PMworkingpaper绩效管理讲座英文版.docx

PMworkingpaper绩效管理讲座英文版.docx

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PMworkingpaper绩效管理讲座英文版

SteveSherretta

October14,2018

PerformanceManagement:

EnhancingExecutionThroughaCultureofDialogue

PeterisChiefExecutiveOfficerforamedicalsupplymultinationalthatrecentlycraftedanewstrategytocountercompetitivethreats.Theplanstressedtheneedtocutcycletime,concentratesalesonhigher-marginproductsanddevelopnewmarkets.

Fourmonthsaftercirculatingtheplan,Peterdida“walkaround”toseehowthingsweregoing.Hewasappalled.EverywherePeterturnedpeople,departments—wholebusinessunits—simplydidn’t“getit.”

Firstsurprise:

Engineering.Thegrouphadcutproductdesigntime30%,meetingitsgoaltoincreasespeed-to-market.Good.ThenPeteraskedhowmanufacturingwouldbeaffected.Itturnedoutthenewdesignwouldtakemuchmoretimetomake.Totalcycletimeactuallyincreased.“Ourstrategicplanmessageisnotreallygettingthrough,”Peterthought.

Secondsurprise:

Sales.Thenewstrategycalledforashift—emphasizehighmarginsalesratherthatpushingproductdownthepipelineasfastaspossible.ButjustabouteverysalespersonPeterspoketowasmakingtransactionalsalestohigh-volumecustomers;hardlyanyonewasbuildingrelationshipswiththemostprofitableprospects.Salesisdoingjustwhatit’salwaysdone,Peterthought.

Worstsurprise:

Evenhistopteam,thepeoplewho’dhelpedhimcraftthestrategy,wasnotstickingtoplan.Peteraskedateammember:

“Whyareyouspendingallyourtimemakingsurethenewmachineryisworkinginsteadofdevelopingnewmarkets?

”

“Becausemyunit’schiefgoalwastoimproveon-timedelivery,”heanswered.

“Butwhataboutcompanygoals?

”saidPeter.“Wecameupwithagoodplanandcommunicateditveryclearly.Butnowhereitisn’tbeingcarriedout.Why?

”

Manyorganizationscreategoodstrategies,butonlythebestexecutethemeffectively.FortunemagazineestimatesthatwhenCEOsfail,70%ofthetimeit’sbecauseofbadexecution.Weakexecutionispervasiveinthebusinessworld,butthereasonsforitarelargelymisunderstood.WhyisitthatnooneinPeter’sorganizationwasactinginsyncwiththestrategy?

Unlessweunderstandthereasons,wecan’thopetosolvetheproblem.

Imaginesomeonehittingatennisball.Whenthebrainsays“hittheball,”itdoesn’tautomaticallyhappen.Themessagetravelsthroughnervepathwaysdownthearmandcrossesgapsbetweenthenervecells.Thesegaps,or“synapses,”arepotentialbreaksintheconnection.Ifneurotransmittersdon’tcarrythemessageacrossthegap,themessagenevergetsthrough,oritgetsdistorted.Whenthathappens,eitherthearmdoesn’tmoveatall,oritmovesthewrongway.

Creatinga“cultureofdialogue”

Justlikeanervoussystem,organizationsalsohavegapsthatblockanddistortmessages.Thesecrettoeffectivestrategyexecutionliesincrossinghierarchicalandfunctionalgapswithclear,consistentmessagesthatrelaythestrategythroughouttheorganization.Soundsimple?

It’snot.Thereasonisthatthe“neurotransmitters”inorganizationsarehumanbeings—executiveteammembers,seniormanagers,middlemanagersandsupervisors—whosejobitistomakesurethatpeople’sbehaviorisalignedwiththeoverallstrategy.Doingwhatittakestoachievealignmentisverydifficult.ItiswhatRamCharancalls,the“heavylifting”ofmanagement,andit’sthekeytoexecutingstrategy.

Aswe’llseelater,thereisanimportantdifferencebetweencompaniesthatsuccessfullyalignbehaviorwithstrategyandthosethatdonot.Companiesthateffectivelyexecutestrategycreatea“cultureofdialogue.”Acultureofdialogueencouragespervasivetwo-waycommunicationswhereindividualsandgroups1）question,challenge,interpretandultimatelyclarifystrategicobjectives;and2）engageinregularperformancedialoguetomonitorbehaviorandensureitisalignedwithstrategy.

Threekeystomanagingperformance

Acultureofdialoguedoesn’thappeninstantly,anymorethanafluidtennisstrokedoes.Ittakespractice,persistenceandhardwork.Sohowexactlycanleadersensurethatstrategymessagesgoallthewaydowntheline—thatthetennisballgetshitcorrectly?

Thethreekeystomanagingperformanceeffectivelyare:

1.Achievingradicalclaritybydecodingstrategyatthetop.Manyorganizationsthinktheysendclearsignalsbutdon’t.Insomecases,managerssubordinatebroadstrategicgoalstooperationalgoalswithintheirsilos.That’swhathappenedwithPeter’stopteam.Elsewhere,topteammembersoftenhavetoomany“top”priorities—we’veseenasmanyas100inonecase—whichresultsinmixedsignalsandblurredfocus.Strategydecoderequireswinnowingprioritiesdowntoamanageablenumber—aslittleasfive.

2.Settingupsystemsandprocessestoensureclarity.Oncestrategyisclear,organizationsmustcreateprocessestoensurethattherightstrategymessagescascadedowntheorganization.Theseinclude:

strategy-centeredbudgetandplanningsessions;staffandteammeetingstodiscussgoals;performancemanagementmeetings;andtalentreviewsessions.Dialoguedrivesalltheseprocesses.Eachrepresentsa“transmitteropportunity,”wherestrategicmessagesareconveyedandbehaviorisalignedwithgoals.

3.Aligninganddifferentiatingrewards.Leadersmustmakesurerewardsencouragebehaviorsconsistentwithstrategy,whichsoundseasybutisn’t.Differentiationisaboutmakingsurethatstarsgetsignificantlymorethanpoorperformers.Butalmosteverywheremanagersdistributerewardsmoreorlessevenly.Aswe’llsee,lackofeffectiveperformancedialogueisakeycontributortodysfunctionalrewardschemes.

Welistthesethreeitemsseparatelybuttheyare,ofcourse,interconnected.Systemsandprocessesdependonclarityfromthetop.Differentiationandalignmentofrewardsdependonmanagersusingperformancesystemseffectively.Dialogueisthegluethatholdsitalltogether.Butnotjustanydialoguewilldo.Itmustbedialoguewithpurpose,focusedonperformance.

Linktocompanyvaluation

Companiesthatmanageperformancewell—GeneralElectriccomestomind—havehighermarketvaluations.Why?

Because,moreandmore,institutionalinvestorsviewstrategyexecutionasavitalfactorinfluencingstockprices.

Justafewyearsagoinstitutionalinvestorsreliedalmostexclusivelyonfinancialmeasuresforcompanyvaluations.Now35%ofamarketvaluationisinfluencedbynon-financial,intangiblefactors,accordingtoastudybyErnst&Young.Thestudyshowedthat“executionofcorporatestrategy”and“managementcredibility”rankednumberoneandnumbertwoinimportancetoinstitutionalinvestorsoutof22non-financialmeasures.JohnInch,amanagingdirectorandanalystatBearStearnsnotesthatinsomesectors,suchasdiversifiedindustrialcompanies,intangiblesaccountforevenmore—uptohalfacompany’svalue.“Youcantakeevenamundaneassetandinjectgoodmanagementandhavesomethingprettystrong,”saysInch.

1.AchieveRadicalClaritybydecodingstrategyatthetop

Thefirststepinsuccessfullyexecutingstrategyisachievingclarityonthetopteam,whichisfrequentlythesourceofgarbledsignals.

LackofClarityattheTop

ArecentHayGroupstudyshowsadisturbinglackofclarityontopteams（organizationalclaritymeasurestheextenttowhichemployeesunderstandwhatisexpectedofthemandhowthoseexpectationsconnectwiththeorganization’slargergoals）.Thechartbelowshowsdramaticallyhigherlevelsofclarityonoutstandingvs.averageteams.Infactthebiggestsingledifferencebetweengreatandaveragetopteamsandtypicaloneswasinthelevelofinternalclarity.SeeFigure1.

Figure1:

OrganizationalClimateandTeams

[ChangeHay/McBerto“Source:

HayGroup,Inc.”infinalversion]

AndaLackofClarityBelow

Workersatlowerlevelsstronglyfeelthislackofclarity.Figure2looksatsatisfactionlevelsforworkersplanningtoleavetheirorganizationswithintwoyearsversusthoseplanningtostaylonger.Thisstudyshowedthatakeyreasonpeopleleavetheirjobsisthattheyfeeltheircompanieslackdirection.Evenamongemployeesplanningtostaymorethantwoyearsattheircompanies,only57%felttheirorganizationshadaclearsenseofdirection.

Figure2:

Keyreasonswhyemployeesleavetheircompanies

Total%Satisfied

Satisfactionwith:

Employeesplanningtostaymorethantwoyears（%）

Employeesplanningtoleaveinlessthantwoyears（%）

GAP

（%）

1.Useofmyskillsandabilities

83%

49%

34%

2.Abilityoftopmanagement

74%

41%

33%

3.Companyhasclearsenseofdirection

57%

27%

30%

[NOTE;HIGHLIGHTSECTION3;MAKEITPOPGRAPHICALLY]

Claritymatters

Whydoemployeescraveclarity?

Thinkaboutit.Whatcouldbemoredemoralizingthantherealizationthatyourhardworkisnotcontributingtooverallcompanygoals?

Employeeswanttodothe“right”thing,buttheycanonlydosoiftheyknowwhattherightthingsare.

Unfortunately,aswesawinouropeningvignette,companiesoftendon’tcommunicatestrategicgoalseffectively.Anoilrefineryclient,forexample,setastrategicgoaltocutcosts.Toseehowwellthemessagehadgottenthrough,anoperationsteamleaderheldastrategydecodesessionwherehequizzedhisteammembersonwhattheyfeltwasthechiefpriority.Tenteammembersproducedfourdifferent“top”objectives,includingcost-cutting,safety,environmentalcomplianceandreducingsalesprocessingtime.Themessagehadn’tgotthrough.Theteamleadercalledhisteamtogetherandcreateda“transmitteropportunity.”

“Don’tyouguysrealizethatifwecan’tcutourrefiningcostsbythreecentsagallon,they’regoingtoshutusdown?

”hesaid.

“Isthatallyouneedustodo?

”repliedtheteammembers,ta