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Achieving Organization Effectiveness

Guest post by: G.J. Miller

Article Overview: Finance professionals will put numbers together that will help you measure results against goals on an annual basis. But if the organization considers only financial metrics such as revenue and profit without being proactive on the people side it may never get there. I think of an organization in the same way a doctor looks at the human body. The symptom (or indicator) is rarely the real issue.

Achieving Organization Effectiveness

“Organizational effectiveness is the concept of how effective an organization is in achieving the outcomes the organization intends to produce” (Wikipedia), and Finance professionals will put numbers together that will help you measure results against goals on an annual basis. But if the organization considers only financial metrics such as revenue and profit without being proactive on the people side it may never get there. I think of an organization in the same way a doctor looks at the human body. The symptom (or indicator) is rarely the real issue.

Small to Medium sized organizations can have a competitive advantage over larger organizations if they consider all the parts and pieces of their human resource strategies very early on in their development. It is easier to grow by design; and growth by design is without the issues of growth through default because waiting until later means your organization now has a history and organization ‘memory'. Redirecting the juggernaut (a large company) is difficult if not entirely impossible. It’s just too difficult to effect change thoroughly within the established culture, systems and processes, without wholesale change in people. The mindset is SET.

Early Stage Organization Memory

If I had my way, startups would begin work on their desired culture at the same time they begin to put their financial plans and structure together. Using consultants to structure a business plan, product marketing strategy, organization plan and the financials is the best approach, in my opinion.

Culture is a ‘tone’ that is set by the CEO, no doubt. And that can work as long as the group is small but growth brings ambiguity as pressures mount to deliver. Using a structured process to identify the set of behaviours (culture) required to make the business strategy a success, early on, and reviewing it with regularity, is a methodology that will last. I would even go so far as to say that between the product development stage and before the go to market stage, is the absolute best place and time to consider the HR pieces and parts…before you make any hiring decisions.

Begin your hiring process after you have identified the desired culture and associated behaviours, so that you can hire people that “fit”. Startups require collaboration, of course, and often that means that the person with the original idea gathers others around. The biggest mistake an entrepreneur can make is to create roles for these people instead of filling roles the organization needs with the right people. Worse still, bringing in people that don’t fit the set of behaviours required to succeed in the business plan, whether the company is small or large, is like signing the company’s death warrant before it even gets off the ground.

Combining the business metrics with the culture and then designing HR programs that will sustain them (recruiting, performance management, compensation & rewards) is the only way to go!

Turning the Juggernaut

Cultures should evolve with the business strategy and goals as part of the strategic planning process. That is why we recommend incorporating this into the planning process. When it comes to the impact on people, this is the stuff of workforce planning or readiness – training, downsizing, ramping up hiring plans, strategically sourcing and selecting future skills and behaviours then determining how to compensate and reward them.

Many organizations don’t consider the culture in this process nor plan for the ramifications. They find their results missing the mark, largely in part because people are not considered or prepared and the lingering organization ‘memory’ is at odds with the direction the company must take. In addition to missed targets and goals, mixed messages abound causing angst and confusion within the organization and ultimately can cause failure but will certainly minimize excellence.

For example, if your product changes, perhaps the skills required to sell it are different from your existing product line…but you take your best sales rep and put them on it without training or some kind of development. The one that suffers most is the individual – but the results will also suffer for some period while the individual figures it out, leaves or gets fired!

I once worked in a large multi-national organization with three business/product divisions. The senior executive talked about the importance of teamwork in sharing resources in order to minimize cost (increase profit) and be successful within their current strategy and annual business plan. There was only one problem. The incentive plans for the senior executives paid them only for their own division’s results…there was no cross pollination in terms of accountability for the total corporate results or either of the other two divisions. Human nature being what it is, meant that the majority of decisions and action were made or taken to satisfy the achievement of individual and division goals with no consideration for the other divisions or the company. What it did serve to accomplish was an ongoing rivalry for kudos and incentive payments that the organization, in my opinion, was never able to overcome. They did try and they made some progress, but the company was large and the organizational memory was set. This takes a very long time to effect.

SO CONSIDER ALL THE PARTS AND PIECES

The leg bone is connected to the hip bone…or so the song goes. Whether large or small, take the time to consider the culture you need to be successful in your business at the same time you do your annual and strategic planning. Build the HR programs that will facilitate and sustain the changes required. And if at all possible, do that while your company is small enough, and easily enough changed!

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Article Tags: organization effectiveness



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