Seven Ways to Make Your Strategic Planning Relevant

strategy, planning, leadership, budgeting

One of the most important shifts in many companies today is the move toward a capabilities-driven strategy. Companies that define a “way to play,” lined up with a handful of key differentiating capabilities that deliver on that value proposition, have a definite competitive advantage. Your own company may have redesigned your strategy accordingly. Now it’s time to execute.

Undoubtedly, you already have a planning and performance management system—otherwise known as a strategic plan and corporate budget. This is a group of deeply ingrained methods for allocating costs and tracking. Even as the top executive team embraces a capabilities-driven strategy, the planning and performance management system tends to remain unchanged. That’s because traditional budgeting planning practices were designed with other priorities in mind. They tend to foster silo-based thinking and to spread investments across all activities. That makes them irrelevant to your strategy—at best. At worst, they will undermine the development of key capabilities. Yet they tend to be so entrenched, combining so many of the formal and informal drivers of behavior in a company, that you may find it difficult to change them.

A truly relevant planning and performance management system will help you instill the discipline and accountability to make hard choices. It will make it easier, not harder, to assign the lion’s share of investment to your differentiating capabilities. And it will keep things on track with clearly articulated objectives and performance metrics. Here are seven guiding principles that will help you put such a system into place:

1. Emphasize key capabilities in your strategic plan. Look beyond short-term marketplace opportunities and challenges. Articulate what you need to do, different from what any other company can do, to deliver on the company’s unique value proposition. Tie strategic objectives to those capabilities. For example, one bank recognized a major opportunity to build its business by selling across product lines. Developing a robust client analytics capability was a requirement. By naming this capability in their strategic plan, the bank’s leaders forced themselves to lay out the steps needed to achieve their long-term goal.

2. Spell out capability-building initiatives in the plan. Design roadmaps for developing and steadily upgrading specific capabilities over time. Then, in each annual plan thereafter, spell out how you can further advance these capability-building initiatives. The leaders of a mining conglomerate, for instance, realized that they could increase production output by rolling out new standards across their portfolio of subsidiaries. That required a series of initiatives: one each for measurement, reporting, IT, best-practice methodologies, and training. Developing the initiative roadmap provided an actionable plan for the management team to build the capability over time.

3. Manage discretionary and non-discretionary spending separately. A successful strategy concentrates investment dollars where they are needed most: the company’s distinctive capabilities. Traditional budgeting can undermine this goal by allowing individual units to spend discretionary dollars as they see fit—often favoring pet projects, even if they have no strategic relevance. To prevent this, use zero-based budgeting to determine the amount of non-discretionary expenditures needed to “keep the lights on” throughout the company. The rest of your spending should go through a management process, connected directly to the strategic plan.

4. Use cross-functional governance to balance company priorities against the priorities of individual business areas. Governance forums should use a set of clearly defined decision rights on a regular basis to steer the business. A transportation company relied on a common information technology infrastructure across all of its business units. Every year, each business unit submitted IT investment requests to an investment committee panel composed of business unit and support function leaders. Its cross-functional organizational design enabled the panel to best decide how to allocate scarce resources for initiatives that would generate the best return for the enterprise. Some of the enterprise opportunities would not have been captured if business unit leaders were the only decision makers on IT.

5. Create guidelines for evaluating investment demands. Your company is subject to a range of investment demands with varying degrees of relevance to strategic priorities. Detailed investment guidelines will help assess these requests, especially when you’re balancing “apples and oranges” demands (such as regulatory compliance expenditures versus capital spending proposals). Each year, for example, the managers of a moderate-sized but much-used airport have to choose just a few of many investment requests—balancing safety, strategy, operations, and regulatory arguments. Establishing a clear set of communicated guidelines allows the airport leaders to focus on higher-return projects. Knowing the reasons for the choices encourages everyone, including those whose proposals didn’t get funded, to engage and execute with more focus on the winning initiatives.

6. Give leaders cross-functional authority to build capabilities and hold them accountable. Capability-building efforts fail when nobody has the authority to carry them out. Help individual leaders build capability systems across functional lines by making sure others can see that they have the requisite decision rights and position. For example, remember the bank building out its analytics capability. This required coordinating resources to develop a solution across product lines and IT. An empowered leader was authorized to manage resources, initiate investments, and manage delivery across the organization matrix to build the capability.

7. Measure and reward progress. Building a strategic capability can often take months or years. Explain clearly how each initiative bolsters a critical capability. Establish objectives and milestones for each initiative. Use these benchmarks to measure and reward progress toward the ultimate goal: a market-leading capability.

A more relevant planning and performance management system yields significant long-term benefits, because it continuously evaluates your company’s performance against strategic goals. The performance benchmarks tell you where and how external changes are affecting your progress. This provides a real-time snapshot of your capabilities at work in the marketplace. Strengths and weaknesses become clear, informing your investment decisions for the next strategic planning cycle. After a few years, this virtuous feedback loop can become second nature, paving the way for real collective mastery of the capabilities that distinguish your company.  – Matthew Siegel  s+b

How to design a road map toward an engaged workforce

Can you prove the ROI of employee engagement? According to a Gallup survey, companies with world-class engagement have 3.9 times the earnings per share growth rate compared to their competitors with lower engagement. The challenge is planning a route to get employees engaged.Here are four basic tips companies can follow to motivate disengaged employees:

  • Pay according to market value. Many executives don’t like to hear it and would rather offer training or take similar steps. But paying accordingly is critical in moving disengaged employees up.
  • Limit organizational reductions in force. While hard to do, it’s impossible for employees to become engaged if they fear losing their jobs.
  • Manage organizational changes. Whether a market change or a leadership change, proactively communicate it to motivate disengaged workers.
  • Increase trust. Make sure all employees see the value in their company and believe in the brand. Executives must be visible and accountable.

While paying accordingly is important, it isn’t necessarily a motivating factor; it’s a baseline. Employee motivation is like Maslow’s hierarchy of needs. People need to be taken care of, have the supplies needed to do the job, know what their job is, and be paid accordingly. Once those baseline needs have been met, you can move employees to becoming engaged.

To accomplish a company’s engagement goals, the process starts with an employee survey to determine what areas need work. The survey should be used as a starting point. To achieve the best results, develop the survey with experts from a third party who understand what motivates employees.
Based on responses, develop a plan for areas that require immediate attention. If there’s something that can be done, work on a plan to make a change. If a change cannot be made, explain why. It’s important for employees to know that action is being taken regarding a survey.
After changes are implemented, measure to see if there’s been an increase in revenue or productivity. Generally, a baseline is measured before the survey and six months to a year later to see if those factors increased.
Engagement takes a long time. But if you are genuinely trying to increase employee engagement, you will get a return on your investment.

The Right Way to Fire Employees

“I’ve seen many a CEO take a bullet themselves because they did not fire the unmotivated and incompetent thinking they could reform, retrain, and remotivate people who either don’t know or don’t care, or both. This is a great article worth the read.” – Sharon Jenks

 

In my years of experience in the C-suite, I’ve met and worked with every kind of personality out there, from big and brash know-it-all executives to quietly confident managers who fly below the radar — and always get the job done.

But I’ve never known anyone who likes to use the “f” word.

Not that “f” word. The one I’m referring to here is “fired,” as in, “You are.”

Even Donald Trump, who has added to his fame and fortune by making “You’re fired!” his catch phrase (something I have first-hand experience with from my time on “Celebrity Apprentice”) doesn’t always relish the idea of letting someone go.

One of the most authentic, radically transparent people I know, Trump didn’t get to where he is today by playing small, avoiding risk, and hoping things will get better. And as a change agent whose job it is to overhaul your company in a way that is massive and measurable, nor should you.

No matter what business you’re in, the key to your success will always be the quality of the people on your team. From your front-line foot soldiers to the back-room strategists, in order for your company to succeed in the cutthroat world of business, you have to know that every one of them is ready, willing, and able to go the distance with you.

If not, it’s time to fire the dead weight and hire new blood. It’s easy to say and hard to put into practice, but it’s crucial to your success.

How crucial?

In my bestselling book, “Running the Gauntlet,” I talk a great deal about the importance of changing a mood of a company as a necessary first step towards changing its culture.
And integral to changing the mood is making sure you’ve got the right people in place.

Avoid firing people, and you might as well try to teach a pig to kiss

Anytime I’m invited to speak to an audience of C-suite execs about turning around a company, effecting massive change, and reaping the financial rewards that come as a result, I always get a chuckle when I liken holding onto employees that no longer fit in with the vision you have for your company to teaching pigs to kiss. As I point out, you can do it, but it’s a messy job.

And it really pisses off the pig.

It’s far easier (and a lot cleaner) to get rid of those employees who aren’t working and trade up for talent that will. This involves identifying those who can’t (or won’t) change as well as those who don’t believe that they need to change in order to be successful, and then firing them.

You hear talk all the time about how hiring the right people is an art, and there’s a lot of wisdom to that statement. But the flip side to that coin is the art of firing those who can’t handle the course to success you’ve charted.

If you’re not there already, chances are good that the time is coming when you’ll need to make some tough decisions about who to keep on and who to let go. Like others in your position, you might find yourself hemming and hawing over your decision, finding every excuse in the book to avoid actually taking action.

These excuses run the gamut, with executives citing everything from the high cost of searching for new talent or the effect of unemployment on insurance costs, to the fact that deep down, they are holding out hope that with a little bit of help or retraining, under-performers will somehow change to become star employees. And then there’s the fear of making a mistake in firing someone and the fear of how letting people go will make the company look to those on the outside.

Yes, yes, yes. Blah, blah, blah.

The truth of the matter is, if someone’s not a right fit, they need to go. Yesterday. When I’ve had to make personnel changes, once the dust has settled I have never felt I made a mistake in firing someone. In fact, more often than not, I often think I should have done it sooner.

It’s a dirty job, but someone has to do it: Three steps to firing with confidence

If the writing’s on the wall for some of the employees at your company, now’s the time to take immediate and decisive action to trim the fat and make room for new talent.

Yes, it’s a dirty job, but someone has to do it. If that someone is you, use my three-step process for making the job as painless — and effective — a proposition as you can for all involved:

Be clear on your conditions of satisfaction first
No matter what your battle plan for success is, or who it involves, a necessary first step is that you get very clear on your conditions for satisfaction, and then share these with your team.

These are so important to your company’s success that I spend a considerable amount of time on the subject in both “Running the Gauntlet” and my earlier book, “The Mirror Test.” Without clearly defined conditions of satisfaction, you miss out on a few key ingredients to success:

  • You won’t be able to sell your endgame to your people.
  • You won’t have a prayer of tackling head-on those feelings that often blind your people to the fact that change is needed — or to the reality that it’s time for some of them to move on.
  • You won’t have any way of pinpointing what your desired end result looks like or knowing whether or not something is working to keep you on track.

When you align your teams around the company’s conditions of satisfaction, you build a foundation for success. Those that get your vision will serve as a cornerstone for that success; those that don’t, won’t. Identifying and sharing your conditions of satisfaction brings into focus who falls into these categories, making it easier for you to decide who to keep and who to let go.

Gather feedback from the rank and file
One of the easiest ways I’ve found to identify who’s pulling their weight and who’s dead weight in a company is by asking your best employees. As with everything else, there’s an art to this (you don’t want your employees to feel like tattletales). The best approach is to ask them honestly and to let them know that what they share with you is in confidence.

I’ve found that asking trusted employees for this kind of information not only makes the process that much more fool-proof (how often have you had someone come up to you after you’ve fired one of their colleagues to confirm that you made the right choice?) but also empowers your best people who are honored to have earned your trust.

And I don’t know about you, but those are exactly the kind of people I want to go into battle with, confident that they’ve got my back, just as I’ve got theirs.

Stop thinking about “why not,” and act!
My friend Miles Young, Ogilvy & Mather Worldwide’s CEO, once told me that whenever he sees anything that’s not working in business, the first thing he does is to take a look at the people around the problem. “Things don’t break by themselves,” Young said, “they get broken as a result of negligence or mistakes.”

Once you’ve laid out your conditions for satisfaction, you know where those conditions aren’t being met, and you have identified the people around the problem, as Young puts it, it’s time to take action. No more beating around the bush, thinking of all the reasons why not to let someone go. A company can only move as fast as its lowest common denominator, which means if you’re going to succeed, you’ve got to let go of those who aren’t cutting it.

If firing people isn’t your thing, get someone to do it for you. However you go about it, get it done. Nothing negatively affects a company’s morale like employees who aren’t a good fit, and chances are those who need to be fired already know that they’re the odd man out living on borrowed time as it is. Giving them the push out the door into something bigger and better won’t just improve the performance of those who stay to build the company; it could be exactly what the person you’ve let go needs in order to grow.

Give your company a fighting chance to succeed

There’s an old saying that goes, “An army marches on its stomach.” These days, while you might not literally be leading troops into battle, you are waging war on a battleground of sorts: the marketplace.

This means that your army feeds on trust and empowerment. And if it’s going to march at all, it’s got to march in unison.

Fill your rank and file with those who share your vision and are ready and willing to follow you into battle, and fire the others. In doing so, you’ll give your company the fighting chance it needs to succeed on today’s battlefield.

Jeffrey Hayzlett is a global business celebrity, TV commentator, bestselling author, and sometimes cowboy.