Outsorcing Inspiration

InspirationMotivating employees is a key leadership attribute. Hence, when morale is flagging, leaders take to the podium to deliver an inspiring speech and hope for the best. The question one may ask is ‘Is this effective? Are there better ways of inspiring staff?’

An article by Professor Adam Grant(*) suggests that it is often more effective for the leaders to ‘outsource inspiration’ to those people, who benefit from the organisations products and services – the end users. This recognises the power of leaders’ actions to speak louder than their words. By relating to end users, leaders help bring more meaning to the work and employees understand their contributions. Continue reading “Outsorcing Inspiration”

Six simple rules to manage complexity

ComplexityIn a recent TED talk by BCGs Yves Morieux suggested six simple rules to manage complexity and improve agility and effectiveness.  These rules are worth sharing. The world is getting increasingly complex. There are more demands from customers, shareholders and regulators. There is ever-increasing competition. The change is occurring faster and it is getting difficult to create value. Organisations typically respond by adding more rules, structures and scorecards. This, in, turn just increases complexity and makes it harder for the staff to actually do the work. Managers often spend 40% of time writing reports and the remaining time in coordination meeting of one type or another. They often have several performance criteria to meet. Boston Consulting Group (BCG) complexity index has gone sixfold since 1955. Continue reading “Six simple rules to manage complexity”

Fad-free performance management

IT magazine articles and whitepapers regularly publish articles such as, “Building a high performing team”, “Reinventing the workforce”, “Transforming the organisation” and the like. These articles have stories from large (usually overseas) companies where the CIO has turned an under performing organisation around (with the help of a brand name consulting firm with their brand name methodology). Local CIOs and IT managers read these articles and begin to believe they too need a major transformation program in order to turn their IT organisation into a “world-class” “high-performing” organisation.

Amidst all this hype about transformation and reinvention IT organisations forget to check if the organisation is performing the basics of people and performance management effectively. I have seen several IT organisations in which managers and team leaders are unclear about the requirements of their jobs. Apart from the mandatory annual performance review these employees are not given any feedback about how well they are performing their roles. If you ask an employee how their role supports the IT departments goals (or business goals) they often have no idea.

IT managers give many excuses as to why their employees have little understanding of their roles. Firstly, as IT managers come from technical ranks they have no people management training. Secondly, IT managers don’t like to have difficult conversations with their staff. Thirdly, many managers themselves are not clear about the business and IT strategy goals. No matter what the excuse, the end result always leads to the same outcome, an under-performing IT organisation! So what can be done? Here are some thoughts on how CIOs and IT managers can begin to manage performance.

IT managers give many excuses as to why their employees have little understanding of their roles. Firstly, as IT managers come from technical ranks they have no people management training. Secondly, IT managers don’t like to have difficult conversations with their staff. Thirdly, many managers themselves are not clear about the business and IT strategy goals. No matter what the excuse, the end result always leads to the same outcome, an under-performing IT organisation! So what can be done? Here are some thoughts on how CIOs and IT managers can begin to manage performance.

Five fad-free steps

Here are five fad-free steps to get to high performing teams. These are:

  1. Clarify the role,
  2. Understand customer needs,
  3. Improve things you manage
  4. Develop your team and
  5. Perform the role in the right way

1. Clarify the role

Every organisation and role exists to perform a function. At a basic level, the IT group normally exists to enable business by providing effective technology solutions that support business activities. The IT group is also responsible for running the technology operations in a cost effective, reliable and secure manner.  Each function within IT must directly or indirectly support these goals. Some teams focus on understanding business goals and needs; designers design solutions that are fit for purpose, developers build these solutions and operations staff ensure these solutions run reliably. Thus, understanding the role purpose is really not that complicated.

Most organisations have job descriptions of some kind. If they don’t, then the first step is to create one. I believe every job function, especially management roles, should meet the needs of the customers, improve people/process/technologies and work and behave in the ‘right way’ (team work, respect, enthusiasm etc). Sounds obvious don’t it? However, you would be surprised how many people don’t understand these expectations because many job descriptions fail to make these expectations clear.

2. Understand the needs of the customers

Every role has a customer. It exists to serve someone. Even the managing director has to serve the shareholders/ board. Most IT roles have internal customers. However, with the emergence of e-commerce, Internet banking and similar services, IT in fact services ‘real’ business customers. In addition to the direct customer needs, IT roles also need to understand the organisation’s needs. These are typically expressed via strategies, values, standards and architecture/ design principles.

Many IT people can become so inwardly focussed (because of processes, departments and skill-sets) that they forget that their role is to serve the needs of the customers. For infrastructure staff, their customers could be applications teams and for architecture staff, designers. Identifying who the customers are and ensuring that their needs are understood is the key to good performance.

3. Improve ‘things’ that you manage

Every manager is responsible for people, processes that control how the work is done and technology (e.g. applications and infrastructure assets). These elements together determine the effectiveness of service delivery and level of customer satisfaction. Even technicians and developers have systems that they look after, manage, fix, control.

Everyone is expected to improve the assets that they manage. This is fundamental part of a professional’s job and not an optional extra! There are many ways improvements can be made such as keeping applications maintainable, improving flexibility, reducing running costs, streamlining processes and improving service levels.

What if employees don’t have the authority or resources to make these improvements? At the very least, employees are expected to show how ‘things’ are better this year than the last and what they have done to make a difference, given the resources available to them. Ultimately, it is the role of managers to convince the ‘powers-to-be’ that improving the assets they manage is an integral part of the job of each employee and support the employees in this endeavour.

4. Develop your team

Improving their team and the people they manage are arguably the most important outcomes managers should be expected to demonstrate. Helping people grow, helping them improve their skills, giving them opportunities learn, gain more experience and deal with new challenges is not only important for the organisation but also for the manager. It helps the manager do their own job better and make a difference.

Developing people involves balancing individual aspirations and capability with the goals of the organisation as well as seeking development opportunities and empowering staff (i.e. giving them the tools and resources to succeed) where appropriate. The key to successful empowerment is to give staff information about the mission, objectives, strategy and dynamics of the organisation so that they can make the right decisions. Successful empowerment also involves providing support for staff if they fail, so that they can learn from their mistakes.

The key to managing for performance is to identify talent in employees and provide the right opportunities and rewards for these employees to take on more responsibilities. One organisation I knew measured managers on whether they were “exporters” or “importers” of talent.

5. Performing the role in the ‘right way’

Many IT people see their role in as being purely technical because the technical part of the job is what they are most comfortable with. However, customers and others expect more from IT staff than just technical expertise. Customers want better service and better solutions. They want IT staff to be responsive, reliable, collaborative and demonstrate team work. Many job descriptions and managers just assume that their staff know ‘the right way’ and don’t set correct expectations or address customer service in performance feedback discussions. This does not have to be a complicated process. I have seen some managers discuss these issues regularly in team meetings in which key customers and peers are invited to share their expectations. As a result, IT staff is encouraged to develop team values and behaviours.

Managing for performance

Most people want to do a good job. It is the manager’s role to clarify what a ‘good job’ or good performance means and how it would be measured. Clarifying the role expectations is the first step in managing for performance. Putting this into practice involves effort i.e. not just in formal performance reviews, but also in regular interactions with their teams.

Managing for performance need not be difficult. One does not need fads or big transformation programs or big slogans to get it right. People see through these big words when actions on the ground fail to match the slogans and strategies.

Keep it simple and fad-free! Get the basics right and ‘high performing teams’ will emerge.

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Managing talent with 9-box grid

Career pathsWhen we think of talent management, we immediately think of managing bright and high potential employees. But although ‘star talent’ are important in any business, just managing stars is not enough. A high performing team means managers have to understand the performance and contribution from all the team and manage the talent pool. Often talent management is the missing ingredient from many IT strategies. While great emphasis is given to obtaining hot technical skills managing existing talent appears to be forgotten.

I came across two management tools, one is called the ‘Career Crossroads Model’ and other is a ‘9 box-grid’. I found these tools useful with the challenge of managing leadership talent. The Career Crossroads Model also helps guide the long-term career development of individuals in the context of the organisation’s needs. I hope you will also find these useful.

Many approaches to strengthening leadership capabilities focus on individual ‘stars’ rather than the whole leadership bench. Leaders drive results and if there are gaps in their ability, performance suffers. If the gaps are known, development plans can be created.

Career Crossroads Model

As an individual progresses though careers, s/he progress through a number of natural crossroads. Usually the individual will advance from ‘managing oneself’ to ‘managing others’, then ‘managing functions’, to ‘managing business’ and so on. Each of these crossroads needs different skills and job experience. For example, technical skills are required to manage oneself whilst P&L management and business strategy skills are needed to manage a business. Individuals step into a new role, grow in that role and get ready for the next career crossroad. In good organisation practices there is no instant move from one level to another at a much higher level (e.g. from managing oneself to becoming a functional manager). Each crossroad is also called a ‘turn’ opportunity.

Performance and potential

Good potential leads to good performance. However, potential is not an absolute measure. In an earlier article, I had discussed the idea of potential being a combination of demonstrated capabilities, ambition/motivation (to take on the challenges at the new crossroads level) and alignment with the organisation’ needs in terms of career progression. The Crossroads Model helps assess potential based on prior performance. When an individual does not have all three aspects of potential, performance suffers.

Performance

In judging performance there needs to a clear and complete job definition. It must define what is required to be successful in the role as well as what customers, shareholders, team and colleagues require. If the job is described as a circle and each dimension of performance done well is shown as a line, the following representations of performance emerge.

Exceptional performance meets performance criteria in many job dimensions, whilst full performance meets performance criteria in all job dimensions (note: this is a simplified example, in reality complications such as exceeding some dimensions and not meeting others can arise). Exceptional performers need to be given larger jobs otherwise they will leave and find challenges elsewhere. Developing performers on the other hand, need more time in the role and need help to improve their performance.

Levels of Potential

There are three levels of potential: Turn, Growth and Mastery.
1.Turn Potential – The ability and desire to move to a job at a higher level on the Career Crossroads Model.
2.Growth Potential – The ability and desire to move to a bigger/more complex job on the same level.
3.Mastery potential – The ability and desire to balance current and changing job requirements and deepen experience and specialisation on the same current level.

The 9-box grid

The 9-box potential performance grid provides an easy way to plot leadership talent in the organisation on a single page. It’s a great way to create an open dialogue amongst a leadership team. Open discussions and multiple perspectives allow better calibration of ratings and expectations and a shared ownership of the organisation’s talent pool. It’s a great way to identify development needs and succession planning opportunities.

Using the 9-box grid

The grid is used in two ways; to plan individual career development and to plan and manage the talent pool in the organisation. There is development action associated with each of the 9 boxes. In brief these are:

  1. Ready for a move to the next level within the next 12 months.
  2. Move to a larger role on the same level within 12-24 months.
  3. Coach and develop to be exceptional performer.
  4. Leverage mastery for the benefit of the organisation. Reward and recognise. Use their help to develop high performers.
  5. Manage /coach to improve performance.
  6. These can be employees who have moved to a new level. Coach/ develop to continue to have a turn potential.
  7. Develop to become exceptional performers.
  8. Assess the reasons for lack of performance. Coach/develop to become fully performing.
  9. As above or move out in the next 12 months.

Effective organisations have a mix of people in all the boxes. Many organisations just focus on the top talent (boxes 1-3) and forget the needs of the people in other boxes. Employees in the boxes 4, 5 and 7 are valuable employees who can have deep expertise in their areas. The challenge is to keep the skills of these employees up to date as business and technology changes. Over time the market forces and change would push the performance levels up, so staff would need to keep up to maintain full performance. Managers ought to help employees improve performance as well as try and lift growth potential of the team.

Ideal talent mix

Different business situations demand different mixes of talent.
Start-up – An organisation in the start-up or high growth phases would need to have a much higher proportion of high potential individuals than one in the mature stages. Start-ups require a high number of ready to grow employees and leaders as well as seasoned professionals (box 4).
Growing business – A growing business needs a high proportion of exceptional performers and a pipeline of talent to move to the next crossroad levels as the business grows and new opportunities emerge.
Consolidation – A business in a consolidation mode
would not have many opportunities for people to take on larger jobs. Hence, they would need lower numbers in boxes 1, 2, 3. There may be more people in boxes 8 and 9 as they try to do more with less and raise the bar.
Normal Business – In a normal business, the ideal mix may look like the below. There would be smaller proportion of high performers and low performers with the middle performers / mid potential staff in higher numbers.

Conclusion

The 9-box model provides an easy and effective way to manage talent. It helps identify the category of the employee and tailor appropriate development plans to groom them. When there is a shortage of talent it is even more important to use the model to optimise performance and help employees grow within the organisation. What I like about the model is that it does not solely focus on high fliers but also recognises the important role played by the ‘solid’ performers who keep the organisation ticking along.

Becoming a performance driven organisation with balanced scorecards

Introduction

A lot of effort goes into developing sound strategies for performance improvement and getting them endorsed by the board and the executives. Initially there is a flurry of new activities and initiatives. But a few months down the track, day-to-day operations seem to take over and strategy is relegated to the bottom of the pile.  The bulk of the organisation continues to do what it did before. As a result, the performance of the organisation remains unchanged.

What is typically missing is the process for turning the broad thrust of a strategy into specific measurable performance goals, and assigning accountability right through the organisation. A balanced scorecard turns a strategic plan from a passive document into marching orders for the troops on a daily basis.

Executive Summary

Strategy describes where the organisation now is and where it aspires to be. It also describes the broad initiatives that the organisation plans to take. It may describe key focus areas, process changes or capability-building initiatives or projects that are necessary for the achievement of goals. Strategy execution needs the ability to take a very broad-brush strategy and find, prioritise and carry out the key things that need to be done to put that strategy in practice. A successful execution means that the goals are set, accountability  assigned and the results reviewed.

A balanced scorecard (BSC) is a one-page document that outlines an organisation’s key performance goals and indicators (KPIs), usually covering financials, customers, execution and people.  These KPIs are driven from the company’s strategic intent. A BSC is critical for a performance-driven organisation as it creates a common view of performance across a range of objectives. For the business, KPIs are the “guiding force” that link strategic goals with day-to-day execution. This allows managers to have a better understanding of how to improve the business. Across and down the organisation, business units and teams then define supporting targets and KPIs, which results in a hierarchy of KPIs cascading down from the corporate strategy.

Why balanced scorecards?

  • We all know that ‘what gets measured gets done’. Organisations are faced with multi-dimensioned challenges (e.g. how to improve service and cut costs?). Balanced scorecards cater for many dimensions by allowing for simultaneous focus on multiple performance areas.
  • Organisations expect the strategy execution to happen in parallel with the ongoing service delivery. Merely tracking strategy execution progress can result in too much attention on strategy and not enough on service delivery. Different managers also have different accountability for delivery and strategy execution. BSC enable addressing these competing demands in a rational way.
  • BSCs also give the ability to assign joint accountability to multiple teams in the areas where joint effort is required to achieve results. Silo behaviours result where managers are held accountable for only the direct performance of their internal processes. External service or customer satisfaction outcomes result from end-to-end process execution. BSC makes this clear and enables teams to be jointly held accountable for the overall outcome.
  • In many organisations, scorecards are used only for the senior managers or executives. In fact, scorecards that cascade down many levels of the hierarchy are more effective. Here, the executives’ KPIs are directly linked to the KPIs of their managers and team leaders. There is clearer accountability for results. Cascading KPIs offer better drill down ability, allowing quick diagnosis and action on performance issues.
  • For teams lower down the hierarchy, this linkage shows, how they are contributing to the overall performance and achievement of the strategy. This can result in staff believing that  “my job matters”.

The goal of metrics is to enable managers to get a complete picture of the performance from multiple perspectives, and hence make wiser long-term decisions. As a management system, balanced scorecards enable regular feedback around both internal processes and external outcomes. Good BSCs capture feedback from the customer (or external) perspective and help analyse it with metrics from the internal processes. This encourages continuous monitoring and improvement by the teams as well as improvement in strategic performance across multiple areas.

Figure 1 – Balanced Scorecard Process

Setting the balanced scorecards is a six-step process. The first step is getting the commitment from the executive sponsor. Strategy mapping then identifies the key performance areas/indicators to focus on. The third step, selection of performance metrics, is at the heart of balanced scorecards. Having the right metrics with well-understood definitions is critical for a successful implementation. Fourthly, it is worth investing time to refine the quality of data used in the measurements and assign responsibilities for data collection to impartial staff. The fifth step, regular review, includes checking the quality and effectiveness of the metrics. The last step is to refine the performance indicators as the performance or strategy changes.

Ten Key Lessons for Balanced Scorecard Implementation

  1. Scorecards are most effective when they are linked to pay and performance management. Without this link there is little incentive for staff to take KPIs seriously. Top-level sponsorship is needed in order for this to happen.
  2. Good scorecards are brief; say one page, with around ten measures of what really matters. A business view of performance is more valuable than an internal view.  Ideally, the scores should show expected and superior performance levels. Scores weighting should be used to derive the performance ratings.
  3. Strategy Mapping will show key areas where performance must be lifted. Typically, the areas covered are financials, customers, execution and people.
    1. Financials cover profits, budgets, return on investment as well as key measures of risk.
    2. Customers cover areas that are important from a customer perspective. These could include customer satisfaction, growth/ attrition in customer numbers, number of complaints, etc.
    3. Execution (internal business process or delivery) covers how well the internal processes of the organisation are running in delivering the strategic mission for our customers. It includes key indicators of service delivery, such as service levels, reliability, on-time-performance etc.
    4. People (learning and growth) covers organisational development and ability. IT is a knowledge-worker organisation. Metrics on ‘learning’, ‘sharing’ and ‘retaining’ knowledge can be used. Metrics can cover talent management, training, turnover, and employee engagement. Some organisations also include “social responsibility”, e.g., volunteering, presentation at industry forums etc in this section.
  4. Unclear definitions undermine effectiveness. It is worth spending time in creating common definitions of the key measures. Assign data collection responsibility and review data for consistency and quality.
  5. Avoid seeking perfection with the measures or the scorecard. Measures that are 80% right can still yield valuable performance data. It is important to set up and practice the process of collecting the data, reporting, review and actions than to seek perfection. Focus on getting an acceptable level of quality.  An iterative approach works best allowing all participants to learn and refine. It is also important to remember that trends are usually more valuable than absolute values. Similarly, over reliance on tools or data collection automation at the beginning will detract from getting value from the scorecards.
  6. Meaningful performance results from understanding the desired outcomes and the internal processes that are used to generate these outcomes. Outcomes are measured from the perspective of customers while process metrics are from perspective of process owners. Usually, process metrics are used for teams while outcome measures are used for department/ service managers. Do not confuse output (what we produce) with outcome (what we produce).
  7. Drill down ability is valuable in analysing performance and improving data quality. Without adequate drill down ability, there will be greater subjectivity in interpreting results, which may result in inappropriate corrective actions being taken.
  8. Assign shared accountability to common measures such as customer satisfaction, where many teams have to work together to deliver satisfactory service to the customers. Joint responsibility will avoid silo behaviours being rewarded.
  9. Organisations that openly share the balanced scorecard results and communicate performance (and the challenges) with their teams and peers create greater commitment from their teams. It also helps to show how everyone is contributing to performance and how collective actions can improve the results.
  10. When planning to cascade scorecards through multiple levels of management in the organisation, it is best to tackle one level at a time and use an iterative approach.

For a detailed discussion and/or information on how you can use balanced scorecards to become a performance-driven organisation, please contact the author.