What Makes Organizations Deliver - 4 Aces that matter

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Most organizations seem to be endlessly engaged in activities, but some deliver, while
others dither. What makes some organizations tick? While external environment and
operating context have an important role to play, what are the key influencing factors
within organizations that enable some organizations to do better than others?
Closer scrutiny of the findings and recommendations of several organizational consulting
studies seems to suggest that there are set of four key performance influencers within the
organisation that largely affect organizational performance. Developing and managing
these variables is a major challenge that managers have to address for organizations to
deliver effectively. These variables may be referred to as Organisational ACES; holding
them right makes one a winner.
These four key influencers (ACES) are:
1. Articulation
2. Alignment
3. Apparatus, and
4. Accountability

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What Makes Organizations Deliver - 4 Aces that matter

  1. 1. WHAT MAKES ORGANIZATIONS’ DELIVER? 4-ACES THAT MATTER Most organizations seem to be endlessly engaged in activities, but some deliver, while others dither. What makes some organizations tick? While external environment and operating context have an important role to play, what are the key influencing factors within organizations that enable some organizations to do better than others? Closer scrutiny of the findings and recommendations of several organizational consulting studies seems to suggest that there are set of four key performance influencers within the organisation that largely affect organizational performance. Developing and managing these variables is a major challenge that managers have to address for organizations to deliver effectively. These variables may be referred to as Organisational ACES; holding them right makes one a winner. These four key influencers (ACES) are: 1. Articulation 2. Alignment 3. Apparatus, and 4. Accountability Accordingly, any organisation analysis framework may contain review of the status of these variables to identify the existing gaps and infirmities and take appropriate strengthening measures. This approach to organisation analysis may not withstand the scrutiny of management purists, but can act as diagnostic aid to practitioners (managers and consultants) for identifying organizational infirmities and designing intervention strategies. Each of these variables is considered as follows. ACE 1: ARTICULATION This involves two key aspects: Defining the Basics It is the responsibility of the organisation leaders to define the Vision for the organization, and the short and long-term Goals and the Values that shall guide the organization decisions and choices. However, organizations most often tend to define a long list of desirables (we want to do everything? touch the sky? be good organization in thoughts and actions etc.), without adequate thought towards their consequent impact on organisation direction, resource allocations and operational strategies.
  2. 2. Most organization consulting jobs reveals gaps and inherent contradictions in basics, when the basics are scrutinized for their relevance and interpretation for the organisation and its leadership. Studying the organization documents describing these basics often reflect the level of thought undertaken while drafting these basics. Further, it is important to analyse the process by which these basics have been defined. Who were involved from within and outside the organisation in defining these basics? To what extent was the exercise a participatory one? How rigorous was the exercise? To define basics, there are several techniques and facilitators available, but it essentially demands disciplined and collective imagination and introspection by the organisation leaders. Communicating the Basics Here the robustness of the process by which the basics are communicated, both within the organisation and outside, needs to be considered. From the perspective of external stakeholders, the brand should carry the same the message, as has been emphasized in corporate advertisements and supported by related positioning on other three Ps of marketing. A greater challenge lies in communicating these basics within the organisation. Several companies have lofty goals and vision statements, hung on walls of corporate office and every other important notice board, but these are never referred to by management in meetings or in general communication. Further, there are no visible signs of periodic and continual sharing of information about organisation performance on these basics to internal stakeholders. How can employees be considered engaged in organisation mission of being in top three or five, in the absence of communication about its present ranking, the nearest next competitor and the gap from the final goal? Further, are leaders walking the talk? Are all leaders speaking the same language? Is there any continuity in the message with change in the leadership or composition of critical management? How are the deviations dealt with? What is compromised in the events of crisis and what is not? These things influence the stakeholders’ perceptions more strongly than formal corporate brochures, and internal magazines. Communication is complete only after it is ensured that the receivers understand, and appreciate the message and its intent. The communication challenge lies in ensuring that the message is conveyed so that employees are able to interpret its relevance to their workplace context and feel empowered to take the right decisions. Is there any formal feedback loop that verifies that the message is being institutionalised in the intended manner? The institutionalisation is considered to be adequately achieved when the queries about basics across groups and hierarchies evoke similar responses. The organisation representatives in the field should know “What business we are into? What
  3. 3. are the priorities? What means are not acceptable?” as much as the staff in the corporate strategy cell at head-office. Indeed, the Articulation Ace puts a lot of pressure on management to clarify its thought process, and demands consistency in actions, and integrity in communication. A1: ARTICULATION • Defining the Basics-Vision, Values, Goals • Communicating the Basics A4: ACCOUNTABILITY A2: ALIGNMENT • Defining the Metrics Organization • Strategy-Structure-System • Defining the Consequences Performance • Organization-Individual A3: APPARATUS • Resources • Delivery Processes • Technology 4-ACES: Variables that influence Organisation Performance ACE 2: ALIGNMENT It includes ensuring fit at two levels. Strategy-Structure-System fit Any serious management would have an idea of the strategic direction, if not compete blue print. The bigger challenge is to ensure that strategy-structure and systems are mutually supporting. Strategies based on innovation and rapid response, but supported by hierarchical structures and bureaucratic systems, may not deliver effectively. Similarly, strategies requiring high level inter-unit coordination but accompanied with highly individualistic reward systems may not work. Although well recognized in theory, this strategy-structure-system fit often fails to get the adequate attention. Sometimes within organizations, the owners of strategy (corporate planning group), structure (Human Resource department) and systems (IT/Operations
  4. 4. department) operate in silos, with organisation head (CEO) responsible for ensuring their coordination - a nebulous mechanism indeed. Moreover, the existing structures and systems often tend to be self-propelling, as entrenched interests work towards ensuring their continuity. It may be worthwhile to take a reality check while drafting new radical strategies to understand the extent to which existing structure and systems are likely to be supportive or restrictive to designed strategy. Every change in strategy needs to be mapped for its impact on structure and systems. At the same time, the structure and systemic changes (like implementing ERP/CRM) are carried out on their own, and it may be worthwhile to examine what other strategic options are now available on account of these changes. It is well appreciated that there could be a time lag between the changes in strategy and corresponding changes in structure and systems. This time lag is sometime reflective of the adaptability capabilities of the organisation. However, analysis should reveal whether the need for changes in structure and systems have been felt as consequence of change in strategies, and have the changes been mapped, and finally is there a road map to address the misalignments. There needs to be an organisation mechanism to ensure that this fit is continuously evaluated and interventions made to address any misalignments. Organization-Individual fit: This fit is equally important and require interventions at philosophical and operational levels. To what extent, are organisational values and priorities are in sync with that of individual? To what extent do individuals believe that working for organisational goals would also help them achieve their own goals? How much is this fit considered at the time of recruitment? In the absence of such a fit, employees may go through the motions of work for extraneous factors (pay/ position etc.), without sense of association with the organizational goal. It is safe to assume that individuals may opt for self-serving and preserving actions unless the ownership of larger goals is not well imbibed. Frameworks like Balance Score Card do help in mapping the organisation goals to individual level performance measures, but simultaneously the fit requires greater alignment on purpose, priorities and principles to avoid employees considering performance measures not only a question paper to score on, but also a vehicle to fulfil personal aspirations and an opportunity to contribute towards a greater purpose in a valued manner. The present level of fit cannot be directly measured, but has to be derived from several cues like performance management and reward systems (stated and actual), feedback from Employee Satisfaction Surveys (aspects like sense of belonging), exit interviews and voluntary participation by employees in various organisation initiatives.
  5. 5. ACE 3: APPARATUS In an organizational context, apparatus would include resources, processes and technology (equipment) employed to carry out the defined functions and operations. Organizational review exercise has to undertake assessment of the appropriateness of the apparatus and its suitability in delivering defined objectives. Are there any formal systems to continuously assess resource capabilities and capacities? While the capabilities would define the kind of service offerings possible, capacities would dictate the scale of operations. Are strategies to handle both the capability and capacity challenges in place? Are these redefined, whenever organizational goals and strategies are redrafted? Processes have to be appropriate to facilitate decision-making and undertake operations. Appropriate processes have to achieve the fine balance between efficiency in operations and quality control, between standardization and flexibility, and between decentralization in decision-making and overall management control. This balancing act requires continuous review of the objectives that each process is serving and pursuit of achieving the same objectives in alternate more effective processes. The review may be prompted by changes in strategies, or new possibilities emerging out of technological developments. What is the role Information Technology (IT) plays within the organisation? Does an IT expert have a “seat on the table”? Organizations can employ information technology as a tactical tool to deliver more efficiently, or as a strategic weapon to deliver solutions more effectively (gain competitive advantages), by using IT’s communicating, integrating and data processing capabilities. It is also important to understand the decision process behind using a particular technology. How clearly are IT initiatives linked with the organization’s overall purpose? How many of these initiatives have ownership with operational managers and beyond IT managers? While focusing entirely on this ACE may yield diminishing returns (as the limits of operational efficiencies are reached), its neglect may severely undermine the effectiveness of other ACES, as well. ACE 4: ACCOUNTABILITY Organizations are accountable to the stakeholders (directly or through boards) both for their results and their conduct. This in turn requires the organisation leaders to lay down the rules for and expectations from its internal constituents. It also establishes systems for ensuring compliance and dealing with deviations. Handling this ACE poses challenges in two aspects:
  6. 6. Defining Metric for Accountability The accountability standards related to conduct have to be uniform across hierarchies and departments, and to that extent may be clearly articulated and reinforced through structural aspects (like ethics counsellors), and well laid out systems and procedures. The greater challenge is to design a framework for establishing accountability standards related to performance and results, which vary with roles and responsibilities, work content and hierarchies, which are perceived as fair and twined with organizational expectations, goals, strategies and operational characteristics. Further, the accountability metric should have predictive value to that extent that it helps in taking corrective action well in time. The metric has to be considered as a dynamic variable, which changes as the organisation redefines its basics, strategies and operating context. For example, in tight labour market, employee turnover may be a concern, whereas in surplus labour market, turnover of only high fliers would be a concern, and right measure to account for organisation performance. Further, with sophistication in the data gathering and processing capabilities within the organization, it may be possible to redefine the metric more accurately, instead of using surrogate or aggregate level metric. With sophisticated information systems in place, it may be possible to track and account for man, moments and money more closely. However, just because systems make it possible, is not sufficient reason to define accountability standards more minutely and exhaustively. The accountability metric would be owned by recipients to the extent that it is perceived to be fair, linked to bigger picture, and supported by requisite resources and managerial competence and authority to deliver. Experience reveals that wherever the reasons of performances are not traceable to causes with some level of certainty, individuals may ascribe success to self and gaps to circumstances. Hence, this metric needs to be as close to revealing individual performance as possible. Following the defined Consequence The accountability metric matters only if it matters. What happens as a consequence? Any measure of performance is effective to the extent that its score is linked to the predefined consequences. Unless the consequences are widely known and consistently applied, the effectiveness of the measurement system is questionable. The metric has to cascade from the organisation to individual encompassing various units and organizational hierarchies in between. Unless management is perceived as responsible and answerable to its own metric, any system to make others accountable is likely to be ineffective.
  7. 7. Consequence has to be seen in twin perspective of rewarding for the desired outcome and ensuring corrective measures to arrest dysfunctional outcomes. While the performance linked reward systems would address the component of making staff accountable for their performance, the second component requires timely analysis of the outcomes and systematic response to organizational inadequacies. Accountability ACE provides the strong linkage between the defined objectives and their effective execution. CONCLUSION The adequate management of four ACES together shall help organisations moving towards delivering defined results. Accordingly, organization leaders may benefit by not only reviewing the present status of these ACES but also examining the robustness of the process that would ensure that these ACES are well managed in a sustained manner - through design rather than chance. The review may reveal organizational weaknesses and infirmities and to that extent help organisation leaders in designing adequate integrated responses. Tushar Khosla is a management specialist working in the areas of strategic and organisation consulting, and institutional development. He is working with Tata Consultancy Services and presently based at New Delhi. The views expressed in this article are personal. For discussions and feedback, please write to tushar.khosla@tcs.com,or tusharkhoslam@yahoo.co.in.

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