Five more questions to test your organization

If your goal is great performance, then every element of your company’s organization needs to support good, fast decision making and execution. Our previous post suggested questions to help you assess five essential parts of the organization—its priorities, alignment, roles, structure, and processes. Here are five more.

Information. Every company asks itself, “Do our information systems support our business objectives?” But that’s too broad. The crucial issue is: Do the people in key decision roles have the information they need when and how they need it? The key is to think through exactly what’s required for critical decisions and figure out how to make that information available in a systematic way.

Lafarge’s Aggregates & Concrete Division, for instance, realized that some of its most important decisions involved its fleet of heavy mobile equipment, which was scattered across 620 sites in 25 countries. Executive VP Tom Farrell invested in a system that captured information about equipment at each site—the location of individual machines, usage levels, maintenance logs and so forth—and married that data with a standard analytic process reflecting group best practices. The system allowed local managers to make better-informed decisions about fleet size, mainte¬nance schedules and equipment sharing between sites.

People. Where people are concerned, the usual question is whether our company is winning the war for talent. But that can be answered only over a period of years. Right now you’re better off asking: Do we put our best people in the jobs where they can have the biggest impact on decisions?

Looking at your organization from this perspective may change how you deploy your talent. One technology company, for instance, found that fewer than 30 percent of its mission-critical positions were filled by top performers. And it found that only 40 percent of its top performers were in key positions. Relocating many of these individuals helped the company make the most of its talent pool and improve its deci¬sion effectiveness.

Performance-linked incentives. Executives ask themselves, “Is our compensation competitive with our peers?” A more powerful question is: Do our per¬formance objectives and incentives focus people on making and executing the right decisions for the business?

UD Trucks, for example—formerly Nissan Diesel—had been rewarding its salesforce mainly on the number of trucks sold in a given period, with only a small incen¬tive for after-sales services. To ensure that incentives helped sales reps make the right decisions about their time and their interactions with customers, the company added new tar¬gets for truck inspections (a leading indicator of service revenue) and service profits. During the last recession, this focus helped UD Trucks make up for falling sales volumes with greater service revenue, keeping the operation profitable.

Leadership behaviors. Companies typically ask themselves whether they have an effective leadership team. A more actionable question is: Do our lead¬ers at all levels consistently demonstrate effective decision behaviors? High-performing organizations carefully define the behaviors they want to see and support people as they adopt those behaviors.

When he was CEO of Gillette, for example, Jim Kilts asked his team to agree to a specified code of behaviors, includ¬ing open and honest debate and wholehearted support for a decision once made. Gillette’s executives at the time received four separate annual ratings on their behaviors, one from themselves, one from peers, one from direct reports and one from Kilts. The score affected a meaningful portion of their bonus pay.

Culture. Every company wants a high-performance culture. A decision-focused company asks itself: Does our culture reinforce prompt, effective decision making and action throughout the organization? The reason for phrasing the question in this way is that lasting improvements in decision effectiveness often require changing a company’s culture.

Though every high-performance culture has its own unique personality, all seem to encourage a remarkably similar set of behaviors—and all of those behaviors support decision effec¬tiveness. People care passionately about winning. They orient themselves outward, focusing on customers and competitors rather than on internal politics. They think like owners and have a bias to action. They build teamwork, and they bring enthusiasm and energy to their jobs. Shinhan Bank has grown to be the second largest in Korea and consistently wins top marks for customer satisfaction. One key factor: its culture of accountability, performance and focus on the customer.

A company that attacks its organizational weak spots in the five areas described here and the five described in our previous post will find that its decision making and execution—hence its performance—improve significantly. But first it has to ask itself the right questions.