Archive for May, 2009

Driving Organizational Results

Improving organizational results.  As business leaders, that’s what we’re interested in doing.  And, in this economy, improving organizational results is even more critical than ever. 

Lots of articles offer advice, but does the advice ever really work?  Here, based on sixty plus years of our experience in helping organizations make improvements, are three keys to improving results in your organization.

Organizational Truth #1
The first key to improving organizational results is this:  Organizational results are a function of individual employee performance.  Read that again.  Now, before you skip ahead, stick with me.  I will acknowledge that some readers will think that this truth is quite obvious.  But, stay with me.

Let’s walk through an example.  For the ABC Company, an increase in gross profit last year is probably due to numerous factors; getting better prices from suppliers, increasing productivity, innovations to deliver products and services more cost effectively and so on.

Here’s where this organizational truth comes in.  Those improvements happened because employees, individually and collectively, took the initiative to seek out and implement those improvements.  Makes sense, right?  So, the organizational results are the outcome of the individual efforts to bring about the improved results. 

But, here’s the kicker.  If this organizational truth is obvious, let me ask you this.  Why, today, in hundreds of companies around the world, is some business leader pounding his or her fist on the table about the need to improve their results?  The focus of the lecture and the discussion that follows is about the results.  Our results compared to our #1 competitor’s results.  The changes that will take place if the results don’t improve.  And, the questions about one or more manager’s ability to do the job. 

The business leader may feel better after venting, but the meeting is not a productive one because the fact of the matter is that yelling about the results and staring at the results won’t change the results.  Not only is the meeting not productive, but the blood and broken glass left in the wake of the meeting is actually moving the organization backwards.

I’m not suggesting that results shouldn’t get measured or reviewed.  I’m suggesting that the focus of the meeting would be more productive if it focused on how we’re going to improve employee and organizational performance.  What new actions and behaviors will employees adopt that will eventually drive improvements in the organization’s results? 

In the heat of the moment, we forget that focusing on improving employee performance instead of yelling about the results is a far more productive way to improve organizational results.
 
Organizational Truth #2
Organizational structure, by its very existence, is dysfunctional.

Let me start with an example.  Over the course of the years working with my clients, I’ve been presented with existing or proposed organizational charts that were designed with 2 co-leaders at the top of the organization.  Some of you have lived in this bad dream like the movie Ground Hog Day, where Bill Murray plays a Meteorologist who relives ground hog day over and over.

The reality is, that no matter how well intentioned, 2 co-leaders at the top of an organization will, over time, pull the organization or team or committee apart. 

That’s an example of an organizational structure that’s badly designed from the start.
Here’s an example of a well designed and well intentioned process that has unintended consequences.

You work for a major high end retail department store.  You’re a senior manager.  The customer survey came back and you’ve developed an idea that will get you some attention with the higher ups.  You say “I’ve analyzed the data and our customers are complaining that when they call the store they can’t ever get connected to a knowledgeable person to find out if something is in stock.”  You go on to suggest that the phone calls, which have, up until know, been routed to customer service reps, should get routed to the employees in each department because employees in the departments have the best knowledge and the best information.  You also suggest that maybe we could eliminate one or more of the customer service reps in each store and cut costs.  Brilliant, your boss says.  And you implement the plan in all stores.

What’s better than having the most knowledgeable employees with the most accurate information help the customer?  Nothing.

Except, the next year, you find out in the surveys that customer satisfaction has gone down.  Now, put yourself in the customer’s shoes.

I’ll grant you that men and women shop very differently, but stick with me.  You drive to the mall.  Ah, that familiar smell.  You’re on a mission.  You brought your wallet and you say to yourself “I’m going to buy something today.”  Life is good.

You walk toward the counter in the department you’ve visited so many times before.  A seasoned employee sees you, smiles and prepares to greet you and……the phone rings.  It’s a customer who saw the ad yesterday in the paper and wonders if the store carries a petite size in a softer shade of green and if the store will price match the competitor’s price.  That’s at least a ten minute call, while you, having driven across town, with your wallet in hand, ready to spend money, you have to wait.

Our well intentioned organizational structures, by their very existence, create dysfunction.

Now, you’re not in a class I’m teaching so I can’t collect this homework, but here it is.   Take a blank sheet of paper, fold it up so it fits in your pocket or purse.  And, over the course of the next three weeks, write down every dysfunctional process you encounter in every interaction you have OUTSIDE of your company. 

The dry cleaners.  McDonalds.  The coffee shop.  The store at the mall.  The car repair place.  The furniture store.  The doctor’s office.  The contractor who’s doing work on your house.  Document every dysfunctional process you encounter.

Then, and only then, start to discover every dysfunctional process you and your customers encounter within your own company.

For those clients of mine who have taken this homework assignment seriously, my clients report back that they have reduced costs and improved sales by as much as  $250,000 per year in the first year.  What could you do with an extra $250,000?

So apply this organizational truth in your organization:  Organizational structure, by its very existence, is dysfunctional.

Organizational Truth #3
Every business challenge has both an organizational structure component and a human behavior component.

Let me prove this organizational truth with a couple of real life examples from my work with clients.

You’re working at a company that produces custom printing jobs.  You know that you need to significantly streamline the ordering process.  Customers used to give you 7 – 10 days to deliver a job, now they want it in 3 – 5 days.  Structurally, you need to reduce the 13 step order process down significantly.  You meet with the employees involved and you finally get support for a streamlined 4 step process that will allow you to meet the customer’s 3 – 5 day requirement.  So, you implement it.

A few weeks later, you realize the new 4 step process now has 7 steps.  A week later, the new 4 step process has 11 steps. What happened?  You included employees in the process of developing the new process so that they would buy in.  And you explained that the process had to be streamlined or that you would lose more business to competitors.  What happened?

Here’s what happened.  On the human behavior side of this business challenge, the manager responsible for the process really believes that some of those steps taken out were really necessary.

The structural side of this business challenge was dealt with.  The process was reduced from 13 steps to 4 steps.  And, to some extent, the human behavior side of this business challenge was also dealt with.  You included the employees who would be affected in the design of the new process to ensure their buy in.  But, the manager of the process eventually had significant reservations about losing some of the steps eliminated from the process and unofficially re-introduced them. 

If the human behavior side of this business challenge is not fully addressed, this effort to streamline a business process will fail.

Here’s another example.

One CEO, a year before we met, moved his company from one building to another building less than one quarter of a mile away.  In fact, you could see one building from the other. 

The new building was bigger and allowed him to accomplish one of his primary goals.  He wanted his senior managers to be located in the departments that they led.  This wasn’t possible in the old building.  So, before buying the new building, he took great care to have drawings done to see if it was possible to accomplish his goal.  It was possible so he bought the building.

What he didn’t anticipate was the impact that reorganizing the office layout would have on the organization.  And it was far more than people getting used to things just being different.  Some interactions became easier as a result of where people sat.  Other interactions became more difficult.  That makes sense. 

But specifically, the informal relationships between people in different departments who used to coordinate things informally became more difficult and happened less frequently.  As a result, some balls got dropped and customers noticed.  Human behavior used to cover for an inadequate step in the process, but that didn’t happen anymore because those people were no longer located near one another.

In addition, locating department managers in their respective departments actually had a negative impact on employee morale.  This came out in interviews I conducted with employees at the CEO’s request.  Employees were not used to their managers always being around.  Over the course of the first year in the new building, employees developed a perception that their managers were watching them and, in some cases, employees reported that mangers were micro-managing them.  They didn’t see the connection between these perceptions and the move to the new office building.

When this CEO and I met, I asked him about the move into the new building.  He said flat out, “I’ll sell the company before we ever move again.”  He and I discussed this organizational truth and he gained insights he could apply to every business challenge.

So, if you’ll remember that every business challenge has both organizational structure components and human behavior components, you’ll more effectively deal with those challenges and move your organization forward.

That’s it.  Here are the three organizational truths:

• Organizational results are a function of individual employee performance.
• Organizational structure, by its very existence, is dysfunctional.
• Every business challenge has both an organizational structure component and a human behavior component.

If you’ll apply what we’ve talked about today, you’ll improve productivity, build competitive advantage and make improvements more successfully.  Keep it up and you’ll see organizational results improve as well.

If you found this information helpful, subscribe to our blog to receive more insights into how we help companies improve employee performance and organizational results.  Our website is www.orgresults.net and our blog is www.orgresults.net/newsblog.

Change is a Double-Edged Sword

Change is the buzzword these days, especially in this new economic reality.  The economy is forcing us to make organizational changes to adjust to the “new normal.”  As you make changes in your organization, beware that change is a double-edged sword.

Organizational change, when done well, brings improved employee performance and organizational results.  Companies become more focused on the customer.  Processes are streamlined as redundancies are eliminated.  Employees are more engaged in achieving organizational goals.

On the flip side, change can bring confusion, miscommunication, resistance and failure.  Here are five reasons not to take change efforts lightly:

• First, the status quo, the current situation today, is less disruptive than any change, even a good one.  As human beings, we prefer a stable situation to a changing situation.
• Second, as bad as the current situation is, the current results could be better than the results achieved with the new way of doing things.  If the change effort is poorly implemented, the new process could, in fact, generate poorer results than you achieve currently.
• Third, changes have unintended consequences.  Every decision has consequences.
  For example, you restructure your customer service process and organize customer service people by industry instead of by sales person.  It will result in better service because they are more knowledgeable about the customer’s industry.  That’s great, except that your customers still prefer to deal with their “favorite” customer service rep. 
• Fourth, the chances of success are low.  The reality is that the data on the results of change efforts tells us that the chances of successfully implementing any change initiative are low.  The fact is that the pull of the status quo is very strong and very resistant to change.
• Finally, employees will only give you so many chances before they tune you out.  Employees will say “Here they come with another flavor of the month,” as they learn to tune you out because they have “real work” to do.

Lead your organization boldly and make the changes necessary to move your organization forward.  In the process, be aware of the pitfalls of change efforts and work to minimize their impact on your progress.  Lead on!