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The KPI.org Blog

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

Dear Abby-Gail: How Much is Too Much?

By Gail Stout Perry

Oct 29, 2013 10286 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

There has been a lot of interest in my recent blog post:  “Balanced Scorecard Gone Bad: What’s that Funky Smell?”  Several people have posted comments and questions in various forums, but one in particular deserves special attention.
  
From Gary: I believe a key point in your message is that a strategy is never static due to external changes (e.g., competitor moves, new technologies), so it will require continuous adjusting.  But this raises a different question. Since as strategic objectives change or the emphasis of what to accomplish within strategic objectives change, this means some KPIs may be dropped and others added (or their weightings may need to be tweaked). As a result, how much change in KPIs can an organization tolerate?

Dear Gary: This is an excellent question.  When strategy changes, then KPIs will have to change. Organizational tolerance to change is affected by several things. 

(1) Is the scorecard system engrained in the organizational culture such that management trusts the system and uses it to make decisions?  If so, they will have relatively high tolerance for change in the KPIs because they understand that the change is necessary if they are to continue to rely upon the system to make strategically relevant decisions. 

(2) Given that you know you need to adjust the KPI, how quickly can you achieve 7 data points on the new or adjusted KPI?  In other words, is there baseline information available that will help you quickly establish an XmR chart?  If not, can you achieve frequent enough reporting points to have useful trend analysis within 6 months?  If you were using an excellent KPI in the past and then switch to one in which it will be a year (or more) before you have enough data for management to have the 7 data points needed to make statistically sound decisions, this will cause frustration and lower the tolerance for the necessary change.

(3) Can your software system handle these changes without losing your historical performance on the objective (assuming the objective does not change)?  Knowing that you won’t be throwing away historical information increases tolerance for change.

(4) What about rewards tied to KPIs?  How do your Human Resources processes link individual or group performance and incentives to KPI performance?  What will be the result of changing a KPI right now?  If it can’t be changed due to a covenant with employees, can it be removed from the calculation so that you don’t keep working towards an “expired strategy”?

I invite feedback from others.  What else has impacted your organization’s tolerance for needed change in its KPIs?  And does anyone want to share their tips for overcoming resistance to this sort of change?

For more challenges and solutions, we invite you to explore The Institute Way: Simply Strategic Planning & Management with the Balanced Scorecard.

Dan Montgomery Dan Montgomery

Dan is co-author of The Institute Way. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

The Trouble with “Change Management”

By Dan Montgomery

Oct 18, 2013 18462 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

A few years ago I was facilitating a post-merger integration process for an expanding publicly-traded utility company that had bought a smaller, rural utility in order to expand its territory. The parent company had a balanced scorecard, and we created an aligned scorecard for the smaller company.

I was given a dedicated, full-time team of six people – a “diagonal slice” of the organization including people from different functions and management levels; a dedicated work space with its own kitchen; and very strong executive sponsorship.  It was an ideal project from that point of view.

One day I wanted the group to talk about “Change Management,” and wrote that term up on the white board in our meeting area. Brian was one of the team members, and a former IBEW shop steward who was pretty critical about the way things were run.  As he walked into the room, Brian said, “That’s exactly what we need to do, Dan.  Change the management!”

Brian had quite a point there. Too often, “change management” means “managing what employees think, say and do.”  Can we also interpret this term as “changing the way management thinks about change?” When I first learned the term while working with a Big 4 consultancy in the early 90’s, the approach to change management was top-down and essentially manipulative.  Senior management, assisted by our brilliant consultants, developed new systems and re-engineered processes to work more efficiently, and “change management” was a set of techniques designed to get the folks to go along with whatever had been decided.

It’s pretty clear that that approach doesn’t work.  Change cannot be “managed” like that.  Hearts and minds are not so easily manipulated. Change can be led however.

Effective change leaders don’t “manage” people, they engage them.

Engagement begins by creating a vision that is emotionally inspiring to employees, and inviting them to contribute their ideas about what the future should look like, how to get there, and how to measure success.  Participation in the process is intrinsically motivating to people, who enjoy the feeling of “knowing what’s going on” and contributing.

The Institute Way provides a detailed approach for building engagement using four inter-related cross-functional teams:

The strategic management team – senior leaders who set strategic direction, provide resources and monitor progress.

Strategic theme teams –cross-functional groups that flesh out key business strategies, or themes.

Communications team – to keep employees and key stakeholders informed

Objective owner teams – cross-functional groups that identify measures and initiatives to generate forward momentum

Gail Stout Perry Gail Stout Perry

Gail is co-author of The Institute Way. With a career spanning over 30 years of strategic planning and performance management consulting with corporate, nonprofit, and government organizations, she enjoys speaking, training, and writing, sharing her experience with others. She currently is the Chief Strategy Officer and VP Americas for Corporater.

The Ultimate Fantasy

By Gail Stout Perry

Oct 14, 2013 10356 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

CheerleadersHigh School Football, College Football and Pro Football still don’t scratch the itch.  Are you familiar with Fantasy Football? Football Season in Texas is well underway yet even with  football everywhere you turn, there are a lot of people who are just as excited about Fantasy Football.  If you are not familiar with the concept, fantasy football is a game in which team “owners” draft  pro players to assemble their ultimate fantasy team.  Then as actual pro football games are played each week, the resultant statistics  from the games are used to calculate how the owner’s fantasy team would have performed. In other words, if the Cowboys’ quarterback had been playing with the Redskins’ running back and Denver’s wide receiver, how would they have performed as a team? 

I never really understood the attraction of Fantasy Football....until today.  I have recently observed a couple of organizations that are similar size / similar business models, yet their team performance is radically different.  In one organization, people are enthusiastic and innovative – they have a wonderful team spirit -  and in the other, the team has to be prodded along.  And as I mulled this over, I remembered Daniel Pink’s book, “Drive: The Surprising Truth About What Motivates Us”.  Pink has found that autonomy over “your team”...in other words, being able to choose your own team...is a primary motivator and he backs this up with research as well as examples from companies such as Whole Foods and Facebook that are successfully allowing employees to select their teammates.

And it hit me, the difference between the high performing company and the struggling company had to do with team performance.  And there was a difference in how the teams were created. One had forced staff to “play nicely together” while the other has allowed its staff more autonomy to choose their teams. And isn’t that the ultimate fantasy? To be able to choose a winning team rather than plodding along with whatever team you happen to have landed in?

I get it now.  This is also what makes Fantasy Football so fun - the ability to choose a team and feel pride in the team’s performance results. I plan to participate next season – that way, if the Cowboys have a bad week, I’ll still have a chance to celebrate via my fantasy team’s results!  

To learn more about organizational change management and how to achieve transformational results for your organization, we invite you to explore The Institute Way:  Simplify Strategic Planning & Management with the Balanced Scorecard.  And to learn more about Fantasy Football, check out the popular sitcom, The League.

Dan Montgomery Dan Montgomery

Dan is co-author of The Institute Way. An accomplished facilitator and trainer, Dan has a 30 year background as a manager, management consultant and executive coach. His previous professional consulting experience includes work with Accenture and Ernst & Young.

How the Mighty Have Fallen

By Dan Montgomery

Oct 7, 2013 7542 Views 0 Comments FacebookTwitterLinkedInGoogle Plus

A few months ago, we got a call from a company asking for help with their balanced scorecard – something that happens every day.  What was surprising was that the company was one that was a former winner of the Balanced Scorecard Hall of Fame, and one that I had worked with years before.

A lot had happened in eleven years. All the original architects of the balanced scorecard had left for other organizations.  It was no longer used as a way to evaluate or update strategy.  Having been cascaded down to an individual employee level years before, what they now called “the balanced scorecard” was simply a way to set targets for employees, based on set objectives and measures.  It was run out of the HR department, where the caller was a mid-level manager. These objectives and measures had become decoupled from strategy, and had not been reviewed or evaluated in years.  What had once been a tool for individual employee alignment with corporate goals was now only a way to set annual targets for individuals. And without ongoing alignment, it was perceived that it was Corporate’s way to get the employees to jump higher every year.  HR’s complaint was that only 5% of the employees had responded to the most recent request for their annual targets.

No wonder!

When I asked the person I was talking with about whether there was a possibility of talking with their strategy function, she was surprised -  “Balanced Scorecard is an HR tool – I didn’t think it had anything to do with strategy!”

Sustaining a balanced scorecard takes ongoing leadership engagement, and needs to be the basis for ongoing strategic management conversations NOT a once year report card. Not only management, but all employees benefit from being involved in discussing strategy, identifying objectives, measures, targets and strategic initiatives at the level that they impact, and that impacts them.

For more on aligning individual objectives with strategy visit here.

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