7 warning signs your company is underperforming, and the fundamental thing you can do about it.
Imagine you are a manager or CEO looking to improve your company. In front of you there is the performance indicator dashboard.
The indicators monitoring the internal functioning are grouped according to the 3 W’s representing the different dimensions of a company:
- The Worker
- The Work, which refers to the process
- The Workplace, or organization.
The indicators show positive progress:
- The skills development program of the personnel is on track
- Operations has defined a new production process which will enhance quality and productivity
- A new governance system of the strategic plans has made the organization more action oriented.
Are you satisfied about what your company is achieving?
I suppose so. Your company is clearly capable of learning new things. Performance should continue to improve in the future.
But there is also another reality.
You are aware of 7 issues on which you are not improving. And they prevent the company from achieving various breakthrough results.
You are puzzled and thinking about ways to solve these matters.
Let’s have a look at these 7 problems. Each one of them is a warning sign of underperformance. I have grouped them according to the “W” they belong to.
“If you take care of your workers, they’ll take care of your business” — Richard Branson
1. Obstacles are all around
Companies want to improve skills and attitudes of their personnel. But this is complicated if some people see many obstacles which they define as being beyond their control.
As a result they take little initiative to overcome the difficulties they face. And they cannot get their job done in an efficient way.
2. Acting busy but not being productive
This is a personal productivity issue, and it occurs in 3 ways:
Suppose you have two days available for a two hour task. The risk is that the task will increase for you in complexity so as to fill two days. In other words, the work expands so as to fill the time available for its completion. This phenomenon is called the law of Parkinson.
This occurs when people spend a lot of their time managing recurring problematic situations. Lack of a long term view makes them look for a temporary fix, instead of really solving the problem.
People in a modern office tend to jump quickly from one task to another. This attitude reduces productivity because our brain is forced to switch gears constantly.
“We are what we repeatedly do. Excellence then, is not an act, but a habit” -Aristotle
3. Lack of standardized work
Standardizing a process defines in a formal way the current best way to perform a certain activity. But it requires time, discipline and skills.
Without standardization we risk that everyone proceeds according to his past experience, or what he or she prefers to do at that moment. Not surprisingly, this brings down the quality of what we do or produce.
4. No continuous improvement
Continuous improvement empowers employees. They are given the opportunity to look critically into the daily work that their team is performing. By doing so, they improve the process continuously.
A process without continuous improvement has much more difficulty in solving its operational issues.
“With organization comes empowerment” -Lynda Peterson
5. Barriers between different departments
This is a problem common to many organizations. Daily cross-functional team work can stimulate people to coordinate their activities and identify growth opportunities. But many companies fail to implement it successfully.
6. Problematic decision making
Decisions make a company go forward and change direction when necessary. However, there are two bad ways of making decisions:
Too much impulsivity
An organization should be responsive. But this does not mean that it should take all decisions in an impulsive way. You risk doing a lot of activities, but without getting the expected returns.
All decision making is top-down
It means all decisions are taken at the top of the hierarchy, and driven down others who execute what they are told.
Mintzberg explained in the 80’s why the rigid top-down approach to strategy and decision making is no longer effective. Basically because the people making the decisions do not know everything, and things evolve.
7. Incapacity to adapt to changes
A company needs to figure out how trends in technology, society and consumer preferences will impact the business.
But many companies are not capable of adapting themselves to what they have envisioned. They miss initiative, creative collaboration and focus.
The capacity to adapt is important. Just think of what Charles Darwin taught us.
What companies do
Here is a list of actions and improvement programs that companies are implementing to solve the 7 problems:
- Obstacles : coaching of the people
- Being busy but not productive: constructive time analysis and habit management
- Lack of standardized work: standard operating procedures and visual one point lessons made by the operators and supervisors
- No continuous improvement: training on problem solving, lean process improvement
- Barriers between departments : cross-functional teamwork, matrix organization and value stream management
- Problematic decision making: specific leadership development programs
- Lack of adaptability: organizational development and adaptive leadership.
But something gets in the way
Unfortunately the 7 actions provide only a partial or temporary solution.
After some time the positive results fade away. Gradually people, processes and organizations seem to forget what they have learnt. They return to the old way of doing things.
Why is it that some improvements are sustainable, but others not?
What is it that gets in the way of sustained results for the 7 warning signs?
Projects that are more successful
The easiest performance improvement projects are the ones where we can focus exclusively on the people, the process or the organization.
In these cases people need to understand the new way of working and put that into practice. This notion is sufficient to solve the problem.
For example, an employee who has learnt a new treasury management system will apply his knowledge. Having understood the new system, his boss also expects him to use it.
The same goes for process improvements. Workers informed and trained about a new way to assemble a car will follow the new procedure. For the simple reason that the process is set up in that way.
What tends to go wrong
However, other improvement projects fail because some critical success factors have not been taken into account. Also because reality turns out to be more complicated.
As a matter of fact, the 7 warning signs of underperformance we described above are related to projects where focussing on one area is not enough.
The problem we want to solve, for example a people issue, is influenced by what is happening in another area, for example the process. The same influence occurs also vice versa, from people to the process.
As a result of this interdependence, we must make sure that there is consistency between the various W’S on the specific topic we want to improve. This fact is often overlooked.
The advantage of indirect facilitation
To put it differently, more complicated improvement projects need some sort of facilitation from other areas. Therefore we must act simultaneously on all the W’s that have an influence on our project. This creates improvement beyond our initial project.
Here is an example. The employees of a medium sized company producing consumer goods take little initiative because of the obstacle problem. The company has set up a training and coaching program, which has improved the situation.
However the company realized that there was also a negative impact from outside. For this reason they worked also on the process, introducing specific instruments that facilitate people to remove the obstacles in team.
Also the organization could facilitate our project. It had to see obstacles as an improvement opportunity and make sure that the process and the people try to discover and solve as many of them as possible.
“Just as one candle lights another and can light thousands of other candles, so one heart illuminates another heart and can illuminate thousands of other hearts.”-Leo Tolstoy
It is important to evaluate whether or not your improvement program needs the indirect support coming from other W’s.
Working on interdependent performance improvement is more complicated. But it has the advantage of bringing more than sustainable results in one area.
In addition we can elevate performance improvement capability across all people, processes and the whole organizational structure.
It permits us to transform a vicious circle of underperformance into a virtuous circle of positive interdependence.
Do you want to find out more?
Thinking about new ways to create competitive advantage and improve your organization? This PDF describes the 4 pillars that increase enterprise performance and helps you to apply them in your company.