Right Diagnosis precedes Right Advice

(Rapid Organization Diagnosis Aid)

Summary:

Top Managers in several organizations often run to outdo each other in adapting latest
management concepts and introducing new initiatives with a hope that these initiatives will
help address performance gaps. These initiatives may fall in the areas of strategy redesign,
restructuring, process reengineering or automation. Sometimes these initiatives deliver, and
most often, not. And the fault may not exactly be with the initiative design or execution, but
with the areas of intervention itself. Disillusioned by outcomes of internal initiatives, clients
often look towards Consultants for advice.

With due respect to fellow consultants, they also often move towards providing advice based
on inadequate diagnosis, that is more selective and biased towards building case for
initiatives that consultants excel in. And organizations are no better off after initial euphoria of
implementing Consultants’ recommendations wear off. All this reiterates the need for having
right diagnosis.

There are several management frameworks and models such as BLM, 7s, business excellence
models, which provide guidelines on undertaking comprehensive review, encompassing all
organizational dimensions and their linkages. These frameworks require extensive data
collection and are often time and resource intensive efforts, which may not be feasible in all
cases.

How about having a rapid diagnostic aide that helps identify problem areas fast- the typical
physician way- using a set of questions, developed on most frequently observed
organizational infirmities.

Based on experience here are a set of questions that will help undertake rapid and RIGHT
diagnosis.

Body:

Rapid Organization Diagnosis Aid is based on the premise that successful firms are able to
manage four key areas well. These four key areas are:

1. Establishment of Organization Fundamentals

2. Alignment of Organization Elements

3. Appropriateness of Apparatus

4. Accountability for Performance

Accordingly, the problem identification process focuses on reviewing the state of these four
areas within the organization, with the help of a set of questions. The reality check would be
best achieved by evaluating how effectively the organization is responding to the key
questions under each of the four key areas.
1. Establishment of Organization Fundamentals

Organization Fundamentals (OFs) refer to the organization values, mission and vision.
Establishing OFs has three key components, which are formulating the OFs, communicating
OFs and institutionalizing OFs.

Formulating OFs

Q.1. Has organization formulated its OFs?

Although initially OF originate from the minds of the enterprise creators, at some stage of
organization evolution the need to formally set and approve OFs becomes evident, especially
as the organization grows to engage more outsiders as employees and its need to inform and
engage diverse stakeholders becomes a business necessity. Hence, if the Management
aspiration is for the organization to exist beyond single projects or opportunities, or to outlive
the working life of Owner/ Entrepreneur, formulating an OF is a prerequisite

Q.2. How has organization formulated its OFs?

It is important to analyze the process by which organizational fundamentals have been

defined. People involved from within and outside the organization in defining these
fundamentals, the extent to which the exercise was participatory and the rigorousness of the
exercise are some of the things that need to be considered. To define fundamentals, there are
several techniques and frameworks available, but it essentially demands disciplined and
collective imagination and introspection by the organization leaders.

At the same time, several organizations entrust the task of defining OFs to Consultants, who
should act as facilitator helping explore options but not substitute for the organizations
collective beliefs, experience and aspirations.

Communicating OFs

Q.3. How are OFs communicated across the organization–passively, actively,

sporadically, or continually?

Communication is considered to be adequately achieved when the queries about OFs across
groups and hierarchies within the organization evoke similar responses. Successful
organizations ensure that representatives in the field know; What business we are into? What
are the organizations priorities? What means are not acceptable?, as much as the staff in the
Corporate Strategy or Business Excellence cell at head-office.

Q.4. Are the OFs communicated consistently, in words as well as actions?

Are leaders walking the talk? Is there integrity in their behavior and their pronouncement of
organization Values. Further, are all leaders speaking the same language? Is there any
continuity in the message with change in the leadership or composition of apex management
team?
Institutionalizing OFs

Q.5. Are there favorite stories or folklores that establish the primacy of OFs in
decision making over short-term prudence?

Culture most accurately reflects the actual importance being given to OFs. In case there is
tacit approval for the actions and behavior, which deviate from that sanctioned by OFs, there
is cause of concern and requires reflection.

Q.6. Are people able to translate the relevance of OFs in their day-to-day work and
particular operating context?

Institutionalizing OFs means that it provides the obvious and paramount reason behind every
decision and action within the organization. The institutionalizing challenge lies in ensuring
that the message is conveyed in the manner that employees are able to interpret its
relevance to their workplace context and feel empowered to take the right decisions.

Indeed, the setting up and institutionalizing OFs puts a lot of pressure on Management to
clarify its thought process, demands consistency in actions, and integrity in communication.

2. Alignment of Organizational Elements

Here Organization Elements mean Strategy, Structure, Systems and Processes(S&P) and
Staff. All of these should be in sync with each other and devoted towards OFs.

Q.7. Does the strategy formulation process include organizational owners of

structure and processes?

Sometimes within organizations, the owners of strategy (Corporate Planning group), structure
(Human Resource department) and S&P (IT or Operations department) operate within their
respective enclosed chambers, with the CEO responsible for ensuring their coordination-a
nebulous mechanism indeed. Even if the apex strategy formulation team includes all the head
of departments, the possibilities of misalignments may not get revealed (and hence
considered), given the macro-level debate which the respective heads would indulge in. These
misalignments may eventually get exposed during the roll-out but by then the commitment to
strategy has been made and revisiting the same would come at a heavy cost, loss of time and
embarrassment to top management. So the next best option with operational team is to make
quick fix changes or develop localized workarounds. In the process, the effectiveness of the
strategy is highly diluted.

Structure follow strategy- says the concept. But, it may be worthwhile to take a reality check
about the flexibility available in altering the existing Structure and S&P and the time and
resources required to make the alterations while drafting new strategies. The existing
structures and systems often tend to be self-propelling, as entrenched interests and
committed resources work towards ensuring their continuity. Sometimes, the structure and
systemic changes (like implementing ERP or CRM) are carried out on their own, and it may be
worthwhile to examine what other strategic options are now available on account of the
improved capabilities of S&P.

Q.8. Is there obvious evidence of strategy and structure being out of sync?

There may be scenarios wherein strategies are based on innovation and rapid response, but
organization supports hierarchical structures, bureaucratic systems, centralized decision
making and manual operational systems. Similarly, strategies requiring high level inter-unit
coordination and team work but accompanied with opaque credit sharing mechanism and
highly individualistic reward systems may not work.

Q.9. Are employees able to connect to OFs and see their aspirations and ideals
reflected in it?

Several organizations view the organization-individual fitment from the narrow perspective of
matching competencies and technical skill requirements, which is more like treating
employees as part of apparatus used for delivering organizational commitments. But
considering the demands on individuals time and family life, that the present organization
exert, it is important to ensure that individuals see organizations as an important facilitator or
vehicle to fulfill personal missions and aspirations. In the absence of such a fit, employees
may go through the motion of work for extraneous factors (pay, position and so on), without
sense of association with the organizational goal. Banking entirely on financial incentives for
employee motivation can only attract mercenaries and would work only till organization gets
outbid by a more paying suitor.

Effective organizations through their conduct and communications attract the right kind of
candidates and more certainly deflect the possible misfits. They ensure value fitment at the
entry stage and then use other tools (skill assessment, personality tests, so on) to place the
employee where he or she delivers from his areas of strength.

3. Appropriateness of Apparatus

Apparatus essentially include the machines, tools, techniques, IT systems that actually
transform inputs into outputs to serve customers’ needs for a value.

Q.10. Is there realistic assessment of the apparatus needs in terms of capabilities

and capacities closely linked to business needs?

Successful organizations choice of resources and technological commitments come from clear
understanding of business requirements, clients’ perspectives and key success factors. They
examine every new technological innovation from its potential effectiveness in gaining
competitive advantage through improved service standards or cost savings. This approach
has often lead organizations to develop considered view of sticking to the old technology itself
and let some technological innovations go by. Contrast this with organizations that are drawn
to every new technology that gets talked about in management seminars or industry circles.

Q.11. Is ownership v/s accessibility choice of apparatus based on clear

understanding of the criticality of apparatus to retaining organization ability to
serve its customers efficiently and effectively?

Management makes decision with regard to outsourcing or doing it by themselves based on

the clear understanding of the role the apparatus is playing in ensuring organizational
competitive strength. In fact these decisions often get revisited as the supplier or venders
industry matures and there is shift in the source of competitive advantage.

4. Accountability for Performance

This includes three specific steps; identification of performance matrix, defining targets and
distributing responsibilities, and finally making accountability system work.
Identification of performance matrix

Q.12. How closely performance matrices reflect the successful execution of

designed Strategy? Does performance metrics guide the Management to take early
corrective steps? Does it balance conflicting organizational needs such as those of
long term organization sustainability and short term results?

Performance matrices should comprehensively address the negotiated expectation levels of all
stakeholders. There are several frameworks such as balance scorecard available that would
help management ensure that performance matrix does not get captured entirely by financial
short terms results. While these frameworks facilitate Management to take a holistic view, it
is Management’s clarity of strategy and organization needs that would help them define
appropriate and adequate set of performance parameters and their relative importance.

As the data gathering and processing capabilities within the organization gets more
sophisticated, say after implementation of an ERP system, it may be possible to redefine the
performance parameter more accurately to reflect key success factors, instead of using
surrogate or aggregate level parameters. However, just because systems make it possible, is
not sufficient reason to define performance standards more minutely and exhaustively,
leading to over supervision and curtailment of individual flexibility.

Defining Targets and Distributing Responsibilities

Q.13. How credible is the basis of establishing performance targets?

While performance targets based on trend analysis of previous years’ achievements may be
most readily acceptable by employees, these targets may not add unto to Management
aspirations. Forcing any significant jump in performance targets based entirely on competitors
comparative performance or overall organization target lacks conviction and is seldom
effective. Establishing targets’ buy-in requires convincing reasons such as enhanced
automation, computerization, change in procedures, simplification of processes, greater
decentralization, delegation of power or resource allocation, or at times dilution of expected
quality standards, which would make target looks like achievable, although with stretch.

Q.14. How equitably and effectively the performance targets are distributed within
the organization?

While distributing performance requirements within the organization, it is important to ensure

their ownership by the staff. The performance targets would be owned by recipients to the
extent that they are perceived to be fair, linked to bigger picture, and supported by requisite
resources and managerial competence and authority to deliver. Hence defining the
performance targets is as much a process issue as it is the final outcome.

While comparing targets, employees would like to believe that achieving targets by
employees at equal levels should require equal effort and those employees up the hierarchy
need to have tougher targets and consequences of shortfall more severe. In case of collective
responsibility, employees would like to know how the credits are going to be shared among
the team. Finally, it needs to be verified that that there is someone responsible for each
performance parameter in the matrix and that there are no conflicting performance targets
among employees.
Making Accountability System Work

Q.15. Are there systems to ensure that performance results can be objectively and
transparently determined?

Employee should be able to self-evaluate his level of performance and the discussion with the
Management should focus on how to address the gaps and to consider any credible external
factors affecting performance, rather than the perceived difference in the level of performance
achieved. Experience reveals that wherever the reasons of performances are not traceable to
causes with some level of certainty, individuals may ascribe success to self and gaps to
circumstances.

Q.16. Are the consequences of the performance gaps predefined? Are consequences
perceived important by the employees to pay attention to?

This is in line with the goal-path and equity theories of motivation. Defining appropriate
incentive scheme is a challenge. Relying too much on financial incentives has its limitations
and so is the system of not effectively rewarding higher levels of contributions. Designing
adequate incentive system to promote desirable behavior and increased effort on behalf of
employees should be considered as a dynamic process, forever refining through gradual
experimentation and continual feedback.

Q.17. Are the consequences perceived to be consistently applied?

Any accountability system works, only if it is objectively adhered to and there are minimum
exceptions made. Such exceptions sometimes made out of short term business prudence end
up compromising the employee trust in the system and the whole accountability system
becomes blunt and in-effective.

Conclusion

There are several frameworks and approaches available to design the required intervention,
once the problem areas have been comprehensively and systematically identified. Indeed-
effective advice banks upon right diagnosis.