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Are we doing all the right things?

Our End Goal

We recall our overall goal. "We need to have the Right people, doing the Right things, the Right way, for the Right reasons with everyone in the business fully engaged and aware of their contribution."

So far we have broken down the income statement into the key drivers of value for your business. We have also a good idea on what areas require focus from our Contribution Curves. We now need to take a moment to bring it all together and assign accountability to the main lines of your Income Statement. We have already mentioned that you might have one IS for your entire business, but to have the right accountability you might have the overall IS broken down into Income Statements per Product or per Segment even. We've seen both. We'll work out what your business requires.

Complete the Functional Areas

The table has been partially completed, and we will use our coaching session to review your best first pass.

  1. Use the Value Trees we generated from the Income Statement, one for Revenue and the other for Costs.
  2. Where you recognise that a function was previously over-looked, enter that function in the Old Functional Column, but do not have a name assigned in the Incumbent and Successor Column.
  3. Capture metrics & values for the KPI and Value Tree Driver.
  4. For the successor column, imagine the unfortunate scenario of the incumbent being hit by a bus. ie Not at work tomorrow nor for the next 3 months. If you have a formal succession plan, then you should enter the name of the planned individual whether they are ready or not.
  5. We should consider the sage advise of Jim Collins and Verne Hamish although they don't always follow it.....3 key stakeholder groups require representation, Shareholder, Employees & Customers
  6. The Table is there as a guide to help you think, so apply your mind, delete what is not valid for your business, change what needs to be changed.
  7. Be bold and stamp your brand all over it in terms of style, naming and metrics/measures.
  8. Keep in mind your constraints, financially especially
  9. Be Tough , Be Honest, Be Fair

Working out your Functional Accountability View

Old Functional Name Accountability Incumbent Successor KPI Value Tree Driver
CEO or Managing Director Voice of Shareholder J.S.vdM P.S.vdM WACC market value of Firm Equity
Reporting & Consolidation Custodian of Value P.T.S.D none
Value Based management & Balance Sheet OptimisationCustodian of ValuenonenonePBT
Risk ManagementCustodian of Value
Sales & DistributionVoice of Customer
MarketingVoice of Customer
Product DevelopmentVoice of Customer
InnovationVoice of Reason
OperationsVoice of Reason
IT & SystemsVoice of Reason
Process ManagementVoice of Reason
Human ResourcesVoice of Employee
Talent & Success PlanningVoice of Employee
Learning & DevVoice of Employee

The Obvious and Expected Issues.

  • The same person will be incumbent in multiple functions
  • The function will have more than one incumbent
  • The function will have a vacancy, this might be intentional, or an over-sight

For each Incumbent and Successor ask yourself the following:

  • "Based on what I know of them now, would I hire them again, without a moment's hesitation? (You dive into a swimming pool to save a child without a moment's hesitation!)
  • Is there consensus on this? Account for self-serving politics and vague generalizations "I feel she doesn't fit the profile" actually might mean "She challenges me and I don't like it!"
  • Differentiate between technical competence and cultural fit and personal behaviours. All three need consideration.
  • Put together an action plan to clean the situation up, and your test is as follows: Do you have a set of business functions with great people accountable for top line result and even better talented youth taking ownership of the operational drivers, so that progress against your strategic objectives can be reliably and fairly tracked?

Notable Past Decisions - Real Life

What follows does not necessarily represent my views, but it is a summary of genuine output from such a session. The point here is not if this is right or wrong, but evidence of some original thinking, an urgency to address gaps in critical functions. It also shows some personal bravery and leadership by the managing Director, who delivered it in person to the business and fielded all the questions. He ended off by announcing the salary, bonus and performance rating of his own team.

The Managing Director made the following announcement at various off-site sessions held around the country.

Expect your business to react

Business Decision Under pressure from our Head of HR, I must finally concede to her wisdom. HR is too critical a function to be left to HR and my reluctance in heeding her advice has allowed line managers to neglect the custodial duties to their people, this has been to the detriment of the business and our employees. This neglect does not reflect the values of our business and is untenable.
Motivation for Decision Those line managers unable or unwilling to fulfill these duties, are either a poor fit culturally or not competent to be managers in our business.From now on a more focused HR team will assess compliance of Line Managers to these crucial duties and assess the quality with which these duties are carried out.To stress the importance of the care needed in attending to all matters regarding our people, we have made it a pre-requisite for all promotions to positions "x" and above to have spent 6 months in this new over-sight and assurance role.
Duty Accountability Rationale Risk Mitigation
RecruitmentLine Manager The Hiring process has been changed to assess:
Cultural Fit
Diversity (age, gender, race, education, personality profile)
Technical Competence
Personal Values & Behaviours
Each new hire must attend breakfast with the CEOwho will extend the offer, if he agrees.
Each final interview before TBB The Big Breakfast will be held with a panel of 3 employees who meet the following criteria:
1) They are in a different functional area.
2) Employed for at least 24 months
3) They must have been assessed as a top performer in their last 3 quartely assessments.
Learning & Dev Line Manager We aim to hire the most competent people we can, who also posses self-starter qualities, we will non longer pay for courses that motivated people manage to train themselves on. we encourage on the job training conducted by our in-house knowledge champions. Training & Dev budget is still available, and the training plan will be signed off by the line manager as part of a career and succession plan, newly implemented.
Remuneration & Bonus AllocationLine Managerfrom now on, for every level of the business, we will publish salary, bonus and 3 performance ratings the line manager assessment, the self-assessment and the consistency check none deemed necessary, but suggestions invited.
Payroll runOperations this is a monthly operations process and should be entirely automated with no manual inputsLine Managers are to sign-off their cost centres monthly, we will not allow leave accruals to occur. Leave must be used.
Succession PlanningLine Manager and Leadership teamthis forms part of the performance assessment, and includesdiscussion on next role, training requirements etcreview by leadership team

The failure of line management is always the failing of the leadership team

One good place to start in aligning the business and providing direction is to articulate what any reasonable audience of employees would ask of their leadership given the opportunity. This is where we go next.