Are You Holding Employees Accountable?

Are You Holding Employees Accountable?

How many times have you tried to implement what seems like the perfect strategy only to fail because you can’t seem to get your employees to make it happen? Oftentimes the success of a strategy execution or performance management system hinges on whether leaders can create a culture of accountability in their organization.

Dr. J. Ed Barnes summarizes two approaches to accountability below. Even though the lists, taken together, read like a simple management 101 reference, I have found that many accomplished leaders and mangers are simply not very good at many of these key skills. The punitive approach is an instructive straw man for how NOT to approach accountability, while the second list outlines basic motivational methods for creating accountability.

 We’ve also created a simple assessment based on the above lists that anyone can use to assess how well your organization is at creating a culture of accountability. Any leader or manager can assess his/her performance by simply reviewing the statement and assigning a score between 1 and 10, with 1 being low.

If you scored yourself low on the formulation or communications of goals and expectations, you might investigate our Balanced Scorecard Professional program. If measuring success or reporting progress is a challenge, you might consider our KPI Professional program. If you score yourself low across the board, you might consider our Strategic Leadership course.

 

 

Which Tax Change Means Reassessing YOUR Strategy?

Which Tax Change Means Reassessing YOUR Strategy?

Tim Johnson noted in his recent strategic planning article that 85% of Fortune 500 companies from 1955 no longer exist today. This is because they failed to keep up with a changing world. The assumptions upon which they based their strategy on were no longer valid due to a change related to either market demands, customer needs, or technology. If your organization wants to avoid a similar failure, it is critical that you periodically evaluate the strategic environment that you work in and make sure that your strategy is not based on similarly invalid assumptions.

The new tax law that was passed in December 2017 in the U.S. offers an example of a change that could possibly disrupt a key assumption you might have made when you developed your strategy. While most organizations will not make any major changes in this case, it still helps demonstrate the types of strategic questions that you might be asking yourself if you work in certain sectors.

Do you work in the non-profit sector? Since the standard deduction has been raised significantly, some fear that there be a decline in charitable donations. This aggravates the problem that has arisen with the generational change happening across our society, where those who have been the strongest donors in the past are aging and passing on to a new generation that likes to give in different ways. The strategic question you may ask is, where can we make up for projected shortfalls in revenue? How must our contribution mix be changed in the future?

Do you sell luxury goods? One accountant I spoke with who had done a year-by-year comparison said that clients that make more than $750k per year were getting quite a windfall, while the middle brackets were coming out close to even. Another friend I know who does million-dollar home remodeling said that he as already seen an uptick in business. The strategic question here is, how can we tap into the increase in capital available across certain industries?

Do you work in, or sell to, the Federal government sector? Non-defense spending is down for multiple reasons already – a huge reduction in revenues will likely only reinforce this trend. The strategic questions might be how can we increase our efficiency or improve our quality to reduce our cost structure? Or should we refocus on different sectors?

Are you an accountant or a tax lawyer? At least in the short term, some folks can plan for a big boost in business as they help everyone figure out what to do. The strategic questions here are, where are the biggest targets of opportunity? How can we align our services and branding to align to these changing market conditions?

Is your business connected to divorce, education, or the moving industry? Do you sell meals and entertainment to corporations? Do you sell depreciable property? Specific issues have been highlighted in the news that could affect very specific industries: alimony deduction rules have changed; 529 College Savings Plan’s can now be used for education other than just colleges; moving expenses are no longer deductible; rules for corporate meals / entertainment expenses and deductions for depreciable property changed significantly. Any of these changes could have an impact on certain organizations. In all these cases, the strategic questions revolve around, how can we succeed considering these changes?

Are you an architect or engineer? You’ll need a team of certified tax lawyers to help you decipher the new pass-through portion of the law, but I’ve already heard of organizations trying to add engineering services to their product line to gain certain tax advantages. Maybe this opens the door for partnering opportunities, or maybe a new consulting service offering to help organizations navigate in a new market place for them?

The point of this blog is not to educate you on the new tax law, as this is just a few highlights of the change. The point is that you might need to reassess your strategy depending on your organization and the assumptions on which you have based your strategic priorities. If any of the considerations listed above are relevant for your organization, I’d recommend you talk to a tax lawyer about the details and then consider what changes might be needed. There might be implications for some of the KPI targets you have set as you emphasize one strategy over another. There might be initiatives that need to be added or removed from your priority list. In some rare cases, there might be reason to refocus your efforts on a different strategy altogether. The key is that you continuously assess your strategic environment to see if any of the assumptions that were made to formulate strategy have changed, as you don’t ever want to be one of those organizations that gets left behind by a changing world.

Why “World Class” Performance Isn’t Measurable

Why “World Class” Performance Isn’t Measurable

Let’s say our organization needs to buy a fleet of vehicles and we have two procurement teams. We tell team 1 that we want quiet, blue, four-door, fuel-efficient cars. We tell team 2 that we want world-class, high-quality, great-value, high-performing cars. Then we give both teams a few weeks to find their vehicles. Guess which team will be able to produce measurable results? Team 1 will have the easier time, as it is clearer what is meant by the criteria provided. Team 2 will struggle because their criteria are too ambiguous. Without further clarifications, “world-class” could be interpreted to mean a hot rod sports car, a luxury sedan, or even a nice SUV. And if the team cannot agree on the specifically desired result, how can it measure success? This example demonstrates an important principle of good measure design. Before you can design a measure, you first must agree on what result you are trying to achieve. And not all results are created equal. Results written in abstract language are less measurable and harder to implement than those written in concrete language. Abstract language refers to concepts or vague ideals. Examples of abstract words or phrases include sustainable, innovative, reliable, leadership, quality, effective, leverage, efficient, resilient, optimized, or responsive. Strategic plans are often littered with this type of language, as we aim to deliver best practices, thought leadership or world-class performance. These “weasel words”, as they are often called, are notoriously hard to measure without first translating into concrete terms. Concrete language is sensory-specific, meaning it describes things you can see, hear, smell, taste, or feel. Because they are observable, concrete results are measurable. Team 1 will have no problem determining the percentage of cars procured that meet their specifications. Concrete results are also more memorable and easier to implement. So if you are struggling to design measures for your organization, your first step should be to clarify what result you are trying to achieve, in concrete terms. To learn more about developing concrete results or related measures, please look into one of our KPI training or certification programs or visit kpi.org.

Types of KPIs: The Logic Model and Beyond

As part of the KPI Basics series of content we are developing as part of the launch of the KPI.org website, I thought I would introduce the different types of key performance indicators (KPIs). As I describe in the accompanying video, like to use a framework called the Logic Model to describe the first four types. The Logic Model is a framework that is helpful for differentiating what we produce from what we can only influence. It is also helpful for separating between elements that are more operational versus those that are more strategic in nature. For every key process, we spend resources like time, money, raw materials and other inputs. Then every process has measurements that could be tied to that particular process. The outputs of my process are what we produce. Ultimately though, I want to create an impact with my work. Outcomes capture that impact. Let’s look at some examples of these types of measurements in real life. If I am a coffee maker, my Input measurements might focus on the coffee, the water, or my time invested. My Process measures could have anything to do with the process of making coffee, from the efficiency to the procedural consistency. The outputs of my process would be the coffee itself. I could have a variety of measures around the quality of my coffee output. Finally, my outcome measures would be related to things I can only influence, such as if my audience enjoys or buys the coffee. There is certainly more value in measuring impact than there is operations. If my customer enjoys the coffee I am doing something right. But you really do need a mix of both to truly understand performance. To fully understand all of the elements of strategy execution, I can then add a few other broad categories of measures to my story. Project measures monitor the progress of our improvement initiatives and projects and can be designed to improve operations or strategic impact. These track things like scope, resources, deliverables or project risk. In my coffee example, I might have a new branding campaign to sell my coffee. Employee measures tell us if employees are performing well or have the right skills and capabilities needed. I might measure my employees’ skills in making coffee, for instance. Finally, risk measures tell us if there has been an important change in a risk factor that could have a significant impact on our organization. For example, I might have a risk indicator that tells me if global coffee bean availability becomes a problem. The information that these different types of measures provide can be used to inform decision making. Using a family of measure like this can broadly inform your entire strategy. To learn more about Key Performance Indicator development and implementation, please look into one of our KPI training or certification programs or visit kpi.org.
How to Keep Lettuce Crunchy and Other Strategy Execution Lessons

How to Keep Lettuce Crunchy and Other Strategy Execution Lessons

I learned two lessons in college that I still think about – one in the kitchen and one as a strategy execution consultant. My professor claimed during a cell biology lesson that if you leave iceberg lettuce in water for about 20 minutes its cells expand as they soak up the water. He said that many chefs knew that soaking lettuce in cold water made it seem fresher and crunchier but few understood that it was because the cells were packed to the bursting point. I went home for the holidays eager to share this new lesson with my mother. This is where I learned the consulting lesson. My mother had been taught that in order to keep salad crisp, you should throw a slice of bread into the salad as you are making it and then pull the bread out just before serving. The thinking was that the bread soaked up the excess moisture that would otherwise lead to wilting. When I shared my professor’s theory with her, I assumed that we would immediately begin saving a nickel per month due to all that saved bread. Instead I was surprised to find that my mother was not about to change the way she made salad because of something her son’s biology professor said, not even after I showed her that the lettuce didn’t wilt. Strategy execution is about transformation. It is about the systematic implementation of the changes needed to move an organization forward. Unfortunately, as you try to convince people to change the way they do things, many of them react exactly like my mother did. The change management field is built around several general principles in how to manage people through change: thoroughly communicate how/why/what change is happening, look for the “what’s-in-it-for-me” for employees, communicate using two-way dialog, remove barriers to change, celebrate success, describe a “burning platform”, etc. Strategy execution specialists bring a few more key approaches to these basic doctrines. Engage Around the Big Picture. A simple business case (e.g. this initiative will help us improve process efficiency and lower operating costs) often isn’t enough. To embrace change it helps to understand how a particular initiative is aligned with the overall strategy of the organization (e.g. we want to bring low cost healthcare solutions to those suffering from an ailment. If we can improve this process, the solution could be better, more consistent, and cheaper than anyone else in the market). Employees will be far more motivated to change if they believe in the strategy. Strategy professionals typically have the skills needed to articulate and communicate that story. Make Strategy Everyone’s Job. Strategy is a team sport. Too many strategy professionals think that because they are good at it they should do all of the work themselves. But good strategy execution relies on others to implement. I can tell my mother that this is a better way or (if she were an employee) order her to follow a new process, but as long as she can dismiss the idea as an outsider’s, change will be painful. Good strategy execution professionals understand that their job is to facilitate a consensus around a shared vision rather than simply dream up a vision in a vacuum. Pick Your Battles. Strategy is about focus and strategic thinkers should be good at prioritizing. The worst thing you can do is overwhelm employees with dozens of major changes at the same time and then when things go badly decide that it’s not worth the trouble. Better is to pick the most important changes and implement them at a pace that the organization can handle. Then think through and communicate the timeline, action steps, and resource changes that will happen as the change is rolled out. Facilitate a Sense of Inevitability. The weakest client outcomes in my career happened when there was uncertainty about whether or not the senior-most executives were on board. A well-meaning strategic planning director that isn’t visibly supported by the executive team will struggle to move an organization forward even if they do everything else right. On the other hand, if the executive team has thoroughly and repeatedly communicated that this change is going to happen with or without you, the inertia of inevitability will convince people to jump on the bandwagon even if other change management mistakes are made.
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