Helping CEOs Add Value

jim | April 16, 2013 | Communication, Leadership, Lean/Six Sigma, Performance Management, Strategy Clarification and Execution

The CEO of a Fortune 200 company had regular town hall meetings with his employees for years. When we conducted focus groups with employees to learn what they thought of the meetings, they liked what the CEO said during the town halls but when the meetings were over employees didn’t know what they were supposed to do differently as a result of the CEO’s message.

“We want to help but don’t know what to do differently,” one employee said.

Were the CEO’s town hall meetings adding value if nothing changed as a result of them? Not if you subscribe to the lean definition of value–any action or process that a customer would be willing to pay for.

I know many people who would say the CEO’s visibility and willingness to communicate information about high level strategy added some measure of indirect value. To some extent I agree. On the surface, he didn’t do any harm.

But to a larger extent I disagree. Resources were spent on the town hall meetings. Employee downtime added to the cost. But work didn’t change. And because work didn’t change, results didn’t change.

So the effort was a pure investment with no short or anticipated long term gain. Try as you might to make a thoughtful gesture equivalent to adding value, it isn’t. Is it safe to say that the CEO town halls were actually draining value from the organization? If the CEO is getting paid to increase shareholder value, did the town hall meetings reflect an activity that was counter to the CEO’s goals?

I believe so.

So, should the CEO stop conducting town hall meetings. No. The company should supplement the town hall meetings with other activities that interpret the CEO’s message to the people in the organization. Business unit and department leaders need to interpret the CEO’s message. They need to explain:

How company goals relate to our business unit of department goals.
Here’s what we need to do to drive corporate success.
And then relate this to the various people in the organization.

The sales person in the field, the brand manager at headquarters, the R&D people in the lab, the inventory manager, the machine operator, and the folks in shipping and receiving all need the information custom tailored for each area.

Leaders at all levels then need to make sure that everything they say and do are consistent with the CEO’s message. They need to make sure people have the resources they need to get the job done. Then leaders need to get out of the way.

The CEO’s town hall message adds value only when it gets translated and communicated throughout the organization.

We Do That

jim | January 29, 2013 | Leadership, Performance Management

A client recently asked how some companies are able to develop such strong leadership teams. So, I spent a couple of minutes explaining how companies like IBM, P&G, 3M, PepsiCo, McDonald’s and General Mills clarify their expectations for leaders and then select, assess and develop them based on those expectations.

These companies also use the performance management process, often including a healthy portion of incentive pay, to hold leaders accountable for assuming the agreed-upon roles and meeting or exceeding expectations. They make it abundantly clear that what you achieve in terms of financial or operating results is as important as how you achieve it.

My client grimaced and responded, “We do that.”

I hear “We do that” from too many business leaders who confuse adopting basic fundamentals with executing them exceptionally well. They confuse checking the box with an obsession to be excellent. They confuse having a great plan with having great execution.

How well do you, “do that?”

A CEO’s Lost Connections

jim | October 4, 2012 | Communication, Employee Engagement, Leadership, Performance Management

The CEO of a large company recently expressed frustration to me because he had a sense that his people weren’t connected to his vision and the strategy—“despite having explained it maybe a hundred thousand times,” he said.

“We need to connect people,” he said. “People in the field need to understand that if they keep doing the same things, we’ll just get the same results. That’s not good enough.”

Lack of connectedness, both vertically and laterally, is rampant in companies. It represents a form of organizational friction that prevents people and the business from achieving performance levels that are otherwise achievable. Many employees don’t know how their work directly affects company goals (vertical connection), or they are beset by organizational silos that practically dare people to work together (lateral connection).

Everyone reading this Report is part of an organization dealing with this type of friction. No company is immune. Many companies, however, have done a stellar job making the connections.

One of the best places to start improving connectedness is by building business and financial literacy. It arms people with the information they need to make better decisions. Better decisions lead to smarter actions that produce better results. The more you properly connect, the better your operation gets.

Business literacy teaches people about the competitive marketplace, customers and their requirements, the company’s products, services and market position. Financial literacy teaches people about the real game. The money game. If we don’t make money, we won’t be around no matter how noble our cause.

Real-Life Example

A high tech engineering company we work with has taught its employees how they can influence cash flow. The parts inventory manager knows she needs to maintain just enough inventory to make sure the machine operators on the manufacturing floor can meet the promised customer delivery date. If she can’t get a needed part to the machine operator in time, she’s messing with cash flow because the customer isn’t going to pay for the product until it’s received.

Is it an extreme concept to think that every person should understand their impact on the business? Is it an extreme concept to think that every member of a given sports team or orchestra should know their role in winning the contest or playing the symphony? Of course not.

Why don’t more businesses teach people the real game? Because it’s hard work.

It’s easier to tell people what to do and hope “they get it,” but that ends up frustrating both employees and their CEO. Doing what’s easy doesn’t help people make smarter decisions, create ownership, or change work so results skyrocket.

By taking on the more challenging approach to creating connectedness through business and financial literacy, you will see business performance get jacked up to unheard of levels.

Communicate Like Air Traffic Control

jim | July 11, 2012 | Communication, Leadership, Performance Management

Why don’t some people let you know when they get your emails, especially when the messages contain important information? Not only is it bad form, but it can set the scene for mistakes.

In today’s business environment, there’s way too much at risk NOT to close the communication loop. There’s an overreliance on assumption. “I assume she got it. I assume she understood it.”

Not always!

Just because you send an email doesn’t mean you communicated anything. And because you received an email doesn’t mean the sender knows you got it—unless you use the Outlook feature that enables this.

My model for closing communication loopholes is the U.S. Federal Aviation Administration’s Air Traffic Control (ATC). Their exchange helps assures that sender and receiver clarify what was said and heard.

Here’s how an ATC exchange might go.

ATC: “United four zero five cleared for takeoff on runway two four right.”

Captain: “Cleared for takeoff, two four right, United four zero five.

ATC: “United four zero five, climb and hold at ten thousand feet.”

Captain: “Climb to ten thousand and hold, United four zero five.”

Now, everyone doesn’t need to exert this much rigor in their communication. In fact, some might consider it a bit anal. Well, ok, perhaps it is too much. But, it’s a hell of a lot better than no response at all.

The point is that when they’re closing the communication loop, the opportunity for mistakes declines while the opportunity for clarity and understanding increases.

People say they’re too busy to respond to emails. Busy is no reason for not doing it right. One of the busiest people I know is a big muckety-muck for a large corporation. He responds to every email, even if it’s simply, “Got it.”

Works for me.

It’s How You Play the Music

jim | June 21, 2012 | Communication, Leadership, Performance Management, Strategy Clarification and Execution

The leader of a large organization wanted help shifting his first line leaders’ roles to servant leadership, which means leading others through development, coaching and facilitation. Servant leadership is intended to replace command and control leadership.

We’d just finished assessing this leader’s work environment. People we talked with told us the current leadership doesn’t foster a climate of openness and trust. They said they don’t have the information or resources they need to do their jobs well. First line managers weren’t involving people in decision making. The operation was underperforming on three of its four major goals.

Clearly, if the work environment was improved in the right way then performance could improve. The leader asked what exactly could we do to address his dilemma.

I began explaining the steps in great detail, including brief stories about other large companies who had successfully navigated their way through the same process. I mentioned how they’d clarified the leaders’ roles, gave them new skills, measured their progress and held them accountable for doing their jobs differently. In each case, operating or financial performance improved.

When I finished describing the process he responded, somewhat abruptly, “We already do that!”

Ah, but it’s less about the process itself and more about how it’s executed.

“All music groups have access to the same sheet music,” I told him. “All sports teams have access to the same plays. But it’s not about the sheet music or the plays. It’s about how well the music is played or how well the plays are executed.”

With that, he nodded and we proceeded to improve his operation.

I repeatedly hear reputable and well-intentioned business leaders who think the shiny new object will be the source of skyrocketing performance. “Let’s do one of these,” a leader says pointing at a new business book that promises instant success. The staff says, “Yes sir,” and another program bites the dust.

Great execution is hard work. If your goal is excellence, ten percent of the trip should be about having the right strategy or plan. Ninety percent should be about damned good execution. How well do you play the music?

What Every CEO Needs To Know About the New Communication Department

jim | May 2, 2012 | Leadership, Performance Management

Communication departments are transforming themselves. That’s good news.

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.

Time Is Currency

jim | March 1, 2012 | Communication, Customer Satisfaction, Leadership, Performance Management

It hasn’t taken me 30 years to realize that great companies and great people manage time well, among other things.

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.

Incentives Must be Done Right

jim | November 27, 2011 | Employee Engagement, Leadership, Performance Management

Incentives can play a huge role in driving results upward, but only if they’re part of a larger continuous improvement system.

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.

Crazy Busy & Knowing When to Say No

jim | September 13, 2011 | Communication, Leadership, Lean/Six Sigma, Performance Management

“I’m crazy busy!”

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.

What Counts is What You Count

jim | May 27, 2011 | Communication, Leadership, Performance Management, Strategy Clarification and Execution

Leaders can talk all they want about the need for people to work together, but if the numbers tell those people to work in silos they will. The “do communication” will trump the “say communication” nearly every time.

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.