Last month, I discussed how too narrow a focus on metrics and results can have unintended consequences that impact management’s anticipated outcomes. Employee disengagement, customer complaints, and material shortages can impede results if management does not take a broad enough view of the organization.
Enterprise management is a system. Often, managers think they can treat functional areas as independent systems. Organizations that subscribe to LEAN operations can easily fall into this trap if they are not careful. Telltale warning signs are holding department managers accountable to measures that are only influenced by their department or isolating front office operations from the production floor.
Keeping a balance between how employees are directed and developed and process management is a simple model for broadening management perspective. Organizations that place too much focus on their employees can become locked in “fire-fighting mode”, develop reactive management unable to address longer-term goals, and display difficulty in predicting cost and cash flow. Companies that focus too heavily on process can experience variance problems due to lack of inter-department communication, lack focus on strategy and are unresponsive to supporting broader goals, and lose their ability to innovate in the marketplace.
Strategy and leadership are the levers that balance these two domains. Many of companies’ top performers are pragmatists that wince at the mere mention of “strategic plan.” Strategic planning often draws a negative response because so many companies do it poorly or not at all. A good strategic plan sets investment levels between people, process, and assets. A good plan checks for employee skill deficiencies and assures that incentives and measures are aligned with the strategy. How many times have you seen a company announce a new initiative and not update their management scorecard? The key measurement for the quality of a strategy is how successfully it affects change.