Many communication departments are in the same business they were in 25-30 years ago—informing “audiences,” which conjures images of someone speaking to an audience.

A confluence of forces including customer demands, increased competition, technology, regulation, environmental pressures and workforce changes are requiring every department and function to generate more value.   The business reality is that budgets that generate acceptable returns aren’t as likely to be cut as those that don’t.

True, not everything that’s done in a communication function–or any other function–adds the same value in terms of its contribution to cash flow, customer satisfaction, operating income or whatever financial measures the company is chasing.

But these forces and the need to add value are requiring communication departments to shift from being a source of information directed at audiences, to a function that eliminates communication defects impeding organizational performance among and within teams.

This shift makes sense to customers who benefit from improved quality, delivery and value. It makes sense to business leaders who can gain a new resource for measurably improving organizational performance. And it makes sense to those in the communication department who can go home at night knowing they influence something important to the greater good.

Communication department transformations today are not unlike those that occurred in HR in the late nineties, or in manufacturing and supply chain management before that.

• Using rigorous analytics to focus the department’s work on activities that increase value–work that improves business results. (One auto company CEO told me our approach was similar to portfolio management.) This helps eliminate low value work that’s traditionally been done because “it’s always been done.”
• Adopting lean six sigma principles and processes that weed out the nice-to-do activities that add no value to the customer who buys the organization’s products or services.
• Shifting the focus from generating output to creating outcomes that are consistent with the higher level organizational measures. This includes eliminating communication breakdowns that cause people to underperform, like mixed messages or inaccurate information.

This systems-wide approach requires far more integration with other disciplines and departments, such as HR, finance and line operations, where much of the money is made.  And because the department is becoming more business-focused, it often requires new skills and knowledge, including business and financial literacy.

As the work becomes directed toward higher value activities, there’s more focus on systems and processes (e.g., measurement, rewards and recognition) that communicate and affect performance more powerfully than, say, newsletters and portals.

Communication departments have an opportunity to shift from a pure cost center to one that adds measureable value when the gains it creates are greater than the cost of creating those gains.

That’s a good news story all around.

Open book management is a leadership philosophy that’s grounded in the notion of creating businesses of business people where everyone in the organization thinks and acts like business owners.

People in open book companies are steeped in business literacy, work daily to improve the financials, have huge amounts of financial information available to them (hence, the term open book) and their rewards and recognition are tied to financial performance. People who see open book for the first time are “blown away.” Their words, not mine.

Here are some quotes from SRC people:

“VP’s and above don’t really know much. It’s the wisdom of the crowd that makes us much smarter.” (Comment from an EVP)

“In traditional organizations, leaders go to bed every night not knowing what they don’t know. We know what we don’t know because everyone is so involved.”

“Many leaders have a Santa Claus complex. They only want to share good news.”

“It’s liberating to give people the information they need to make better decisions.”

“Our leadership meetings help us identify where employees are constrained from doing what they want and need to do to get things done.”

The four key points from last week’s visit:

• Communication management is, as it should be, future focused through the windshield. Most companies manage communication historically by reporting what has happened—through the rear view mirror. Sure, we want to know if we’re winning or losing but the emphasis should be on numbers we can do something about.
• Don’t think about top down and bottom up. That’s old thinking. Think about lateral conversations—people collaborating to get the job done better. Ban we-they thinking and language.
• Focus on the critical number you’re trying to improve—the one that provides organizational focus and that everyone can influence. So-called “messaging” becomes old way because the focus is less on talking points and more on the numbers that represent the real game that’s being played in business.
• If you have a trust problem, open the books. If you won’t open the books—even a little—you’re perpetuating the trust problem. Can you continue to lead if you’re not trusted?

What’s your biggest barrier to opening the books? Leaders who don’t trust their people? Fear of exposing reality? Saddled with the myth that the SEC won’t let you?

I initially heard “time is currency” when I was working at Microsoft. Referring to Bill Gates’ obsession with time management, my host told me they refer to his time as “Bill capital.” “It’s a strategic asset that we monitor regularly.”

I was recently reminded of that comment when I was waiting for a client to start a weekly leadership meeting. Scheduled start time was 10 am. At 10:15, people were filing in as though it were a backyard barbeque. There was no sense of urgency. The meeting ran 20 minutes late.

Contrast this experience with one I had when I was working with GE Chairman Jack Welch at the company’s leadership institute in Crotonville, NY.

Welch and I were facilitating an afternoon session on leadership for Amtrak, who was one of my clients. Welch’s office had sent me his schedule for the event: Helicopter lands at 1:10 pm, he speaks at 1:15.

Sure enough, at 1:06 pm I heard the whop-whop of the chopper blades. It landed at 1:10 and we started precisely at 1:15.

• Being on time means people can count on you.
• Being on time shows you respect others around you.
• Being on time communicates you have your act together.

Of course there are extenuating circumstances when you simply can’t help being late. But not chronically late.

Being late means you’re undisciplined. If you can’t manage your own time, why should I put my trust in you?

Being late probably means you’ll run late. When you run late you do so at my expense.

When a group of people schedule a time to start, they’re making a contract. When you show up late, you’re breaking the contract. Why bother to agree to a start time if you aren’t going to live up to your end of the deal?

When a television network or cable channel says a program will start at 6 pm, they don’t start at 6:03 because someone couldn’t get through traffic or misjudged how long it would take to get to work because of the rain.

6 pm is 6 pm.

Last year, I worked with a company that had a gain-sharing plan for hourly people. Employees worked to create gains that they, in turn, shared. It was a relatively decent design but its implementation was flawed. As a result, it became perceived as a form of entitlement—something employees deserved. Even worse, they had no idea how to create the gains.

Here are some characteristics of good incentive plans:

The right targets
There should be a clear line of sight between what people do and what they can influence. Expecting hourly people to connect to an earnings-per-share goal is a bit of a stretch. But connecting them to reducing scrap or re-work in their area provides line of sight. The incentive needs to focus on targets that drive results because results fund the payout. If there’s no gain, there’s no payout.

High involvement
People are more apt to actively participate in an incentive plan that they’ve helped design and set targets to achieve. They will work like the devil to hit the stretch targets that they have set. In most cases, people will beat their own goals, even if they are high.

Leaders at all levels, but especially first line leaders, need to promote high involvement and a disciplined continuous improvement process that fosters root cause identification, problem solving, solution testing and refinement.

An information-rich environment
Goals and actual performance information should be as available to the incentive plan participants as a sporting event scoreboard is available to the players on the field. And they should have the information they need when they need it to improve work and results. This includes information about the workings of the business and what it takes to “improve the score.”

The right payout at the right time
Payouts should be large enough to get attention, yet frequent enough to connect the work that was improved with the results that were created. For example, if the incentive is paid annually, the line of sight between work and results is so long that most employees forget the plan exists. Monthly or quarterly payouts (with a form of hold-back in case the company tanks late in the year) keep the effort, results and payout connected.

Everything that comes after is merely repetition.

Not long ago, I spoke at Darden, the big full-service restaurant company and a Fortune 100 Best Places to Work.

Darden screams, “Great Company!” even from the highway.

My Darden host, knowing I fancy myself as somewhat of a foodie, took me back stage into the Olive Garden test kitchen where I watched the chefs create some new entrees. I was like a kid in a candy store.

That’s what we all say we are these days. But when is “crazy busy” a waste of time?

Well, how often do you manage your time according to the value it adds to your business?

An organization’s role is to create value for its customers and continuously improve the process, so more value can be added.

This is the concept of lean. Leading an organization using lean principles and a lean mindset is becoming a big deal everywhere.

If you’re not pruning waste out of your core process—like converting raw materials to something customers’ value—you’re likely to be at a competitive disadvantage.  You can bet your competitors down the street are pruning madly.

How can you add more measurable value today than you did yesterday? How can you add more value tomorrow than you will today?

Check your calendar. Is what you’re doing every hour today adding value to your core process, or is some of it draining value from that process?

Will you say “no” to a meeting that you know will not add value to the organization’s core process?

When you’re in the throes of a petty, political conversation, are you willing to stop and ask your fellow “politicians” whether the discussion you’re having right now is something the customer would be willing to pay for?

Will you give up some sense of control by delegating a lower value-adding task to someone who makes less money than you do?

Will you prune your core process today? The other guys might be doing it right now.

In my book The Leadership Solution, I discussed how leaders can use questions to signal their priorities. If you want to improve speed to market, ask about speed to market issues. If you want to focus on customers, ask about customers.

If you want to increase innovation, ask about new ideas.

Two companies I’ve worked with recently have used employee surveys to try to surface barriers to innovation. Sure enough, the questions related to management’s interest in new ideas received low scores (56% and 38% respectively).

If you want to be more innovative, you absolutely must be viewed as someone who wants fresh new ways to take care of the customer.

The question I’ve always liked best is: “What do you think?”

What counts is what you count.

Among the CEO’s I work with, getting people to work together across functions and departments is one of the top issues. Why then, do others guard turf and focus only on their department, business unit, function or geographic area, which is often at the expense of the company’s overall health?

With the assumption that few if any of us get up in the morning relishing another emotionally-draining day of battle with our teammates, I believe we aren’t willingly creating the silos. Systems create them and they usually start within the goal setting and reward systems. These two systems communicate what’s expected in a powerful way.

If you want integration, check to see if your leaders have shared goals. The way I do it is to use a simple Excel spreadsheet, listing the leaders down the left column and company goals across the top. Fill in each leader’s goals and weightings. You should be able to see quickly if you have a problem. The goals will be out of whack at a glance.

Here’s what you should focus on:

• Keep the number of goals to a minimum—the critical numbers. Having a small number of goals clarify priorities. Having many goals confuse people as to what’s important.
• Company-related goals should be shared by the leaders and weighted heavily.  This makes it clear what’s important and creates interdependencies among the leaders. That is, the goals should be set so that individual member rewards come as a result of the entire team winning.
• Business unit or functional goals should be secondary, so they should receive lighter weightings. They should drive the overall corporate goals.

If you’re trying to integrate your organization, start with the exercise I use and see what it tells you.  Then, if necessary, modify the goals and weightings to eliminate silos, integrate the organization and improve overall results.

For this reason, savvy business leaders target their engagement efforts where they’ll get the biggest returns and the most leverage. You can do this, too.

What do they do that you can do?

For those who missed an earlier Leadership Report, let me reiterate two fundamental, but not universally understood, notions about engagement.

First, employee engagement is a condition that occurs when your employees share the values and purpose of the organization and are willing to “do whatever it takes” to help the organization succeed.  The condition must be properly directed at hitting or exceeding operating or financial performance goals that are important to your business. When you do this well, you’ll hit those goals more efficiently. It’s the equivalent of driving your car to a destination on eight cylinders instead of five.

Second, engaging people requires hard work and resources, as do so many things that are worth doing.  There’s a cost associated with increasing employee engagement.  But the return can be huge—or it can be small. In fact, somewhere along the line, there can be a point of diminishing returns where the cost to engage people is greater than the gains increased engagement can create.  (Do you have to be at a six sigma level (99.9997 defect free) in everything? Most would say no.

Initial efforts to engage people often—but not always– should be focused where the potential gains are the greatest.  Below is a Pareto chart (named after Vilfredo Pareto, which is why it’s always capitalized), representing five cities where a company maintains distribution centers. The height of the bars reflects the number of customer service complaints each facility received in a given unit of time.  The percentage numbers above each bar reflect the engagement scores (on a scale of 1-100) for that facility.

The data tell us that the biggest opportunity for improvement is at the Atlanta facility where the complaints are the highest and the engagement scores are the lowest.  This shows us where the potential opportunity is to improve engagement, but doesn’t necessarily tell us the size of the potential return on the investment (ROI).

To calculate the ROI, we need to know answers to some questions.

1. What’s the size of the problem caused by the complaints? This might be reflected in warranty costs, the cost of rework, processing customer returns or loss of contracts or future sales.
2. What are the root causes of the complaints and what actions and investments are required to make the root causes go away and lift to occur?
3. How much of #1 and #2 above do people have control over? That is, to what extent will an investment in engaging people modify discretionary effort, eliminate root causes and create the gain?
4. Knowing the size of the investment and the size of the gain will reveal the ROI.

It’s important to appreciate what employees can and can’t control through the use of their discretionary effort. To use an exaggerated example, insurance company employees have no control over where a hurricane hits. But, they do have control over how accurately or quickly they process the claims.

Similarly, the employees in the Atlanta facility in the example above have a lot of control over what goes on inside the four walls of the distribution center. But control over inventory levels may be dictated by a corporate supply chain operation, something employees in the distribution center may have no control over. Yet the inventory levels may be too low, causing late shipments that are spawn the customer complaints. So, it’s important to focus engagement efforts where people have control over the results that need to be improved.

Typically, the ROI is higher where the opportunity is the greatest. As a leader increases engagement over time, performance goes up and the so-called low hanging fruit gets picked. Reducing cycle time, for instance, becomes increasingly challenging as the degree of difficulty goes up. Eventually the investment/return lines can cross and leaders need to decide whether to keep improving performance at a cost that may well be higher than the cost to create those gains. That’s, as they say, a strategic decision.

However, as I’ve said many times, aiming for a 100 percent engaged workforce is a fool’s errand in almost all cases.

I hear this question frequently—most recently by someone in Turkey—about transforming an organization into a lean one.  It’s always worth learning from those who’ve gone before you, especially if it can avoid costly missteps.

For those new to lean and its brother, six sigma, lean is a concept that focuses on maximizing value by eliminating waste. Six sigma is a measurement of variation. It’s used to improve quality. Successful lean transformations are characterized by the performance improvements they create and their staying power. That is, lean becomes a way of doing business, not another program of the day.

There are two components of lean. One is the technical, or hard side of business; the formulas, measures and processes. The other is the cultural, or the soft side that includes issues related to leadership, communication and rewards.

The starting point?  Without equivocation, I advocate that the cultural side of the change effort must be addressed first.

In every situation where I’ve been asked to help “fix” a lean transformation gone bad, the problem had been created by addressing the hard side first–changing work processes or imposing new performance measures that no one understood.  Tools, techniques and work processes were implemented on top of a value system that was incompatible with lean.

Starting with leadership, communication and involvement issues takes time. But sometimes we have to go slow to go fast. Getting the cultural issues down right will cause the lean effort to skyrocket, once you marry up the technical and cultural sides and begin the integrated implementation.