Tag Archives: Performance improvement

Team management and motivation

I’m working these days on developing a course on managing virtual teams so I’ve taken some time to think about what I do and how I do it.

During the last financial year, the service I’m managing recorded growth of 65% (compared against an ambitious target of 20%). Consequently, delivery time has been reduced and… here comes a shock for any academic: quality has improved! Any theory would tell you that, if you reduce delivery time and increase work load with the same resources, quality will drop off.

What made the difference? I would rather say it was the motivation of each team member. On my side, I did not stay to check each of their tasks but I rather encouraged flexibility and efficiency over bureaucracy and strict rules. I transferred much of the assessment from my own review to the final beneficiaries. They are the ones to say if the work was good and to what extend. Interim and final financial year results are transparent, including individual rankings: most of poor performance has been corrected the moment they saw their place. I’ve not used financial incentives as motivation factors and I think of “carrot and stick” as being a manipulation theory rather than real inside motivation.

I had a look over the research performed during the last years on motivation and Dan Pink’s message from a TED presentation got my attention:

The next decade – the “most innovative time” ?

A recent PwC survey found that that innovation is high on the executive agenda in virtually every industry. In all, 78% of CEOs surveyed believe innovation will generate “significant” new revenue and cost reduction opportunities over the next three years. But it is highest for those where technology is changing customer expectations. In both the pharmaceutical and entertainment and media sectors, for example, more than 40% of CEOs believe their greatest opportunities for growth come from spawning new products and services.

Additionally, the survey found that CEOs are re-thinking their approach to innovation and increasingly seeking to collaborate with outside partners and in markets other than where they are based. For example, a majority of entertainment and media CEOs said they expect to co-develop new products and services.

The innovation process generally has four phases: 

  • Discovery: Identifying and sourcing ideas and problems that are the basis for future innovation. Sources may include employees as well as customers, suppliers, partners and other external organisations.
  • Incubation: Refining, developing and testing good ideas to see if they are technically feasible and make business sense.
  • Acceleration: Establishing pilot programs to test commercial feasibility.
  • Scale:  Integrating the innovation into the company; commercialisation and mass marketing.

However, the drive for innovation must arise from the CEO and other executive leadership by creating a culture that is open to new ideas and systematic in its approach to their development.

Therefore, the study also identifies 7 misconceptions about the innovation process:

  • Innovation can be delegated.  Not so. The drive to innovate begins at the top. If the CEO doesn’t protect and reward the process, it will fail.
  • Middle Management is the ally of innovation. Managers are not natural champions of innovation. They to reject new ideas in favor of efficiency.
  • Innovative people work for the money. Establishing a culture that embeds innovation in the organisation will attract and retain creative talent.
  • Innovation is a lucky accident. Successful innovation most often results from a disciplined process that sorts through many ideas.
  • The more open the innovation process, the less disciplined. Advances in collaborative tools, like social networking, are accelerating open innovation.
  • Businesses know how much innovation they need. Leaders must calculate their potential for inorganic growth to determine their need to innovate.
  • Innovation can’t be measured. Leadership needs to identify its ROII (Return on Innovation Investment).

Details about the study here.

Competitive intelligence: a real value or a buzzword?

ATWS Slide presentation from Sandra Carvao WTO...
Image by !/_PeacePlusOne via Flickr

“What competitive intelligence? We are in the middle of a crizes, we need to survive!” That may be the statement of many executives today, and it seems that competitive advantage is nothing but an elusive goal. The results of a recent McKinsey survey suggest one reason: just 53% of executives characterize their companies’ strategies as emphasizing the creation of relative advantage over competitors; the rest say their strategies are better described as matching industry best practices and delivering operational imperatives. In other words – this is nothing but a buzzword for stakeholders to make them feel safe.

What I even find more interesting is that only 33% say their companies’ strategies rest on novel data and insights not available to competitors, rather than widely available data. We are more or less used to see companies (especially the big ones) as having some “CIA” teams in charge with competitive intelligence but it seems that this is only true in some of them. What we don’t know from McKinsey’s survey is how many of those 33% are large multinationals and how many are not.

However, there may be one likely explanation of this fact that wouldn’t be affected by the size of the company or the existence of such intelligence units: the widespread availability of information and adoption of sophisticated strategy frameworks creates an impression that “everyone knows what we know and is probably analyzing the data in the same ways we are.” Yet if strategists question their ability to see something that no one else does, the question that raises is how reach are the powerful insight that are most likely to differentiate them from competitors?

Another astonishing result: only 12% of surveyed executives place novel insights in strategy among the top three influencers of financial performance. The financial crisis of 2008 and the recession that followed revealed weaknesses in many strategies and forced many companies to confront choices and trade-offs they put off in boom years. Not surprisingly, 56% report that their companies are making strategic decisions more frequently than before. This increased speed may make it difficult for some companies to analyze each decision in detail. However, a shift toward shorter planning cycles only increases the need to focus on the timeless aspects of strategy that can drive competitive advantage.

And this brings us back to our main question: is competitive intelligence a buzzword or does it bring a genuine value to the company and its financial performance?

Restructuring checklist #3

Retaining key talent

• Can you identify your key talent today?
• Are you prepared to put a retention payment system in place to ensure that key talent does not leave your organisation?
• What will be the effect of such a programme on employees who are not covered by it? Are you ready to manage the consequences?

Reward effectiveness

• Is this the time to review remuneration structures and to consider increasing the variable and/or deferred element?
• Have salary sacrifice cost reduction opportunities been fully explored?
• Can you use this opportunity to maximise the financial efficiency of current and future incentive arrangements?

Flexible working

• Should you review flexible working policies to drive down cost and extend the concept for specific areas of the business?
• Would it be appropriate to open up part-time working opportunities to employees who might not qualify under the existing policy arrangements?
• Is this the time to introduce policies for unpaid leave, career breaks and sabbaticals?

HR effectiveness

• Do you need to review effectiveness of your HR function, its restructuring capabilities and future role?
• Do your HR business partners have a clear understanding of the commercial realities facing your business?

You may also want to read:
10 guiding questions to help restructuring initiatives
Restructuring checklist #1
Restructuring checklist #2

Restructuring checklist #2

Managing your employment brand

• Have you thought about how best to minimise the negative impact of restructuring on your employment brand values?
• Do you need to reinvigorate your employment brand initiatives for future talent acquisition?
• Do managers know what you are expecting of them when it comes to maintaining the equity of your employment brand?

Communication

• Do all your stakeholders (shareholders, employees, suppliers, community) know what your vision is for the organisation going forward?
• Is the message clear and supportive to your business plans?
• Have you considered the customer perception of your restructuring actions?

Consultation steps

• Have you considered what your employee relations strategy needs to be during a restructuring phase?
• Have you built in the time necessary for consultation in all the markets in which your business operates?
• Do you need the approval of any employment inspectorates before you implement your restructuring proposals?

Hiring freezes

• Are you prepared to stop external hiring to ensure that future employment opportunities are available to your existing employees first?
• Are you required to stop hiring in some markets where you are implementing compulsory redundancies?
• Are you going to police the consistent application of any hiring freeze you announce?

You may also want to read:
10 guiding questions to help restructuring initiatives
Restructuring checklist #1
Restructuring checklist #3

10 guiding questions to help restructuring initiatives

Cover for the Business Strategy Wikibook.
Image via Wikipedia

Turbulent economic times are making many organisations consider restructuring. Theoretically, a company that has been restructured effectively will be more efficient, better organised, and better focused on its core business. However, in practice, many restructuring initiatives fail as a result of overlooking “insignificant” issues or taking an unrealistic approach of the reality of restructuring across multiple countries and markets.

Here are some key points you should consider before and during a restructuring initiative that may help you thrive in challenging times:

Adding value to your company

1) What are the business drivers behind your restructuring requirements?
2) What should your redesigned organisation look like?
3) Are you obtaining function efficiency and true value for money for your spend?

Engaging effectively with your employees

4) Is your approach to your restructuring consistent with your declared values?
5) Have you got effective communications plans in place?
6) Are you engaging with employee representatives in an appropriate manner in each of your markets?

Balancing your short and longterm risks

7) How do you manage your employment brand in such challenging times?
8) Is there a risk of any proposed measures damaging your future business strategy?
9) How do you retain key talent now and in years to come?
10) How do you continue the development of tomorrow’s people whilst restructuring?

You may also want to read:
Restructuring checklist #1
Restructuring checklist #2
Restructuring checklist #3

How can we make cost cuts stick

54% of the executives surveyed by McKinsey in April indicated that they would take steps to reduce operating costs in the next 12 months, compared with 47% in February. In April, 2/3 of the respondents rated economic conditions in their countries as better than they had been six months previously, and another 2/3 expected further improvement by the end of the first half of 2010 (“Economic Conditions Snapshot, April 2010: McKinsey Global Survey results,” mckinseyquarterly.com, April 2010). Yet any successes companies have at cutting costs during the downturn will erode with time. Many executives expect some proportion of the costs cut during the recent recession to return within 12 to 18 months (“What worked in cost cutting -and what’s next: McKinsey Global Survey results,” mckinseyquarterly.com, January 2010) – and prior research found that only 10% of cost reduction programs show sustained results three years later (Suzanne P. Nimocks, Robert L. Rosiello, and Oliver Wright, “Managing overhead costs,” mckinseyquarterly.com, May 2005).

Why is it then so difficult to make cost cuts stick?

In most cases, it’s because reduction programs don’t address the true drivers of costs or are simply too difficult to maintain over time. Sometimes, managers lack deep enough insight into their own operations to set useful cost reduction targets. In the midst of a crisis, they look for easily available benchmarks, such as what similar companies have accomplished, rather than taking the time to conduct a bottom-up examination of which costs should be cut. In other cases, individual business unit heads try to meet targets with draconian measures that are unrealistic over the long term, such as across-the-board cuts that don’t differentiate between those that add value or destroy it. In still others, managers use inaccurate or incomplete data to track costs, thus missing important opportunities and confounding efforts to ensure accountability.

Some possible solutions:

Focus on how to cut, not just how much

Benchmarks matter. External ones on some measures may be difficult to get, but where they are available – for example, on travel expenses – they can enable managers to compare performance across different units and identify real differences, as well as trade-offs that may not be in line with the organization’s overall strategy. Internal benchmarks are easier to access and provide great insights, especially because managers are more likely to understand and adjust for differences among their company’s organizational units than among different companies represented by external benchmarks.

P&L accounting data is not enough to make lasting decisions

Unfortunately, few companies have the kinds of systems they need to track costs at a fine-grained level – and they face a number of challenges in establishing them. Multiple data systems may make it difficult to aggregate and compare data from different geographies. Inconsistent accounting practices between businesses or time periods may lead to significant distortions. Changes in organizational structure (as a result of acquisitions, divestitures, or even changes in the allocation of overhead costs) may similarly distort tracking.

Clearly link cost management and strategy

Strategy must lead cost-cutting efforts, not vice versa. The goal cannot be merely to meet a bottom-line target. Indeed, among participants in a November 2009 survey, those who worked for companies that took an across-the-board approach to cost cutting in the recent downturn doubt that the cuts are sustainable. Those who predicted that the cuts could be sustained over the next 18 months were more likely to say that their companies chose a targeted approach. (“What worked in cost cutting – and what’s next: McKinsey Global Survey results,” mckinseyquarterly.com, January 2010).

Yet, many companies do not explicitly link cost reduction initiatives to broader strategic plans. As a result, reduction targets are set so that each business unit does “its share” – which starves high-performing units of the resources needed for valuable growth investments while generating only meager improvements at poorly performing units. Moreover, initiatives in one area of a business often have unintended negative consequences for the company as a whole.

Aim at results for 2-3 years not just 12 months

Most companies treat cost management as a one-off exercise driven by the need to manage short-term profit targets. Yet such hasty cost-cutting activity typically goes into reverse once the pressure is removed and rarely results in sustainable changes in cost structure. A better approach is to use the initial cost reduction program as an opportunity to build a competency in cost management rather than in cost reduction.

Transform: business trends in 25 markets across the Central & Eastern Europe

Tallinn, Rotermanni new neighbourhood
Image by Bookish type via Flickr

Transform is the bi-annual magazine of PwC in Central and Eastern Europe (CEE). It covers the latest business trends in 25 markets across the region, from the Czech Republic to Kazakhstan. Each issue of the magazine goes out to 10,000 business leaders, financiers, politicians and opinion formers in CEE.

Within the last issue, PwC brings the regional CEOs of three leading companies – Siemens, Orange and the ROLF Group – together to debate this issue and asks Romanian business veteran Dinu Patriciu for his insight. Staying in Romania, PwC features an exclusive interview with Bogdan Dragoi, Secretary of State at Romania’s Ministry of Public Finance, on how the government is trying to get the economy there back on track.

Also, in the wake of the World Eonomic Forum’s annual leaders summit in Davos, Switzerland, in the New Year, PwC turned to four commentators with expertise in the region for their thoughts on what CEE’s business and political leaders should be tackling this year.

You may download a free copy from here

How do we measure success? Is short-term performance an appropriate solution?

Ziarul Financiar published today one of my articles in which I asked myself these two questions. The article’s conclusion is that short-term performance is no longer a good way of measuring success and it should be measured in decades instead of quarters.

Regarding the current economic context, I underlined the fact that the USD 50 trillion contraction of global assets between September 2007 and March 2009 shows than many companies took excessive risks and used unrealistic expectations.

You may find a PDF copy (Romanian version only) at:
“Cum măsurăm succesul”, Ziarul Financiar, 2 Septembrie 2009

or you may read it online at:
http://www.zf.ro/

Economic Conditions Snapshot, August 2009: The economy at large

McKinsey Global Survey Results show that, overall, thinking about financial and other effects of the crisis and their companies’ current position, just over 2/3 of respondents expect their companies to emerge from the crisis stronger. However, when that will happen is much less clear; while executives indicate that the economy as a whole is healthier now than it has been in some time, they don’t expect much further improvement soon.

A comparative analysis shows that respondents’ views on a range of trends affecting businesses and the economy are slightly more optimistic overall than they were in June, and notably more optimistic than they were in March. Similarly, the share of executives saying that their nations’ economies are better off now compared with last September is notably larger than it was six weeks ago. But the share expecting improvement in economic conditions by the end of 2009 has barely changed and more than twice as many executives still expect their nations’ GDPs to fall in 2009 as to rise.

Although 37% of the respondents do expect economic conditions to be better at the end of this year than they are now, conditions are so poor that only 20% of all respondents expect an actual economic upturn in 2009, a fall of 8% points in six weeks. Even when stock markets are booming, it seems, executives think there’s still a long way to go.