Planning and accountability

Fast Track to Alignment: Ignore Head Office

Many moons ago, I was an Operations Manager for a big, global company. My part of the empire was very small, but I was still subject to much of the silliness that comes with being part of a huge organization.

You could have said that the right hand didn’t know what the left hand was doing, but that would have been overly-kind. There were departments at global headquarters that out and out competed with each other. The loss-control guys would send out a memo, only to be contradicted by the HR group. Of course, none of them did this knowingly – they were simply so big, that they had no idea what the other support group was doing.

This is what happens when companies face operational issues, and rather than invest in frontline managers to teach them to deal with the complexities of the business, they suck control of everything short of turning the key in the front door back far away from the core business.

The result: total and complete misalignment. Frontline managers and the employees doing the actual work that makes money are being continually pulled in all directions, and end up flying like a moth to the brightest light depending on which support department issued an email directive that day.

I made the decision to leave this organization, about a year before my ultimate departure. I still loved the business, I just didn’t like working for a large, bureaucratic company that had centralized all control and decision-making.

I can honestly say, I was at my most effective in this last year. I still wanted the business to be successful, and I cared deeply about the people I worked with. What made me (and my operation) effective and successful in this last year is that I stopped listening to head office. I did what I thought was in the best interests of the business, and largely ignored my instructions from head office.

The result? They didn’t notice I was not complying with the multiple and competing directives. They did notice our numbers were in the top ten percent in the company.

Remember you heard it here first – the fastest way to aligning your business, and ultimately generating better results is to ignore your head office. Of course, it could also be the most direct route to getting fired, too.

Let’s be careful out there.

Business Alignment Strategies

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One of the most common ailments in business today is a lack of alignment. Below we discuss Business Alignment Strategies to recognize and correct business alignment.

Identifying the absence of Business Alignment Strategies
The link between Accountability and Business Alignment
Ensuring Your Business Alignment Strategies
How to Improve Your Business Alignment Strategies
Ensuring Accountability as part of your Business Alignment Strategy
How Goals and Objectives contribute to your Business Alignment Strategy
Three Things to Remember about Business Alignment Strategies

Identifying the Absence of Business Alignment Strategies

If you suspect that Business Alignment Strategies in your organization may be lacking, here are some symptoms:

Do you have orphan projects or initiatives? Are there projects or initiatives that seem to be completely disconnected from the rest of your business, or that just don’t seem to fit in?
Do you have zombie problems or projects? If you are sure that a project has been killed multiple times, but seems to keep coming back from the dead, you may have a lack of alignment.
Direct reports that are not clear on their leaders accountabilities or goals. Ask any employee what is most important to his/her boss. If there are unclear or conflicting answers, it could be because of a lack of alignment.
Continuous lack of improvement. Is the business treading water, and not improving over time?
Managers are reaching down into the organization to do the work that should be done by the people who report to them (or even lower).

The link between Accountability and Business Alignment

Business Alignment cannot be achieved without clear accountability in an organization. Here are some definitions:

Alignment: Linking of organizational goals with team goals, and ultimately with the employees’ individual goals, actions and activities.

Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Ensuring Your Business Alignment Strategies

Goals must cascade clearly between all levels in an organization. All goals of individual contributors must be supported by development plans as well:

How to Improve Your Business Alignment Strategies

There are three core reasons your Business Alignment Strategies may not be working:

Execution
Quality
Quantity

Execution – are you cascading your departmental goals? Are you transferring them into individual goals/objectives for your team members? Or, do you not execute this and hope everyone knows what’s truly important? People will not know their role in achieving results unless goals are properly cascaded.

Quality – Are all goals SMART, clear, and aligned with the larger organizational goals? Or are they vague, not tied to a specific outcome or measure and without a deadline?

Quantity – is this a once a year exercise to keep the HR people off your back, or do you talk often about what is expected, how people are doing and what they can do to get even better?

Ensuring Accountability as part of your Business Alignment Strategy

If accountability around goals is critical to ensuring alignment, then you need to ensure that accountability is achieved. The best way to do this is use existing meetings to refine and discuss progress against goals.

How Goals and Objectives contribute to your Business Alignment Strategy

Drives focus and alignment through the organization on what’s most important.
Closes the gap between Strategy and Execution.
Helps define and drive performance.
Clarifies priorities.

Watch the ‘3-Minute Crash Course’ about Business Alignment Strategies (CLICK THE ARROW TO START THE VIDEO):

Looking for the Full-Length Podcast/Video? …

Introduction to Business KPIs

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Why Measure at All?

As part of your introduction to business KPIs, you should have some idea as to why you should bother to measure at all.

To know where you are in your business, and how to improve it.
To build a business case for a course of action, or an investment.
To determine the impact on clients or customers.
To improve objectivity, and reduce reliance on opinion and rumor.
To establish accountability amongst teams or team members.
To ensure people are not working at cross-purposes.
To celebrate success.

Where Performance Measures Fit

Introduction to Business KPIs — Definitions

A Strategy: Longer term direction or scope that differentiates you you’re your competitors. (How do you make money or if you are not in a profit business how you achieve your organizational “end”).
Goal: Something specific you work towards to achieve your strategy. (What you’ll do to realize your strategy)
Key Success Factors: Those critical areas (or key work activities) we must focus on in order to be successful (achieve our goals). Some generic KSFs are:
- Quality
- Quantity
- Cost
- Time
- Safety
Performance Indicator: A metric that tells you how you’re doing in working towards the achievement of a Key Success Factor.
- Result indicator: Measures outcomes or results
- Process indicator: Measure activities that lead to outcome or results

Introduction to Business KPIs: Good indicators

Simple to understand and use
Aligned with corporate strategies
Promotes continuous improvement
Controllable or significantly “influenceable”
Examples of Good Performance Indicators:
- Tons per hour
- Absenteeism rate
- Time loss numbers
- Overtime as a % of salary

The Business KPIs you choose must be within your sphere of control or your sphere of influence. You may measure some things that are in your sphere of concern, but they will not drive your business the way that Business KPIs in the other spheres will.

Introduction to Business KPIs: Bad Indicators

Are too complex
Are not specific enough
Not connected to larger goals
- Lousy production
- Bad attitude
- Bad safety
- Good overtime control

Introduction to Business KPIs: 3 things to remember

There is never one perfect measure – look at a variety of things.
Don’t let your metrics take on a life of their own. They should enable decision making and action.
Let your indicators change over time. As you learn more about your business, and as your business changes you should allow your Business KPIs to change too.

Watch the ‘3-Minute Crash Course’ about Business KPIs (CLICK THE ARROW TO START THE VIDEO):

Looking for the Full-Length Podcast/Video? …

Managing Measurement by Best Seller

Performance metrics often provide an excellent illustration of how a really good idea can be made difficult and useless by poor implementation. It’s a lot like watching your favourite sports franchise consistently snatch defeat out of the jaws of victory.

Usually it goes down like this: someone in some position of authority will read the first fifteen pages of a book about measurement. Without reading the following 250 pages, he concludes that his organization needs to get everyone on the measurement bandwagon. Then he strikes a committee, or hires a consultant to go forth and make this happen.

Fast forward in time six months, and a significant portion of everyone’s work week becomes dedicated to counting the number of paper clips they have consumed since last week, and calculating the annual impact of that paper clip consumption. They then have a meeting to discuss how to reduce paper clip consumption, thereby reducing annual operating costs by $48.50, or roughly 1/100^th the cost of the first meeting about paper clip consumption.

OK… that might be a bit harsh. But here are some actual examples of performance metrics gone horribly wrong:

The technology company that measured sales success exclusively on dollar volume at the end of each quarter. THE RESULT: A whole bunch of clients went somewhere else because they were tired of being sold things they really didn’t need.
The grocery retailer that measured check-stand effectiveness by calculating the frequency of cashiers using customers’ names. THE RESULT: the customers went to stores where they measure how much time was spent waiting in line – something the customer actually cares about.
The restaurant owner that attempted to reduce cost by reducing the number of paper napkins provided to each customer. THE RESULT: I don’t know… probably sticky fingers and dirty tables – this one just seemed really silly to me
The lumber manufacturer that measured how much fibre it recovered from each log, as opposed to how much money they made on different dimensions of lumber. THE RESULT: Very few wood-chips, but a yard full of garden stakes that no one would buy (and a whole bunch of trees unnecessarily harvested)

Some people will tell you all that matters at the end of the day is how much money you make. Not true – if you focus exclusively on this, you are in a never-ending cycle of sub-optimized decisions that forbid any long term success. Most obviously, if you ignore safety while focusing exclusively on how much money is make, it is only a matter of time before you injure or kill someone, which beside being ethically reprehensible, is very expensive.

Here’s the bottom line about measurement: The great thing about measuring performance is that people will adjust their behaviors to affect the outcome of the measure. Unfortunately, the really scary thing about measuring performance is that people will adjust their behaviors to affect the outcome of the measure.

So measurement (like other recreational drugs) should be used cautiously and in moderation. Second, you should never have only one number you are tracking. And finally, you need to understand why numbers are trending the way they are, as opposed to (over)reacting to one data point.

Let’s be careful out there.

5 Reasons Performance Reviews Suck

In the past fifteen years, I’ve been in and out of dozens of organizations, all of which had some process for conducting Performance Reviews. Of all of them, only one organization did them consistently, and did them well. The rest of them conducted performance reviews that ranged between ineffective, and highly offensive.

This got me to thinking what all these organizations have in common when it comes to Performance Reviews, so here are the top five (of several dozen) reasons why Performance Reviews usually suck:

1) Everybody wants more feedback – as long as it’s good. Yep… as much as your Gen Y types tell you they crave feedback, they really only want it if it confirms their worldview that they are beyond fantastic. Any suggestions for improvement are usually met with a thud. It is only the most elite of corporate cultures that have overcome this aspect of human nature. These organizations train and encourage people to constantly seek out feedback that will make them better – which sometimes requires facing up to the fact you don’t do some things well.

2) Performance Reviews are non-specific. They often contain broad sweeping statements about someone being “good with customers”, or “needing improvement on follow through”. These observations are about as useful as a chocolate teapot. If it’s not specific, don’t bother. Bring data or specific behavioral observations.

3) People are too polite. Most supervisors hate performance reviews more than the employees. So they try to get through them as quickly as possible, without hurting anyone’s feelings. Great organizations, and great leaders use performance appraisals as catalyst for improvement. This actually requires giving people feedback on how they can improve – rather than just trying to keep the peace.

4) Performance reviews are structured too much like report cards. If the performance review is simply “the year in review” without any mention of the future, or developmental opportunities, then it is a waste of time. Even more of a waste of time is a 4 or 5 point rating system that employees are graded on with little thought or explanation. No wonder people hate them.

5) They are disconnected with what people do every day. The big problem with performance reviews is that they are designed by HR people, or external consultants who have absolutely no idea what people in a particular role do everyday. Hence people are assessed on things they rarely or never do, and the bulk of their efforts are not captured by the criteria or format used.

Employees don’t have any accountability for the Performance Review process. OK… I said five reasons, so this one is a bonus. In most organizations, the employee merely shows up for a performance review meeting, having lent no thought or effort to outcome. Great organizations and great managers insist that employees complete some form of self-assessment in advance of the meeting so that the success of the process is shared.

Conducting a Mid Year Performance Review

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Why Conduct a Mid Year Performance Review?

Most organizations set their objectives at the beginning of the year, but much can change in six months time. You need to keep objectives aligned with business changes.
The Mid Year Performance Review acts as a formal “check in” with the employee. If you are only formally reviewing performance at the end of the year, you run the risk of surprising the employee with a poor review. A Mid Year Performance Review gives the employee the opportunity to take corrective action before the formal end of year review.
It can solidify the actions you need the employee to take for the balance of the year. It is an excellent opportunity to clarify and review specific goals and actions to be achieved by the end of the year.

Steps to Conducting a Mid Year Performance Review

Employee provides self-assessment. Employees should have as much responsibility in the performance review process as the supervisor does. The best way to ensure this accountability is shared is to insist that the employee conducts his/her own self-assessment using the same criteria and format as the supervisor will to assess performance. The differences between ratings provides a fertile ground for discussion.
Manager collects performance data and feedback. The manager should use data wherever possible, and at the very least list specific behavioral examples. To use vague or non-specific statements when assessing performance is neither professional, nor useful.
Review assessment and write review. Review the employee’s self-assessment, and write your own review as to the employee’s performance. Incorporate all the data and examples you gathered in step 2, above.
Conduct the Mid-Year Performance Review discussion. After both employee and supervisor have done their preparation, they need to meet to formally discuss performance.

The Mid Year Performance Review Discussion

This is the most important aspect of the Mid Year Performance Review.
Conduct a quick retention interview along with the performance discussion. For example, you may simply want to ask how the employee perceives his/her work environment, and how challenged and satisfied they feel working there. Too often, organizations wait until the Exit Interview to gather this feedback.
The employee should be given the opportunity to describe their deliverables against each objective and other projects. They should be able to articulate what they’ve done in the first half of the year, and how that has contributed to their stated goals and objectives.
During the Mid Year Performance Review meeting, discuss feedback grounded in multiple perspectives from the organization. In other words, how are the efforts of this employee important to the larger organization.
Ensure that key priorities are clear, and alignment is obtained on balance of year objectives. This is an opportunity for both the employee and the supervisor to discuss changes or “course corrections” to ensure the employee is successful for her end of year review.

Three Things to Remember about Mid Year Performance Reviews

This is a listening exercise for the supervisor. Listen carefully to both the content and context of the message being delivered.
Be candid and balanced in your feedback. Both parties will get much more out of the discussion if they are honest and forthright with each other. Being too polite will not drive performance. Nor will berating and humiliating the employee.
Clarify how you will support the employee. It is important for the supervisor to commit to what she will do to enable the success of the employee.

Watch the ‘3-Minute Crash Course’ about Conducting a Mid Year Performance Review (CLICK THE ARROW TO START THE VIDEO):

Looking for the Full-Length Podcast/Video? …

You Can’t Always Get What You Want

Mick Jagger was right – you can’t always get what you want.

One of the dynamics that managers face is weighing off short-term objectives against longer term ones. This sometimes results in seemingly poor decisions being made.

Often, I get to hear people in organizations complain about the seemingly silly decisions that are made. It is so clear to them, that by investing $100,000, you can recover a $1m. They’ve done the cost benefit analysis, and the answer is clear. The only problem is that they haven’t figured whether there is $100,000 to spend in the first place.

Think of it like this: If you replace the windows in house with better insulated ones, install high efficiency furnaces and air conditioners, and put new insulation in your attic, you will undoubtedly save thousands over the lifetime of those renovations. However, you may not have the $25,000 required now to do those modifications. Further, you may not be sure you’ll be in the house long enough to recover the investment.

It is the same for organizations.

Don’t get me wrong – I’ve seen lots of examples of corporate stupidity, too. My favorite one is the company that decreed in blood that all travel occurring within an operating division must be by surface, and that air travel was restricted to those going across operating divisions. This made a lot of sense in Northern California, where the decree was issued. It didn’t make a lot of sense in British Columbia (about twice the size of Texas, and full of mountains). It turns out to drive from one side of this division to another was a four or five day exercise. Surely a plane ticket would be cheaper? Nope – the policy stands. Truly stupid.

The dynamic of measuring the short term and long term costs and benefits is not easy. Leaders need to do the math and figure out the right thing to do. But sometimes, the right thing to do is deferred to what can be done.

You might not get what want, but rather “get what you need”. Thanks Mick.

How to do a Cost Benefit Analysis

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What is a Cost Benefit Analysis

It is a tool used to more objectively assess:
- the value of a solution or action
- the comparison between alternative solutions or courses of action
For our purposes, it does not include detailed financial analysis

When to conduct a Cost Benefit Analysis

To determine feasibility of a solution or course of action
To compare alternative solutions or courses of action
When you are justifying a course of action
When you are requesting additional resources for something

How to do a Cost Benefit Analysis

Determine the Costs
Calculate the Benefits
Compare Alternatives
Report and Plan Action

Determine the Costs

You should first check to see if any analysis has already been done on your project or idea. Perhaps there has already been some detailed costing work done. If not, you will need to collect the cost numbers.
List out costs of your solution or course of action:
- Initial or capital costs
- Ongoing costs – what are the costs in the coming months or years?
- Labor costs – how much time will your idea take from people?
- Contractor costs – Are there external labor costs?
- Supply or input costs
- Non-monetary costs – what is the impact on safety, morale, reputation and other less tangible things. You may not be able to assess a number to these things, but you should at least list them for consideration.

Calculate Benefits

The next step in the Cost Benefit Analysis is to estimate the benefits on all the same dimensions as you did for costs:

Dollar value of benefits:
- Time (labor) saved
- Supply (input) savings
- Energy savings
Non-monetary benefits:
- Safety, environmental
- Reputational
- Morale, turnover
- Quality

You should consider the immediate, yearly, and ongoing benefits in your Cost Benefit Analysis.

Compare Alternatives

You now need to compare the costs and benefits from each of your alternatives. If you only have one alternative, you are still comparing your option with the status quo.

Subtract costs from benefits for each alternative
First compare against doing nothing
Compare each alternative with each other
Take non-monetary into consideration

Below is a comparison table for a simple Cost Benefit Analysis. In the last 4 rows, a dollar figure may be difficult to quantify, so you can put a description of the cost or benefit in each of these areas:

	*Status Quo*	*Option 1*	*Option 2*
Initial Costs
Ongoing Costs
Time Savings
Supply Savings
Energy Savings
Safety
Environmental
Reputational
Morale

Report and Plan Action for your Cost Benefit Analysis

Make a recommendation based on your Cost Benefit Analysis
Put together a brief plan of action for your recommendation.
Don’t forget about other influencing conditions. Sometimes, you may have a compelling argument that still needs to be deferred for other reasons, such as:
- Cash flow
- Availability of resources
- Competing priorities

3 Things to Remember About How to do a Cost Benefit Analysis:

Non-monetary conditions may have a considerable influence. Safety considerations, for example, may trump all other criteria in determining action
The time-value of money must not be underestimated. Many people forget that capital has a cost, and if your idea ties up dollars there is a direct cost to this.
If it gets complicated, more detailed financial analysis may be more appropriate. You may need to seek out a finance individual in your organization to assist with your analysis.

Watch the ‘3-Minute Crash Course’ about How to do a Cost Benefit Analysis (CLICK THE ARROW TO START THE VIDEO):

Looking for the Full-Length Podcast/Video? …

How to Set Goals and Objectives

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Below we discuss the following aspects of How to Set Goals and Objectives:

Goals and Objectives in the larger context of Performance Management
Why managers should bother with Goals and Objectives
Three Steps on how to Set Goals and Objectives

How to Set Goals and Objectives in the Larger Context of Managing Performance:

Every organization should have an infrastructure for managing employee performance. Below is a simple model that shows how to Set Goals and Objectives in a broader context:

Goals Versus Objectives:

There are many different definitions of “Goals” and “Objectives”. Here is how we delineate the two:

Goals are higher level than objectives
Goals have longer time frames than objectives
Objectives are more specific than goals
Several objectives may contribute toward a single goal.

Why Bother to Set Goals and Objectives

To Set Goals and Objectives closes the gap between Strategy and Execution. Goals and objectives are needed to translate high-level strategies into more manageable behaviours that need to occur on a daily basis.
Without well-written goals and objectives, evaluating performance becomes unnecessarily more difficult. Goals and objectives translate into tangible actions that are observable and often measureable.
Setting Goals and Objectives drives focus and alignment through the organization. When Goals and Objectives are clear, and cascade through an organization, alignment is assured.
By setting Goals and Objectives, you help define and drive performance.
Goals and Objectives clarify the employee’s priorities and allow them to allocate their time and resources effectively.

Cascading Goals and Objectives

When you set Goals and Objectives, you need to ensure alignment between different levels of the organization. Starting at the most basic functions of a company, the Goals and Objectives must contribute or “roll up” to the Goals and Objectives of the next level up in the organization. In situations where there are many layers, this alignment must be carried on until the very highest level of the organization.

Three Steps to Set Goals and Objectives:

Align the organization’s and team goals. Regardless of where you are in an organization’s hierarchy, you need to look above you, and ensure that you understand those higher-level goals, and ensure your goals will contribute to those.
Draft your goals and objectives. After you’ve looked up the hierarchy, sit down with your team and draft your team objectives, and personal goals and objectives accordingly.
Meet to discuss and finalize. You need to meet with your boss to discuss and finalize your Goals and Objectives. You then need to meet with your team to ensure that all Goals and Objectives are fully aligned.

Drafting Clear Goals and Objectives

The SMART acronym is instructional when refining Goals and Objectives:

Specific: Well written Goals and Objectives state a clear end result. The objective names the end result, output or intent, so there is no room for misinterpretation. When writing Goals and Objectives, use concise verbs, such as:
- “to establish,”
- “to increase,”
- “to reduce”
Measurable:Your Goals and Objectives must be quantifiable in some way. Some general categories and examples associated with measuring objectives include:
- Quantity number of units produced, items processed, calls taken, contacts made, etc.
- Quality number of specs met, percentage error rates, percent waste rates, number of complaints received, accuracy of reports, etc.
- Cost dollars spent, percentage within budget, dollars spent on overtime, etc.
- Time in Use percentage of target dates met, number of deadlines met, number of units shipped on time, etc.
Attainable: there must be a reasonable chance that the objective can be achieved; some people suggest an 80% probability is effective as a motivator. If you set Goals and Objectives that are too much of a stretch, people won’t take them seriously.
Relevant: Goals and Objectives must be related directly to the individual’s sphere of influence and key job accountabilities.
Timebound: states a time frame, target dates, and/or milestones during the year that are expected to be met.

If you struggle with writing performance objectives, here is a formula to get you started:

I will ( action )
so that ( outcome ).
by ( date )

For example:

I will work with my team to develop performance objectives so that 100% of my direct reports will have documented objectives by January 31.

3 Things to Remember About How to Set Goals and Objectives:

Involve your team when establishing Goals and Objectives. These should not be done in isolation.
Meet often to discuss progress. Do not allow the setting of Goals and Objectives to become an academic exercise that is visited only once per year.
Include Business/Operational and Leadership objectives. Most people establish their business or operational Goals and Objectives, and fail to define Leadership ones. If you are a leader of other people you need to set Goals and Objectives that pertain to that function. For example:

a) The number and quality of one on one meetings

b) % compliance on performance appraisals

c) measure of employee development activity

Watch the ‘3-Minute Crash Course’ about How to Set Goals and Objectives (CLICK THE ARROW TO START THE VIDEO):

Looking for the Full-Length Podcast/Video? …

Laundry Lists and Diffused Focus

The fun part about our job is being exposed to a number of different industries and organizations. One of my favorite things to say is, “I’ve worked in Nuclear Power Stations, and in grocery stores, and 90% of the management issues are the same.” I usually get significant pushback from the Nuclear Engineers on this one, but it’s true.

Often the response I get from this statement is a question about the most common thread that weaves organizations and their performance together. The answer, quite simply, is “Focus”. The great performing organizations define and continually refine the limited number of things they need to do well, and then execute those things.

The reason people lose focus is because they get so busy managing tasks, they forget to look up every now and then and make sure they are doing the right things. Or, as I like to say, “They are so busy doing their jobs, they forget to do their jobs.”

As a busy manager, the next time you feel more overwhelmed with work than the bartender on the Kennedy Compound, spend a couple of minutes to review what your top 3 to 7 objectives for the year are. What are you doing to achieve those objectives this week? Better yet, review your top objectives every day before you start diving into tasks.

If you find yourself involved in meetings and activities that have nothing to do with those 3 to 7 objectives, then you need to question what you’re doing. Worse yet, if find yourself with 25 or 30 objectives, you need to go back to drawing board, and transform your laundry list into a more manageable, critical action list.

Achieving focus is conceptually very easy, but requires a lot of discipline to do well.

Fast Track to Alignment: Ignore Head Office

Business Alignment Strategies

Introduction to Business KPIs

Managing Measurement by Best Seller

5 Reasons Performance Reviews Suck

Conducting a Mid Year Performance Review

You Can’t Always Get What You Want

How to do a Cost Benefit Analysis

How to Set Goals and Objectives

Laundry Lists and Diffused Focus

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