CHANGE & PERFORMANCE
In an evolving business scenario, changes are inevitable. However, a change within the enterprise or the supply chain may negatively impact customer service, resulting in loss of brand equity. Concargo consultants have a rich experience of planning and structured execution towards change management. We leverage this experience to help businesses adapt their supply chains to internal or external changes to ensure consistent customer service with increased profitability, while gaining a competitive edge.
“We often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.”, words of Scottish physicist and mathematician Lord Kelvin are so relevant when it comes to performance management.
The key challenge in performance management is in “what” you measure and “how” you measure it. “What” you measure comes first and managers have to be very clear about what they want and think through all aspects relating to the way the performance is perceived by everybody – users who are measured on the performance. The “how” is also important because it has to be a true reflection of the “performance” of the behaviour. It is also important to maintain consistency in the way the performance is measured.
How many performance metrics should be there? There should be enough to tell what is happening and for serving the basic purpose of improving performance. Too many leads to a loss of focus and the effect on behaviour is diluted. Ideally, we believe there should be not more than five metrics for any department or individual- three major metrics and two minor metrics. If there are several parameters leading to several metrics, a composite metric may need to be defined to achieve the above objective.
A further aspect which adds to the complexity is that any function needs to strike a balance between various aspects of behaviour. This is true for supply chain functions as well. For eg. inventory levels have to be balanced with service levels, quality has to be balanced with cost considerations, Logistics costs have to balance with lead times. In each case, the two parameters listed are inversely related, i.e. low inventory level results in low service level, higher quality is at a higher cost, and so on. Hence, whether it is an individual or a function, this balance has to be reflected in the performance metrics to ensure that there is a right balance in behaviour. Typically, the main metrics for a function contradict each other which has lead to the idea of a Balanced Score Card.
Consultants understand the nuances of measuring the right metrics, using the correct means to measure them and finally producing a balanced score card for the supply chain functions of your company that truly and succinctly describe the performance of your supply chain. We also ensure that the metrics can be broken down to lower levels so that they can not only be monitored closely by middle managers, but also point to corrective actions in terms of execution at lower levels.
The “people” factor is probably the most important, but neglected by most companies in the implementation of any initiative. Why? The answer lies in the nature of the efforts and benefits involved. Among all business initiatives, bringing about change is one endeavor which is one of the most long term ones. Change can be at several levels – it could be only in terms of a way of working, it is easier to implement, but still takes a few months. If however, a change is required at a cultural level, it can take a few years for the change to take place.
Combine this with the benefits – better employee morale and satisfaction, better customer experience, etc. which are all intangible and difficult to directly relate with the top and bottom line. Managers therefore, who bring about the change, would find it difficult to justify in commercial terms to stakeholders who might be looking at profits “for today”. Also, they may not be around by the time the benefits of the change starts getting felt by the company. All this is a disincentive for managers to take up change on a proactive basis.
Besides, today which has so much emphasis on technical capability, the soft skills required for bringing about change is not given as much importance as it deserves. So in terms of technique there tend to be gaps in implementation done by many companies on this front. Implementations done without bringing about the required change in mindsets and thinking do not last long and take one of two courses. Either they are abject failures and get discarded by all including management as not workable. Or, they get only lip service, where people claim implementation has taken place, and run it only for show, but continue with the older way of working.
One important aspect of change management is a holistic perspective – the change has to reflect in all aspects. So if the business wishes to bring about a change and focus on profitable products, the change has to be effected in all activities – review meetings should talk about profitable products, sales and promotions should target this, performance targets and rewards should align to the same objective and this has to be across all departments.
Another good example of the importance of the “people” factor is when it comes to implementing IT systems or having a consulting engagement. Here, the threat of employees losing their importance or their jobs is very real. Users then make every effort to sabotage the initiative. Employees will be more cooperative if they know that they will be treated in a just, fair and humane way – like assets, rather than cost liabilities and that they may actually benefit from the process. This comfort feeling does come by merely talking or exhortation, but only comes after a long term association of repeatedly getting fairly treated by the company.
We give prime importance to considering the end users and beneficiaries of any business initiative. We believe that the Litmus Test for success of any initiative is if the end users are following the requirements given by the initiative and find it beneficial to them. We believe that culture forms the bedrock of all successes. If an initiative has to be successful, the cultural alignment has to be there first. This needs to be followed by strong processes, performance measurement systems and reward mechanisms. We consider all these aspects and the impending changes in job roles that will occur because of the change right at the very outset, and minimise issues and risks to the engagement to the most extent possible.
Performance Management
“We often say that when you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind.”, words of Scottish physicist and mathematician Lord Kelvin are so relevant when it comes to performance management.
The key challenge in performance management is in “what” you measure and “how” you measure it. “What” you measure comes first and managers have to be very clear about what they want and think through all aspects relating to the way the performance is perceived by everybody – users who are measured on the performance. The “how” is also important because it has to be a true reflection of the “performance” of the behaviour. It is also important to maintain consistency in the way the performance is measured.
How many performance metrics should be there? There should be enough to tell what is happening and for serving the basic purpose of improving performance. Too many leads to a loss of focus and the effect on behaviour is diluted. Ideally, we believe there should be not more than five metrics for any department or individual- three major metrics and two minor metrics. If there are several parameters leading to several metrics, a composite metric may need to be defined to achieve the above objective.
A further aspect which adds to the complexity is that any function needs to strike a balance between various aspects of behaviour. This is true for supply chain functions as well. For eg. inventory levels have to be balanced with service levels, quality has to be balanced with cost considerations, Logistics costs have to balance with lead times. In each case, the two parameters listed are inversely related, i.e. low inventory level results in low service level, higher quality is at a higher cost, and so on. Hence, whether it is an individual or a function, this balance has to be reflected in the performance metrics to ensure that there is a right balance in behaviour. Typically, the main metrics for a function contradict each other which has lead to the idea of a Balanced Score Card.
Consultants understand the nuances of measuring the right metrics, using the correct means to measure them and finally producing a balanced score card for the supply chain functions of your company that truly and succinctly describe the performance of your supply chain. We also ensure that the metrics can be broken down to lower levels so that they can not only be monitored closely by middle managers, but also point to corrective actions in terms of execution at lower levels.
Change Management
The “people” factor is probably the most important, but neglected by most companies in the implementation of any initiative. Why? The answer lies in the nature of the efforts and benefits involved. Among all business initiatives, bringing about change is one endeavor which is one of the most long term ones. Change can be at several levels – it could be only in terms of a way of working, it is easier to implement, but still takes a few months. If however, a change is required at a cultural level, it can take a few years for the change to take place.
Combine this with the benefits – better employee morale and satisfaction, better customer experience, etc. which are all intangible and difficult to directly relate with the top and bottom line. Managers therefore, who bring about the change, would find it difficult to justify in commercial terms to stakeholders who might be looking at profits “for today”. Also, they may not be around by the time the benefits of the change starts getting felt by the company. All this is a disincentive for managers to take up change on a proactive basis.
Besides, today which has so much emphasis on technical capability, the soft skills required for bringing about change is not given as much importance as it deserves. So in terms of technique there tend to be gaps in implementation done by many companies on this front. Implementations done without bringing about the required change in mindsets and thinking do not last long and take one of two courses. Either they are abject failures and get discarded by all including management as not workable. Or, they get only lip service, where people claim implementation has taken place, and run it only for show, but continue with the older way of working.
One important aspect of change management is a holistic perspective – the change has to reflect in all aspects. So if the business wishes to bring about a change and focus on profitable products, the change has to be effected in all activities – review meetings should talk about profitable products, sales and promotions should target this, performance targets and rewards should align to the same objective and this has to be across all departments.
Another good example of the importance of the “people” factor is when it comes to implementing IT systems or having a consulting engagement. Here, the threat of employees losing their importance or their jobs is very real. Users then make every effort to sabotage the initiative. Employees will be more cooperative if they know that they will be treated in a just, fair and humane way – like assets, rather than cost liabilities and that they may actually benefit from the process. This comfort feeling does come by merely talking or exhortation, but only comes after a long term association of repeatedly getting fairly treated by the company.
We give prime importance to considering the end users and beneficiaries of any business initiative. We believe that the Litmus Test for success of any initiative is if the end users are following the requirements given by the initiative and find it beneficial to them. We believe that culture forms the bedrock of all successes. If an initiative has to be successful, the cultural alignment has to be there first. This needs to be followed by strong processes, performance measurement systems and reward mechanisms. We consider all these aspects and the impending changes in job roles that will occur because of the change right at the very outset, and minimise issues and risks to the engagement to the most extent possible.
