This white paper discusses the importance of focusing on people and behaviors when implementing business improvement programs. It argues that to achieve sustainable performance improvement, organizations must first recognize that people are the key drivers of change. The paper outlines a model for integrating people, processes, and tools in a way that puts people first. It emphasizes that educating and empowering employees is essential to cultivating the right environment for lasting organizational change.

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Managing People and Behaviours
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Strike a balance
Introduction
To stay on top in today’s complex and competitive business environment it is more
important than ever for organisations to keep improving performance and strive for
business excellence.
All too often when implementing business improvement programmes, however,
organisations launch into tackling their processes and tools with enthusiasm and
vigour, but overlook the importance of people and behaviours. If businesses want to
implement sustainable performance improvement, it is essential they first recognise that
people are the key drivers in any change programme and that success depends on the
organisation’s ability to cultivate the right environment for change.
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To extract the best possible performance
from any business, it is vital to strike the right
balance between people and behaviours,
processes and tools. Hitting the ‘sweet spot’
where these overlap is fundamental to facilitate
lasting change. Not only must businesses
address all three in equal measure but also
approach them in the correct order; and that
means people first.
Many organisations fall at the first hurdle
because they turn their attention to processes
and tools first and then look to align their
people afterwards. In this case ‘people-
dependent processes’ are created, and
wherever there is a dependency on people
there will be variation, which may lead to error
and fire fighting. The improvement programme
inevitably fails and at that point there is a
tendency to blame the systems in place, when
in fact it is not the tools themselves causing
the issues, it is because they have been set up
incorrectly.
Figure 1 shows the interdependency of people
and behaviours, processes and tools and the
sweet spot in the middle where they meet. It
is critical to work anticlockwise around these
three core components: processes must be
designed to meet the needs of the company
first, and aligned to people and behaviours
(after the appropriate education and training
has taken place); tools can then be better
specified and aligned to processes, allowing
the software to deliver the required information
back to the people making the decisions. It
becomes a virtuous circle.
By Lloyd Snowden
Oliver Wight Partner
Figure 1: Principle objective of integration
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Design for full integration
2
In a modern business environment, end-to-
end integration of the organisation is essential.
A company cannot service customers in the
most efficient, cost-effective and profitable
way, unless its processes, people and tools
are integrated and aligned. And the expected
behaviour has to suit the design of the
company.
As an organisation strives for business
excellence, it must move up the maturity map
(Figure 2). The great majority of enterprises sit
within phase one, but a business at the bottom
of phase one is likely to have a very informal
culture, whereas a business at the top of
phase one is likely to be more structured, with
people behaving much more in line with the
requirements of the business.
There are four major categories of
organisational design: functional; process/
team-based; matrix and virtual. Each will
have challenges particular to that type of
environment and will therefore demand and
facilitate different types of behaviour.
The best functional organisations will have
some cross-functional teamwork but for the
most part they tend to operate with discrete,
independently managed silos. With a command
and control environment, these businesses may
be able to punch their way out of a bad position
using a ‘tell and do’ approach but they must
ensure this is not so autocratic as to have a
detrimental impact on the working environment.
As a business matures towards phase two, it
will move to a structure where the functional
barriers have been removed, and processes
become more end-to-end. These are process
or team-based organisations.
Matrix organisations are typically at phase
three. They combine the best characteristics of
functional organisations (development of people
and talent) with those of team- or process-
based organisations - the breaking-down of
barriers and establishment of teamwork.
At phase three, there will be knowledge-
based automation of processes and finally at
phase four, these processes are integrated
by technology. Virtual organisations within
phase four, are those where key departmental
activities may be outsourced. Maturing to
this phase from the firefighting environment
of phase one, mandates a dramatic cultural
change across the organisation.
Figure 2: Integrating the business - maturity
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Realising opportunity through organisation development
As the business matures through the
development phases and the structure and
design of an organisation changes to suit the
environment, the leadership style also needs
to change to nurture the appropriate behaviour
and culture for maximum opportunity to be
realised.
Figure 3 shows that organisations in phase
one are characteristically deeply vertically
integrated; with an inward ‘eyes down look
in’ focus in order to gain control. Power is
concentrated with a handful of people at the
top who provide ‘command and control’,
which is then cascaded down the organisation.
Organisations moving from the bottom to the
top of phase one often refer to their journey
as ‘transformation’ or being in a ‘turnaround
environment’; in so doing, they can achieve
a 3:1 productivity improvement and advance
performance levels from around 70% to 90%.
Once the business has reached the top of
phase one – the business is ‘in control’ and
at this point the senior level of the business
can take a step back, decompressing the
organisation as some managers move their
focus from the short-term and start to think
more about the future. This is when strategic
planning as a process comes in to play and the
management style moves from just ‘managing’
to management and leadership.
In order to continue changing the behaviour
of a company and generate further cultural
improvement, the structure needs to be
flattened through a focus on core processes,
which means a move to a process- or team-
based organisation. In this case, authority
is shifted downwards, giving employees
increased autonomy and decision-making
power. Businesses in phase two will have
decreased the number of layers from the CEO
right through to the shop floor from typically,
12-14 (in phase one) to just 5-6. This flatter
structure with its business process focus, gives
the organisation more opportunity to address
velocity of process, which means at phase two,
waste is progressively eliminated, performance
levels approach 99% and costs are reduced.
In moving from phase two in to phase three,
another 3:1 productivity improvement can be
achieved - i.e. the same performance with
fewer people, because processes have been
automated. With an even flatter structure,
there is more control at the bottom; with
everyone clear about what they are doing,
and empowered to act. It is here a business
can start the move towards becoming a virtual
organisation.
Phase four companies are market leaders,
the top companies in the world. Unlike the
functional organisation in phase one, with eyes-
down thinking, phase four companies undergo
a complete inversion with an ‘eyes-up and look
out’ mentality.
Figure 3: Organisation development
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An important prerequisite of maturity is the
formation of a strong team-based culture.
This necessitates education and training;
individuals at the bottom of phase one move
from ‘innocence’ through ‘awareness’ to
‘understanding’ at the top of phase one; to
‘competence’ and eventually, ‘excellence’ at
the top of phase two (Figure 4).
As the organisation matures, people will mature in
to different teams at different rates, so in change
management, a degree of patience is required.
However, it is important to enable people to
distinguish between a group and a team.
In phase one, when the management team
sees there is a problem, they will select four
or five people to become a ‘group’; this group
will have one person selected as leader, who
is wholly accountable and responsible for the
actions of the group.
When a business matures to phase two, the
management team can select ‘teams’ instead
of groups. Members of multi-functional teams
are held jointly responsible and accountable,
and the team leader may change as the project
progresses, because different skill sets can be
required at different times.
Mature to a team-based culture
Within a continuous improvement environment,
teams will operate through a cycle as shown in
Figure 5. The knowledge base builds through
education and training and is applied (by the
teams) to the task at hand. This in turn provides
learning, which is fed back to the knowledge
pool and used to improve over and over again.
Figure 4: People / environment maturity development
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Figure 5: Cycle of improvement
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Since it is people that will be implementing
change, and on whom success depends,
building the right foundation for sustainable
change must begin with people.
These days, Integrated Business Planning
(IBP) sits at the heart of many organisations
as the management process of choice to
run the business; it is a true people process,
designed to empower individuals at all levels of
the organisation. Integrated Business Planning
uses top down messages from the strategy,
business plan and measurement hierarchy to
enable effective, integrated decision-making.
It is capable in bringing about a huge cultural
change in the organisation, but successful
deployment depends on the critical mass
of the organisation understanding both
the direction and strategy of the business.
People – the key cog in Integrated Business Planning
Integrated Business Planning enables teams in
the organisation to deploy ‘top-down’ messages
on a monthly basis and integrate them with the
‘bottom-up’ performance. Comparing the two
means business gaps are identified and decisions
can be made. People are the constant and key
factor because they communicate and deploy
the top-down messages; they run the Integrated
Business Planning process; deliver the bottom-
up performance; and enable the decision-
making. (Figure. 6).
The right people, with the right behaviour and the
right knowledge, will design the right processes
– and with visibility of performance, the right
business improvement tools can be deployed.
Integrated Business Planning helps organisations
move up the maturity map because it breaks
down paradigms and encourages development
from a a functional structure to a more integrated
process-based one – progressively removing
traditional functional barriers and generating the
capability for individuals to work multi-functionally
rather than in silos, leading to improved
communication, and greater understanding of
one another’s roles and responsibilities. Let’s face
it, roles and responsibilities run the company; not
the organisational chart.
The challenge is to implement a change
management programme in parallel with
Integrated Business Planning, so behaviours are
changed and the full advantages of integrated
processes and teams can be realised.
Changing the behaviour of individuals is never
easy and more often than not, presents the
greatest barrier to change. Past paradigms often
remain, even when the reason for the paradigm
has been removed. So, what can be done to get
people to discard these unhealthy paradigms,
become inspired by change, and work together
for the future direction of the company?
Figure 6: Critical relationships and dependencies
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One result of the top-down message from the
strategic planning process is that people will
understand the company values and guiding
principles. With these, the right environment
and culture can start to be created; one where
people work together, understand how they
should think and behave and know what kind
of team they are expected to work within.
Leaders must walk the talk - they must excite
their people about change and the future
direction of the company; everybody must
understand, believe in, and live the company
values. The potential of the ‘silent majority’ –
90% of the organisation – can only be realised
with hard work, consistency and alignment to a
common agenda.
6
Empowerment lies at the heart of not just
managing and leading the business but also
driving business improvement. However, when
implementing change, businesses often miss
out the implementation of the strategies and
tactics required, and jump straight to actions
(see Figure 7). Consequently, when people
are empowered to make decisions, they don’t
know how because the linkage provided by the
roadmaps and programmes is missing.
The definition of empowerment to follow is
‘responsibility matched with authority’. People
need to feel empowered to do their job more
effectively, and recognise the impact they have
on change. There are four simple questions
which people need to know the answers to:
• What is my involvement?
• What is my ownership?
• What level of empowerment do I have?
• How am I going to engage the rest of the
organisation to enable me to do business?
The more people are educated about which
processes they own and how they can
influence change, the more they will act
responsibly, make the right decisions and feel
energised by change. People need to feel
valued. By making the organisation’s policies
and procedures readily available, people will
be enabled to act without having to constantly
refer to their managers, thus allowing them to
make key decisions that will drive change.
Information and data availability is a very
important aspect of communication, so both
must be easily accessible.
Empower people to change
Figure 7: Developing the top down
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Education is key in achieving best practice
behaviours because it provides people with
the knowledge of what best practice is. Unless
people understand why change needs to
be made and what they need to do to make
it happen, they won’t be able to implement
change, or take part in the process of change.
Educate and train for success
Creating a culture of improvement hinges very
much on establishing a ‘two job’ attitude: ‘the
job I do and the job I will do better’. If people
do not develop this way of thinking, they will
always be waiting for somebody else to change
first. Education is the key catalyst.
The first barrier to overcome is the stigma
attached to admitting you do not already know
something. This requires instilling a desire to
learn - that lack of knowledge is not a failing,
but an opportunity to learn and progress.
People should be encouraged to be inquisitive.
Once people and behaviours have been
integrated with processes and tools, training
rather than education becomes the priority -
training people how to use the tools, and how
to integrate information with their colleagues.
But education must come first. It provides the
essential building blocks for determining the
right behaviours with which the processes
and tools can be integrated. Without it,
organisations lack the solid foundation for
developing a culture of continuous change
and ultimately can never achieve true business
excellence.
Figure 9: Successful implementation needs
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Measurements provide a powerful tool in driving
and maintaining the right behaviours. They allow
people to see where they are and how their
decisions are driving improvement.
‘Hard’ measures, i.e. KPIs, must be clearly
defined and have an obvious link to the strategic
business objective. The old adage applies:
‘measure me right and I’ll behave right; measure
me wrong and I’ll behave wrong; don’t measure
me at all and I’ll behave however I like’.
Properly defined KPIs make decision-making
both more logical and straightforward, but
these hard measures alone cannot drive the
right behaviour; they need to be balanced with
‘soft’ measures.
The balanced scorecard (Figure 10), introduced
by Kaplin and Norman over 40 years ago,
Measure to improve
is designed to ensure people look at their
business, not just in terms of hard performance,
i.e. finance and production outputs, but
also from a soft perspective; measuring
performance in terms of satisfying customers,
employees and buyers.
This balanced attitude needs to be drilled down
through the different levels of the organisation,
so everyone looks at how the business is
performing from a variety of angles; from the
perspective of the customer, supplier, finance,
and so on. Introducing measurements in this
way ensures people understand how they must
work together, as well as providing reassurance
everybody is measured in the same way. Thus,
helping to remove the ‘us and them’ culture
that prevails in functional organisations and
encouraging a one-body organisation.
Figure 10: Measurements hierarchy
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Continuous improvement schemes differ
depending on the organisation’s maturity. When
businesses begin a change programme at
the bottom of phase one, use of continuous
improvement (CI) tools is prevalent to
identify opportunities for improvement in the
organisation, (as shown by the large arrow
in Figure 11). As a business matures and a
culture of improvement develops, the need for
CI tools diminishes, (the grey arrow in Figure
11 gets smaller) both because there are fewer
opportunities to improve and because other
tools become more relevant. Yet it never stops;
continuous improvement is always required and
there will be some instances in which CI tools
remain effective, for example, in identifying the
root cause of problems.
The right tools at the right time
In phase one, CI tools should be used to
implement the ‘two job culture’ to ensure there
is ownership of the improvement, by the people
who need the improvement, rather than by
external teams of CI experts. In this way not
only will the improvement be achieved but local
paradigms will also be changed.
As a company improves, and its business
maturity develops to phase two capability,
the functional organisation structure found
in phase one, is challenged as end-to-end
business processes are implemented. These
processes effectively signal a change to the
functional structure, as it becomes a process-
or team-based organisation. Now it becomes
logical to implement ‘Lean’, and focus on
Figure 11: Driving business improvement maturity challenge
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Through establishing the right leadership style
and educating people to work within a team-
based structure, the right behaviour and culture
can be achieved to ensure change is both
effective and lasting.
The Oliver Wight Proven Path provides a proven
methodology for sustained cultural change. Its
focus begins with leadership. Leaders must
be on board from the outset and they must
allocate sufficient resources - time, money and
people - for change to happen.
It’s crucial too that people are equipped with
the required knowledge, so they can start
to apply best practice within their clearly
defined roles and responsibilities. External
consultants can play a part here because they
Proven path; proven results
have the knowledge to share, as well as the
experience to help change attitudes and inspire
people to new ways of working. However,
sustainable improvement has to come from
within. Knowledge must be transferred to the
organisation’s executive team and cascaded
down through the organisation using coaching
and education to embed that knowledge into
the fabric of the business.
With the right mind-set, each and every
individual will be able to understand and
implement best practice, not just from a
personal point of view, but an end-to-end
perspective. It is this that brings lasting
business improvement and allows an
organisation to get the very best from its
people.
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eliminating waste and driving process velocity.
Although some companies do implement Lean
in phase one, it can only be applied vertically
at that stage, which by definition, misses the
opportunity of eliminating waste between
the functions. As a result the improvements
made are usually only three to four per cent,
whereas applying Lean methodology in phase
two allows waste between functions to be
addressed and for improvements to reach 30%
to 40%.
Six Sigma assumes Lean has already been
implemented and should therefore be applied
in phase two once Lean has been implemented
and the improvements secured. As Figure 11
shows, the percentile performance in phase
two moves up to 99.5% and the mathematical
modelling capability of Six Sigma comes in to
its own to detect and resolve variations.
The final decision is the most appropriate time
to develop your Agile capability. Agility is a
great offering for clients, providing it is cost-
effective and doesn’t require a fire-fighting
approach for its delivery. Phase two again
offers the most stable environment for an agile
response to be determined and planned.

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About Oliver Wight
Oliver Wight has a 40 year track record of delivering business improvement to some
of the world’s best-known organisations. We believe that sustainable improvement can
only be made through your own people. So unlike other consultancy firms, we transfer
our knowledge to you, which means you can achieve performance levels and financial
results that last.
At the leading edge of management thinking
and practice, our Integrated Business Planning
(IBP) model lies at the heart of our clients’
journey to outstanding business performance.
Oliver Wight originated Sales and Operations
Planning in the 1980s and IBP can most simply
be described as advanced S&OP; evolving from
its production planning roots over 40 years into
the fully integrated management and supply
chain collaboration process it is today. IBP
allows the senior executive to plan and manage
the entire organisation over a 24 month horizon,
aligning tactical and strategic plans each month
and allocating critical resources to satisfy
customers in the most profitable way.
The information contained is proprietary to Oliver Wight International and may not be modified,
reproduced, distributed or utilized in any manner in whole or in part, without the express prior
written permission of Oliver Wight International.
Oliver Wight EAME LLP
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