Category Archives: Accountability

Interest in the Work (Not the Job)

“What’s missing in this young recruit’s career?” I asked.

“I don’t know,” Arlene replied. “All she seemed interested in was how many vacation days she is going to get.”

“Why do you think she is focused on her vacation days? What’s missing? What was missing in her work before she came to your company two months ago? And perhaps is still missing in her work?”

“I don’t know,” admitted Arlene. “It is pretty basic, entry level work. Perhaps there really isn’t that much to focus on, except how much vacation comes with the job.”

“You might be right be right about the job,” I agreed. “But what about the work?”

Leadership Charisma

Leadership is a billion dollar business, yet all around us, we rarely see effective leadership. There are books, seminars, groups and programs to build better leaders (that’s the billion dollar business), yet much of that effort is wasted and fruitless.

The effectiveness of an organization is based on its structure and the role of leadership is to design and build that structure. Effective leadership has less to do with charisma and personality, more to do with building an organizational system to get work done.

Structure begins with the founder, a structure of one. There is work to be done and the founder is doing the work. There is always work left over, so the founder hires three or four people. These people do a little bit of everything. The work is organized around the scarce resources of infant structure. At some point the founder realizes the work can no longer be organized around the people, the people have to be organized around the work.

Organizing the people around the work requires that specialized roles be defined, tasks, activities and expected outputs from those activities. This is the emergence of roles.

This organization is no longer a structure of one, but a structure of many. It is not enough for each person to play their role, the roles have to be designed to work together, more complex than a structure of one, a structure of many. And, organizational structure is born.

Organizational structure is simply the way we define the working relationships between people. The two things that must be defined are –

  • In this working relationship, what is the accountability?
  • In this working relationship, what is the authority? Authority to do what? Make decisions and solve problems the way I would have them solved.

And, so the structure of one becomes the structure of an organization. I don’t care about your personality or charisma as a leader. I only care whether you can design and execute the structure, to get some work done.

The Team Retreat

Naomi had several sheets in front of her, spread out like a game of solitaire. “I don’t understand,” she remarked. “I thought I had this group nailed together.”

I dug deep into my bag of diagnostic questions and asked, “How so?”

“Our company has really been working hard this year on teamwork. We know that higher levels of cooperation and cross support make a big difference on our output. I thought I had this team dialed in, but sometimes cooperation seems to be the last thing on their mind.”

“What makes you think you had this team dialed in?” I asked.

Naomi was quick to respond, “Oh, we started out this year with a big retreat, back when we had budget for it. It was a great team building experience. We had a ropes course and we did group games. I mean, we didn’t sing Kumbaya, but, you know, it was a great weekend. Everyone came out of there feeling great.”

“And how long did you expect that to last?” I probed.

“Well, the consultant told us we needed to create some sort of team bonus, you know, where every one depends on the rest of the team to get a little something extra at the end. That way, if one makes it, they all make it. Shared fate, he called it.”

“I see. And how is that working out for you?”

It’s Not Your People

It’s your structure. Peter Schutz (1930-2017), former CEO at Porsche quipped, “the successful companies are those that get extraordinary results from ordinary people.” It’s not your people, it’s your structure.

Structure is the way you think about your company. That includes your business model, who you think your customers are, how you think they use your product or service, why you think they use your company vs a competitor. It’s your structure.

Organizational structure is way we define the working relationships between people. The first level is every person playing their role. The second level is the way those roles work together. It’s your systems. The way we think about roles and the way those roles work together determines the effectiveness of the organization.

Every company has people. Every company thinks their people are special (and they are). It’s the structure that determines the company’s success. Extraordinary results from ordinary people. It’s your structure.

Appropriate Timespan of Goals

From the Ask Tom mailbag –

Question:
I would like to roll out a goal-setting program for my team. Management by objectives (MBO) is a process where everyone in the company is required to set annual goals. I think it will go a long way toward results based performance.

Response:
The big failure of MBO is the focus on annual goals. If you look at the sequence below, you can see that MBO is appropriate for only a small slice of your workforce, and some of the most important goals and objectives are beyond two years.

Goals Framework and Timespan

  • S-V business unit president – longest timespan goals – five years to ten years
  • S-IV executive manager, VP – longest timespan goals – two years to five years
  • S-III manager – longest timespan goals – 12 months to two years
  • S-II supervisor – longest timespan goals – three months to 12 months
  • S-I technician, production – longest timespan goals – one day to three months

Goals and objectives should cascade through the organization starting with the longest timespan goals first, most often from the CEO. Each successive layer should have shorter timespan goals that support the goals from the layer above. You can also see, based on timespan, that longer timespan goals are more strategic (conceptual) in nature, and that as timespan falls below 3-4 years, those goals become more tactical, below 1-2 years, exclusively tactical.

While we have a general orientation toward marking our lives in annual timeframes, goals and objectives require a more specific orientation in the timespan of each role.

Leading Indicator

“They missed it again,” Isla complained. “The goal was very clear. Sometimes, the team gets close, but last month, dramatically disappointing.”

“We’re already two weeks into this month,” I nodded. “You’re the manager, what are you going to do?”

“The team better brace themselves for another speech,” she replied.

“And, how are you going to build this speech?” I asked.

“It’s pretty easy, I’m going to copy the speech from two months ago. Better get in gear, chin up, pay attention, focus.”

I waited. “Focus on what?” I finally said.

“The goal, of course. They know what the number should be,” insisted Isla.

“And, the goal comes at the end of the month, you don’t get your reports for two weeks. Isn’t it a little late by then?”

“I suppose I could get my reports out earlier,” Isla floated.

“Right now, you have a monthly number in mind, but by the time you get to the end of the month, no amount of effort will save you. And, yet, one week into each month, don’t you already know how the month will turn out?”

“You mean, like intuition?” Isla looked puzzled.

“Okay, let’s call it intuition. During the first week of each month, what is going on that gets your attention?” I wanted to know.

“You’re right. The number of sales appointments are always light during the first week, barely better the second week, improving by the third week, then crammed on the last week, right before we miss the target at the end of the month,” Isla’s eyes became distant, imagining the numbers in her head.

“So, in addition to measuring completed contracts at the end of the month,” I probed. “What would happen if you tracked sales appointments each week, while there is still time to impact closings at the end of the month?”

Don’t Judge People

From the Ask Tom mailbag –

Question:
It’s been at least four years since you spoke to my TEC group. I was chatting with one of my members yesterday and he asked me if I knew whether there was a profiling tool available that indicates a person’s capability related to stratum level?

Response:
I had the same question in 2002. The answer was and still is, no. There are some consultants who propose to have a profiling solution, but I would question its validity. Anecdotally, most profiling tools have about a .66 correlation with reality. You might say, well, that’s not too shabby until you understand the flipping a coin has a .50 correlation. So, even if there were a psychometric assessment, its validity would likely not be any better than the others.

I don’t judge people. I’m not very good at it. So, let me propose a much cleaner method. Focus on the work. I don’t judge people, but I do judge the work. Work is decision making and problem solving. Focus there.
Problem Solving Methodology

  • S-I – Trial and Error, substituting a single variable at a time until something works.
  • S-II – Cumulative diagnostics, experience, best practice. Solving a problem by connecting to a best practice.
  • S-III – Cause and effect, if-then, required for a single serial system or a single critical path, root cause analysis.
  • S-IV – Multi-system analysis, how one system impacts its neighboring system, based on outputs and inputs, or capacity mis-match.

Look at problem solving required in the work. Then look at the candidate. Is this person any good at solving problems at that level. If they are, that is a clue. Design a project with embedded problem solving, see how they do.

Don’t overthink this level-of-work stuff. It’s not that difficult.

Scalability

From the Ask Tom mailbag –

Question:
We have worked very hard to refine our core process. We believe we have the highest quality in our product offering and simultaneously have driven out extraneous costs. So, our customers enjoy a high quality product at the most competitive price. In spite of that, while sales growth is steady, our profitability suffers. Our gross margin is good, but by the time we get to the bottom line, the net is not so good. We have tried to cut SG&A, but that seems to make the net even worse. The more we try to take our company to the next level, the more frustrated we become.

Response:
You are in that No Man’s Land dilemma, too big to be small (amongst your competitors) and too small to be big (among those companies who have the biggest market share).

This is a classic integration issue. You describe your refined core process, which is clearly a step up to S-III. Your core system is well-honed, but scalability is elusive. Your core system creates your gross profit, right where it needs to be, but it sits among other systems that drag down the net profit. Companies at S-III have great products, but scalability only happens at S-IV.

  • S-I – Product
  • S-II – Process
  • S-III – Core system (sequenced processes, critical path)
  • S-IV – Integrated systems (multiple critical paths)

Your core system is critical, it is the product that your customers want, but it is now surrounded by other systems. Not only do these systems have to be effective and efficient, but they also have to be integrated together, and that is the challenge at S-IV.

Most core systems exist in a defined operation function, and are surrounded by a marketing function, sales function, project (or account) management, quality control, research and development, sustaining engineering, human resources, facilities and finance. You may have a strong core function in ops, but your company will never scale without the integration of all those internal systems.

Out of Integrity

“When we hired Lucas, we were clear about our values,” Alex described. “He’s been here for two weeks and we already caught him.”

“Can you be a bit more specific?” I asked.

“One of our values, integrity,” Alex replied. “We found him skipping the product testing step in quality control. Not on every unit, but he was only testing one in five.”

“How did you find that out?” I wanted to know.

“Easy. We have a reject rate of 20 percent. I know, I know, that’s high, but we had some raw materials out of spec lately, so our reject rate is higher than normal. Lucas’ reject rate was only 4 percent.”

“What did Lucas say?”

“He was proud. Said he thought a lower reject rate was good. Something about sampling. Pointed to his bonus on output. On that, he was right, his output was 16 percent higher than anyone else. But now we have to go back and re-test the entire batch.”

“The entire batch?”

“Yes, his lot output was mixed in with the other lots, so we don’t know which is which,” Alex answered.

“I have three questions for you,” I said.

  • How is your bonus system out of integrity with your quality standards?
  • How is your measurement of output out of integrity with the raw materials problem?
  • How does your management system blame an employee attempting to do his best, when this is really a management issue at a higher level?
  • Done or Done, Done?

    “But, Paula promised to finish that report by Friday,” Francine lamented. “Now, I guess I will have to finish it myself, to meet the deadline for the Board meeting.”

    “So, your definition of finish and Paula’s definition are different?” I asked.

    “What do you mean, finished is finished,” she flatly stated.

    “I understand what you mean by finished and I understand what Paula means by finished. Your understanding is that the report is complete, legible, proofread for accuracy, math checked and double-checked. What you mean by finished is published. What Paula means by finished, is substantial completion of the report so she can go home at 5p.”

    “But, on Monday, we were in agreement,” Francine protested.

    “Yes, but you agreed on different states of completion,” I nodded. “What words could you, as the manager, have used to clarify the agreement?”