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.

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 !!

Need for organisation structure role clarity in growing organization

When the organization is small, it does not require any formal organization structure, role clarity as most of the transaction would be done by the promoter cum business head with this known people through RELATIONSHIP. But when the organization grows regarding sales turnover, customer's addition, new product lines or variety increasing, the business also becomes complicated. The Organization requires a formal structure with relationship to get the things done without much complication or trouble.

when we say formal structural relationship, it involves 

• The positional designation, 
• Role accountability, 
• Performance metrics to measure accountability and responsibility 
• Reporting relationship 
• Organization-wide formal communication process about the structure 

Need for this structural in a growing organization

1. When the organization grows the relationship, and informal management becomes challenging to manage
2. Increase in communication complexity leads to confusion among the team
3. There is a chance for poor accountability  among the team in case if they are not governed by performance metrics, and there is no reviews and reporting method
4. When we have a structured  organizational relationship with performance metrics and the review forums helps to build performance culture .
5. It is a known fact that what we measure with accountability will bring focus and control.

Let us discuss organization structure designing

Most of the time we see a trend when we are asking for organization structure people are showing some visual positioning of man people and saying on a structure is already there. It is not just who is reporting to whom or who are all going to report to porting to one person.

In my opinion, visualized organization structure is a final step in the designing organization structure. Before that, a lot of strategic and tactical thought process has to go into the designing the organization structure.

As we discussed in manpower planning whenever there is an increase in the volume of product lines or customer base or whenever you are going for expansion, then it calls for revisiting the organization structure roles and responsibility.

For example, if there is a  position as General Manager  with business development as his accountability, then we need to articulate his  positional accountability with one or two performance metrics 

It could be a sales turnover increase our new customer development and so on one.

Most of the time we are mixing up accountability and responsibility . Accountability is result and responsibility is related to the process.

For example, the person is accountable for increasing the sales turnover is responsible for maintaining a relationship with the customer once in a week or sending the queries or finalizing the quote and so on are responsibilities to achieve the sales turnover. This responsibility becomes the person's daily/weekly management activities. Also, we need to be clear on the reporting relationship for each position, in turn, the person occupying the position.

The above inputs of all positions will be the inputs for designing the visual organization structure. The business head plays a major role in defining the organization structure with strategic and tactic perspective.

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!

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!

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!

which is one performance measure (KPI) indicating your organizational strength?

As there are many methodologies and key performance metrics (KPI)  to assess the organization strength. In fact, no one measure does not indicate the complete picture of the organization.

However, as a business head, if you want to gauge quickly about your organizational capability, people working culture, communication process and likely future prospects of the business, one key performance indicator will show you the strength of the organization.

That is " Delivery Actualization"  or "Customer order fulfillment on time."

Given the order position, if your organization meets  "Delivery commitment 100 % every time and that too on time, then we can presume, the organization is built on people and process strength.

why we insist this measure is dipstick measurement to assess the organization strength :

Irrespective of each functional efficiency, only when there is a cohesive team, business process and daily management practices, and capability, then the organization can deliver on time with 100 % actualization. This KPI  indirectly measures the organizational strength.

Relook at your organizational performance on order fulfillment for last one year, and you can relatively understand your organization's strength!

Why is business (head) transformation equal to business transformation, especially in SME’s?

There are several factors contribute to the success of the business regarding profitability and growth. Those factors could be type of products or services, talented employees, competition, positioning, market, economic environment and so on.Those are all common factors prevailing for any business in which some organizations are doing successfully, and others are struggling.The crucial differentiating factor between a progressive organization and stagnant or struggling organization is a business head especially in small, emerging medium size (SME’s) organizations.The business head could be the founder or the director of the firm.The business head's beliefs, quality of thinking, business practices and leadership style determines the organizational success amidst the common factors as listed.

As I had a privilege to work with more than 100 small and medium-size business heads on different occasions, one profound truth that I have realized.That is, irrespective of industry, business nature, product, manufacturing process, marketing environment and competition, the growth of the organization primarily depends on the business head ‘s thinking process or mindset, leadership style, his business practices or daily management processes and how he is directing or guiding his team.

Predominately his belief or how he looks at the business determines his leadership style, enables him to choose the right business practices or processes and ultimately reflects on the profitability and growth.

Most of the business heads as I observed, look at their business with either one of the two beliefs like survival orientation or growth orientation.

In survival orientation, he looks at his business and customers as a mean to make profits; he tends to make a profit somehow, with little or no emphasis on adhering to process, ethics, considering the interest of all stakeholders, future growth aspects and long-term sustainability of the business.Those organizations struggle with profitability issues, low employee engagements, frequent customer's turnout.

In growth orientation, he looks at his business and customers as a purpose to enhance the value of all stakeholders, including his motivation. This mindset will improve his thought process towards long-term sustainable business decisions. When he has the purpose of the business, his approach and thought process would be on building a solid foundation for the process, systems, technology and talent management, in turn, his visionary approach would be long-term oriented even though sometimes he loses in the short term. His growth mindset enables him to choose a set of business processes or practices on a day-to-day basis, which promotes positive organizational culture, business results, and long-term growth.His enhanced mindset enables him for creating sustainable wealth creation from his business to meet all stakeholder's expectation.

In our business transformation engagements, we have witnessed that whenever the CEO or business head understands the desirable behavior gap or the business process gap and then works full heartedly along with us, the business results used to be extraordinary. 

In my opinion, business success factors like technology, effective asset utilization, expanding into new markets, managing the competition, talent management and fulfilling the customers’ requirements are relatively easy tasks if the CEO or business head tune up his mindset and thought process towards growth orientation.

The real transformation has to happen at a business head level from mere survival mindset to a growth mindset.Business transformation starts from an individual and that too from the head of the organization. If that change happens at a business head level, I firmly believe that business is also equally transformed.