Why as a leader you need to be more disciplined?

One of the phrases i often hear from most of the business heads of a small, emerging business is “My people are not disciplined”.

When  i  go in-depth on this conversation, i  realize that the business head himself is not disciplined enough and i can correlate the people’s behavior in the so-called discipline aspects.

Let us understand what is meant by discipline in the organizational context.

Most of us relate the word discipline with personal conduct or in more specific to the punctuality to the organization and to the meetings. I accept this as a discipline, however, in my opinion, this is a must for any individual, but this is a low order of discipline. This must-have adhered 100 % and no compromise on it.

What is a high order level discipline that is  really required for the organization?

1.       Consistency in doing in any activities

2.       Alignment in what is being told and the action being done

The above disciplines must be demonstrated by the leaders.

There only the leader’s role comes in a big way.

I know one CEO is very punctual to the organization and not consistent in other business-related activities like conducting reviews regularly, frequently switching on and off on any new initiatives, not adhering to his commitments to the team. When he is not disciplined enough, the team also behaves in a less disciplined way because people are watching their role model always. In the organizational setup, the business head is a role model.

People and organizational culture will be in line with the leader’s way of working even though the leadership team can preach many motivational contents to the team.

As a leader, you need to be more disciplined, that is maintaining consistency in your thoughts, behaviors, and actions because people are watching you!

Why portfolio clarity is required among family members in the small ,emerging organization?

In most of the family business, one of the common patterns I see is that all the family members use to get involved in all the business matters. Still, at the end of the day, either decision never gets taken or decisions deferred as no one will have the final say. In this process, the organization remains mediocre, or the growth opportunities are not leveraged as supposed to be.

There is no doubt that the organization had grown from startup to significant size due to the mew hardworking family members. However, if you want to take the organization to the next level growth or if you want to make the organization more of the professional firm by bringing external talent, the first step would be restructuring at the senior leadership level, ie family members level.

One of the restructuring processes is bringing clarity on the portfolio among the family members

What does Portfolio clarity mean?

• For each family member, define the roles and responsibilities according to their qualification, strength, and experience.
• Assigning the particular functions or set of functional deliverables 
• Empowering an individual to make decisions in their respective functions or domain. To continue the inherent, inclusive way of working, the information to be shared among family members periodically. 
• Making people accountable for the result

Benefits of portfolio clarity among family members:

1. Mainly, organization growth can be accelerated as inherently, and the business has resources. Still, due to a lack of clarity on portfolio clarity, resource's time is getting wasted by involving in all business matters and enriched with only information.

2. Duplication of roles and responsibility can be avoided, and the resources can be utilized effectively

3. Gives clarity to the people of the organization on whom they should report for what purpose. The clarity at a higher level will remove the ambiguity among the employees, and also we can avoid the manipulation of communications by the employees.

4. The decision can be taken faster which helps the organization to respond quickly to the external world.

5. Bring out the extraordinary talent of the individual when they work under pressure to deliver the results


When the business is growing from small to large size, professionalism will help to accelerate the growth and for the benefit of the organization's growth, relationship and accountability need to be balanced through portfolio clarity among the family members!.

Step by step process in implementing organization wide performance management system

One of the dreams or visions for most of the business head of the small, merging organization is to make the organization a system driven and to implement performance-driven management.


As we discussed the need for an organization-wide performance management system, now let us learn the step by step implementation step to make the performance management throughout the organization.

Step1:

Implementing Business performance management, keeping the second level reportees as stakeholders.


Business  Level Performance Management :

When the organization is small, or the first time, the organization is getting into the performance management system, the logical step would be determining the important business key performance metrics along with some of the functional key performance metrics and start measuring. Key performance metrics can be measured and tracked by the business heads and his/ her second level reportees, mainly functional heads. 

For example, some of the business KPI's like sales turnover, inventory cost as a % of sales, Plant effectiveness, attrition rate, % of NPD contribution over sales can be measured and tracked. This set of performance metrics can be reviewed along with functional heads, and they can be encouraged to work on the action plan to improve the business performance.

This process implementation duration can be one year. 

Benefits of  business-level performance management :

1. Senior leadership team becomes familiar with the process of performance management even though they are not feeling fully accountable for the result and but they feel they are part of the process.

2. Enhances the engagement among functional heads or second level reportees o when the business head reviews along with them every month or weekly 


Step 2:

Implementing Business performance management as done in the first year and arriving suitable functional level performance management, keeping the second level reportees and their team as stakeholders.


Business +Functional Level Performance Management 

Since the organization already familiarizes itself with a business-level performance management system in the first year, now the organization can have Business performance metrics that can be set by the business head and tracked along with the functional head.

In the second level, detailed functional level performance metrics can be set and assigned to the second level or operational head level. The functional performance parameters can have more functional oriented and some of the business metrics as derived from business KPI's from the business head.

For example, the supply chain function can have more functional metrics like no of vendors developed, inventory level at different levels, freight cost as % of sales, and so on. Similarly, for all functions, we can have more functional level metrics which can be assigned to respective functional heads and their team.

The functional heads and teams can be encouraged to present the performance metrics trend and a detailed action plan for the business head every month.


This process implementation duration can be one year. 

Benefits of business + functional performance management :

1. The focus will be given in-depth to the functional effectiveness, by the way, measurements are extended to all functional key activities

2. Since we involve functional heads and their team, their involvement and focus is improved on functional effectiveness

3. Most of the organization covers under different functional metrics and performance measurement system, eventually, there will be an improvement in the communication process, visibility of issues and the solutions approach, understanding the pains of cross functions enhances significantly.

4. Eventually, engagement enhances across functions


Step 3 :

Implementing  Individual-level performance metrics which is derived from business and functional performance metrics 


Business Performance Management  + Functional Performance Management + Individual performance management :

Since the organization already familiarize itself with the business performance management system in the first year and the functional team engaged in the functional performance system in the second year, now the organization widens the performance management net to all the people in the organization. Ideally, it can be extended to executives, first-line supervisors level.

In this process, each individual is given a set of performance metrics that will have linkage with the functional parameters, which is derived from business metrics.

Each individual is accountable for improving their metrics and report the progress. The review period can be once every quarter or monthly basis, depending on the bandwidth of the organization. It is the responsibility of the functional head to review the progress of their team members. 

For example, the individual depending upon the level in the organization can be given performance metrics that are related to his/ her functions. Also, some of the development plans can be added.

By the way, almost the entire organization is governed by performance metrics related to business and functions.

Benefits of  organization-wide performance measurement system:

1. Since the direction is set for the organization at business, functional, and individual levels; it improves the focus and engagement.

2. Eventually, the organization gets clarity of performer and non-performer, and this will help to focus on people developmental efforts 

3. When the rewards and recognitions are based on the performance, it brings visibility, differentiates the performers and non-performers, improves the culture towards self and organizational performance improvement

Overall, performance management brings engagement among people, eases the communication, improves the focus on results or solutions, and thereby culture would become more of winning than blaming or complaining.

Implementing the organization-wide performance management system is a long process and needs to be implemented in a phased manner for sustaining the results and involving all the stakeholders to create performance-based culture!

Why business head should differentiate performer and non performer?

In most of the small, emerging organizations, one of the patterns I observe is that the consistent performer is not getting recognized and rewarded suitably.

When I am saying rewarded means, it could be either monetary benefits or openly recognize his / her work and appreciation or giving more preference for providing exposure to training programs or learning opportunities in the workplace itself.

In some organizations, the business head determines the incentive or salary hike based on the loyalty measures, that who is staying in the organization for longer years.

when the business head does not differentiate the performer and non-performer through different means, it  creates the following impact on the organization

1. The performer is not getting the motivation to give his/ her best as human beings; everyone craves for recognition and appreciation. When his / her extraordinary contribution goes unnoticed, either he/ she loses interest in the work or leave for a better opportunity outside the organization.

2. when all the people are treated equally irrespective of the performance by the business head, it sends the message to all that mediocre performance is acceptable in the organization. Eventually, the organization becomes an average performance organization.

Differentiating the performer and non-performer boosts the morale of the organization and also helps to promote performance culture inside the organization. 

The practice of recognizing and rewarding the performer must be ensured and demonstrated by the business head whenever he/she spots the performance and performer for retaining the talent and to build a performance-oriented organization.!

Loyalty vs Intolerance to low performance

A dilemma most of the family-owned business head has is how to deal with a mediocre performer who is coincidentally the relative or loyalist to the family.

This is a real concern for the business head as today's mediocre performer might have been with the organization from early-stage and might have contributed to the growth of the organization even at tough periods. In today's scenario, the person may not be able to cope with business challenges and modern business practices. Sometimes the behavior and performance of the person affect the decision making capability in the organization and may impact the morale of the people who strive for delivering performance.

What should be the way out for the business head to deal with those people?

1 First, the business head must realize the fact that the purpose of the business to maximize all the stakeholder's interests. The organization exists to serve all, and the organization will exist only when it is competitive.No individual is vital than the bigger purpose of the organization. This realization is a must for the organization's head.

2. Second, the business head spends quality time with the mediocre person by giving the perspective about the change in the way an organization works in early times and the now in the competitive environment. The person's challenges to cope with the current business challenges need to be understood, and the necessary exposure can be given by training, coaching, and mentoring.

3. Also, the person must be given some time to perform well as per expectation mutually set. This time duration can be a year or a couple of years, depending upon the role the person plays in the organization.

4. If the person copes up with the modern business practices and delivering the expected results, that is a piece of good news for all, and the person can be groomed for further development.

Incase even after meticulous training, coaching, and development efforts, if the person is not willing to unlearn and learn, not intending to deliver the result as expected, the business head must speak up to the person and be prepared to separate the relationship and business.

If the business head prolongs the decision to separate the business and relationship, it will inevitably affect the overall business performance, which is not suitable for anyone. The survival itself will be challenging for the business head and the entire stakeholders of the organization.

The key is balanced, quick decision making from the business head is vital for the meeting the larger purpose of the organization.

Cultivating winning culture in small, emerging organization

Who is cultivating culture? In one of my client organization, the CEO starts his monthly review meeting first by reviewing the employee engagement aspects like safety issues, employee participation levels, recognition, and then only he reviews other business deliverables. Over a period, "employees first" becomes the culture of the organization. The people under him also are giving first preference to employee engagement aspects. Similarly, in another organization, the business head always keens at delivery performance irrespective of any factors. His team also oriented to the practice. Now the culture of the organization is to deliver target" somehow" irrespective of profitability, quality level, or process adherence. Even in the home, if parents watch TV while eating, then the children also follow the same, then, over a period, it will become a culture of that family. The point is that the person at influencing level cultivates the culture either good or bad, not the other way around as followers cultivate the culture. Irrespective of title, you are the leader in your work or home. Influence positive, right things consistently, that will become a practice & culture.

In the personal front, what you do consistently becomes a habit. Similarly, in an organizational setup, what you do always becomes the culture.

culture is nothing but how people behave, relate to your business challenges in the organization.

It is the leadership team that is establishing the culture. When I say leadership team, not only CEO, senior-level managers, whoever is leading a team are leaders. When they demonstrate consistent behavior in some aspects, that will become the culture of the organization.

For example, if the leader believes in data transparency in everyday interaction, then the team also start thinking in data collection, analysis, sharing, and taking decision based on the data.

is it difficult to change the culture?

At the outset, anything is difficult in life, but possible with conviction. That is applicable in organizational culture setting and change the culture as well !!

Framework for bringing synergy among people in small, emerging organization

When we complete 12 months transformation intervention with small, emerging organization, the foremost question asked by the business head is " How can we sustain the improvements going forward?

The answer lies in establishing the daily management process in the organization at each level viz CEO& Senior leadership level, Middle-level management team, and operating level. Once if we implemented the system across all levels and executed on a daily/weekly/monthly basis, it creates an opportunity to build the organization as agile and vibrant.

also, it improves the engagement level of people with the organizational objectives, and this creates an opportunity for each individual to bring out the potential.

Target / Agenda / KPI's

In any level, what we measure, that gets focussed and get improved. We need performance metrics for individual/functions and the overall business as such. Measurement drives people behavior.

Right People / Cross functional Team

We need to identify the right people and place them in the right position. That itself solves most of the organizational problem. sometimes to solve the business challenges, we need a cross-functional team

Review forum / Communication 

We need to establish review forums to discuss the challenges. Status and facilitate the team towards the solution. Meeting or review forum is an excellent place to facilitate the solutions.

also, we need to establish different communication process like Management information system/groups for sharing and updating the live information.

when the organization sets the above process and does the cycle more frequently and effectively, the concerns on sustainability, people engagement, speed of response can be addressed.

Business planning process for existing business in a small, emerging organizations

Most of the Small, Emerging firm's business head think that business plan is meant for banks/finance institution to get financial assistance when they start a new business or expanding the existing business.

Actually, in the existing business itself, the business plan needs to be done at least once in a year irrespective of expansion or new plant. This planning process drives your thought process to navigate future opportunities and challenges in a proactive manner.

What is business planning or preparing a master plan is all about?

1. Visualizing the future opportunities/threats
2. Anticipating the risk
3. Proposing counteractions
4. Preparing your organization for next-level growth

How to do business planning for your business?

Inputs required for business plan

• Industry Trend / Changes in the business environment
• Volume forecasting/projection for the next 3 years
• Your organizational goal aspirations on profitability and growth 
• Customer segment or new customer's opportunity 
• 
  

Planning areas

Likely output from business planning Process

• Organization structure / Engagement initiatives
• Financial plan
• Organization development plan
• Initiatives on productivity/cost and quality aspects
• Product portfolio / business model / integration / diversity plan
• Marketing initiatives

This is a collective visualization and introspection process to make your organization to manage any uncertainties as well as to prepare your organization for future!

Factors for building winning culture in small, emerging organization

What differentiates the outstanding organization and mediocre organization is how the organization responds to customer's or market's expectation.

The response effectiveness depends on the internal organizational culture.

When the organizational culture is a positive and winning spirit, the response would be quick, reliable, and with cost-effective solutions or product. Whereas if the organization culture is more of victimized culture, then the response would be late, non-reliable and less cost-effective solutions or product. 

How the people are feeling themselves and working towards the customer is all about the indication of winning culture.

Building a winning culture is the time-consuming process, and it is a continuous effort, and predominantly, it is the prime responsibility of the business head than the followers.

Building a winning culture does not have a single factor, and it is a combination of multiple factors, as mentioned below. 

1.Respect
2.Environment 
3.Education
4.Forum for reviews and feedback
5.Communication process
6.Risk-taking and experimentation
7.Process and Standards
8.Recognition and appreciation

How do you look at your people?

One of the concerns, most of the small, emerging organization  CEO or business head is " high level of attritions."

When we go in-depth of an attrition analysis, we may realize that people are leaving the organization in a short period of joining, say within a year. 

There could be many reasons for high attrition rate like compensation not matching with individual's expectation /potential, growth opportunities in the external world; people are not liking the work culture, safety, lack of learning opportunity. Those are the reasons for the employee or from an individual/employee point of view.

From the management point of view, I can attribute the reason for high attrition is the top leadership's mindset towards PEOPLE.

As a business head or leadership team, how do you look at your people?

Are you looking at them as a commodity or an asset? 

That perspective makes much difference in the way you conduct your business and treat the people.

If you look at the  People as a commodity:

• Your belief will be "there are many more talents in the market."
• If " x " is not there, I will take " Y." 
• You treat people cost as expenses and You do not show interest in developing
• You are reluctant to create a learning environment for people as you think  as expenses

If you look at the people as an asset:

• Your belief will be whoever is working for you is an asset to the organization
• You will look at each one's strength and look for leveraging and start developing further.
• People get respect for their uniqueness.
• You will build the organizational environment for learning where people will get recognized for taking the risk and delivering results. 

The point is "High-level attrition within short duration" is fundamentally the outcome of how people are treated or respected inside the organization for their uniqueness, effort, learning, risk-taking. If many individuals feel there is a scarcity of respect and the internal environment is conducive for basic survival and growth, then they find an alternative.

Business head or leadership responsibility is to ensure the conducive environment, and the intention of creating a climate comes from the belief and how you look at the people.

Hence, change your perspective on how you are looking at people, either a commodity or an asset!

Need for organizationwide performance management system

As we discussed earlier "what you measure, will get focus and control." Measuring business, functional and individual through performance metrics will drive the behavior and actions. 

Organization-wide performance management systems mean from top of the organization to the bottom of the organization have a COMMON GOAL, deployed to all levels, with a different set of objectives that will have linkages with COMMON GOAL. 

For example, a business goal of achieving X % net profit is to be deployed from top to bottom levels of the organization and everyone will have the same focus to achieve the goal. But the fact is business metrics cannot be populated down the level as such as it is very difficult for the people to understand.

To engage all levels of people, deployment of business objectives to the down the level with supporting objectives are being done. For example, a business goal is further broken down into the functional level goal, in turn, the functional level goal is further broken down as an individual goal. By achieving the goal at the individual level, the functional goals are achieved. By ensuring functional goal achievement, the business goals are achieved.

Given below 
deployment of one performance metric from the business level to the individual level.

Now let us discuss why does the company require organization-wide performance deployment?

1 Organization-wide common performance deployment promotes performance s oriented culture over a period of time.
2. It differentiates performer and nonperformer.
3. It engages individual and the team, and it is a natural team-building process
4. The team understands each other's challenges and helps each other for a common goal.
4. It helps to improve individual / functional efficiency as constraints are exposed.
5. eventually, the organization migrates from functional orientation to organizational goal achievement orientation, and this drives the solutions-oriented mindset among the team.

Driving organization towards solutions-oriented culture is a paramount priority of business head, and organizational-wide performance deployment will help to achieve the mission !!

Importance of daily routine management towards sustainable performance

One of the common phrases we use to hear in most of the discussion in the organization is daily routine management.

Let us understand the meaning of the term and its significance on sustainable performance in the organization, especially in small, emerging organization.

Some of the myths of daily routine management:

"It is all about roles and responsibility as described in the job description."

Even though daily routine management is a responsibility of all individual in the organization, it goes beyond as mentioned in the job description. From my experience with small, emerging organization, the job description is written with the mix of activities and accountability.

However , Daily routine management is nothing but how you are consistently managing your daily routines so that you ensure your organizational performance is on track against the target. 

The context is if you are not active on a daily basis, you cannot be successful in your weekly results. If you are not effective in your weekly commitments, you cannot be successful in your monthly results and so on quarterly, half-yearly and annually.

"It is required only for shopfloor people and not for management level"

Daily routine management is a management practice, and it is required for all the levels.

For instance, if you are a shop floor manager, you suppose to do some of the activities on a daily basis irrespective of your other priorities. For example, the activities like reviewing your previous day production against the target, quality issues, customer complaints, communicating with other functions through MIS or meeting forums at a fixed time are the daily routines.

If you miss it for one day or do it in ad-hoc frequency, you may have the consequences regarding losing targets. For example, if you do not review your production status on a daily basis and ensure you are matching with asking and running rate, you may have relatively less response time to catch up or to take timely counteractions.

If you do not monitor the progress on a daily basis, you don't know the reality and cannot take timely corrective action.

In fact, daily routine management is based on the P-D-C-A cycle.

Similarly as a business head, if your daily routine activities are maintaining relationship with customers and employees, reviewing the financial aspects, reviewing the strategy implementation aspects and so on and if you are consistently doing those activities on a fixed, short intervals, you may face the consequence on the performance failure in any of those critical areas.

Benefits of daily routine management across all levels

1.Improves certainty and communication among team members

2. More response time available to take corrective action in case performance slips

3. It drives organization towards performance-based culture and engagement

4. More importantly, it improves personal efficiency and effectiveness

As any habit formation, initially it would be challenging to follow disciplined, structured daily routine management, but once it is formed, the organization is capable of handling any changes from external as well as internal environment.

In my opinion, more than management processes, daily routine management is culture building towards performance!

Relevance of Target setting & Review forums on accelerating business performance

One of the management process to control the business performance is to set the business target and review those targets.

when the organization grows from small to large, complexity also gets grow faster than business growth thanks to more customers, more products, more people and so on. Communication also gets complicated among all the stakeholders.
To overcome the complexity and bring accountability, setting the target and review those targets becomes important.

The targets could be Business targets, Functional Targets, and Individual Targets. The targets can be termed as Key Performance Indicators (KPI's)

Depending on the size of the organization and bandwidth to administer the performance management system, the business head can set the target in the following hierarcy

1. Business Key performance indicators 
2. Functional Key performance indicators
3. People Key performance indicators

From our experience, it would be a right approach, to begin with, Business Key performance indicators covering all functional deliverables in terms of the following categories

• Productivity
• Quality
• Cost 
• Delivery
• People engagement

The business head can set the annual target on the above categories as it covers all functions.

for example, "Manufacturing cost per component" is one of the key performance indicators under the category of "Cost".To achieve this KPI target, all functions have to contribute, by the way, business level KPI target setting covers all functions.

Once the organiztion becomes familiar with target setting at a business level and acquires competency, it can go to the next level of target setting at a functional level and individual level.

The business level KPI's can be set for annual basis which can be tracked every month , every week and every day.

Benefits of Setting Business Targets (KPI's)

1. Business heads and the team get clarity what they want to achieve on business profitability and growth
2. Targets set the direction to the team
3. Brings the people together
4. Improves the focus of the team
5. Improves the communication among team

Review forums :

once the business KPI's are in place, it is the responsibility of the business head to create a review forums to review/discuss the target status along with cross-functional team members and take a counteraction if it is required.

The review forum is nothing but a meeting of a relevant cross-functional team with fixed agenda.

The review forum could be monthly KPI review meeting, weekly reviews or daily performance review.

Benefits of Review forums:

1. Review forum is excellent process to review the target status and take counteractions
2. when the review happens along with cross-functional team members, it brings accountability to all
3. Review forums brings the problem to surface and can be solved along with the team quickly rather than individual review
4. Since each cross functional team member involving and contributing to different KPI's in different roles either as lead or team member, the review forum helps the team to know each other's problem . It helps to bring the bond among the members
5.Review forums if conducted properly with a real problem-solving approach, it enhances the personal productivity of each individual.

When the targets are clear and the teams are facilitated for achieving the targets through review forums, eventually organization sets for performance management culture and it would accelerate the business performance!

How do you measure organizational maturity in terms of problem solving competency?

One of the differentiators between the organization is people and their problem-solving competency inside the organization. Developing the organization towards performance culture or problem-solving orientation is the biggest challenge for the business head and also the responsibility of the business head.

Unlike, capacity enhancement or technology upgrade, bringing the culture of problem-solving will not happen overnight as this calls for systematic, consistent people development and creating an environment inside the organization.

Any organization can be measured by maturity level regarding problem-solving competency using the below framework.

Level 0: No data availability
Level 1: Availability of data
Level 2: No structured Analysis
Level 3: Gaining Insight from Analysis
Level 4: Converging  into solutions approach
Level 5: Implementation focus
Level 6: Track performance through metrics

Relook at your organization' problem-solving competency based on the above maturity framework. Be aware of your current status and actions required to move to the next level!

Steps in Structured Problem Solving Process

As you are aware that any chronic problem in the organization can be solved only through structured problem-solving methodology. The tactic or ad-hoc solutions won't work, that is why the problem became chronic!

The chronic problem could be stagnant in sales turnover, the repeated quality problem in the product, High attrition rate, high failure rate of new products and so on.

In those chronic problems, if you systematically approach the problem, you can arrive at the right solutions.

Typical steps in solving chronic problem-solving method as follows

1.Define the problem and set the desired target
2.Data collection from the past  few  months or years
3.Analysing the data and finding the pattern or prioritizing
4. For identified pattern, collect further data to understand the reality
5.Identifying the causes of the occurrence
6.Validating the causes with real-time experiments or documents
7.Propose the solutions approach
8. Make an ACTION PLAN to implement
9.Implementation on trial basis
10.Learn from the Implementation
11.Track for the progress or improvement
12.Make the new solutions as standard

Irrespective of the problem-solving methodology you choose to solve the problem like 6 sigma approach, QC tools approach, 8D approach, A3 approach, the essence of steps are almost the same as above.

To learn more about problem-solving methodology, tools and techniques with real case study example from the manufacturing organization, pl visit.

https://www.udemy.com/structured-problem-solving-methodologytools-and-techniques

Why P&L Analysis must be done EVERY MONTH?

One of the best management practices, most of the smart CEO or business head use to do every month is review P&L (Profit & loss) statement along with the key people. In fact, some organizations have a habit of reviewing P&L before 10 the of every month and accordingly all the financial accounting is completed, and the process of bill collection and accounting is set in place.

Benefits of doing P&L Analysis every month:

1. As a business head, notionally, you come to know the business profitability either positive or negative in the month .that give you more response time to take countermeasures in the subsequent months.

2. Analysis of P&L every month will give you a lot of insight about your profitable product mix. For example, in one month, an organization made High turnover compared to the previous month, but the Operating margin is lesser than the previous month. When analyzing the expenses, there is not much variance between months. However, when the team analyzed further on the product mix, they realized that even though they produced more of a particular product, say X, the price was low. The team had realized that more you produce product X, more loss the organization makes. This kind of analysis will give a lot of insight about your product mix and accordingly, you can take a call on optimizing the product mix.

3. Also, when you analyze P&L along with cost variance of each expense, that improves the cost consciousness in the organization, and in fact, you can take countermeasures to control the cost. We are witnessing in many organization,, where the business head reviews the P&L every month, the culture of the organization also moves towards cost consciousness.

Limiting factors of not doing P&L review every month :

1.one of the reasons people use to say is P&L statement may not reflect the real numbers as there is variation in inventory accounting, tax provision, depreciation, etc.

Yes. As said this P&L statement is just notional and indicative of your operational performance only. In the year-end, with all provisions, your auditor will make right P&L including right accounting principles. This monthly P&L will give you an instant picture of your business performance so that you can take timely actions.

Regarding inventory accounting, when you regularly do every month, will get eventually normalised. You need to ensure that you are using a standard format and input/output mechanism and the source must be the same. For example, if you are using TALLY software, use the same source and format/assumptions to prepare P&L statement every month

2. Lack of discipline on accounting all the bills on time and preparing P&L statement on time.

Rather than blaming the people and system, it is the discipline of the business head in showing interest to analyze the P&L every month before 10th matters a lot!!



The point is reviewing P&L analysis is a prime responsibility of business head, and it must be done every month for taking corrective action on business performance on time!

Change Environment and Trigger Positive behaviour in organization

when I asked the following question  in my management seminar, the response would be as follows

"Imagine you are in an airport. You eat the chocolate and search a dustbin to put the wrapper. However, you do not find a dustbin in a nearby area also you hear the announcement for boarding into flight. What will you do with the chocolate wrapper?"

In almost the session, to my surprise, people responded honestly as follows 

In case of  AIRPORT1, I will through  the wrapper in the corner and move on, even though it is embarrassed me, 

Whereas in case of AIRPORT 2, I will keep the wrapper in my pant pocket to find a dustbin later and dispose of it. 


What does this behavior or response indicate? 

As a human being, we create a perception about the place based on its environment ( how it is organized, cleaned, lighting, visuals, and  visibility). When the environment is more appealing, positive, conducive, it triggers positive behavior on the people.

Alternatively, when the environment is not conducive or less positive ( with things are not organized properly, low lit level, dust, dull appearance, no visuals), it triggers negative behavior on the people.


It holds good for the organizational environment as well. When the internal organization is organized neatly, it triggers positive behavior in the people, and it would get demonstrated with timely communication, care for the people, product, and equipment, . When the workplace is not organized correctly, people working in that environment also behave negatively as not caring anything and adding further chaos in the system.

Hence,
Change Environment ----Change perception ----Trigger Positive behavior

How will you create a positive environment in the workplace?

Workplace organization is based on the popular 5S principles 

1.Remove unwanted items 
2.Provide Location for each wanted items
3.Provide Identification 
4.Clean regularly 
5.Ensure the sustenance through Visual Management Systems

Keeping the workplace organized is the responsibility of all the people, and it is a way of life. It is an attitude toward the work .some organization make it as a habit, and it brings positive culture in the organization. The positive culture is being demonstrated through

1.Respecting each other
2.Transparency in communication
3.Care about people, product, and  facilities
4.Focus on continuous improvement on a daily basis
5.Recognition  of talent
6.Celebration of  work 

Even though it is organization-wide participation and continuous improvement by all employees, primarily creating a positive environment and facilitation starts from the business head or senior leadership team! 

It is an attitude towards work and life!

Why is Lost Order Analysis important for Organization?

Keeping continuous order pipeline is one of the healthiest indications of the organization. Even though ensuring order pipeline is perceived as accountability of marketing or sales function, it is actually cross-functional deliverables. 

Typically in a medium size organization, the following functions involved in order procurement process

1. Marketing or customer relationship 
2. Sales 
3. Engineering & 
4. Finance / Cost estimation 
5. Business head or pricing committee

Order procurement process indicates the speed, flexibility in decision making, teamwork, cost competitiveness and disciplined approach of the cross-functional team and management. One of the analysis indicates the organizational speed, decision making is "Lost Order Analysis."


What is meant by Lost order Analysis?:

Even though Lost Order Analysis is reactive, it analyses the reason for losing the prospective customer order. The reason could be a technical reason or regret from a technical perspective, pricing issues, delay in response from the organization, perception of the customer and so on.

This analysis will give clarity of why the organization is losing the potential customer's order.

What are the parameters to be analyzed? :

As said, this is cross-functional deliverables, and the business head must review the cross-functional team on the following parameters and the gap 

1.No of potential customers asked for queries  Vs. No of queries responded on time
2.No of quotes responded Vs. No of quotes converted into a sales order
3.Reasons for losing the potential orders

this analysis will give an insight about the organization on the following 

1. The effectiveness of marketing function to identify, grasp the opportunities
2. The cross-functional effort in ascertaining technical, commercial feasibility on time
3. decision-making ability on pricing 
4. Speed in responding and followup with prospective customers
5. Cost & Quality competitiveness in the market from customer's perspective


How frequently the organization needs to do  Lost order Analysis?

The frequency depends on the industry type, customer 's profile, lead time to respond. Generally, we suggest to our client to do the lost order analysis at least once in a quarter, as it is a reasonable time frame to understand the losses.

Role of business head:

The role of a business head is critical to conducting lost order analysis reviews as typically the functions point each other for losing orders and most of the time from our experience, the organization losing the orders due to both strategic and operational reasons.

The frequent review by business head will help the organization to improve the policies, business processes and of course to improve sales turnover of the business.

For example, when we initiate this analysis in one of our client, the team had realized that the majority of the orders lost due to High pricing. When we did deep analysis on the pricing, the cause identified was on the "cost estimation method" in which "lot size" was given overemphasis while costing in engineering function as well as at business head level. Once team identified the mistake and policies were framed on " lot size" in costing. After the corrective action,  we could see the reduction in the quote value and subsequently order conversion rate was increased significantly. 

The point is as a business head, if you do the lost order analysis frequently along with your cross-functional team, you will get a lot of insights about your order procurement process, and you can improve your business turnover.

 Also, this type of analysis will improve your cross-functional working cultures towards speed on decision making and execution

Typical symptoms of poor management practices in (SME) Organizations?

Whether small, emerging medium  or large size organization, most of them have common  macro-level challenges like

1. Improving profitability
2. Sustaining the growth & Future fit
3. People Engagement towards growth

However, small and emerging organizations have other typical challenges apart from the macro level challenges. Those challenges arise due to lack of proper management practices and business / functional processes.

Let us list down some of the symptoms of poor management practices or processes that result in mediocre performance or survival challenges.

1. Struggle to meet the given delivery schedule on time and qty. This will be regular scenario every month
2. There is no structured planning on customer's orders. Most of the time, serving the customer based on the urgency of the customer on a daily / weekly basis.'
3. One of the complaints or frequently listened word (FLW) is " our planning person is not effective, or are planning is very difficult in our industries.
3. Inventory (RM+WIP+FG) accounts for more than a monthly requirement, still manufacturing lines come to a halt for want of material
4. Rework / segregation is part of daily activities  and those  are considered as  essential activities for delivery
5. For any quality problems, quality executive or quality manager  is expected to own and solve it
6. Quality is ensured through Inspection 
7. Making the operators to run the machines. Checking the quality aspects and taking actions are considered as idealistic and impossible
8.A permanent imbalance between feeder shop and final assy line. Neither aware of the imbalance nor the actions to improve
9. Typically the first week would be low production achievement and gradually increased to last week. During month end, all are busy.
10. Sometimes, previous month billing execution would continue even after first 5~7 days of the month and this continues forever
11.No clarity and communication about monthly billing/production target and actual at any point of date. That information restricted to the senior management team only
12 No performance drive on improving business / functional deliverables.
13.No structured reviews mechanism between the business head and the next level
14 Functionally I am right; but as an organization, we fail mentality across the level 
15 No Monthly business performance review by the business head
16 ERP system is either tried  or hold  for correction
17.Thinking that  ERP system will solve all our today's communication issues
18 No structured  HR policy on recruitment and compensation
19. New product development is given least priority. No structured cross-functional team reviews
20. No time for a celebration of small success and always  firefighting mode to serve the customer

The point is to relook at your organizational symptoms and work on eliminating or reducing the intense to prosper!