This is one rule, which every leader can internalize. It’s a myth that customer’s, shareholder’s and employee’s interests are always aligned. A leader always has to maintain a balance across these three entities. This tip helps a leader to make this perpetual act of balancing to be simpler.

Shareholder is foremost boss

The value chain is ‘A financially satisfied shareholder leads to a loyal customer leads to engaged employees’. The first priority is always to keep your shareholder happy. An unhappy shareholder is going to take away his monies and your ability to keep happy customers and employee will crash. Therefore, one always has to work on maximizing value for the shareholders. That’s why one needs to be driven by the shareholder wishes related to return on investment, embedded value expectations, book value expectations, earning per share and maintaining healthy P/E (market stock price divided by earning per share) ratios.

Next boss in the chain is the customer

 
A customer is who gives you the monies in lieu of your products and services. Customer is a significant asset and customer attrition can have significant customer attrition cost. One should do all what you can to keep a customer happy as long as it does not hurt shareholder’s interest. For example, you will not give a business class service to an economy class customer to win his loyalty. Customers are also no naive. They do understand the value which they can expect vs. what they are paying. Sometimes companies do take financial loss in the short-term to gain long-term customer relationship. However, this will be blessed by the shareholders. A big challenge with the CEOs is to meet the short-term expectations of the shareholders, while investing for the long term. The joint-venture partnerships are more interesting as may have different shareholders with different expectations.  The rule is ‘Customer is your king and shareholder is your emperor’

And finally its the employees

Employee comes as the next to demand your attention and focus. A prudent organization always takes the decisions which are best for the customer and the shareholder, and considers the impact on employees before going ahead with the same. In other words, an organization will take all the steps to have satisfied and engaged employees, as long as it is not compromising customer and shareholder objectives.

In all the above there is not always ‘either and or’. One needs to consider that pampering shareholders at the cost of customers, will finally hurt the shareholders and similarly dis-satisfied employees will finally lead to dis-satisfied customers. Therefore, in this tip, we are not suggesting an extreme approach. The idea is on which entity takes precedence over the other.

As an example, I have faced this question ‘will you support a 7 day week, if it makes your customer happy?’ I find this question little absurd, as a 7 day week will result in 100% attrition of high quality employees, which will destroy my capability to serve my customers as I will be left with fewer and 4rth quartile employees. Yes, if 7 day week does make sense for customer and shareholder perspective, I will hire more employees, so that I can rotate week-end duties, I will pay more monies for week-end duties and make the work environment for week-end working highly employee-friendly.

There is another way to support this tip-

1. A customer always wants to be with a company which is financial strong and robust.
2. An employee always wants to be with the company which is financially strong, has a safe future and has satisfied customers.

You may have best employee practices, but if you are not financially sound , both customers and employees will leave you over time. As some philosopher has put it ‘Warmth of love emanates from the kitchen fires’.

The contents of this post are referred from  Be Shareholder-driven, customer-focused  and employee-sensitive from business intelligence and performance management institute.

There is saying that ‘people treat you the way you treat yourself’. The reverse is equally true and more applicable for leaders ‘An employee becomes the way you treat him’. If you treat an employee as he is responsible, he will become one. If you treat an employee as being intelligent, he will end-up demonstrating the same. If you expect people to do more, they may end up doing more.

The hypothesis is that people love it if you trust them or expect more from them. Deep in their conscience, they want to be put into a situation, which takes them to the border of insecurity and anxiety. They want to be put into the deep-end of the swimming pool as long as they know that there is a safety rope. If your employees don’t have that fire, one has to look at the leadership practices or the recruitment practices.

As a leader, you can keep on looking for opportunities to inculcate that feeling of increased self-worth. As an example- Let’s say that the true potential of an employee is 120% of what he is doing as of now. A true leader will expect an employee to do 140% (while being careful that the employee is not set for failure), and an employee will end up doing 130% of his current role. This is what you call ‘making an employee discover the limits of his true potential and pushing those limits’

To see it another way, most of us do not insist enough from our employees. A human being is wired to perform better when he is challenged. Some interesting way to expect people to do more is-

Challenge them to think next level

I have a standard question which I have used often when my direct reports used to come to me with a problem ‘ what you would have done, had you been in my place?’ Surprisingly many of them come-up with a good answer. My response is ‘just go ahead and do it’. People sometime avoid doing things, because they feel it is ‘not appropriate for their level’. I do tell my people ‘think like next level and you will soon rise to the same’.

Place the buck on them

Take away the mentality that buck stops with the boss. Make the people accountable and create rewards and penalties, as if they are on the hot seat. Move from ‘leader is responsible and employee needs to be told what he has to do’ to ‘employee is responsible and boss needs to be told, what he has to do’. Let an employee come to you, when he needs a solution, or money or escalation support. If you move the sense of ownership to the employee, he will start building the same at his end.

Give the cues to the employee and not to do his thinking for him

Everyone loves cooked, ready to serve solution. As a leader you need to make an employee do that cooking and help him where he needs it. When an employee comes to you with an issue, give him cues to stimulate his thinking and its direction. Questions like ‘what have you thought so far?’, ‘what do you think are the alternatives?’, ‘have you explored that option?’, ‘ lets assume that this solution will not work, lets limit our thinking to these three alternatives’..

The contents of this post are referred from People become the way you treat them from Business Intelligence and Performance Management Institute.

A leader struggles with two seemingly conflicting objectives.

One objective is to put the best man for the job and the other is to support the development goals, by giving assignments where the skills levels of the employee are low and learning potential is high.

The first objective works on getting to maximize the productivity and the second works on maximizing the potential. Given that organizations are demanding higher productivity, efficiency and the appetite for mistakes is low, the first objective seems to be the norm. In that case how does a leader address the employee aspirations?

Before we get into resolving this perceived conflict, It is easier said than done to put the best man on the job. If you do a general survey, you will have many employees who are thirsting to be given assignments, which can leverage their current capabilities. In other word, the first responsibility of a leader is to ensure that employees in his team are not ‘under-employed’.

Post fulfilling ‘well-employed’ objective, longer-term investment into employee learning, is must . A lack of on-the job learning will lead to low level of employee engagement and therefore decrease in productivity. A leader should pursue the development goals for employees, while not significantly impacting the productivity or quality of outcomes.

Here are some tricks to resolve the conflict perception:

1. Invest leader’s own time: Taking note from situational leadership model, an employee having low-skill for a given assignment, will need a mix of continuous direction and hand-holding from the leader. A leader will need to invest time, so that he is able to maintain the desired productivity and reduce the level of risks.
2. Assign a buddy: Another employee with expertise on the given assignment can play the role of a guide or a help-point, if employee runs into an issue. The buddy can also review the deliverables on interim basis.
3. Make an employee work in a support capacity, before taking charge: If you want to given an employee the project management responsibility for the first time, he may spend few months by being an assistant project manager with an experienced project manager.
4. Start small: Taking the same examples, an employee may handle a sub-project, before he graduates into managing a project and then a program.
5. Look at the aptitude: The level of ‘newness’ of the task assigned to an employee should be based upon the leader’s assessment on the employee’s inherent capacity to handle the unknowns and his grasping power. It also depends on inherent competencies. For example if an employee is great business systems analyst, he should be able to handle an entirely new system in a new subject domain.

Content of this post are referred from Maximize output first and then the potential

There is a mis-conception that development plan of an employee is the training plan. To clear the terminologies, there are three terms which are used for building employee capabilities:

1. Training: This is the lowest level of intervention. Training is a formal class-room knowledge delivery. It is the best way to ensure the attention and attendance of an employee. It is the most structured way as well.
2. Learning: Learning can some from different channels. Training is one medium for learning. One can also learn by self-learning methods of reading, enrolling in self-learning programs etc…To further clarify, attending a training session does not mean that employee has learned.
3. Development: The goal of learning and training (as a subset of learning) is development or in other words, the actual enhancement of expertise and competencies in an individual. To clarify further, training and learning may not guarantee that employee has developed.

Therefore, we always emphasize on our clients to use the term of ‘development plan’. Employee Development can be broadly achieved through the following means:

1. Training Plan
2. Self-learning Plan
3. On-the-job development Plan

The above three have their own role to play in the development process, and cannot replace one for another. Our recommendation to our clients has been to adopt 70-20-10 formulae to get the most efficient and cost-effective development agenda. As per this rule, one should have 10% of development effort to be spent through training, 20% through self-learning and 70% through on-the-job experience. The reasoning is as follows:

1. Training is costly and is only the first step in the development process: Without under-mining the importance of training, it does add a visible cost to the development expense. Training should be used as a starting point for a development path, to provide the basic grounding and to lay a foundation. It is evident that in the initial stages an employee needs help for a systematic and structured input.
2. Self-learning is cheaper and also tests employee initiative: Self-learning comes through reading, getting enrolled into self-paced learning, becoming part of the groups and associations etc… Self-learning is cost-effective and above all tests the interest of an employee to develop himself.
3. On-the-job experience is the longest but surest path for development: Five days of training may need 5 months of on-the-job experience to covert the learning into actual practice. On-the-job experience builds the confidence, as well as brings the sense of reality in terms of how to apply the practical side of the theory learnt in the training room.
4. On-the-job experience gets value for the organization: Having deployed an employee for on-the-job development opportunity, will get some benefit to the organization for the compensation given.

The Challenges

1. Employees love trainings: Formal trainings add flavor to an employee’s resume. They also give en employee a dedicated time off the work-madness. Trainings don’t demand that much initiative from the employee as self-learning or on-the-job deployments. Therefore, employees may not appreciate the non-training related investment by the organization.
2. It’s difficult to track the self-learning: Apart from the situation, where an employee enrolls into a central self-learning platform, it’s difficult to keep a check on the enrollment, progress and performance of an employee.
3. Quantifying the application of trainings and self-learning: Organizations have generally failed in track on how well the training or self-learning has contributed to an employee development and how well those learnings are getting applied. The challenge is on how to quantify and also the band-width to do the same.
4. On-the-job deployments are not systematically followed-up: On-the-job development becomes part of any other job and when a leader and employee don’t get time to discuss on how and what employee has learnt. This leads to employee not actually realizing the level of development which has been achieved.

Mitigation

1. Explain the whole concept of development to an employee: One can explain the concept of development and how training, self-learning and on-the-job fits in the development agenda.
2. Include the tracking piece in the development plan: The development plan can have an additional column which tracks on not only the completion of a development activity, but also on how it is adding to the actual development, and how it is being applied.
3. Keep the employee and leader alive on development agenda on day-to-day basis: Just like one keeps a tab on the work-goals on the day-to-day basis, one can keep on discussing the development agenda, and a leader can keep on giving a near-time feedback on the development.

Content of this post is referred from Follow 70-20-10 development plan in Business Intelligence and Performance Management Institute

Scorecard review sessions are more holistic, span a greater horizon of performance and have operational as well as strategic perspective. Dashboard review sessions have narrow domain, have operational focus and highly frequent. Here are the facilitation tips for Performance Review Sessions. The details on these tips can be found in facilitating a performance review session in my portal Business Intelligence and Performance Management Institute.

1. You can start with reinforcing the objectives of the session and ground rules.
2. Keep the review focused on 5-10 key performance points.
3. Do not keep the review sessions too regimented
4. Apply situational leadership
5. Focus on the decisions which need team involvement
6. Keep some time for feedback on whole performance review process
7. Do not do too many time-checks
8. Keep on building the outcomes throughout the session
9. Interject with appropriate statements to stay focused
10. Use templates to drive discipline
11. Facilitation differences between scorecards and dashboard review

What typically happens today on performance management?:

Some level of this alignment exists in today’s world. Based upon the strategy, a CEO defines the goals of his/her management team. The goals are given weight-age depending upon the strategic priorities. This means that performance assessment, ranking and rewards will be skewed towards heavier goals. The same approach is then cascaded down to the lower levels in the organizational hierarchy.

This surely works to a certain level. However, there are some more aggressive methods to consider:

Create special initiative reward pool-
As many of the strategic priorities are translated to strategic initiatives, one can create special incentive bucket for completion of those initiatives. If you do not want to give extra money, you can take it from the overall rewards pool. This means that people get less money for same performance for business as usual and get additional monies if they do well on certain initiatives.

Make variable component higher in the pay and align it to the strategic blue-print-
Organizations are increasing the variable pay component, and the level of variability goes-up with the levels of hierarchy. However, variable pay pool is typically spread equally. It is driven more by the levels, than the role played by the individual.

One can place higher level variable pay pool to the roles which have greater criticality and stake in the strategic priorities. This will attract, retain and propel these critical resources to deliver more than expected norms. The variable pool shift across the roles will keep on happening with the change in the priorities of the organization. For example, if raising customer service satisfaction index is a high priority, we will place higher variable pool with customer service function. Once the required benchmark is achieved, the variable pool next year could move to selling a certain category of products (say institutional products).

Provide mix of individual plus team incentives
Most of the rewards and incentives are individual based, whereas it is the teams, which make it happen. For critical performance indicators and priorities, one can give a mix of individual achievement and team achievements.

All of the above methods are aggressive, and have a challenge of design, introduction, articulation, operations and stabilization. However, they are part of new competitive era, where employees understand the need for an organization to be nimble.

There are many such tips on performance management in my portal Business Intelligence and Performance Management.

Dear All,

Typically I try to keep my posts complete within themselves. However, this is a long subject. Therefore, I recommend you to refer  Vision vs. Mission statement page in my portal Business Intelligence and Performance Management.

Essentially, there is a lot of confusion between Vision vs. Mission statements and also on what is a good vision or mission statement and what is not so good. We have tried to provide the clear distinction between the two terms and what are some imperatives for long-lasting Mission and Vision statements.

One can have million different KPIs but finite number of KPI-Classes. KPI class is the base KPI category, out of which you can create many varient KPIs. For example- Sales Productivity by Value . This KPI class can have many varient KPIs:

1. Average Sales Productivity Year to Date
2. Average rate of growth of sales productivity by value month-by-month 
3. Increase in sales productivity year on year etc…

Whenever you design your Business Performance Management system, do not design it for the specific KPI, but the KPI-classes. A specific KPI is essentially one out of many different cuts (across dimenstions and time trending) one can put on a KPI-Class.  When you gather business requirements from a user, the chances are that the user will give the need in terms of a specific KPI. It is upon the performance management analyst, who will need to

1. Link the specific KPI to KPI class
2. Agree the same with the user
3. Design the  infrastructure accordingly

More details on this tip are in designing performance management by KPI class in my portal Business Intelligence and Performance Management Institute.

Strategic Execution Management is an ignored subject, and most of the organization either loose steam or focus by the time they have to start implementing the lofty documents like SB and SBP. Execution is generally not considered “Strategic”

Journey from Strategy to performance has challenges. The whole concept of Balanced Scorecard, is geared towards translating strategy into performance. We in corporate world talk about SOTBS (strategy on top of the book-shelf), as once created, no one looks into it. Let’s look on what falls apart when we get down to execution. This post is towards the mind-set issues:

1. Alignment between stakeholders.
2. People loosing steam after a prolonged and excruciating process of strategy creation.
3. Demarcation between strategists and doers.
4. Execution is Business as Usual and not a glamourous project.

Please refer to Strategic Execution Management is an ignored subject for details.

There are typically so many issues with scorecards, that business managers have set-up less than ideal objectives for a scorecard. People are still struggling with phase I “What is happening”? These are the fundamental imperatives which need to be resolved before we start thinking of next level:

Refer Designing Scorecards for a back-ground.

In other words, the evolution of scorecards is mostly focused to achieve the objective of finding answers to “What is happening?”

In this situation, it may sound a bit too much to go for ’next level’ objectives out of a scorecard. There is another softer issue. Using a scorecard to answer ‘next level’ of “why” and “what are we going to do about it?” and “How much we project the metrics to change over time?”, demands a level of commitment, which many managers may not be in a position to put on the table.

Given the above challenges, my suggestion will be to select certain key metrics whereby you would go for higher objectives. For example a scorecard might have 20 different metrics, and you might be struggling with 10 of them to achieve fundamental quality on data and interpretation. You may select top 3-4 metrics where you would first go and fix the fundamental ‘information integrity’ issues, and take them to the next level. You can start answering “why is it happening”? and “projected Change in performance”. For the rest, stick to ‘what is happening?’