Top Managers in several orgnaisations often run to outdo each other in adapting latest management concepts and introducing new initatives with a hope that these initatives will deliver and help organistaion achieve success. These initatives may fall in the areas of strategy redesign, restructuring, process reengineering or automation. Sometimes these interventions deliver, and most often, not. And the fault may not exactly be with the intervention design or execution, but with the areas of intervention itself. So the bigger challange is to undertake a comprehensive review of the organistaion and identify areas where there are gaps and interventions are most required and likely to be effective. This article presents one of the ways in which organistaion review can be carried out to identify potential areas of intervention. The proposed method uses a set of questions, falling in four key areas that contributes most to the success of the organistaion.
The quest for finding ways to ensure that organization achieve success, defined in the limited sense of achieving its goals while following its cherished values, by design than by chance continues. While the role of the external factors that influence organizational performance (more acknowledged during performance gaps than exceptional performance) cannot be undermined, devising a plan for success would primarily mean interventions that the Management of the organization can control and act upon.
However, before the intervention is designed, it is worthwhile to identify the gaps in the organization delivery system and how these can be addressed. This requires reality check of the organization situation in the following four key areas:
• Establishment of Organization Fundamentals
• Alignment of Organization Elements
• Appropriateness of Apparatus
• Accountability for Performance
The reality check would be best achieved by evaluating how effectively the organization is responding to the key questions under each of the four key areas. Let us consider each of the four areas and questions that emerge under each of them.
Establishment of Organization Fundamentals
Organization fundamentals (OFs) refer to the organization values, mission and vision. Establishing OFs has three key components, which are formulating the OFs, communicating OFs and institutionalizing OFs.
Formulating OFs
Q.1. Has your organization formulated OFs?
Although initially OF originate from the minds of the enterprise creators, at some stage of organization development the need to formally set and approve OFs becomes evident, especially as the organization grows to engage more outsiders as employees and its need to inform and engage diverse stakeholders becomes a business necessity. Hence, if the Management aspiration is for the organization to exist beyond single projects or opportunities, or to outlive the working life of the present Management, formulating an OF is a prerequisite
Q.2. How has your organization formulated OFs?
It is important to analyze the process by which organizational fundamentals have been defined. People involved from within and outside the organization in defining these fundamentals, the extent to which the exercise was participatory and the rigorousness of the exercise are some of the things that need to be determined. To define fundamentals, there are several techniques and frameworks available, but it essentially demands disciplined and collective imagination and introspection by the organization leaders. In fact, in serious organizational vision formulating exercises, often the proponents of alternate vision resign from the organization and visions thus formulated unfortunately tend to be taken seriously moreover these closely guide the future of the organization.
At the same time, several organizations entrust the task of defining OFs to Consultants, who could better be facilitator helping explore options but not substitute for the organizations collective beliefs, experience and aspirations.
Communicating OFs
Q.3. How are you communicating OFs across the organization–passively, actively, sporadically, or continually?
Communication is considered to be adequately achieved when the queries about OFs across groups and hierarchies evoke similar responses. Successful organizations ensure that representatives in the field know, What business we are into? What are the organizations priorities? What means are not acceptable? as much as the staff in the Corporate Strategy or Business Excellence cell at head-office.
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Q.4. Are the OFs communicated consistently, in words as well as actions?
Certain questions that need to be answered here are, Are leaders walking the talk? Is there integrity in their behavior and their pronouncement of organization Values. Further, are all leaders speaking the same language? Is there any continuity in the message with change in the leadership or composition of apex management team?
Institutionalizing OFs
Q.5. Are there favorite stories or folklores that establish the primacy of OFs in decision making over short-term prudence?
Culture most accurately reflects the actual importance being given to OFs. In case there is tacit approval for the actions and behavior, which deviate from that sanctioned by OFs, there is need for reflection.
Q.6. Are people able to translate the relevance of OFs in their day-to-day work and particular operating context?
Institutionalizing OFs means that it provides the obvious and paramount reason behind every decision and action within the organization. The institutionalizing challenge lies in ensuring that the message is conveyed so that employees are able to interpret its relevance to their workplace context and feel empowered to take the right decisions.
Indeed, the setting up and institutionalizing OFs puts a lot of pressure on Management to clarify its thought process, demands consistency in actions, and integrity in communication.
Alignment of Organizational Elements
Here Organization Elements mean Strategy, Structure, Systems and Processes(S&P) and Staff. All of these should be in sync with each other and devoted towards OFs.
Q.7. Does the strategy formulation process include organizational owners of structure and processes?
Sometimes within organizations, the owners of strategy (Corporate Planning group), structure (Human Resource department) and S&P (IT or Operations department) operate within their respective enclosured chambers, with the CEO responsible for ensuring their coordination-a nebulous mechanism indeed. Even if the apex strategy formulation team includes all the head of departments, the possibilities of misalignments may not get revealed (and hence considered), given the macro-level debate which the respective heads would indulge in. These misalignments may eventually get exposed during the roll-out but by then the commitment to strategy has been made and revisiting the same would come at a heavy cost, loss of time and embarrassment to top management. So the next best option with operational team is to make quick fix changes or develop localized workarounds. In the process, the effectiveness of the strategy is highly diluted.
Q.8. Is there a common set of key success factors that tie the strategy, structure and processes together?
Strategy, Structure and S&P fitment is ensured by developing shared understanding of the key success factors for the organization, their definitions, relative priorities and requirements among the decision makers of the organization. At the operational level, task is the link that connects strategy with structure and systems. Strategy defines or redefines which tasks are to be taken up, discontinued or outsourced. Having established that, structure gives the way to organize the resources, distribute authority and responsibility, workflow, command and control relationships to accomplish the tasks most efficiently in a sustained manner. S&P need to support the corresponding workflows, coordination, integration and monitoring mechanisms.
Q.9. Does strategy always takes precedence over Structure and S&P?
It may be worthwhile to take a reality check about the flexibility available in altering the existing Structure and S&P and the time and resources required to make the alterations while drafting new strategies.
The existing structures and systems often tend to be self-propelling, as entrenched interests and committed resources work towards ensuring their continuity. Sometimes, the structure and systemic changes (like implementing ERP or CRM) are carried out on their own, and it may be worthwhile to examine what other strategic options are now available on account of the improved capabilities of S&P.
Q.10. Are there obvious evidence of strategy and structure being out of sync?
There may be scenarios wherein strategies are based on innovation and rapid response, but organization supports hierarchical structures, bureaucratic systems, centralized decision making and manual operational systems. Similarly, strategies requiring high level inter-unit coordination and team work but accompanied with opaque credit sharing mechanism and highly individualistic reward systems may not work.
In general, low cost strategy requires centralized functional structure, whereas focus and differentiation generic strategies require more decentralized divisional structure.
Q.11. Are employees able to connect to OFs and see their aspirations and ideals reflected in it?
Several organizations view the organization-individual fitment from the narrow perspective of matching competencies and technical skill requirements, which is more like treating employees as part of apparatus used for delivering organizational commitments. But considering the demands on individuals time and family life, that the present organization exert, it is important to ensure that individuals see organizations as an important facilitator or vehicle to fulfill personal missions and aspirations. In the absence of such a fit, employees may go through the motion of work for extraneous factors (pay, position and so on), without sense of association with the organizational goal. It is safe to assume that individuals may opt for self-serving and preserving actions unless the ownership of larger organizational goals is not well imbibed. Banking entirely on financial incentives for employee motivation can only attract mercenaries and would work only till organization gets outbid by a more paying suitor.
Effective organizations through their conduct and communications attract the right kind of candidates and more certainly deflect the possible misfits. They ensure value fitment at the entry stage and then use other tools (skill assessment, personality tests, so on) to place the employee where he or she delivers from his areas of strength.
Appropriateness of Apparatus
Apparatus essentially include the machines, tools, techniques, IT systems that actually transform inputs into outputs to serve customers’ needs for a value.
Q.12. Is there realistic assessment of the apparatus needs in terms of capabilities and capacities closely linked to business needs?
Successful organizations choice of resources and technological commitments come from clear understanding of business requirements, clients’ perspectives and key success factors. They examine every new technological innovation from its possible usage in gaining competitive advantage through improved service delivery or cost savings. This has lead many effective organizations to make innovative uses of new technologies and at the same time developed considered view of sticking to the old technology itself. Contrast this with organizations that are drawn to every new technology that gets talked about in management seminars or industry circles.
Q.13. Is ownership v/s accessibility choice of apparatus based on clear understanding of the criticality of apparatus to retaining organization ability to serve its customers efficiently and effectively?
Management makes decision with regard to outsourcing or doing it by themselves based on the clear understanding of the role the apparatus is playing in ensuring organizational competitive strength. In fact the decision gets revisited as the supplier or venders industry matures and there is shift in the source of competitive advantage.
Accountability for Performance
This includes three specific steps which are, identification of performance matrix, defining targets and distributing responsibilities, and finally making accountability system work. Let us consider each of these steps:
Identification of performance matrix
Q.14. How closely performance matrices reflect the successful execution of designed Strategy? Does performance matrix guide the Management to take early corrective steps? Does it balance conflicting organizational needs such as those of long term organization sustainability and short term results, or capability milking and building requirements?
Performance matrices should comprehensively address the negotiated expectation levels of all stakeholders. There are several frameworks such as balance scorecard available that would help management ensure that performance matrix does not get captured entirely by financial short terms results. While these frameworks facilitate Management to take a holistic view, it is Management’s clarity of strategy and organization needs that would help them define appropriate and adequate set of performance parameters and their relative importance.
Besides, there has to be regular review of the chosen performance parameters which may require change as the organization redefines its fundamentals, strategies and operating context. For example, in tight labor market scenario, employee turnover may be a performance parameter, whereas in surplus labor market, turnover of only high fliers would be a more appropriate measure.
As the data gathering and processing capabilities within the organization gets more sophisticated, say after implementation of an ERP system, it may be possible to redefine the performance parameter more accurately to reflect key success factors, instead of using surrogate or aggregate level parameters. However, just because systems make it possible, is not sufficient reason to define performance standards more minutely and exhaustively, leading to over supervision and curtailment of individual flexibility.
Defining Targets and Distributing Responsibilities
Q.15. How credible is the basis of establishing performance targets?
While performance targets based on natural progression to previous years’ achievements may be most readily acceptable by employees, these targets may not add upto to Management aspirations. Forcing any significant jump in performance targets based entirely on competitors comparative performance or overall organization target lacks conviction and is seldom effective. Establishing targets’ buy-in requires convincing reasons such as enhanced automation, computerisation, change in procedures, simplification of processes, greater decentralization, delegation of power or resource allocation, or at times dilution of expected quality standards, which would make target looks like achievable, although with stretch. .
Q.16. How equitably and effectively the performance targets are distributed within the organization?
While distributing performance requirements within the organization, it is important to ensure their ownership by the staff. The performance targets would be owned by recipients to the extent that they are perceived to be fair, linked to bigger picture, and supported by requisite resources and managerial competence and authority to deliver. Hence defining the performance targets is as much a process issue as it is the final outcome.
While comparing targets, employees would like to believe that achieving targets by employees at equal levels should require equal effort and those employees above the hierarchy need to have tougher targets and consequences of shortfall more severe. In case of collective responsibility, employees would like to know who is accountable for performance gaps and how are the credits to be shared among the team. Finally, it needs to be verified that that there is someone responsible for each performance parameter in the matrix and that there are no conflicting performance targets among employees.
Making Accountability System Work
Q.17. Are there systems to ensure that performance results can be objectively and transparently determined?
Employee should be able to find out for himself his level of performance and the discussion with the Management should focus on how to address the gaps and to consider any credible external factors affecting performance, rather than the perceived difference in the level of performance achieved. Experience reveals that wherever the reasons of performances are not traceable to causes with some level of certainty, individuals may ascribe success to self and gaps to circumstances.
Q.18. Are the consequences of the performance gaps predefined? Are consequences perceived important by the employees to pay attention?
This is in line with the goal-path and equity theories of motivation. Defining appropriate incentive scheme is a challenge. Relying too much on financial incentives has its limitations and so has the system of not effectively rewarding higher levels of contributions. Designing adequate incentive system to promote desirable behavior and increased effort on behalf of employees should be considered as a dynamic process, forever refining through gradual experimentation and continual feedback.
Q.19. Are the consequences perceived to be consistently applied?
Any accountability system works, only if it is objectively adhered to and there are minimum exceptions made. Such exceptions sometimes made out of short term business prudence end up compromising the employee trust in the system and the whole accountability system becomes blunt and in-effective.
Conclusion
There are several frameworks and approaches available that would help in designing the required intervention effectively, once the intervening areas have been comprehensively and systematically identified. Subjecting the organization to the above set of questions would help management identify the areas where interventions are required.
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Tushar Khosla is a Management Consultant working mainly in the areas of Corporate planning, Strategy, Organisation restructuring and Institutional development. He is with Tata Consultancy Services and presently based at New Delhi. The views expressed are personal. For discussions and feedback, please write to tusharkhoslam@gmail.com or tusharkhoslam@yahoo.co.in.
