Tag: alignment

Goals of an Integrated Planning and Control System

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The proliferation of planning and control systems has led to a large number of goals.  Fortunately, they can be consolidated and categorized to facilitate the development of an understandable consolidated system.  The essential goals are eternal, but the growing complexities of the business environment and processes have increased the number of goals worth monitoring.  On the planning side, firms need to prioritize, clarify, align, communicate and prepare. 

In spite of the countervailing winds of entrepreneurship and empowerment, in a dynamic world with greater value at stake, firms need to set key priorities at the top for direction, values, strategies, investments, projects, critical success factors and key performance indicators.  Without them, even in the best conditions, managers and staff will ineffectively make decisions “as well as they can”.  Clear priorities and expectations can significantly reduce the zero-sum game of internal politics.  Senior management needs to proactively clarify the priorities, trade-offs and commitments made to all stakeholders, including investors, customers, suppliers and internal departments. 

A well-designed strategic plan and its related structures effectively align the decentralized, specialized, outsourced, matrixed and virtual resources of today’s firm.  Intentions, decisions, opportunities, authorities and best practices are clearly communicated.  The well-defined expected and desired future state allows individual functions to optimize within their frameworks.  Long-term commitments are made and managed, allowing business units and functions to flex within the context and pursue immediate opportunities.  Commitments are made at every level at the right time, with confidence.  Scarce resources are devoted to priority objectives and secondary projects consume no resources.

An effective planning process prepares the firm to face the unknown.  Participants at all levels have devoted time to organization level thinking about direction, situation, gaps and solutions.  If simulations, sensitivity analysis and emergency preparedness work has been done, some level of preplanned formal responses and tools has been defined, providing a base and confidence for managing the challenges that were not expected.

On the controls side, the system needs to deliver results while managing assets and risks.

“What gets measured gets done”.  Objectives that are measured and reported receive priority management and staff attention.  Today’s digital dashboards expand the number of goals to be pursued and more clearly communicate their status to everyone in real-time.  This greatly increases the motivation by staff to improve their real performance (and sometimes beat the system).  The quality revolution attempts to move this feedback loop to a higher level, with staff understanding customer needs, defining their own goals, measuring performance and developing quantum leap improvements to serve easily understood definitions of success.

The accounting staff has always been charged with safeguarding the firm’s assets.  In the analog world, this was straightforward.  Today, it requires a deeper understanding of intangible assets such as patents, supplier relations and brand value.  In spite of the loss of firm loyalty, it is apparent today that employees are the most valuable assets for most firms.  Employees need to feel valued for their skills and contributions, and be given opportunities to build their skills and apply their talents.  The human resources management system (job descriptions, evaluations, compensation) needs to be effectively integrated into the overall planning system.  An effective process system also builds the knowledge management value of the firm by documenting processes, accumulating knowledge and improving the rate of knowledge transfer through training and sharing.

In the post-Enron, Sarbanes-Oxley informed world, risk management has become an important board level topic (because board members have new responsibilities).  Developing basic and advanced internal controls to prevent and detect theft is a classic controller responsibility.  Administrative policies and procedures have long been used in large and small firms to increase the degree of compliance with management’s expectations by managers and staff.  Most firms have been subject to some level of regulatory oversight, audit and compliance.  All firms have reported financial results to external stakeholders within generally accepted accounting practices and tax laws.  Firms have always thought about the risks of natural disasters, but today’s decentralized and electronically supported worlds require much more attention to a variety of 10%, 1% and 0.1% risks.  Firms have used insurance policies for basic risks for centuries, but today they must evaluate and guard against a much wider variety and degree of business risks.  Finally, complex and decentralized firms are subject to Murphy’s Law and the role of the weakest link.  The sheer number and impact of risks has caused them to make openness and transparency a top value.

An integrated planning and control system needs to address all of these goals.  Planning must prioritize, clarify, align, communicate and prepare.  Reporting must deliver results while managing assets and risks.

Role of Corporate Culture

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In the years since World War II, the organizational environment has changed from
 one of static, mechanical efficiency optimization to another of dynamic, organic,
 effectiveness evolution.  Global competition, innovation and limited resources in the
 face of a growing and wealthier world population have lead to non-stop, disruptive
 change in all industries.  This change is accelerating, impacting all organizations
 which now need to improve their activities or face extinction.  
 
 In addition to competitive industry threats, organizations must compete for highly
 qualified staff as never before. The increased requirements for success mean that
 there are more organizations pursuing a limited number of high potential employees. 
 Increased organizational demands for mastery level skills, flexibility, innovation,
 accountability, teamwork, tolerance, self-control, service, self-motivation and loyalty
 have outstripped the ability of labor markets to provide these new versions of the ideal
 employee.  Organizations with the greatest needs and resources are providing
 compensation and work environments to attract, motivate and retain these
 individuals.
 
 There is a growing consensus by thought leaders  that  success requires:
 
 A. Innovation
 
 The ability to digest changes by staff members at all levels and functions.
 The ability for all staff to innovate and apply innovations made elsewhere.
 A customer focus that shapes decisions and relations that first meet external needs.
 
 B. Best Human Resources
 
 Access to the very best human resources at all levels and functions (inside, outside)
 A work environment that is attractive to the very best human resources.
 Cost-effective recruiting/retention of high value employees, contractors,  suppliers.
 Staff members whose value-added assets and results grow by 5% annually.
 Embracing diverse talents, perspectives and cultures in decisions and practices.
 
 C. Cost-Effective Use of Resources
 
 Best use of all resources by matching talents and experience to needs.
 Best use of resources through developmental delegation focused on results.
 Best use of leadership, management and professional roles.
 Synergy from combining complementary talents to produce breakthrough results.
 
 D. Alignment Within Complex Systems
 
 Engaged, self-motivated staff with a minimum of management overhead costs.
 Shared accountability, reducing the need for oversight and measurements. 
 Complex processes that connect many individuals, departments or organizations.
 Systems that motivate achievement, rather than attempt to control behavior.
 Less detailed planning/forecasting, with more capacity for adapting to situations.
 Commitment to a team, organization or mission that motivates personal effort.
 Alignment of global supply chains, without fully integrated planning systems.
 Elimination of waste, duplication and conflict through coordination mechanisms.
 
 Overall Strategies
 
 Organizations that are able to evolve and adapt in a challenging competitive
 environment must have several complementary overall strategies, including:
 
 Effective Strategic Plans … 
 … clearly defining direction, evaluating situations and choosing priority actions.
 Human Resources … 
  … attracted, engaged and motivated by a true commitment to win-win results.
 Leadership … 
 … to set direction, coordinate plans, engage staff, serve customers and inspire.
 Resources … 
 … financial, supplier, brand, processes, patents, intangible and tangible assets.
 Performance Management Systems …
 … planning, reporting and improving systems.
 Culture … 
 … a set of values/expectations that create alignment and motivate optimal results.
 
 Culture
 
 A well-defined organizational culture honestly reflects the expectations of staff
 members for each other and for the organization as a whole.  A set of values defines
 what is expected in terms of behaviors and habits, and what is deemed
 unacceptable behavior.  These values are consistent with the organization’s history,
 customers, experience, strategy and institutional features.  A well-defined culture is
 internally consistent.  It captures the history and expectations of the organization.
 
 An effective organizational culture supports the drivers of success.  It promotes
 innovation and change management.  It values and rewards high performers.  It
 embraces cost-effective practices, especially in terms of delegation which
 empowers strong employees.  Finally, it honors accountability and promotes the
 ability and commitment of staff members to create alignment as an intrinsic part of
 their daily work.
 
 In the end, an organizational culture serves to make explicit the bargain between
 employee and organization in a challenging environment.  Organizations are
 modifying the way they do business to attract, engage, motivate and empower
 individuals who can create the most value.  In return for a commitment to the
 organization and the benefit of their services, employees are provided with an
 environment that maximizes their personal growth, rewards and market value.  
 
 Different organizations select different individual values to define the essence of their
 ideal or preferred cultures. Taken as a collection of values, they clearly provide an
 answer to the question, “what is it like to work at …?” The values represent ideals,
 both of staff and organizational attainment.  They describe what employees want to
 be like, what they aspire to show at their best.  Organizations can slowly change their
 values if they find that the existing set is inadequate to meet the needs for survival. 
 This is a slow process, requiring very significant investment in selecting, defining,
 complementing and implementing.
 
 As an ideal system that coordinates and controls behavior, cultures and values in
 organizations are like those in other social institutions: families, churches,
 communities and clubs.  They are effective only when the members believe in them. 
 This means that leaders are held to a high standard.  It means that trust is essential. 
 It means that individuals must have personal relations with others and that emotions
 matter.  Inconsistent messages or behavior can rapidly undermine commitment. 
 Like an emotional bank account, organizational values can be a reservoir of goodwill
 or an overdrawn checking account.  Directors, management and staff are required to
 hold each other accountable or the values and culture can quickly become
 worthless.
 
 In addition to setting an example in their personal behavior and creating an
 environment of trust, senior managers are responsible for ensuring that
 complementary policies, procedures, processes and plans are consistent with the
 organization’s values.  The primary focus is on human resources systems for
 recruiting, performance management, training, advancement and benefits.  Systems
 for planning, measurement and control are equally important.  Managers must also
 commit to enhanced communication to ensure that consistency is understood or
 inconsistencies addressed.  In addition, managers must operate consistently,
 holding all to the same standards. Managers must develop open, constructive
 relationships with their bosses, peers and staff which allow for constructive
 communication to address situations that appear to challenge the organization’s
 values.
 
 Summary
 
 The demands on organizations are greater today than ever before.  Organizations are
 concluding that global competition, innovation and competition for the best staff will
 continue.  To survive in this environment, they are adjusting their structures to
 promote innovation, best human resources, cost-effective use of resources and
 alignment within complex systems.  A key strategy is to define a set of values which
 comprise the organization’s culture and expectations.  By formally defining their ideal
 values and committing the organization to operating in accord with these values, they
 are seeking to attract, engage and retain the best employees, who are then motivated
 and aligned to produce the greatest results for the organization.  This organizational
 effectiveness strategy is being adopted and refined in all industries with increasing
 success.  It is not the easiest strategy, but it promises the greatest individual and
 organizational rewards to those who can commit to living up to the high standards of
 an ideal culture.

ROI on Personality Styles

tomkapostasyLeave a comment

In a world of non-stop change, financial managers agree that “alignment” is the most difficult challenge faced by most organizations.  Through time, more equal access to all other resources has grown: materials, suppliers, facilities, financing, technology, products, entrepreneurs and human resources.

 Organizations have used a variety of methods to create alignment.  Military command and control, strategic planning, portfolio management and process management in various forms have been tried with mixed success.  In some static environments with less technology change, less competition and simpler processes, these approaches have worked well.  In the highly specialized, global, decentralized, changing, virtual world of today, many organizations have concluded that alignment can best be achieved through defining, shaping and reinforcing their corporate culture.

 A critical element in any corporate culture initiative is helping all staff members to have the self-awareness and other-awareness to manage their relations with others.

 My favorite introduction to self-awareness and paradigms is through the fable of “The Blind Men and the Elephant”.

 http://www.peacecorps.gov/wws/stories/stories.cfm?psid=110

 Individual blind men conclude on the basis of their personal investigations that an elephant “IS” a wall, a snake, a spear, a cow, a magic carpet or an old rope.  The moral is that an elephant is more than the sum of his parts.  Attempts to generalize from limited information or paradigms are doomed to failure.  The blind men can see neither the forest, nor the trees.  Many individuals have these same blind spots.  They are unable to see the big picture and they passionately hold onto their world view because they are not aware of the possibility of another approach.

 To help staff members with the personal growth needed to overcome this limitation, many organizations implement a personality styles program.  Myers-Briggs, DISC, Predictive Index, Gallup Strengthsfinders and a dozen others can be used to help all staff understand a few key results and begin to practice seeing the world from multiple perspectives, even forming the habit of expecting to employ multiple perspectives.

 These programs deliver 5 main lessons.  Individuals tend to behave in their own patterns or styles, which can be described.  No pattern is inherently better or worse, except as a means for completing certain responsibilities.  Personal styles make individuals especially effective in functions (accounting, sales, design, or engineering) that match their natural talents.  Individuals are not limited by their styles, but these habitual behaviors are more natural and using other complementary styles requires significant effort.  Since organizations have many functions and individuals with different styles, it is necessary for all staff members to be aware of their styles, recognize the styles of others and learn how to flex their styles to get along with others.

 Since these programs have been implemented many times in most firms across 30 years, one might expect that self-awareness would be the norm, followed by cross-functional cooperation and sophisticated used of different perspectives.  Unfortunately, many of these programs have not delivered the desired results.

 For personality styles programs to build self-awareness, complement corporate cultures, align teams and deliver results, firms need to invest more resources.

 1)      All managers, beginning at the top, need deep training, evaluation and feedback.

2)      All staff require experiential learning, examples, reinforcement and consistent guidance.

3)      Firms need to use the tool everywhere to create the skills, habits and expectations: training, hiring, promotions, cross-teams, planning, performance evaluations, etc.

4)      Firms need to break down the functional barriers and require a mix of styles in each function, job rotation for managers and cross-team experience for everyone.

5)      The personality styles tool, profiles and understanding needs to become part of the culture.  This is the language we use.  These are the stories we use.  These are the executives we use as examples of this style.

 Invest the resources to create a real asset for your organization.  Half of an investment produces little return.