Define Strategy? Ask this question and most likely you will get complex answers. Simply put, Strategy is a roadmap, to achieve the Vision”. More importantly, it is critical that the strategy gets implemented. Organizational leadership incentivize their employees, thinking they will drive strategy implementation. However, employees need to be know what is the company’s strategy. More importantly, they need to know what to track and how to track implementation of the strategy. There are multiple tools to track Enterprise Performance. One of them being the Balanced Scorecard (BSC) framework, which has been successfully implemented by global organisations.
The strategy needs to be broken down into specific and prioritised objectives by the organisation’s leadership. These can be across various perspectives of financial, customer, process, organization development & technology. This is important, so the concerned departments know where to focus their efforts. The Financial objectives custodians are the CEO with the Finance Department; Customer objectives by the Sales & Marketing and Customer Service, Process objectives by the Operations departments, OD objectives by HR and Technology objectives by the IT department.
This creates alignment. Motivated staff enabled by technology will help to drive Internal Processes, leading to Satisfied Customers, who buy products & services and hence business can deliver on the Financial Outcomes of revenues and profits.
Now lets’ look at tracking and monitoring achievement through Measurement. What gets measured gets done. Identify Key Performance Indicators (KPIs) to track success in delivering the strategy, with a mix of lead or lag indicators. It is important to create a set of lead indicators, to allow for course correction.
Then set targets for the KPIs, with a mix of stretch and easy targets, depending on the organisation’s focus. Management needs to push hard enough on the stretch targets, to deliver its strategy. Keep some easy targets too. For example, if there has been headcount reduction due to organization re-structuring, employee satisfaction will tend to be lower.
Even though the CEO is accountable to drive an organisation’s success, he/she cannot be solely responsible to deliver the organisation’s strategy. It is a shared responsibility of the management team. The ownership to track and deliver on objectives and KPIs, creates joint accountability amongst the management team members. The CEO can take direct accountability for some objectives like the Overall Revenue/Profitability target, Employees Satisfaction, etc. The department head with direct control over their area of operations, takes accountability of the respective KPIs (eg. Recruitment and Training KPIs accountability by the Head of HR)
Then take a count of identified projects/initiatives, since they require financial and/or human resources. Their importance for implementation can be prioritized by mapping them to the strategic objectives. Projects not delivering value to the organisation’s performance improvement, can be dropped.
Now develop Individual Performance Measures (IPMs), aligned to the enterprise KPIs. There have been cases, where due to non-alignment, individuals have been awarded a bonus when they achieved their individual targets, but the organization had made a loss!!
Let’s re-iterate. Without clarity on enterprise direction, individual performance will remain non-aligned. And then the top management wonders why the strategy is stuck as another Confidential Document in the CEO’s drawers!