November 2007

Welcome to The Leadership Report, where we focus on practical issues, problems and solutions confronted by leaders who are trying to take people performance to unheard-of heights.

Goals and incentives can be a drag.

We’re seeing a large number of companies who’ve set corporate and leadership goals that are out of sync with their business strategies. They drag performance down or produce unintended consequences. Take a look at your goals.  Do they communicate what you intend them to?

Here are a few examples.

• Damage done: A large company is trying to eliminate damage from its supply chain, namely in its warehouse and distribution centers.  When we examined the goals and incentives for the warehouse facility managers and their teams we found 80% of the performance weighting on productivity, 10% on safety and 10% on quality. The leaders’ goals were telling them to move product in and out rather than move product in and out without damage.
• Case in point:  WellPoint, the nation’s largest health care benefits company in terms of medical membership, got a lot of media attention earlier this year when they announced that their 42,000 employees will have 5% of the annual bonuses they already receive tied to whether the company meets specific screening and treatment goals for its policyholders. The company claimed this was a nod to the employees’ responsibility to the health status of members.  The other 95% of the bonuses will be determined by “other operating and financial issues.” according to the company’s public relations folks. Well intentioned, I’m sure.  But of the 42,000 employees, who doesn’t know that 95% is bigger than 5%?  When people in an organization have choices, 95% speaks a whole lot louder and drives more behavior than 5%.
• Why no team?  One of the world’s largest technology companies was implementing a business strategy whose success required marketing the company as an integrated portfolio of products and services.  It wasn’t working. The chairman asked us what was amiss.  We examined the goals of the business unit heads and discovered that 40% of their incentive was weighted to the company portfolio, while 60% remained focused on their specific business unit.

It takes less than an hour to carefully inspect your goals and incentives to see if they’re facilitating or impeding your ability to hit your targets.

In Sweden with Westinghouse

I just returned from Sweden, where I addressed a Westinghouse global conference on measurement. I talked about the new ways that leading companies are using to measure outcomes and performance results.My slides are attached.Please click here to view the slides.

A lot of people in Sweden ride bicycles. Bike racks like the one on the right hold thousands of bicycles.

What’s better for the customer?

There’s a wonderful interview with Jeff Bezos, Amazon’s CEO, in the October Harvard Business Review. “Whenever we’re facing one of those too-hard problems, when we get into an infinite loop and can’t decide what to do, we try to convert it into a straightforward problem by saying, ‘Well, what’s better for the customer?’”

Cater to Customers, Not Generations

Much is being made of the younger generations; their technology-orientation, ability to multi-task and the special needs they seek from people who hire them, namely flexible work options.  At a conference I chaired on the West Coast recently, the conversation turned to the effort to “accommodate” these folks. One senior human resource person spoke of trying to “anticipate, understand and serve the needs” of the so-called Echo generation, those born between 1977-1994. 

My work brings me into contact with many young people.  Clients ask me to mentor them so they can learn the realities of business and organizational change. I find these young people to be energized, exciting, entrepreneurial, candid and authentic.  But, they’re also young and inexperienced, just as my baby-boom colleagues and I were at that age.  They’ll learn, as each generation that preceded them has learned, that despite the media gushing over this or any other generation, they will be assimilated, not accommodated.

The reality is that in the modern business world, customers—not employees—establish the requirements and if we don’t meet those requirements, customers have options. Experience teaches us that if we don’t deliver what the customer wants when the customer wants it, the customer will go next door to someone who will accommodate them.  Although multi-tasking can be a good thing, what’s more important is delivering solid, high quality results that the customer wants.

So while it’s popular in the media to focus on generational differences and the need to cater to them, I’m convinced there are more similarities than differences and that we will do an excellent job of capitalizing on differences that represent strengths and setting aside those that aren’t.  We’ve done it before.  We’ll do it again.  And, everyone will benefit—customers, employees and shareholders.   

Pondering Casual Friday

What makes Friday different?  So different that some companies still permit/encourage dress code relaxation only on Friday. What is it that customers are telling customer-focused companies that direct us to relax our dress only on Fridays?  Why do customer requirements change on that day only?  Just curious.

A Hopping Popping Weekend in Annapolis

Here in Annapolis, Maryland the town was hopping and the trees were popping as Navy beat Notre Dame for the first time in 43 years Saturday.