subject: The Business 3A's [print this page] Over the years, I've had the opportunity to work with quite a few organizations. Some were very well run businesses where things ran smoothly and everything just seemed to come together. Others were operating in a state of chaos where everything seemed to be in a constant state of confusion resulting in high stress, low productivity and low employee morale.
To put in perspective, back in elementary school we were taught the 3R's:
Reading
wRiting
aRithmetic
For today's business environment, I'd like to introduce what I call The Business 3A's:
Alignment
Action
Accountability
Alignment:
Over time I have found that the fundamental building blocks of any business foundation are the organizational Vision and Strategic Plan. Without these two basic and critical elements, the business has no direction and is operating without a rudder.
In looking at the dichotomy between these two types of organizations, I find the primary difference to be the Alignment provided by a clear Vision and Strategic Plan that is communicated and accepted by all members of the organization.
In most chaotic organizations, if there is a Vision or Plan, it is usually loose, not well documented or communicated and as a result, not fully understood by the workforce. They are often found sitting on a shelf in the President's office collecting dust, where they will sit until pulled out late next year in preparation for the next year's budget. The bottom line is that from an organizational perspective, there is no Plan to move the organization forward.
This lack of a Vision and Strategic Plan drives organizational confusion and misalignment as the organization heads-off into unguided and unintended directions. In several organizations, I have asked the workforce for their interpretation of the company's Strategic Plan and in most cases the answer was 'Make the Month' or as I call it, MTM' - making the projected sales for the month. Without a Plan, this becomes the default objective because that is what they constantly hear from the folks upstairs.' "We must make our projected sales forecast." So, MTM' becomes the primary focus of the organization.
This 'MTM' mentality drives the organization in the wrong direction causing month-end shipment 'hockey sticks,' increased inventory, poor on-time delivery, reduced customer satisfaction, reduced cash flow, low employee morale, stress and chaos within the organization.
The Vision and Strategic Plan are the answer to the question: "Who do we want to be when we grow up?" They define where we want to go and are key to setting the organization's direction.
Once these two elements are put together, they should then be broken down into 3-5 specific and clearly defined Organizational Objectives. These Organizational Objectives support both the Vision and the Strategic Plan and help gain the needed organizational Alignment as they are rolled-out across departments. These Objectives define what is really important and provide the primary focus. In turn, each area of the organization then supplies its own 3-5 supporting Departmental Objectives specific to its department which in turn, reinforce the Organizational Objectives, Strategic Plan and Vision. It all bubbles up.'
With the established Vision, Strategic Plan, Organizational Objectives and Departmental Objectives, you now have the foundation for true organizational Alignment.
Once the Alignment is established, the need drives the creation of a supportive set of Performance Metrics. These Metrics are an integral part of the Alignment process and will provide performance feedback over a specified period of time. These Metrics are segmented into individual performance areas that include Financial, Customer, Internal Processes and Investment. These in turn, track and report the organization's actual performance against specific targets. Depending on the organizational needs, each performance area may have as many as 3-10 individual contributing Metrics. Each of these Metrics would be color-coded Green, Yellow or Red dependent on its performance to the target.
I have found that Strategic Maps and the Balanced Scorecard (BSC) formats provide the best tools and help in maintaining Alignment and measuring performance. They are straightforward and clear cut.
In summary, the first Business A in gaining organization is Alignment. This Alignment is gained by communicating a fully defined Vision and Strategic Plan augmented with a set of supporting Organizational and Departmental Objectives along with the development and implementation of Performance Metrics.
Action:
Once the Alignment elements listed above are in place, it will then be necessary to develop specific Action Plans for each underperforming metric. I've seen many organizations where senior management mandates that certain items improve, but these efforts fail due to the lack of a specific and well defined Action Plan. In these cases, the Plan usually breaks down into a generic We'll work harder' approach and nothing improves. This is compounded with the lack of Alignment and the focus on MTM.'
I have found that for an Action Plan to be successful, there are four key elements that must be understood. Those elements include the:
Metric - Or what it is we are trying to measure. I recommend that the Metric not only be historical (3-6 months back), but also provide a forward looking forecast for the next 3-6 months.
Drivers - Or the key contributors that feed or drive a particular Metric.
For instance, if you were tracking on-time delivery for a manufacturing facility, the Drivers may include items such as supplier on-time delivery, rework, machine down time, labor variance These Drivers are the basic elements that when added together make up the Metric.
Issues - Items that directly relate to the Drivers.
To use the on-time delivery scenario, issues here may include: purchase orders to suppliers are placed late, the engineering is inadequate for part number XXXX, material for the XXXX is hard to obtain, HR is having difficulty hiring qualified help...
The key thing to keep in mind for defining Issues is that they need to be very specific and measurable. (Example: How do you measure "Do a better job at?")
Action, Owner and Completion Date Now that you have a full understanding of the Metric, Drivers and Issues, it is now time to determine the Action segment Action segment.
As with Issues, the Actions also need to be very clear and specific. Using the same scenario for "Purchase Orders for suppliers are placed late" the Action may be to reaffirm and adjust the supplier times within the MRP system and/or develop a follow-up system to ensure Purchase Orders are placed on time.
Once the Action has been indentified, it is then necessary to assign an owner to the Action. I find that designating or assigning a specific person responsible for the Action is the best way to foster ownership, ensure follow-through and drive the Accountability described in the next section.
The last item is the Completion Date. This too needs to be specific in order to establish the improvement timeline and also to ensure closure and the enhanced Accountability.
When these four elements are understood, they would then be laid out into a one page Quad or 4- Blocker style arrangement with the:
Metric Top Left
Drivers Top Right
Issues Bottom Left
Action, Owner, Completion Date Bottom Right
This Quad would set-up landscape on an 8.5" x 11" sheet of paper. An example of the Quad layout is shown below:
Quad
Metric
Drivers
Issues
Actions
Now that the Action Plan Quad or 4- Blocker is prepared, it can easily be used as a tool to track progress not only to the Issues and Actions, but also as to how these Actions remedy the Issues and drive Metric improvement. The key here is to use this one page document as a tool and not a report. This Action Plan concept needs to become part of the organizational culture. It also provides effective visual tools that are necessary when affecting an organizational culture change.
In summary, the second Business A is Action. This element is defined as a one page Quad or 4-Blocker that is made up of the performance Metric, the related Drivers, Issues and specific Actions related to rectifying the Issues and Drivers and provide the roadmap to improve the Metric.
Accountability:
Now that the Alignment and Actions have been established, we now need to talk about Accountability.
With the development of the Organizational and Departmental Objectives along with the associated Performance Metrics, it is now possible to develop Objectives for individuals. With the Departmental Objectives established, it is relatively easy to break them down into 3-5 specific employee Objectives that feed and support the Departmental and which drive the Organizational Objectives.
These 3-5 employee Objectives would then be built into an Incentive Compensation Plan that would financially reward the employee for his/her performance to those Objectives. I recommend that these Objectives be reviewed with the employee at least quarterly in order to track performance, provide employee feedback and adjust the Actions as necessary.
The employee also needs to understand that they will be held responsible and Accountable for their performance to these Objectives. The employee's annual performance evaluation and the employee financial reward for his/her performance to these Objectives are fundamental to the Accountability element. With a thorough understanding of their Objectives and access to the necessary resources, they are in a position to take ownership and follow them through to completion. They are in control of the outcome.
The difficulty with employee Accountability is in understanding why the employee may not be meeting his/her Objectives. Underperforming employees fall into 3 categories:
They don't know how to do it, which is where we as leaders need to provide them the necessary tools and training.
The Objective is beyond their capability, meaning they are operating out of their experience and skill level.
They just don't want to do it. In this case we need to follow through with a normal disciplinary process.
The difficulty is in determining if the employee fits into category 1 or 2.
In all areas, leaders need to take an early assessment of the employee's Objective progress and make the necessary changes/adjustments early enough in the process in order to facilitate Objective success for the employee, department and the organization.
The third Business A is employee Accountability. This element is made up of 3-5 clearly defined employee performance Objectives that bubble up' into the departmental and organizational Objectives. For this to be successful, the employee must be have the tools, training and experience to take full ownership of accomplishing the Objective and reaping the rewards.
Closing:
By adopting this straightforward and no-nonsense approach to the Business 3 A's of Alignment, Action and Accountability, I feel that any organization can accelerate or improve its operational performance. The Tomcat Group has successfully implemented these concepts and tools for several organizations and the results were major positive shifts in organizational performance.
About the Author:
A dynamic, driven and visionary leader, Chuck Gumbert, Founder and CEO of The Tomcat Group, has acquired over 30 years of business, sales and operational experience with demonstrated achievements in leading successful Operational and Financial turnarounds and Accelerated Business Performance.
Mr. Gumbert is adept at creating synergies, gaining organizational alignment while enabling business growth through accelerated throughput, reduced product lead times, increased capacity, reduced inventory and increased cash flow in both stable and unstable environments.
For more information regarding Chuck Gumbert and The Tomcat Group, please see our website at www.tomcat-group.com
The Business 3A's
By: Chuck Gumbert
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