Dynamic Performance Plans Not Static Job Descriptions

“Evaluations offer little insight to workers, survey finds,” reads the headline (1) in a report on a survey of 1190 US workers by Watson Wyatt, a human resources consulting firm. “Only 30 percent of workers say their company’s evaluation process helps them improve their performance, and less than 40 percent say the process provides clear goals or feedback…It’s an exercise that may have a negative effect on companies’ bottom lines. In a previous study, Watson Wyatt found that firms that clearly lay out workers’ responsibilities and their connection to larger company goals…perform better overall…’four times the total return to shareholders.'”

This study confirms what great managers know: People need clear direction tied to the organizational goals to perform well. Too often companies, driven by legal imperatives, resort to putting everything into a “job description” that becomes obsolete the moment it hits paper. Many evaluation systems try to quantify un-quantifiable ‘attitudes’ or create hopelessly muddled descriptions of ‘competencies.’

The solution begins with a robust strategic plan for the business, government or nonprofit organization. The plan should be based on the long-term vision AND the more immediate mission of the company. The strategic plan links each employee to that mission:

* The company sets its high level goals and concrete objectives.

* Objectives describe results that move the mission forward.

* Departments create aligned plans to achieve a portion of the overall plan.

* Cascading this process continues until it reaches the individual employee.

Each manager and work group creates a very actionable plan tied directly to the objectives. Each manager discusses with each team member how his or her specific job and assignments help fulfill the mission. By the time the process is complete, every individual has an explicit knowledge of how his or her work contributes to organizational success. The manager and employee develop an Individual Performance Plan with measurable results in two areas, ongoing responsibility and growth. Then the manager and employee discuss progress against this plan (at appropriate, regular intervals) so feedback is quick enough to reinforce desired behavior and take action on undesirable performance.

In their breakthrough study, First Break all the Rules, (2) Marcus Buckingham and Curt Coffman found that great managers do a formal performance review quarterly. In fact, the “annual” evaluation becomes just another quarterly review. This approach provides:

* continuous feedback

* concrete performance and improvement

* results integrated with the company’s needs

* individual awareness of what he or she should be doing at any moment to accomplish the mission.

When examiners for the US Malcolm Baldrige National Quality Award interview companies, they ask almost everyone “What is your company’s mission and what is your role in fulfilling it?” World-class companies invariably have a workforce that can answer this question specifically. People know what the company is trying to accomplish and what they contribute.

The tie between individual performance and mission is NOT just a ‘nice to have.’ The Gallup Organization published their latest study in 2006 based on millions of employees’ survey answers and analysis of observed business results in hundreds of companies around the world. When they asked people to rate how much they identified with the statement, ‘The mission of my company makes me feel important’ they found that “the top quartile…average from 5 to 15 percent higher profitability than bottom-quartile units. Mission-driven workgroups suffer 30 to 50 percent fewer accidents, and have 15 to 30 percent lower turnover.” They concluded that it was “as if the employee can’t energize himself to do all he could without knowing how his job fits into the grand scheme of things…For reasons that transcend the physical needs fulfilled by earning a living, [the employee] looks for her contribution to a higher purpose.”(3)

Leaders who want their organizations to be successful are converting static job descriptions and valueless annual performance evaluations into dynamic Individual Performance Plans and continuous review and improvement. Everyone is tied to the mission and clear about what they need to do to accomplish bottom line goals. It’s no wonder the data show quadrupled return to the shareholders and better morale and productivity among the workers who focus on the mission. (1) Any company can get these results if they begin with a strong, mission-driven strategic plan and cascade it to everyone to execute. The plan is only as good as its execution and execution happens at the individual level where people are fully engaged with the mission.

(1) The Miami Herald, Business Monday, page 16, Workplace column, Andrea Coombes, May 10, 2004

(2) Marcus Buckingham and Curt Coffman, First Break all the Rules: What the World’s Greatest Managers Do Differently, Simon and Schuster, 1999

(3) 12: The Elements of Great Managing, Rodd Wagner and James Harter, Gallup Press, 2006

Private Equity 100 Day Plans Vs Strategic Plans

Most private equity firms give at least lip service to some version of a 100-Day Plan upon closing the investment transaction in a new portfolio company. Given the laundry list of post-close action items, the effort makes sense. Even so, does the 100-Day Plan actually create value? Not likely. However, the 100-Day Plan mitigates risk, so chalk this up to good defense.

Whereas defense may keep teams from losing the game, offense scores the points that win the game. This reality should shift leadership focus to strategic planning. But wait a minute! Doesn’t the investment thesis cover strategy? Of course, but the investment thesis does not “operationalize” strategy. Strategy is only vindicated when it results in accelerated earnings before interest, taxes, depreciation, and amortization (EBITDA) growth. “Operationalizing” strategy (the investment thesis) is tactical and must be owned by the portfolio company leadership team. Middle Market Methods suggests a planning session for the benefit of the portfolio company leadership team-not the private equity firm deal team. Using a different moniker for the endeavor also precludes confusion. How about calling it the “Value Creation Roadmap?”

What should the Value Creation Roadmap accomplish? The first objective is introducing the key process owners of the business model to the investment thesis. Depending on who negotiated the deal for the portfolio company, these leaders and their subordinates may still be in shock about the change of ownership, much less the expectations of them for EBITDA growth. When business model process owners initially encounter the typical “3X in 3” investment thesis, they often reflexively emote-followed by awkward moments toward reestablishing composure. This reaction, however, may be the best due diligence the private equity firm deal team encounters. This is the second objective the Value Creation Roadmap: identifying what the leadership team knows that the investors do not know about the scalability of the business model. By engaging those who actually run the core processes of the company, valuable insights are gleaned, including (i) corroborated due diligence, (ii) clarified due diligence, (iii) invalidated due diligence, and (iv) missed due diligence.

Okay. Now what? Given a finite resource pool, leadership teams need to prioritize the initiatives that, in colloquial terms, accomplish “the mostest with the leastest” (sic). This is the third objective of the Value Creation Roadmap: establishing the “vital few” accretive initiatives. As Larry Bossidy and Ram Charan remind leaders in Execution: The Discipline of Getting Things Done, less is more, i.e., teams do better in knocking out a choice few deliverables at a time. What happens when the “vital few” require bandwidth or skills beyond the realm of reality for the portfolio company leadership team? The answer addresses the fourth objective of the Value Creation Roadmap: identifying capabilities vs. necessities. This is a “moment of truth” for the private equity deal team. By sourcing among the private equity firm’s subject matter expert network, the deal team builds relational bridges with the portfolio company leadership team while simultaneously supporting the value creation endeavor. Of course, some private equity firms have operating partners who may cover the supplemental skill sets needed by the portfolio company initiative. Even so, a bullpen of relievers is advisable for three reasons. First, the operating partners may also have exhausted their bandwidth. Second, some types of deliverables are so infrequent that the firm is better served by outsourcing than staffing. Third, an outsider may occasionally have more situational flexibility than a member of the firm.

Initiatives invariably have a bevy of tasks-including a critical path for those tasks. Additionally, there is an optimal execution order across initiatives and their requisite tasks. This is where good project management pays off. The execution recipe should be codified in a Microsoft Project plan. Project plans have tremendous utility. Not only do they facilitate choreography and coordination, but they also aid general management, performance management, meeting agendas, and communications. This is the fifth objective of the Value Creation Roadmap: execution leadership.

Did we forget the 100-Day Plan items? Of course not! They are in the mix. The point is that when 100-Day Plans are done independent of strategic exercises, potential dysfunction ensues. Why? Both draw from a common resource well. What about timing? After the letter of intent (LOI), there is a tipping point at which stakeholders deem deal closure to be imminent. This is when planning should commence. “Homework” assignments kick off in a two-week window on either side of the projected closing date. Ideally, the Value Creation Roadmap session occurs within 30 days of closure.

In summary, a corollary to Harvey MacKay’s (Swim With the Sharks Without Being Eaten Alive) line reminds us that we don’t plan to fail; rather, we fail to plan. The best timing window for the Value Creation Roadmap suggested above is an 80-20 scenario. Keep in mind, however, that 80% is more than twice Ty Cobb’s lifetime baseball batting average. The results of prioritized planning are potent.

Using 7 – Steps, To Transform Strategic Planning, To Quality Action Plans

If you wonder, why, it appears, these days, there is a significant dearth of genuine leadership, in so many organizations, so do, many others! Perhaps, the most significant, relevant reason, is, few groups, either, take the time, are prepared, understand, or are willing, to use professionally designed, leadership training programs, to enhance the potential of their leaders, to be, ready, for prime – time! One of the keys, is to teach these people, how to perceive and conceive of, and, then, create, a quality, strategic plan, and use it effectively, as a planning tool. When this is done, it serves as the basis, for a relevant, viable, sustainable, meaningful, and, hopefully, effective, action plan! With that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, a 7 – step, approach, to transform, strategic planning, to the best action plan, for the specific organization.

1. Needs goals/ perceptions: How can any leader, make a difference for the better, until/ unless, he takes the time, and makes a true effort, to fully understand the mission of the specific group, and how it relates the group’s, and constituent’s goals, and perceptions? Whatever the mind of man, can perceive and conceive, he can achieve.

2. Determine/ address priorities: Great leaders focus, and determine, the priorities of the group, beginning with effectively listening, and learning from every conversation, and experience, in order to proceed, with a high degree of expertise, and, hopefully, justice, and wisdom! He then, proactively, proceeds, to address these, in a systematic way, without delay, and/ or, procrastination!

3. Budget considerations and evaluations: If you want to achieve, you must take budgeting, and finances, seriously, so your group, can maximize the bang – for – the – buck! Instead of merely, going through the motions, it is important, to, periodically, develop a budget, using zero – based budgeting techniques!

4. Compare options and alternatives: Once, you’ve made a quality evaluation, with an open – mind, and evaluated costs, and benefits, proceed, to consider, and compare a variety of options, and alternatives, and determine the best course of action!

5. Plan A, B, C, etc: Since obstacles, and situations, happen, a wise leader prepares, not only with a primary plan, or, Plan A, but also, with several contingency approaches, in order to seamlessly proceed, forward, without delay, if conditions indicate, doing so.

6. Chart of responsibility: You can’t do it all, yourself, so it’s important to develop your team, and/ or, inner circle, and begin, with a clear – cut, Chart, and/ or Table of Responsibility. This efficient, effective approach, makes all efforts, more viable!

7. Implement strategically – based, action plan: Once you determine, what you seek to achieve/ accomplish, it’s important to ensure, your action plan, is a strategic one, which will address these needs, goals, and priorities.

Quality leaders, always, focus on the bigger – picture, in their quest, to become, as effective, as possible! Are you, up to the task?