Boards and C’ level executives are accountable for policies, people, and practices within their organizations. But how can they take responsibility for people, systems, and initiatives that are managed by people several reporting levels down – who may not, themselves, know what’s going on?
I recently spoke with a friend of mine who is a CFO of a small company. I asked her if she really knew what was going on in her company. She assured me she did, that it was her job to know. How did she know? Because the numbers (ROI, etc.) matched the projections.
“How do the financials indicate if the people and teams are working together as effectively as possible? Or if policies are generating appropriate collaborations between teams or departments or partners? Or if managers are leading appropriately?”
“Well, we have no idea. We just assume that if people are unhappy they’ll tell us, and if they don’t, and the numbers are good, that all is working well.”
When financials seem to be in line with company expectations, why would Board members even think that something might be wrong that will affect the company later on? In other words, if it all looks fine’, if the numbers match the projections, how do Board members (or senior executives) recognize trouble and head it off at the pass?
THE PROBLEM WITH FINANCIALS
As we know, financial data (including projected monthly sales revenues) is incomplete. It sidesteps information that uncovers problems that will surface down the road if not handled in time, or ignores information that could be used successfully to develop a new initiative. Specifically, when focusing on financials and de rigueur reports, there is no accounting of those unspoken people’ systems that make or break success.
Case in point: I was beginning work with an auxiliary group from one of the large British telecommunication companies that wanted to increase their customer contact and retention. I quickly noted a palpable disregard for their CEO: it seemed that much of their thinking, their new initiatives and strategies were created to circumnavigate this woman, although it was not something directly mentioned. Because the people I was working with had their own budgets, it was not readily apparent that I needed to have a conversation about this and speak the unspeakable. The uneasiness that they felt appeared regularly in our conversations:
“We must make sure Ms. X looks good on this one.”
“Let’s try to keep the goals manageable within our groups.”
“We can create the right wording in the reports that need to be generated to the mother company.”
It was clear to me that the mother company should know what was going on: that the CEO was hiding, not leading; that there were no clear strategic goals coming from the CEO, but from the field people almost in opposition to the CEO; that there was an alliance occurring among her senior managers that omitted her from consideration; that something she was/wasn’t doing would come back to harm the group eventually. Whenever I would address these issues with the managers I was working with, they would smile, tell me I was smart, and move on.
Months later, as we were getting ready to roll out our initiative, I got a call from one of the people.
“We’ve been fired. Our entire group has been disbanded, and all of us – top to bottom – have been let go. The mother company has discovered that our CEO was falsifying data, that the numbers she was reporting were not real, and she was nowhere near the goals she had agreed to a year prior. We’ve been losing money steadily, and we didn’t know that either because the numbers we’ve been shown were also falsified.”
As it happened, if the initiative we were creating were carried out, they would have had a good chance of meeting their numbers and picking up the slack. But no one knew that. And, it was too late. How many secrets do groups keep from one another or from senior management? How many problems that sit within a group or a department are hidden to the outside? What about that manager that everyone dislikes, and employees work around him – or don’t work to their capacity? What about those teams that should be sharing resources, but don’t get along, so they spend so much time arguing that they are slacking off on their job duties? How bout the duplication when teams on different floors or buildings unwittingly recreate the same materials rather than share resources?
Here’s another example. While doing assessment for a software company, I noticed that one of the group managers was behaving strangely: he seemed to be too involved with the daily running of his group. I mentioned this to senior management, and my observation was made light of, with the rational that he was supposed to be highly involved with his team. Six months later, he left the company and took every file and every client name with him. They had to close the entire department; it was decimated.
QUESTIONS TO ASK
Here are a few questions that Board members, or senior management, need to have answered in order to better understand what’s going on within the daily routines of the company:
How will we know that the reports we’ve been given are an accurate portrayal of the people-systems that carry out our initiatives?
What do we need to know/do differently to ensure we have the type of information we need?
What is currently stopping us from seeking that type of information?
At what point will we recognize that the numbers data we collect is not enough to indicate success?
How do we define success? Is it ROI, customer sat, position in the market?
How do we include #8216;people’ into our measurement? What specific people-systems do we need to notice to have the capacity to change what needs to change?
How do we recognize when something is happening that will cause problems down the road?
If the answers to the questions above give you data that points to some potential problems, you might need to bring in a consultant or some type of independent board assessor to give you a clearer understanding of the people-systems involved. It’s literally impossible for someone internal to do the assessment.
Given our new level of responsibility for our companies since Sarbanes Oxley, it’s time to include ways to manage the people-systems in a way that is measurable, and in a way that gives Boards and senior management the ability to resolve problems before they become costly.
POSSIBLE SOLUTIONS
While doing research for this article, I’ve begun thinking of several ways that management can track what’s going on within their organization on a daily basis. Please feel free to email me and add to this list. It’s a new field, and we’re all just beginning to explore the problem, implications, and solutions.
Here is an initial list of possibilities. I’m starting to write a book now called Assessing the Invisible that will explore each of these scenarios in detail:
1.focus groups: Have people from different departments meet monthly to discuss what they are doing, how they are meeting their goals, what new initiatives they are creating and focusing on. The departments then know what the other departments are doing and can share data, add thinking, and bring back thoughts and material to their own groups.
2.dialogue: Have semi-annual events that include getting people involved in the dialogue process of sharing feelings and thoughts in a non-threatening format.
3. intranet: Have an on-line newsletter that includes an anonymous tattler’ page for people to blow whistles, complain, or report people and activities of dubious nature. This one’s a hard one, but Sherron Watkins might have prevented the Enron debacle this way. It’s happening anyway; people talk about it in whispers. They might as well shout about it and get it fixed.
4. assessment/measurement tool: With an interdisciplinary team of researchers, analysts, and technical people, I’m developing an assessment tool that applies numbers and other measurement criteria to people issues. Companies can come up with their own version; it’s just important to track this data monthly.
5. decision facilitation: Lead employees through the Buying Facilitation/Decision Facilitation sequence to ensure they are all on the same page when it comes to changing the company culture and addressing current problems. If you want to read about the decisioning system in full, take a look at my new e-book Buying Facilitation: the new way to sell that influences and expands decisions that can be purchased and trailed at www.newsalesparadigm.com. As a reminder:
– Where are we? Where are we going? What criteria are we using to know that we’re getting there?
– How do we notice problems? How can we fix them with what’s already in place?
– If we cannot fix the problems with our familiar resources, what do we need to do differently? How do we choose external support systems to fix our problems?
– How will we know that our problems are fixed?
– How do we maintain supervision over them until they are fixed? What has to be managed internally so the problems will not recur?
It’s important to note that telling employees what to do – whether bringing in new initiatives, or correcting errors, or shifting policies – does not get them to change their behavior. They’ve got to make a new decision to do something different (hence the efficacy of using the model), and they need to build their new decision around their beliefs around trust, ethics, values, and their own moral code.
6. Ceridian Ethics Hotline: This group takes calls from employees and delivers anonymous reports to companies with tales of harassment, substance abuse, dishonest practices, accounting violations, violent acts, and workplace theft. Their number is 800-729-7655.
CONCLUSION
Enron and Worldcom did us a favor of sorts: the workplace abuse that was highlighted here alerted us to the need to begin monitoring the full range of components within our organizations, and create the need for us to assemble and standardize the full range of (People) Factors that create our brand. Monitoring the numbers is just not enough.
I’d like to conclude with a quote from an article called “Using Values and Ethics For Competitive Advantage” that appeared in the 10/14/03 issue of HR.com, by David Lapin of Strategic Business Ethics.
“Organizations should integrate their values, translate them into an ethic and align that ethic with their strategies. When an organization achieves this, its employees see their work as a vehicle with which to fulfill their own higher spiritual quests to make rare and needed contributions. The money they earn reflects the value of their contribution and provides them with both economic security and emotional self-esteem. This leads employees to invest their intellects and their passions in the work they do, driving their organizations’ thinking to the very edge of competitiveness, and their performance beyond that.”
In the same article, Mr. Lapin reminds us that “Profit is the value the market attaches to an organization’s contribution and the efficiency with which it makes that contribution.”
Let’s have our organizations be truly efficient. Let’s add people to the measurement equation so we can run healthy companies that inspire leaders and create real wealth.
ABOUT MORGEN FACILITATIONS, INC.
Morgen Facilitations Inc. is a leader in the field of ethical business practices and values alignment. Headed up by Sharon Drew Morgen, MFI runs regular programs in facilitative technologies, such as:
Buying Facilitation – the new sales paradigm that leads to effective, efficient decision-making and collaborative relationship for clients and sellers;
*Change Facilitation – the integrative process that creates company-wide buy-in, easy adoption, and integrative speed;
Coaching Facilitation – the communications approach that facilitates supervision, collaboration, and team building;
Customer Facilitation – the collaborative process that supports customer loyalty;
Technology Facilitation – the alignment of users, managers, and techies to create an integrated system for successful implementations.
*Often, changing one segment of your company leads to disruption in other areas of the company. At MFI we are able to come in, assess the problems that will come up in relation to bringing new technology or other business practices, and create company-wide solutions that will alleviate the problems created by change.
NEW OFFERING:
Independent Board Assessments:
Given the new challenges with internal concerns, Sharon Drew is now available to work with you in assessing the systemic people/group/partner issues within your company.
As always, we are here to support your learning, and, with our group of dedicated visionaries, are eager to create whatever companies need to insure success.
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Should you wish to learn more about this, go to www.buyingfacilitation.com and purchase my ebook Buying Facilitation: the new way to sell that expands and influences decisions
