Improvements in Performance

Today's multidisciplinary approach requires equal and simultaneous attention to peoples' readiness to implement change and their willingness to learn and apply state-of-the-art technology to do so. Studies show that where companies effectively attend to both people and technology issues, they are successful in:

• reducing Supply Chain Management costs 48 percent more effectively than competitors;
• requiring 53 percent less cash to run their businesses responding 38 percent faster to shifts in customer demand.

Today, organizations are in the midst of initiating sweeping changes in the way they compete in a rapidly expanding global marketplace. Processes are being reengineered. Costs are being streamlined. Performance management systems have been implemented where an environment of greater accountability, responsibility, and measurement of results is more the rule than the exception. Furthermore, companies are making long-term commitments to continuous improvements in quality, customer service, people development, and involvement of all levels of the organization. They are moving quickly to design and implement strategies that will sustain their competitive advantage. But to maximize these investments, they must learn how to align their leadership-and ultimately all employees-with the new ways of doing business.

During a recent forum, a senior executive of a leading multinational corporation stated, "The objective of the next phase of organizational transformation is to involve all employees in the improvement efforts to help achieve dramatically improved market-based performance and to become world class in defining product and delivering it to the customer." Yet, what are the proven approaches that create synergy among what has to change and how it should be approached? What does the organization do to ensure that the change is positive and enduring? Four major themes, or areas of focus, are important to consider if the organization is committed to a "multidisciplinary road map" for change-a change process where those performing the work are directly involved in improving the work, where skills are enhanced to support the improvements and where managers learn to create a healthy organizational climate that sustains and enhances peoples' ability to perform at high standards. The four areas can be graphically represented as follows:

Developing and Communicating a Vision and Supporting Business Strategies

Articulating a compelling vision about what is possible gives people a purpose that arouses their emotional commitment to spend the extra effort necessary for successful change. For employees to see a direct relationship between what they do and its value to the organization, they need to:
understand how their contributions make a difference;

• understand what outstanding performance looks like;
• be clear about their accountabilities and what others are relying on them to deliver;
• receive clear, timely, specific performance feedback and coaching to enhance their skills.

As an international bakery products company reviewed its competitive position, it became readily apparent to its leadership that unless they changed the way they managed their business they soon would not have a business to manage. Key issues of declining profits, market presence, service quality, and brand distinctiveness were strong indicators that created the sense of urgency to begin turning things around.

Initially, a review of all manufacturing processes was conducted. Because all bakeries operated independently, a "hands off" culture had evolved. Each bakery president was given the authority to make the calls in his/her region. Coordination of resources was not encouraged; standard practices were not adhered to; continuous improvement was not a strategic imperative; and cost consciousness and innovation were not encouraged. After serious reflection, it was also noted that people in key leadership positions had never participated in a development process to ready them for the responsibilities they now had. It can be said that, all in all, the bakery presidents were doing the "best they could" yet not doing the "best that was required."

Using the following questions as a guide, (from Gary Hamel and C.K. Prehalad, authors of Competing for the Future) they established a fact base that helped craft the vision and supporting strategies necessary to shape the future and focus resources appropriately.

• Do we have a clear and broadly shared understanding of how the industry may be different in ten years?
• Are our "headlights" shining further out than our competitors?
  Has my point-of-view been clearly articulated, and is it clearly reflected in the company's short-term priorities?
• To what degree is my view about the future competitively unique?
  Within the industry, do competitors view our company as more of a rule-taker or a rule-maker?
• To what degree do we define new ways of doing business, build new capabilities, and set new standards of customer satisfaction?
• What percentage of our change efforts focus on catching up with competitors versus building advantages new to the industry?
• To what extent am I a maintenance engineer working on the present or an architect designing the future?
• Among employees, what is the balance between anxiety and hope?
  

Shaping All Elements of the Organization

After the bakery's top management team established a new vision and direction, they formed integrated bakery teams to address profit and customer service issues. They created a strategic architecture to help identify the activities and processes necessary to support the change initiative. Teams went through an actual, ideal data analysis to help isolate priority gaps and then established action plans to address those that had the greatest potential for impacting  the necessary changes. Out of this analysis came future-oriented questions that further refined their change process.

• What are the core organizational competencies we should begin developing?
• What new customer groups should we begin to understand?
• What new channels of distribution are important to explore?
• What are the new research and development priorities we should commit to?
• Are we organized to best address the future competitive requirements?
• Are our systems and processes aligned with the vision and strategy of our organization?

Shaping all elements of the organization addresses the need to create a broad opportunity approach plan. In the multidisciplinary framework, it links competency building, realigned work processes, structure, and strategy to ensure that the organization is positioned to capture a significant share of the future revenues in emerging opportunity arenas.

Implementing Redesigned Key Business Processes
and Work Activities 

Implementation, (turning strategy into reality) requires that everyone understands the exact way in which his or her contribution is crucial to achieving the overall vision.

• Do people feel the goal is compelling?
• Can employees describe the nature of the link between their contributions and attaining the goal?
• Do people feel the goals have been personalized for their jobs?
• Are the goals challenging? Do they focus everyone's attention on the priority advantages or capability to be built?

Leadership's role is to focus the organization's attention on the next challenge, the right initiatives-and continue to build upon this energy so it becomes a distinguishing characteristic of the culture. The first might be quality; the next, cycle time; the next, entry into foreign markets; the next, strengthening service guarantees; the next, introducing and mastering a new technology; and so on.

As the bakery assessed its situation and identified where energy should be focused, management determined that three challenges were critical to both their short-term and long-term success.

1. Reversing a trend that was showing an increasing number of bakeries losing money each year.
2. Accelerating the bakery general manager development process in order to build their bench strength. To remain competitive, the bakery needed to change the way it was viewing the general manager's job and then introduce selection and development strategies to reduce the time necessary to prepare people for top bakery positions.
3. Introducing a competency-based selection and development process to enhance future bakery performance.

Their slogan, which became the rallying cry throughout the organization was, "it is no longer business as usual."

In establishing a commitment to address key business practices, top management committed to operationalize and integrate the work which emerged from setting the direction and shaping the organization.

Building the Essential Skills and Essential Competencies 

Competencies are defined as those characteristics of a person that account for and predict outstanding performance in a particular job, role, organization, or culture. Competencies describe what is different between top performers and their average counterparts; that is, they separate the "best from the rest." And, as redesigned business processes and work activities are being introduced and implemented, it is necessary to define "what outstanding performance will look like" as people adopt new ways of doing things. A picture of the new competency requirements evolves from shaping the organization and is the critical factor to introduce people's talent successfully into process design implementation.

The bakery decided to conduct talent assessment and development concurrently-the organization wanted to instill a commitment to the learning and improvement process. They did not want people to view the approach as a "weeding out activity."

Therefore, the following was initiated to create a climate where people saw the development process as an opportunity to strengthen their leadership capabilities and better align themselves with the new vision and direction of the organization.

• Work was begun to identify the leadership requirements necessary to drive future business success.
  • What are the situations managers must be prepared to handle successfully?
  • How do the effective handling of these situations align with and impact the new vision and direction of the organization?
  • What skills, abilities, and personal characteristics are necessary to predict success when managers are faced with these situations?
• People in present leadership positions were identified who had demonstrated proficiency in successfully handling situations similar to those identified in Step 1.
• The people nominated participated in an in-depth interview to assess how they addressed critical situations and what led to successful outcomes.
• The information generated from the interviews was organized into a framework of leadership behaviors that described what outstanding performance would look like for future success.

• The framework of leadership behaviors, i.e., competencies, were integrated into a comprehensive development strategy entitled, Commitment to Leadership, that all key managers participated in over an eighteen month period of time.
• Participants received feedback on the degree to which they demonstrated the critical competencies and were coached on how to improve.
• Participants had the opportunity to practice and refine the skills necessary for future success.
• Participants set goals for change that focused on the hard outcome measures necessary to create increased profits and improve customer service.
• Six month and twelve month follow-up sessions were held to reinforce the initial learnings and to track performance improvements among the various bakeries.

• Participants reported on performance improvement progress within their areas of responsibility.
  • Participants described how they were strengthening specific leadership skills and the impact the improvements were having on their operations.
  • Participants received further coaching on strengthening their leadership skills and then worked in small teams to further develop and refine their approaches.

Results. After one year, the organization reported the following outcomes:

1. Process improvements focused primarily at meeting or surpassing profit and customer service targets delivered more than $3,000,000 in cost savings.
2. Key managers who rigorously applied the learnings from the Commitment to Leadership process reported healthier levels of organizational climate in their bakeries when compared to others who did not demonstrate the same level of change leadership.
3. Those bakeries where the organizational climate substantially improved reported more significant gains in profit and customer service when compared to those bakeries where climate remained the same, or deteriorated. In addition, where climate was the healthiest, process improvement teams thrived and recommendations were more readily accepted and acted on when compared to their counterparts in other bakeries, where the organizational climate remained static.

The bakery committed itself to integrate the business process issues with people development issues that created a framework for:

1. Defining the behavioral characteristics that account for top performance. What are the determinants of present and future success within the organizational culture? Who are the outstanding performers? What accounts for their exemplary performance?
2. Assessing the level of skill and identifying those people ready to assume greater responsibility and those in need of further development.
   Introducing a training and development curriculum that enhances competencies and the  resulting skills across a wide range of activities.
3. Designing an ongoing training plan that reinforces the core development strategy, and aligns with the performance improvement priorities.
4. Ensuring that steps are implemented to review developmental progress, i.e., the timely selection and promotion of qualified candidates into critical positions across the organization.
   

Summary

Organizational change efforts that lead to sustained breakthrough improvements in performance must be approached systematically. The multidisciplinary approach addresses the system as a whole in an integrated fashion. The leader's vision and resulting strategy help shape the organization's readiness and ability to chart new territory, challenges the status quo and asks the organization to pursue breakthrough opportunities that redefine the future, and pursues excellence by ensuring the competency strengths are aligned with the needs of the new direction.

About Rath & Strong...

Rath & Strong is a management consulting firm headquartered in Lexington, Massachusetts. Founded in 1935, Rath & Strong helps clients achieve desired change by providing consulting services in four main areas: process and operations management, organization development, counsel to leaders, and customer connection. The firm specializes in helping clients address issues relating to these four areas simultaneously from a systems perspective.