Ross McLelland, Pacific Consulting
Management and leadership theories tell us what should be done, but are conspicuously short on the 'how to'.
All too often CEOs and other senior executives are clear on the problems or issues, but what they struggle with is how best to fix them. And they want to fix them for good - not just slap on a band-aid job that ends up a waste of time, money and staff energy. Let's do it properly and fix things that will last!
Take the case of Chris, the CEO of a medium-sized organisation with around 300 employees, which did well for many years. They had good sales, good profit and growth, and even good dividends to the shareholders. This was surely a company made in heaven? Not so! In Chris' company the systems and processes were not keeping pace with the company's growth. And over the longer term this neglect led to disarray. Things just didn’t work well the way they used to. The problems surfaced slowly. Customers started complaining, deliveries were wrong and they were not invoiced accurately or on time. This led to debt blowing out. Staff were too busy, quality was suffering, and they were not happy. Overtime increased, but productivity was decreasing. Chris had not got into e-business while their competitors had. The number of stock items blew out by double in 5 years and stocks tripled as special orders to please individual customers were causing chaos across the company. Margins could no longer be sustained. Then the inevitable happened, sales fell and down went profit!
Now here is the crucial question. What does Chris as CEO do to get things back on track? The Finance Director says “Cut costs! Reduce staff and offer retrenchments” But everyone is busy, really busy. And anyway what will that do to the customer service levels and the need to restore sales and profit levels? Customers are complaining now, so won’t this only spiral the company further downward? Chris is also facing increasing opposition from the sales force, who feel they are being blamed. Morale is plummeting and senior management is under pressure for not fixing things earlier. Chris believes they have two key options. They can do a quick fix solution, or a deeper, more systematic, targeted approach exploring root causes, not just the symptoms!
Chris went for the first option. They retrenched some staff, cut costs, even sent out a memo to stop supplying the tea rooms with biscuits. But this expenditure freeze caused major discontent.
It certainly didn't work because the customer problems got worse and the best staff were twitchy about their futures. Some resigned for more stable companies. The cuts in marketing and business development added to falling sales. With less staff, the overtime went up, staff enthusiasm and productivity were measurably down. The workplace environment was negative. Chris now realises that the second option is the appropriate choice to fix things for good. ``The outcome I want is accelerated solutions for the long term competitive viability of the organisation,'' Chris said.
This is what Chris did.
Chris' new plan had 6 main steps to move the organisation forward and ensure future results. They consciously elected not to blame anyone, especially the staff, not to focus on the past, but to learn from it and improve. Chris communicated the following to the staff :"We are good, we have been very successful and now we are going to be even better. This is the direction I want to head in and this is the plan of how we are going to get there. Your role is critical in bringing it all together, particularly in working out the detail that affects your job, our customers and suppliers. The management team's role is to provide you with the systems, procedures and resources that you need to help make it all happen, and to ask how can we help!"
Here is Chris’s plan:
Step 1: Diagnosis Review
While we all have ideas on where we are now and what causes us to be either very good or mediocre as a business, it makes good sense to stop and reflect on past, current and future issues. We want to analyse and diagnose our business successes and shortcomings. Out of this will be a blueprint of what works here, what doesn't and why. Hence we will use a tool such as OEP (Organisational Effectiveness Profiling) to help us get a clear picture of how the organisation is working, what people think about it and how to fix our shortcomings.
This step is an investment in thoroughness to achieve future results and outcomes. Such a foundation for the future is paramount to our success.
We will analyse our strategies, our culture and our business systems and processes.
Step 2: Strategy Planning
Planning for now and the future based on what we have learnt from Step 1, lets plan - both operationally and strategically where we want to be and how to get there.
Chris organised a 2 day strategy workshop to make this happen through a strategy planning matrix.
Step 3: Accountability Distribution
Now that we have agreed on a plan we need to establish the other steps. Accountability will be allocated amongst the senior executives to head up a range of improvements, initiatives and day-to-day activities. Other staff across all functions and divisions can participate as members or influencers. An accountability matrix will be the tool to plan and record the distribution.
Step 4: Leadership Development
We will undertake leadership, management and staff development, and provide support. This will include discussing and documenting expectations of each person's role in terms of results, and actions and behaviours.
These have been set out as the way things work around here - our values, morals and expected behaviours. Each executive will participate in leadership and personality profiling. We believe such change should start at the top. This will provide a road map for each executive to:
- Focus on achievement of corporate and departmental goals and objectives;
- Improve systems, procedures and resources to enable staff to perform better;
- Create leadership and management behaviours that will make this a more positive and profitable work environment.
Each person will have a contribution and development plan setting out the requirements and expectations of their role and the support they need to achieve it.
Step 5: Executive and Staff Coaching
Consistent with our philosophy that change starts at the top, we will start executive coaching to lift our game and turn things around as fast as possible. Then we will introduce coaching and/or monitoring to other staff to help them improve their performance. This will ensure that we get clarity on our roles consistent with the overall plan. Most importantly we will get this action quickly, so that the 'rubber hits the road'. Coaching will also help me as CEO, ensure management accountability will be real and not just shallow words of 'here they go again.'
Step 6: Monitoring, Reporting and Adapting
We need to continually assess how we are doing. We will do this by monitoring progress, both financial and non financial aspects. We need to monitor how you, our staff are feeling about working here and what can be done to make things better for you, to help you do your jobs better and enjoy working here. We need to monitor our customers and fix any shortcomings, quickly. We need to keep a vigilant eye on our performance in terms of sales, margin and profit to ensure we are going to do well both in the short term and more importantly in the long term, 2 to 5 years out.
In these times we need also to be aware of our role and representation to our community and the
environment. We should ask ourselves and be measured against what we have contributed to both as an organisation.
In each step we will need to change and adapt our plans and thoughts.
We need to be flexible to adapt our activities to align with our desired results and outcomes.
The overall direction is clear, so too the details of how we are going to get there, and how each of our roles can adapt as time goes on to get what we want.
We will regularly reassess, re-measure and discuss our progress and adjust, keeping our longer term outcome as our beacon strategy.
How Did the Plan Work?
If we accept the somewhat obvious, but nevertheless valuable assertion, that leaders lead, what is your assessment of Chris's plan and actions as the CEO? Do you think it will work? What could you suggest to Chris to do differently to get better results?
If we look at the results, Chris achieved significant change. For the first time expectations and roles have been spelt out. Senior executives and other staff know what is expected of them.
The executives have worked wonders - so much for 'leopards don't change their spots'! There have been significant turnarounds in the approach and behaviour of managers. They are acting and doing things they admit they wouldn't have done 6 months ago largely because of the one-on-one executive coaching sessions. They confront and successfully resolve issues regularly instead of avoiding and delaying them.
Each manager delegates more and fixes more issues/problems. Each has fixed a range of systems and processes which in total over time has multiplied to many positive changes for the staff and customers that wouldn't have happened otherwise.
We are still monitoring the business results. Things have improved but international events eg Iraq,
SARS disease in Asia and the drought haven’t helped. What we do know is that the work environment and culture are more positive. Keeping closer to customers has decreased the level of complaints. Delivery and invoice streamlining is more efficient and staff aren't leaving. Sales are up, although pressure on margins is tight. So we await the next 6 to 12 months to see the medium term impact of Chris's initiatives as CEO.