although both serve the same purpose of identifying areas of improvement in personnel performance, the name is more than a semantic make-up, Personnel development planning is orientated towards making thing work out. In addition, managers should:

Negotiate objectives for use in development planning;
Avoid all-or-nothing objectives;
Demand brutal honesty from subordinates when it comes to define areas of improvement; and
Reward performers.

As a Wells Fargo executive once said, the best way to help doers, people that deliver, is not to burden them with people who are not. It is never pleasant to make a people change, and waiting will not make it more pleasant for either party. When you know a change is needed, then act. Waiting is in fact putting at risk the right people, the doers, who have to compensate for the inadequacies of the wrong people, which in the end can drive them away.

Again, many tools exist to implement performance management systems that deliver as objective as possible improvement analysis: 360-degree reviews, …

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Published at 20:01

11 March 2011