In every single operating environment around the world, irrespective of business maturity or industry sector, managers struggle each quarter to ensure that those at the bottom of the business understand, feel connected to and ultimately drive the business goals. Every company I have worked in has done some good stuff here, but equally made a few mistakes. This week’s post will help you identify your gaps and take action accordingly so that your people make your business goals into reality.
Is your business goal all about the $$$?
Whether you are privately owned or publicly traded, every business has investors and shareholders. For the most part, they have less interest in what or how you do it, and much more interest in seeing a financial return on their investment. Fair enough, they took a punt on you by ploughing in cash, so every business needs to focus on profit, revenue, growth, cost efficiency, especially at senior levels, where there is a direct opportunity (and responsibility) to influence these financial measures. Further down the chain, the link between daily / weekly / monthly performance and financial success becomes more and more tenuous. Core metrics solely focused on $$$ for the whole business at best leave most of your people stone cold, at worst, disengage them from delivering results.
TIP: If the financial returns are the successful evidence of a business delivering, what are the outcomes that the business needs to achieve to deliver this? Set your business-wide goals around these outcomes, whilst tracking and reporting financials as proof of success to allow everyone in the business a realistic chance to contribute.
Too fluffy or too granular?
I’ve worked in various companies where witty or memorable acronyms were the way that managers helped staff to remember the business goals. At first, during a “big bang” roll-out, this seems like a good idea, but reality is that a few months on, the names you gave to the metrics start to become less relevant, and more symbolic. For newer team members, the business measures can appear ill-defined or fluffy, making it harder to engage. Equally, a short term pain point (competitive threat, regulatory change, staff attrition, profit warning) can also drive very granular focus, which serves a specific purpose, but may impede a business’s ability to respond effectively to an ever-changing market. Over time, these short-termist, non-strategic goals can become distracting and damaging to your business growth.
TIP: Whilst every individual needs to have explicit and measurable goal, if the CEO and the front line agents have similar measures, there is something wrong with your hierarchy! Ask yourself whether the quarterly and annual focus is more about a specific action, rather than a long term business measure, and re-adjust the focus accordingly.
Cascading: bottom up or top down?
This point is a little bizarre, but for some businesses, goal setting involves each part of the organisation working simultaneously to define what they will deliver in the next quarter(s), then coming together to align and connect the jigsaw into one big puzzle. From the inside, I can see that this feels like a truly collaborative approach, allowing individuals and teams to have real influence in setting the business direction. This can work well in small, early-life start-ups to keep focus and buy-in across the team. However, as businesses grow, this can start to look like the leadership are not leading, and by setting bottom-up goals, silos are established, leading to counter-intuitive goals and conflict.
TIP: As a leadership team, ensure that a well-defined strategy / plan / direction is articulated. If it’s good enough for share holders and investors, it’s good enough for your people! Then agree the business goals for a rolling period (4, 6, 8 quarters) and publish this information as the starting point for each functional lead, team manager, then individual to build out their plan to drive results.
Rewarding the right behaviours?
Many businesses have rewards for staff beyond the salary – whether sales incentives to achieve targets, or retrospectively paid bonuses related to customer engagement, operational efficiency or business growth. It never ceases to amaze me how infrequently businesses review these rewards against the evolving business measures, meaning that over time, what you reward your staff for, and what you measure them on in terms of performance become disconnected. This is often compounded by the established habit of a company-imposed approach of checking up on the performance on a quarterly basis (in line with shareholder or investor financial reporting requirements). Quarterly focus drives certain undesirable behaviours, which can result in poor business habits. For example, the rush to close business and implement new customers in the last few days of the quarter, in turn creates turbulent renewal cycles, and locks a business into a rollercoaster ride of staff pressure and emotional response to business risk.
TIP: Monthly, 6-monthly and annual focus is just as important as quarterly monitoring to establish (as much as possible) a sustained cycle of business growth, avoiding the exhausting ups and downs typically seen in SaaS businesses. Tracking the progress frequently and ensuring that reward mechanisms (incentives or bonuses) drive the business goals, and not other distracting behaviours unite different teams and levels more effectively.
Review, revise, re-engage!
Most businesses have some form of metrics in place. KPIs, OKRs, balanced scorecard or whatever you might call them, these are the “metrics that matter the most” to the business. When they were defined, the leaders, managers and influencers agreed that focus on these measures would drive business success. But when did you last review these core metrics, and how are you validating that the results are delivering what you expected? Too many businesses still hang on to outdated basic operational measures (average handling time, number of marketing qualified leads generated, 99.99% server availability) which are a lower level metric relating to delivery. Just because what REALLY matters is hard to measure should not be a reason to not at least try! Because most businesses are in a rush to start the new quarter, little or no effort is expended on reviewing successes and failures of the previous quarter, and what a business may chose to do about it. Lost learnings have a high cost long term financially, and on staff morale.
TIP: Book some time with your peers to question your business goals and measure, review the previous 1, 2 or 3 quarters and honestly validate if your goals, objectives and measures tangibly contributed to the goals. Were the business goals clear enough? What learning can you take from previous performance? And most importantly, what are you going to change to ensure you and your team can make a more significant impact on what really matters going forward?!